I am back in Rome, the eternal city, under new management facing a €30 billion austerity plan. Rome, that is, not me.

Niccolo Machiavelli, that great sixteenth century Florentine strategist once said that “…every type of government…should consider beforehand what adverse times may befall him and on what people it may have to rely in times of adversity, and should in its dealings with them act in a way in which it judges that it will be compelled to act should misfortune befall”. As €-Day approaches, 9 December, 2011, there is a lot of ‘befalling’ going on at present. Make no mistake, at this week’s Euro-Armageddon Summit a new power map of Europe will be drawn.

The failure of Europe’s institutions to cope with Euro-stress is leading to a power shift of historic proportions as a new/old balance of power re-asserts itself. It will be a Europe of winners and losers, of ‘ins and outs’, of creditors and debtors. Even if enacted in the name of the European Union, paradoxically forced integration could well mark the beginning of its end. Listening to some of the rhetoric flying around got me thinking; are we facing the economic equivalent of June 1940?

Germany is dominant (by default – no master plan), France subordinated, Britain isolated and puppet governments installed in both Greece and here in Italy. For a historian it all has a very familiar ring to it. There are some anomalies. Polish Foreign Minister Radek Sikorski has told Britain that, “we would prefer you in, but if you can’t join please allow us to forge ahead”. Minister Sikorski once accused me across a Washington table of being too pro-European. Politicians are always ‘pragmatists’ with principle. And, I really wonder if the Polish people identify as readily as He does with His ‘we’ and His ‘us’?

Of more consequence Chancellor Merkel has said rather ominously that “politics has failed” in Europe. Steady, Chancellor. And, President Sarkozy has called for a new EU treaty “re-founding and rethinking the organisation of Europe”. Meanwhile, out-manoeuvred British Prime Minister Cameron has said at one and the same time that a) if the greatest British-marginalising shift in European power politics since 1945 takes place outside a new treaty Britain is happy to acquiesce in its own demise (Churchill is spinning in his grave); whilst b) murmuring darkly that “Britain will defend its national interests” in the wake of last Friday’s failed Paris meeting with Sarkozy.

Two scenarios are likely to emerge from 9 December. Scenario one would see a new German-led core operating at the expense of Europe’s periphery. The forced German-led hybrid integration that Merkel favours will see all the European debtor nations forced to accept a fiscal straightjacket under Berlin’s direction with France and the Commission providing a fig-leaf of legitimacy. In time there will be no alternative but to create a European Finance Ministry. In the absence of effective Europe-wide political oversight democracy will be progressively eroded to the point where the only election that really matters concerns who gets elected in Berlin.

In such a scenario the British will stay out and no doubt fight – politically. Over time London would probably slowly get its act together and begin to build a counter-coalition around Europe’s periphery and beyond and reconstitute old strategic relationships in pursuit of a new strategic end – the containment of German influence. London and Berlin would thus once again find themselves strategic political adversaries.

Scenario two would see Berlin reach out not only to Britain and the EU peripherals but also to those in the wider European Economic Area (EEA) in pursuit of a new pan-European political and economic settlement. Germany would express grave concern about the legitimacy of the Eurozone and the implicit dangers to democracy therein if Berlin is seen to lead overtly for too long. Berlin might even suggest national parliamentarians replace Euro MPs in the European Parliament as part of a new European Constitution (yes, it will return). Euro-MPs are so far distant from the European peoples the X-Factor has more political legitimacy than they do.

Critical will be the relationship between London and Berlin because Germany understands that there are many Europeans within the Eurozone deeply disturbed by Germany’s power and Britain’s exclusion. If Berlin can do a deal with London then that will ensure the all-important strategic reassurance both Berlin and Europe needs to legitimise the profound change from which there is now no escape. Strategic reassurance would also be reinforced if Britain and France together strengthened their leadership of European defence. To that end, London needs to raise its strategically-illiterate, Treasury-driven eyes from the current account balance sheet and recognise that in its armed forces it possesses its one of two tools of critical strategic influence. The other being the City of London.

For Britain this moment is defining. After years of drift and spin the strategic incompetence of its political and bureaucratic elite has left London faced with the most awful set of choices since 1940 when all it could do was fight on at great cost or surrender. If the Eurozone integrates the British economy will escape mass destruction, but British influence in and over Europe will be non-existent and Britain will be reduced to a second-class European state and we British second class European citizens. If the Euro collapses Britain’s influence will be strengthened, but only over an economically-devastated Europe.

So, is it time to dust of the Spitfires? Certainly, the crisis is leading to old reflexes as Europe’s post-war institutions fail under Euro-stress. And, as an Englishman there is something deep, beguiling and tempting about standing on the White Cliffs of Dover, shaking my fist and bellowing defiantly, “very well, alone then”. But such a fantasy must be resisted – that was then and this is now.

December 2011 is not June 1940 and we need to ensure it does not become so. No, whilst similar power relations can be implied by the shift that has taken place it is important to limit references to Europe’s destructive past. It is most certainly a power struggle but the use of power today is very different. What we need is legitimate and shared grand strategy, the effective organisation of huge means in pursuit of an urgent end. Sadly, what we will get, I fear, is grand tactics; badly organised and insufficient means leading to a disastrous end.

Therefore, we must all be vigilant but avoid the stereotypes of history that stress always provokes. Otherwise, we may in time be condemned to relive our history and I would not wish that on anyone. For as Machiavelli said, “…in the actions of men, when there is no court of appeal, one judges by the result”. Today, Machiavelli might have added the actions of women…one woman.

Julian Lindley-French is Eisenhower Professor of Defence Strategy at the Netherlands Defence Academy, Fellow of Respublica in London, Associate Fellow of the Austrian Institute for European and Security Studies and a member of the Strategic Advisory Group of the Atlantic Council. He is also a member of the Academic Advisory Board of the NATO Defence College in Rome. This essay first appeared on his personal blog, Lindley-French’s Blog Blast.