The destabilization of Eastern Europe and of the Southern Mediterranean has exposed the limits of the European peace project. Obviously, the European Neighbourhood Policy has not succeeded in boosting peace and prosperity. This article attributes this failure to a combination of functionalist hubris and political myopia that emanates from the European Union's peculiar constitution as a regulatory power with weak political union. While the projection of the European Union's single market acquis has set over-ambitious targets, the needs of the partner countries and the wider geopolitical implications of the Neighbourhood Policy have received little political attention. In sum, the experience at the fringes of the European peace project not only unveils the limits of the European Union as a foreign policy actor, but it also raises more theoretical questions on the notion of ‘liberal peace'.