WHO says that Germans lack a sense of humour? Certainly not Westphalian entrepreneur Uwe Dahlhoff, who used the year-long Greek economic crisis to launch a new vodka-based cocktail called “Grexit” – the term used to describe a possible Greek withdrawal from the European Union. The bottle’s label said it all – a crude depiction of Greek prime minister Alexis Tsipras and finance minister Yanis Varoufakis drinking a toast below an EU flag with German Chancellor Angela Merkel’s grim visage surrounded by a wreath of stars. The slogan, “sauer macht lustig”, roughly means “even sour is good fun” and it plays on the bittersweet relationship between Greece and Germany as well as underscoring the use of lemon in the cocktail.

Dahlhoff’s cheeky initiative was one of the few things to make the rest of the world smile because Grexit is not a laughing matter. The crisis began when the year was only three weeks old with the election of the new Syriza (“Coalition of the Radical Left”) party, which formed a government under Tsipras with Varoufakis as Minister of Finance. Matters got worse as the year progressed. By June, Greece was facing bankruptcy when it seemed inevitable that the country would have no option but to default on its scheduled debt repayment to the International Monetary Fund. All of a sudden it looked likely that Greece would collapse, doing massive damage to the European ideal and causing shock waves across the continent. Equally worryingly the disaster would mean that Europe could wave goodbye to the stability and prosperity which has underpinned it for the past fifty years.

That was not all: as Greece is a member of the Eurozone, her demise would have marked the end of the euro as a viable currency, a possibility that was recognised by Chancellor Merkel who said bluntly that “if the euro fails, Europe fails”. Fortunately none of this happened and thanks to a short-term bail-out deal, a German-backed compromise was cobbled together allowing Greece to limp on for the time being. A third election in September returned Tsipras to power but the vote changed nothing as the economy was still in tatters.

Adding to the sense of doom was the fact that the Grexit upheaval was taking place at a time when Europe was facing a refugee crisis, which threatened – and still threatens – to overwhelm it. More than any other factor, the plight of the thousands of refugees from the Middle East and north Africa has helped to define Europe in 2015. Long simmering, the problem finally boiled over during the summer as dispossessed people gave up home and hearth to make the long journey to Europe either by tramping through the Balkans or by risking the uncertain waters of the Mediterranean. The majority were escaping war zones in Syria, Iraq and Afghanistan while others were looking for a better life and a smidgen of security. It’s also likely that most were taking advantage of Merkel’s “come all ye” open-door policy, which will provide up to a million places for refugees in Germany. The EU’s border control agency Frontex has admitted that a record 1.2 million illegal crossings have already been made this year and there are many more to come.

Not everywhere has been as welcoming as Germany. All over Europe, prompted by the rising tide of humanity, countries started battening down the hatches by suspending the Schengen agreement which guarantees freedom of movement without passport or visa controls. For a time, Denmark closed its rail link to Germany while Germany and Hungary shut their borders with Austria. In turn Austria, Slovakia, Slovenia, Croatia and the Netherlands brought back new border restrictions and even liberal Sweden imposed stricter border controls and began sealing several remote northern border crossings with Norway.

Inevitably, given the fear and alarm occasioned by the number of people involved, there was a reaction. The terrorist attacks in Paris in November did not help matters and two of the EU’s smaller members, the Czech Republic and Slovakia, linked the violence to the refugee crisis and claimed that the influx of refugees not only allowed Islamist terrorists to enter Europe incognito but that it would be difficult to integrate Muslims into their society.

By and large, however, most of Europe has offered a reasonably tolerant welcome to the refugees. After all, 70 years ago most of the continent was on the move at the end of the Second World War, but all that was conveniently forgotten and xenophobia began to make an unwelcome appearance. In Poland, the centre-right Law and Justice Party came to power in October promising to introduce policies which are distinctly anti-EU in tone and demanding that immigration should be more strictly controlled. Portugal followed suit with a centre-right coalition whose junior partners advocate withdrawal from the EU and Nato while in the recent French elections, Marine Le Pen’s right-wing anti-immigration Front National only narrowly missed taking control of the regions.

There is a possibility that the UK might also decide to quit Europe (the so-called Brexit), which will be decided by referendum at a date still to be decided. On returning to power in May, Prime Minister David Cameron promised that an in/out vote would take place before the end of 2017 but he could bring the date forward to as early as this coming summer if he feels that his negotiations for reform are gaining traction amongst fellow European leaders. However, the signs are mixed with Cameron claiming before Christmas that the UK’s relationship with the EU will “fundamentally change” in 2016, while his Eurosceptic enemies said that any concessions would only be “trivial”. Even Boris Johnson, Mayor of London, said that his old school friend (both are Etonians) had been given the “bum’s rush” in his attempt to curb benefits for migrants, a key British demand.

It is too soon to say if Cameron is making any progress in his attempts to find a new settlement with the EU, but according to the latest end-of-year opinion polls, the decision is on a knife edge. If the referendum were held today the result could go either way.

As if to reinforce the notion that the EU has been a power for good in that Europe has been relatively peaceful during the past seven decades, the peace was disturbed when ancient enmities resurfaced along its eastern borders. The spark was provided by the situation in Ukraine where fighting between government forces and Russian-backed proxy militias has been going on for two years and has cost around 10,000 lives. After annexing the Crimean peninsula last year, President Vladimir Putin had made little secret of his support for the separatists in eastern Ukraine, who want to carve out for themselves a Russian-speaking enclave dependent on Moscow and to be known as Novorossiya. All too soon it was impossible to ignore the fact that the separatists in the Donetsk region were not only equipped with modern Russian heavy weapons but that many of the “volunteers” supporting them were Russian-speaking service personnel, many of them from elite specialist “spetsnaz” forces.

Various peace deals were attempted, most notably a truce brokered in February by the French and Germans but the year is ending with an unsatisfactory state of half peace and half war. For the most part the guns are now silent and Putin has greater problems on his mind in the Middle East but the threat of super-power confrontation seems to be at an end – at least for the time being. The main and unspoken problem can be found in the attitude of the Ukrainian people and how they decide to respond to the government of President Petro Poroshenko who came to power last summer in place of the pro-Russian leader Viktor Yanukovych.

A wealthy oligarch with business interests in the media and confectionary, known affectionately as the “Chocolate King”, Poroshenko promised to end Ukraine’s nuclear ambitions, to curb corruption and to move towards the creation of a free-market economy, but so far little has happened. Ukrainians have a deserved reputation for being bolshie (remember the Maidan Square revolution, which preceded the ousting of Yanukovych?) and there is no guarantee that they will quietly sit back and watch events unfold. If any reminder were needed that Ukraine is still a powder keg it came just before Christmas when a brawl broke out in parliament in Kiev following an exchange of insults about corruption and nepotism.

Like it or not, Europe will have to take note. Not only does Ukraine have ambitions to join the EU and Nato but there will be no reforms of the country’s economy without investment from European capitals, thought to have reached £5 billion this year. And Russia too will have to take note as one of the main restraints on Putin is the EU sanctions regime, which shows no sign of being eased.

By preventing war from spreading in February, France and Germany proved that the EU still had teeth. However, as the year comes to an end, it is clear that the diplomacy came with a hefty price tag.