The many heads of the European crisis

Like the mythological Hydra of the ancient Greeks, the European sovereign debt crisis is proving difficult to overcome as new “heads” appear after others are seemingly dispatched.

In recent times, there are mounting concerns that the financial crisis is close to becoming a major political crisis.

Polling that suggests French president Nicholas Sarkozy will be defeated by his Socialist rival Francois Hollande at elections on 6 May have raised the prospect of a schism in the fabric of European unity.

Mr Hollande startled economists and markets with his recent statement that “My true adversary does not have a name, a face or a party. He never puts forth his candidacy, but nevertheless he governs. My true adversary is the world of finance.”

He has also been a strong critic of the austerity measures that governments across the Eurozone have agreed to impose in response to the crisis.

The collapse of the Netherlands government last week over disputes on Budgetary management is further evidence of the mounting political pressures within Europe.

Ominously, controversial financier George Soros warned recently that "far from abating, the Euro crisis has recently taken a turn for a worse".

He said that "the deflationary debt trap threatens to destroy a still incomplete political union" and "the crisis has entered what may be a less volatile but more lethal phase".

A spokesman for European Commission president Jose Manual Barroso has urged “the region’s leaders not to give in to the temptation of populist speeches and to continue to move on with a Europe of peace and growth.”

European Council President Herman Van Rompuy is also reported to have warned that the "winds of populism" are threatening the open borders of Europe.

This can be interpreted as a warning against those calling for a re-introduction of border controls between European countries in violation of the Schengen agreement that guarantees free movement of people within Europe.

Those advocating border controls are appealing to concerns about illegal migration.