By Paul Taylor
BRUSSELS (Reuters) - Winning the Nobel peace prize is a huge morale boost for an organization that has only recently had a near-death experience and is still not entirely sure it is out of danger.
By highlighting the European Union's central achievement of securing peace on a war-scarred continent, the Nobel judges may give the 27-nation bloc back a sense of purpose that its day-to-day practitioners often seem to have lost.
The EU is still a magnet of hope and prosperity for emerging democracies in eastern Europe and the Balkans, but it is unloved by ordinary Europeans, whose sense of belonging remains national or local rather than European.
Its image among many of the 500 million EU citizens has been tarnished by the euro zone's unfinished debt crisis, which has fueled Eurosceptical populist parties of the far-right and hard left in many member countries.
Italian Prime Minister Mario Monti has called for EU leaders to hold a special summit to address "the backlash against European integration" and the rise of mutual suspicion and prejudice due to the handling of the crisis.
The survival of the currency shared by 17 EU states - Europe's central economic project - has looked uncertain for the last two years. Financial markets lost confidence in the debt of troubled peripheral countries and doubted the determination of the European authorities to hold the euro together.
That now seems assured after the European Central Bank vowed last month to buy unlimited quantities of short-term government bonds to defeat any attempt to bet on the breakup of the euro.
But much of Europe faces a grinding recession and a roll-back of pensions, employment rights and welfare benefits that have long defined a generous European social model.
The Nobel citation acknowledged that the EU is going through grave economic difficulties and social unrest, but said: "The Norwegian Nobel Committee wishes to focus on what it sees as the EU's most important result: the successful struggle for peace and reconciliation and for democracy and human rights.
"The stabilizing part played by the EU has helped to transform most of Europe from a continent of war to a continent of peace."
The judges highlighted how the EU expanded to embrace new democracies in Greece, Spain and Portugal that had cast off dictatorships, and the former communist countries of central and eastern Europe after the fall of the Berlin Wall, entrenching pluralism, the rule of law and the market economy.
European politicians rushed to congratulate themselves and take credit for the accomplishments of post-World War Two statesmen who overcame national divisions to forge a union first on coal and steel, then on free trade, subsidized agriculture and assistance to poorer regions.
Yet typically for an organization that often struggles to speak with a single voice, it was not even clear who will receive the award on its behalf.
European Council President Herman Van Rompuy and European Commission President Jose Manuel Barroso jointly laid claim. But European Parliament President Martin Schulz made clear he too expects to be invited to the Oslo ceremony. Some might argue that European Central Bank chief Mario Draghi should be there to represent the federal institution that has kept the euro zone show on the road.
The prize cannot exonerate today's EU leaders from criticism that they often sacrifice long-term European interests to short-term domestic considerations or institutional turf wars.
Vital decisions for the continent's stability are postponed until after the next national election in Germany or Spain.
Floundering euro zone states Greece, Ireland and Portugal were rescued only at the last moment when they were already drowning, and on punitive, draconian conditions. EU paymaster Germany is now telling Spain its borrowing costs are not yet unbearable enough to justify euro zone and central bank support.
Leaders such as Konrad Adenauer and Charles de Gaulle, who sealed Franco-German reconciliation, Jean Monnet and Robert Schuman, who founded the European Coal and Steel Community, and among surviving veterans, Helmut Schmidt, Valery Giscard d'Estaing, Helmut Kohl and Jacques Delors, who prefigured and created the single currency, might all have had a greater claim to Nobel honors than the current crop of EU crisis managers.
The prospect of deeper euro zone integration, widely seen as essential to put the monetary union on a more stable economic and political basis, is clouded by the attachment to national sovereignty of founders such as France and the Netherlands.
The Nobel award may find little resonance with a younger generation of Europeans who take peace for granted, having never known war on the continent, except in the former Yugoslavia.
Many blame policies promoted by the EU for recession, social regression and mass youth unemployment on the periphery of the euro zone and question what Europe has done for them.
Few give the EU credit for having slashed the cost of air travel or mobile phones by forcing open competition and setting common technical standards in the interest of consumers.
As Delors, the most influential president of the European Commission, said: "You can't fall in love with a single market."
In the latest regular Eurobarometer opinion poll, public trust in the EU fell to its lowest ebb of 31 percent, down from 57 percent in 2007 before the global financial crisis began.
National governments have even lower trust readings, but that is scant consolation for European Union officials who feel they have been made a convenient scapegoat for the turmoil.
"It's important to put the record straight in terms of (austerity) programs. It is not true that the guys in Brussels and Frankfurt ... are imposing these policies," Barroso told a conference on Thursday on "The State of Europe: escaping the doldrums".
It was national governments, not EU institutions, that had run up excessive debts and budget deficits and allowed real estate bubbles and private credit booms to grow unchecked, he said. And it was national governments that agreed unanimously to the conditions of each bailout program now blamed on Brussels.
Such arguments carry little weight in the streets of Athens or Madrid.
"I don't see the logic in the EU getting this prize right now. They can't even agree among themselves," said Francisco Gonzalez, a 62-year-old Madrid businessman.
"We're all very tense right now with the crisis and all that's going on here. I don't know if it's really the right time for them to get this," added Alejadro Roman, a 20-year-old Spanish student.
But in the court of European public opinion, the voice of the Nobel committee will carry some weight and may perhaps give EU leaders a bit more courage to make the case for European integration to their publics.
That will be especially important in Germany, Europe's central power, where Chancellor Angela Merkel is struggling to convince an angry electorate that showing solidarity with weaker euro zone states is in Berlin's economic interest.
"What is missing is a clear sense of what we are trying to achieve, where we are trying to get to in two or three years' time," said Etienne Davignon, a former European Commissioner and grandee of EU integration.
(Writing by Paul Taylor; Editing by Will Waterman)