All evidence now is that the German public recognizes that the present government has failed to address economic stagnation, high unemployment and the underfunded pension time-bomb that continues to tick. The likely next chancellor, Angela Merkel, leader of the Christian Democrats and a discreet and even enigmatic doctor from East Germany, may continue the Kohl-Schröder policy of favoring a federal Europe but will probably rebuild the American alliance and try to implement serious quasi-Thatcherite reforms to Germany's overtaxed, overregulated economy, with its inflexible labor market rules and a social safety net that became an overstuffed hammock decades ago.

France's support of Euro-federalism was based on France's ability to be the guiding force behind the whole European Union, by exercising a Mephistophelean influence on Germany. The entire Gaullist rationale--which was largely continued by the one non-Gaullist president of the Fifth Republic, François Mitterand--was based on the theory that France was never defeated or ceased to resist in World War II; that de Gaulle warned the heedless Churchill and Roosevelt of the dangers of Stalin; that France is a genuine defender of Europe and the Anglo-Saxons are not; and that France is a reliable ally to the British and Americans in a crisis, as de Gaulle demonstrated in the Cuban Missile Crisis of 1962 (while British Prime Minister Harold MacMillan havered and temporized with President Kennedy).

Almost all of these propositions were false, and France, since the end of the Algerian War in 1963, has devoted most of its foreign policy energies to the obstruction of American objectives. Gaullist foreign policy is essentially an aggregation of confidence tricks, lent plausibility in the 1960s by de Gaulle's great prestige, by the Vietnam War, which divided and distracted America and disillusioned many of America's natural foreign supporters, and by the apparently close balance of military power between the United States and the USSR, which permitted maximum influence for de Gaulle with a minimum of actual geopolitical effort. Thus, an inflammatory speech by de Gaulle in Quebec, his exchange of ambassadors with China, his pandering to Arab powers at the expense of Israel and the French veto of British entry into the European Community magnified apparent French world influence inexpensively.

None of these conditions obtains now, and France is left with a foreign policy of Ruritanian posturing and ineffectual huffing and puffing. The inept Jacques Chirac will hang on until 2007, but he is a lame duck. France will have to be regenerated from within the Gaullist movement. The French economic malaise is severe and, to use one of de Gaulle's many graphic phrases, in public policy terms France "is crossing the desert."

Practically all the institutions of the French state were devised by Richelieu, Colbert for Louis XIV, Napoleon and de Gaulle, none of whom was a decentralizer or much of a believer in an unregulated private sector. If France cannot lead Europe, it is unlikely to support a Euro-integrationist policy, at least until it regains economic momentum.

The eastern countries in the European Union--former Soviet satellites (Poland, Hungary, the Czech Republic, Slovakia), Soviet republics (Estonia, Latvia, Lithuania) and Slovenia--are Euro-federalists because they have never in their history (except the Czechs to a slight degree) had any political institutions that were worthwhile and because they have a burning ambition to be part of the West. Anything that integrates them into the West is insurance against a return to the evils of the past, which completely repressed the independence and enlightened governance of most of these peoples for centuries on end.

But the eastern countries, for the same reason, want the closest possible alliance with the United States and want little to do with the socialist economic model now floundering in France and Germany. They also want to avail themselves of the generous economic equalization programs the EU operates for its members of below-average per capita wealth. By cleverly using the so-called structural funds, available from the EU for improvements to infrastructure in poorer member countries, and by reducing taxes and seeking and favoring foreign investment, Ireland was transformed in twenty years from one of the poorest to one of the wealthiest European countries.

Spain and Portugal, having been largely excluded from the Western world for much of the 20th century while under rather discredited dictatorial rule, also want integration into Europe as an antidote to isolation and also want the money transfers available to them in the EU. These countries, as well as Italy, Ireland and Greece, and soon Malta and Cyprus, have effectively picked the pocket of Germany and the other wealthy countries. Germany bought popularity and took the responsibility for the disciplines of a hard currency, to which the southern countries were unaccustomed. Now Germany has neither the means nor the motivation to continue to bear these burdens.

Belgium, the Netherlands, Luxembourg, the northern countries (except Norway) and Austria seem to adhere because their elites may have the opportunity to exercise greater influence and enjoy more fulfilling careers in a larger jurisdiction, and a federal Europe is in all respects a safer environment for them than a Europe fraught with great power rivalry. In all countries, the attraction of a brotherhood of Europe's nationalities is real, strong and commendable. The fact that European federalism has been oversold and has necessarily underperformed predictions does not mitigate the merit of the ideal it embodies.

But the different ambitions of the different components have made Europe fissiparous. The budget is now an overstretched patchwork of placebos and fiscal enticements. About 40 percent of the $125 billion EU budget is subsidies under the Common Agricultural Policy, largely to French and German truck farmers, who are not really agrarians at all. These subsidies are 60 percent of French farm income. Margaret Thatcher became so exasperated by this nest feathering that she demanded, and Britain still receives as a result of her table-pounding, an annual rebate that is projected to average €7.1 billion ($8.5 billion) between 2007 and 2013. At the failed budget meeting in June, it was poignant to see the new eastern members offering to take less if the British, French and Germans could just agree among themselves. Whoever pays to reignite the European project, it should not be the most long-suffering Europeans.

There are three keys to reorienting the Continent on a sound path. First, a new, moderate-right, reforming German government could transfer its chief allegiance from Paris to London and work with Tony Blair, whose European and social democratic credentials are impeccable and who has just been re-elected. Blair has always subordinated his Euro-enthusiasm to Britain's national interest (by which he means British public opinion) and his social democracy to moderate personal-income tax rates and stinginess toward Britain's long-notorious unions. (In an amusing revenant of recent European history, after Blair made these points in a speech at the European Parliament in June, he was pyrotechnically attacked as a fraudulent European and social democrat by Daniel Cohn-Bendit, one of the leaders of the anti-de Gaulle uprising of 1968. Blair just smiled at his superannuated assailant.)

The British, especially, have been severely irritated by authoritarian EU pettifogging, regulating everything from grocery store displays of bananas to a uniform size of condom. They are less than delighted with Tony Blair's imposition of European identity cards, with direct access to tax and medical records. The British are generally quite law-abiding but resent intrusions into their privacy that Germans might not notice.

An Anglo-German-led move to the moderate right would please the Italians and former communist-bloc states and ease all of Europe into a more growth-friendly, incentivized economy, with lower taxes and less regulation, making competition with other regions and continents gradually less frightening than it has been. If this were the governing political ethos of Europe, the European Union could quickly regain the self-confidence of success. There is precedent for an Anglo-German alliance; it was the dream of Joseph Chamberlain and Lord Haldane and of a number of German leaders, including, intermittently, Bismarck.

Britain's natural genius for placating and leading the secondary countries of Europe--a habit developed over centuries in resisting whichever was the strongest continental power, whether the Habsburg Empire, Spain, France, Germany or Russia--could be deployed to round up strays. But shepherding France into the fold of enterprise culture, despite the proverbial avarice of the French, would be a formidable challenge, as France has turned retention of its stagnant socialism into a Kulturkampf against Anglo-Saxon free market economics.

Second, there will need to be a dual-speed, or "variable geometry", Europe. Those countries that wish full political integration should not be prevented from having it. Those that do not should not have it forced upon them. The unfortunate metaphor of Helmut Kohl, that "The convoy must not advance at the speed of the slowest ship", (not a public relations triumph in the UK, where the Battle of the Atlantic is not fondly remembered), is inadvertently correct. But the answer is not to impose by bribes and blackmail a uniform rate of progressive integration; rather, it is to divide the EU member states according to their level of federalist preferences. This would drain away most of the bitterness in the endless tug-of-war at European ministerial and summit meetings.

Essay Types: Essay