There used to be a view of Europe: that France and Germany ran the union. It was fashioned to their design.

There used to be a view that Europe's leaders preferred backroom deals to the harsher light of open debate.

There used to be a view that, despite its economic power, Europe punched below its weight on the world stage. Other nations were frustrated at having to phone numerous European capitals in a crisis. It used to be said that the world was becoming a G2 - America and China, with Europe excluded.

So began a long, divisive process to change how Europe functioned. It ended up with the Lisbon Treaty. The larger union of 27 nations would function more efficiently and Europe finally would have powerful leaders who would rub shoulders with Obama and Putin.

Wind forward to the present. The key power-brokers in the choice of Herman Van Rompuy and Baroness Catherine Ashton were the French and the Germans. President Sarkozy and Chancellor Merkel coordinated their approach. They agreed not to oppose each other in selecting the candidates for Europe's top jobs.

They went for the Belgian Prime Minister, Van Rompuy, not because he was the best leader for the job. Germany's Angela Merkel said he offered "consensus". It is an interesting word that can be interpreted in many different ways. In Europe it often means "the person that is least objectionable". Some interpret it as "the lowest common denominator".

It should be said that Van Rompuy does not arrive empty-handed. He is an effective mediator but he is not a communicator who can sell where Europe stands. It will be interesting to see when he gives his first international interviews.

The key for the French and Germans was not to have a Blair-like figure who might overshadow them. The laws of power have not changed by the signing of a treaty.

In any system there is always some backroom horse-trading. It is not necessarily sinister. In the past few days Gordon Brown knew that Tony Blair would not make it, yet he and his ministers continued to support him publicly. It strengthened their hands in the deal-making. The French and Germans knew that if Tony Blair's name remained on the table it could split the member states. They were desperate to avoid it.

It enabled Gordon Brown to go to a meeting of the Socialist group of leaders yesterday and essentially trade in Blair for Cathy Ashton. From the British point of view it was not a bad deal. They have someone who is the Vice President of the Commission and at the heart of decision-making.

Earlier this week the British felt what support there was for Tony Blair was draining away. The final straw came on Tuesday evening, when diplomats received a Swedish paper detailing what the job of president involved. Under the Lisbon Treaty it had been left vague. There was mention of the need for a consensus-builder, a good chair of meetings. What had slipped away in the night was the role of being the voice of the EU on the world stage.

In that note the British understood the job had been redefined in a way that would not suit Tony Blair. He was called by Downing Street and by Thursday morning he knew it was over for him.

Of perhaps greater significance was the new emphasis of the job. The ambitions of the EU have been lowered. They have backed away from a powerful figure sitting at the world's top table. After being appointed Van Rompuy joked that he was anxiously waiting by his phone to be called in the event of a crisis. It was a joke because world
leaders will continue to make their first calls to Paris, Berlin and London. Part of the federalist dream has faded.

That is why some of those applauding the appointments are Eurosceptics. They can live with a relatively low-profile "chairman". It does not seem like another step towards a "superstate".

So the EU, in many ways, is back where it was. Certainly, under the new voting system it will be easier to reach decisions among the 27 member countries. But in choosing relative unknowns the EU has signalled it does not want new centres of power to challenge the nation states.

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For nearly eight years, Europe had been debating and discussing how to increase its influence on the world stage. That was one of the driving forces behind the Lisbon Treaty.

The concern was that Europe would not have a seat at the highest table beside America and China. Only recently the British Foreign Secretary, David Miliband, had argued that Europe needed a president who would stop the traffic in Beijing.

But over dinner in Brussels, the leaders came up with a compromise. The job of President of the European Council was given to the Belgian Prime Minister, Herman van Rompuy. He has been successful in negotiating between the French and Flemish factions in Belgium. He is, by all accounts, a good mediator. He probably is able at chairing meetings, but he has no international reputation. He is camera-shy, a man who some refer to as the "grey mouse". He will struggle to command attention when he travels on behalf of Europe.

There is a key to understanding today. The job description for the post of president was changed. In a paper, the Swedes essentially side-lined the part of the role that related to international affairs. The president they envisaged would chair meetings and co-ordinate the agenda. This was now an introspective post. The Lisbon Treaty, however, was quite clear of its intentions. "The President of the European Council... shall ensure the external representation of the Union on issues concerning its common foreign and security policy..."

The power brokers were France and Germany. They still drive much of European Union policy. In this, they co-ordinated their position. Van Rompuy was their man. He was from the right political grouping. He was also from a small party. But crucially he would not over-shadow them. When it comes to an international crisis, the first calls are still likely to be directed towards the Elysee Palace in Paris and the Chancellery in Berlin.

The other key job also went to a relative unknown. Catherine Ashton is the UK's Commissioner in Brussels. She is now the EU's foreign policy supremo. She was not the first choice and she got the job as a result of what looks like a trade-off. The French and Germans wanted Gordon Brown to give up on Blair and in exchange the British got the No 2 job.

It is a significant post, running not just a diplomatic service but being Vice-President of the Commission. Catherine Ashton has little experience in foreign affairs but she has a good reputation for competence. What she will not be able to do in the short-term is speak with a convincing voice about Iran, Afghanistan and the Middle East.

Carl Bildt, a veteran of the European scene, warned today against picking weak candidates. He said Europe would miss a historic occasion and that could diminish Europe's voice in the world.

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With European leaders due to arrive in Brussels in the next few hours to select a president, those close to Tony Blair are downbeat about his chances.

They have accepted for some time that the prevailing mood among EU leaders is for a low-profile chairman rather than a more charismatic president with international connections.

It also seems there has been a deal done, whereby the top job will almost certainly go to someone from the centre-right rather than the centre-left and that, too, excludes Tony Blair.

The former Labour prime minister has never offcially declared himself a candidate but he is not expecting a late-night call to head to Brussels.

There is still a slender chance that if the dinner tonight is deeply split, Tony Blair's name could yet emerge, but that is not now thought likely by Blair himself.

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