"The nation-state on its own has no future... "

Angela Merkel's apparently ominous declaration in late May was actually part of what might be the strongest vote of confidence in recent memory to ensure the future of the European Union. After years of touting austerity and protecting national fiscal sovereignty, the German Chancellor has suddenly teamed up with French President Emmanuel Macron to launch a 500-billion-euro European Union recovery fund that mutualizes members' debt for the first time. It's a fiscal U-turn justified by the risks of the "deepest recession since the Second World War."

No doubt that risk is very real, and Merkel is now urging swift adoption at the upcoming EU summit in mid-July — while also reminding the so-called Frugal Four (Austria, Sweden, Denmark and the Netherlands) — that populist extremists would pounce on a divided EU.

Macron and Merkel discussing the European reconstruction plan. — Photo: Kay Nietfeld/DPA/ZUMA

But the German leader changing her stance overnight simultaneously tells us plenty about the precariousness of the situation. Dutch author Joris Luyendijk described the claims about populism as half-truths, as "refusing mutualized debt will fuel populism in the south. But by adopting mutualized debt you are going to fuel populism in the north."

And it gets worse. Adding to the deepening of the perennial north-south rift, which has festered since the Greek debt crisis, there is also the cultural and political east-west divide. More recent entries like Poland and Hungary risk undermining the union since EU membership has failed to deliver on all the envisioned post-Communist economic potential.

And in the middle of all of this sits Germany, which coincidentally embarks today on its six-month rotating EU Council presidency. Europe's largest economy, contributing a quarter of the Union's GDP, is still wrestling with its 20th-century history and what it means to be a nation. There is an inherent paradox in Merkel dismissing the nation-state as much of the world looks to her country to rescue the European Union. If she pulls it off, it would be a fitting final act of a political career successfully managing a world of paradox.