Europe and its long crisis

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Media captionThe BBC's Gavin Hewitt reports on the winners and losers in the deal

On 22 occasions Europe's leaders have tried to fix their debt crisis at summits.

They have come a long way, but it remains a painstaking endeavour. Compromising and fudging is the way business often gets done in Brussels. And so it proved once again in the long hours of Thursday night.

The leaders of the eurozone have taken an important step towards setting up a banking union but it is unclear when this will be fully operational. They have agreed to set up a single supervisor for banks in countries that use the euro.

The Commission, ambitiously, had hoped the supervisor would be in place by January 2013. That will not happen.

At best, the legal framework will have been agreed. It is unclear when the supervisor will be fully operational. The President of the Council, Herman Van Rompuy said it would probably be during the course of 2013.

This deal represents an uneasy compromise between the French and the Germans. Paris wanted to fast-track the banking supervisor.

Berlin wanted to put the brakes on. Angela Merkel remains, as always, cautious. She still thinks the timetable is ambitious. "Our goal," she said, "is to have a banking supervision that deserves its name."

The timing matters because only when a banking supervisor is in place can the zone's rescue fund inject cash directly into ailing banks. That is vital for countries like Spain that are desperate to see their banks helped - but not by increasing government debt.

Cheerleader for optimists

The one certainty is that much wrangling lies ahead.

French President Francois Hollande has become the cheerleader for the optimists. He declared in Brussels "the worst is over".

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Image caption Greeks have been protesting against austerity measures

Whatever the reality of the Greek economy and its debt, Greece must stay in the euro, he says. If Spain needs a bailout, then the French president sees no reason for extra austerity to be imposed.

And that is the fundamental and growing divide between Francois Hollande and Angela Merkel.

He believes that austerity first is dangerously wrong. Only this week he said "you can't inflict perpetual punishment on countries that have already made considerable effort".

That is how the French president sees made-in-Berlin austerity - as punishment.

Contrast that to the German chancellor's sober analysis of Greece. A lot is happening in Greece too slowly, she told the Bundestag and "measures which should have been implemented long ago are still being worked on".

A postscript about Britain: A view is taking root that the UK is turning its back on the EU.

The Finnish Europe Minister Alex Stubb said: "I think Britain is right now, voluntarily, by its own will, putting itself in the margins… it's almost as if the boat is sailing away and one of our best friends is somehow saying, 'Bye bye' and there's really not much we can do about it."

The French president is of the view that the British "for the moment want to be in retreat".

Whatever British officials may say, they are increasingly regarded as outsiders.