AP Photo

For the third year in a row, the eurozone is the weakest link in the world economy. In 2010, attention was focused on responses to the crisis on the eurozone periphery – Greece, Portugal, and Ireland. In 2011, the crisis moved to the core, with Italy and Spain feeling the heat, and concerns mounting about the viability of the eurozone itself. The question for 2012 is whether those tensions will abate or reach a new climax.

Once again, the Greek crisis is the focus of attention and epitomizes Europe’s failings. Once again, hard decisions have to be made about debt restructuring and the provision of further assistance to Athens. And once again, the Europeans have to accept that the situation is more serious than they thought.

But the depth of...