I will not vote in today's European election. Instead, I am doing something much more interesting and relevant to the future of Europe and Britain. I am travelling to Riga to speak at the centenary celebrations for Isaiah Berlin, the great Latvian- Jewish philosopher, who explained why democracy and freedom do not always work hand in hand. Why is this trip to Latvia more important than voting? Because, believe it or not, the future of Europe could be decided by this tiny Baltic state.

Before explaining why this is so, allow me another digression - about a remarkable TV documentary to be broadcast on June 19 on BBC Two. Linked to another cultural centenary - that of Felix Mendelssohn - it is called Mendelssohn, the Nazis and Me. This film, charming, hilarious and horrifying in equal measure, is about the bizarrely legalistic efforts of the Nazis to expunge all traces of Jewish pollution from Germany's music culture, as well as the population, in the 1930s - and more generally about the sudden descent of one of the world's most highly educated and civilised nations into a state of collective insanity. Specifically the film is about bureaucratic attempts to determine whether Mendelssohn's German descendants were more or less “Jewish” than his music - a literally life-and-death issue that rested on the Nazi authorities' inability to establish whether the exact proportion of Jewish heredity in the Mendelssohn family was one-quarter or three-sixteenths.

What does this nightmarish experience, which ended luckily for Mendelssohn's descendants, have to do with the future of Europe? Plenty - and the connection runs through tiny Latvia, where I am writing this.

Europe is now in the middle of a perfect storm - a confluence of three separate, but interconnected economic crises which threaten far greater devastation than Britain or America have suffered from the credit crunch: the collapse of German industry and employment, the impending bankruptcy of Central European homeowners and businesses; and the threat of government debt defaults from loss of monetary control by the Irish Republic, Greece and Portugal, for instance on the eurozone periphery.

Latvia, partly because it has followed an Argentine-style policy of “fixing” its exchange rate and encouraging its citizens to borrow in euros and Swiss francs, is now in the front line of the battle between governments and financial markets - and a humiliating devaluation looks increasingly likely. Last weekend a former Swedish finance ministry official brought in by the Government as an adviser admitted that devaluation was no longer a matter of “if” but of “when and how”. If Latvia does devalue, then the two other Baltic states will almost certainly be forced to follow and the panic will probably move to Romania and Hungary. Beyond that, the contagion is likely to spread to the weakest members of the eurozone - Ireland, Greece, Portugal and probably Austria.

If the crisis expands, other EU governments - and especially Germany's - will face an existential question. Do they commit hundreds of billions of euros to guarantee the debts of fellow EU countries? Or do they allow government defaults and devaluations that may ultimately break up the single currency and further cripple German industry, as well as the country's domestic banks?

Publicly, German politicians have insisted that any bailouts or guarantees are out of the question. Germany has vociferously blocked proposals from Italy, Spain and the European Commission for the EU as a whole to issue bonds and use the proceeds to support the governments with weaker credit. But as so often in Europe, the pass has been quietly sold in Brussels, while politicians loudly protested their unshakeable commitment to defend it.

Last October a previously unused regulation was discovered, allowing the creation of a €25 billion “balance of payments facility” and authorising the EU to borrow substantial sums under its own “legal personality” for the first time. This facility was doubled again to €50 billion in March. If Latvia's financial problems turn into a full-scale crisis, these guarantees and cross-subsidies between EU governments will increase to hundreds of billions in the months ahead and will certainly mutate into large-scale centralised EU borrowing, jointly guaranteed by all the taxpayers of the EU.

This policy of “fiscal federalism”, long advocated by France and high-debt countries such as Italy, Spain and Greece, has been fiercely opposed by Germany and Britain. In terms of its potential costs, it makes the agricultural policy and budget rebates seem like a vicarage tombola.

How could German politicians accept such a policy, having repeatedly sworn to oppose it, without sacrificing their unbending sense of moral righteousness? And how can they pervert democracy by telling their electorates that they are doing one thing, while advocating the exact opposite within the EU?

Much as they did in the case of Mendelssohn and the Nazis, the Germans focus on the letter of the law when they cannot bear to think about the spirit of the rules they are applying - whether unspeakably evil, as in the 1930s, or merely profligate and dishonest, as in the EU today. The new EU borrowing, for example, is legally an “off-budget” and “back-to-back” arrangement, which allows Germany to maintain the legal fiction that it is not guaranteeing the debts of Latvia et al. The EU's bond prospectus to investors, however, makes quite clear where the financial burden truly lies: “From an investor's point of view the bond is fully guaranteed by the EU budget and, ultimately, by the EU Member States.”

And so the juggernaut of euro-federalism rolls on; but viewed from an increasingly liberal central Europe, there is a great consolation: the history of euro-federalism keeps being repeated but, as Marx once said, what began as tragedy tends to end in farce.

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