There were no doubts that last week’s European Union summit would be difficult. The EU leadership has been in uncertain territory since two national votes rejected the new constitution. Few anticipated, however, that EU leaders would compound their troubles with an ugly squabble over the budget that would actually embarrass them. Yet, that is exactly what happened. Europe now faces a prolonged crisis that is not likely to be resolved until there are changes in governments of EU member countries.

Enlargement of the EU from 15 members to 25 required the adoption of new policies and procedures to ensure that the expanded community could function. That was the rationale for the new constitution, which, despite two years of negotiations — headed by a former French president — was rejected by French and Dutch voters late last month and earlier this month, respectively. The document must be adopted by all 25 members to go into effect, however. Ten ratified the document, but the “no” votes push the EU into uncharted territory, especially since there is no “Plan B” in the event of rejection.

It was hoped that last week’s summit would devise a strategy to deal with this situation. Instead, the leaders merely called for more discussion and debate. The outlook darkened when three countries — Ireland, Denmark and the Czech Republic — joined Britain and announced that they were postponing their referendums on the constitution.

Saying the November 2006 target date for complete ratification was “no longer tenable,” Luxembourg’s Prime Minister Jean-Claude Juncker, chair of last week’s meeting, called for a one-year period of reflection to help change the terms of public debate about the document. While there is a need for more public understanding of the new constitution, providing time for reflection will serve little purpose unless the French and Dutch reconsider and recast their votes.

There is little chance of that as long as the EU is deeply divided. The failure of EU leaders to agree on a budget for 2007 to 2013 at last week’s meeting made perfectly clear the divisions in their views of the union and how little they agree on purpose. On paper, the problems are simple. The EU budget must be expanded to support development in the 10 new member countries, yet old members are reluctant to increase their contributions or cut their share of existing programs. France demands continuing support for its farmers through the Common Agricultural Program — worth about $13 billion annually — and Britain refuses to give up the rebate that it won in the 1980s, now worth about $6 billion a year.

Their failure to compromise showed domestic politics at its worst and revealed the fiction of European “union.” The leaders of “old” Europe were then showed up by their “new” colleagues, who offered to cut their share of the budget and allow the older members to keep theirs if it facilitated a deal. While that did not produce an agreement, such selflessness suggests there is hope for the EU after all.

For the time being, however, acrimony appears to be intensifying. National differences are being exacerbated by personalities. The greatest antagonism appears to be between British Prime Minister Tony Blair, who has been dogged in his commitment to the rebate, and French President Jacques Chirac, who is equally devoted to the protection of French farmers. They called off a joint appearance before the press after one especially difficult meeting last week.

The reluctance to compromise is compounded by political weakness. The French “non” vote this month was as much a rejection of Mr. Chirac as it was of the new constitution. His long-standing partner in Europe, German Chancellor Gerhard Schroeder, is also weak, having been badly beaten in recent regional ballots. He is likely to lose a national election later this year, and his office. Mr. Blair, and others who look to create a more economically dynamic, liberal EU economy, may be waiting for a change of the guard, and will use the opportunity to provide a new momentum — and direction — for Europe. Britain has a chance to do just that when it takes the rotating presidency on July 1.

Europe has overcome crises in the past. What distinguishes the current situation is that without reform the EU cannot take on the new responsibilities that its members wish to assume — without jettisoning its plans for expansion. Yet without expansion, the EU will have defined itself as much less than originally hoped — implicitly acknowledging failure — and alienated a substantial number of its neighbors as well. It will force them into other institutional arrangements, perhaps ones that put Russia or Turkey at their center. The EU will have retreated in its ambitions, and a more circumscribed role will surely follow. This is not the dream of Europe, but it is the most likely future unless Europe’s leaders can unite around a vision of the union and convince their citizens it is a vision worth pursuing.

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