Double 'no' to treaty plunges Europe into crisis
(Agencies)
Updated: 2005-06-02 18:16

BRUSSELS - The European Union faced a deepening crisis of confidence on Thursday after the Dutch joined the French in rejecting a new constitution in a move that could stall the bloc's expansion and disrupt decision-making.

EU leaders urged member states to press on with ratification of the treaty, drawn up to make the bloc run more smoothly after its enlargement to 25 states from 15 last year. The treaty must be ratified by all 25 to come into force.

"The referendum result from the Netherlands was as expected, but it doesn't change our position. We will push ahead with ratification," said Czech Prime Minister Jiri Paroubek.

Latvia's parliament overwhelmingly approved the treaty on Thursday, meaning 10 members representing almost half the EU's 454 million citizens will have endorsed it.

Still, the Dutch "No" vote of 61.6 percent in Wednesday's referendum was even more decisive than the nearly 55 percent scored by French opponents of the treaty three days earlier.

"The French slapped the left cheek of Europe, the Dutch have now slapped the right," said Graham Watson, Liberal leader in the EU Parliament. "I hope this will bring the European Union out of its torpor and force its leaders ... to show leadership."

Many believe the rejection of the treaty by two of the six nations that founded the bloc in the 1950s was a kiss of death.

But there is now likely to be two weeks of uncertainly before EU leaders debate how to proceed at a June 16-17 summit.

"We'll give an answer at the ... meeting in mid-June," Italian Prime Minister Silvio Berlusconi told reporters in Rome. "There's nobody right now who has a definitive answer, one that is valid for everybody."

European Commission President Jose Manuel Barroso called on member states to proceed with ratification and not pre-empt their summit discussion with "unilateral decisions" before then.

ECONOMIC RISKS AHEAD

Britain faces a decision next week on whether to suspend or go ahead with legislation to pave the way for a referendum.

Minister for Europe Douglas Alexander said Britain -- where voters are more Euroskeptical than the Dutch or French -- would not unilaterally declare the constitution's demise and would seek a consensus with its partners.

"These two "No" votes leave the constitutional treaty in serious difficulty ... but it's not for one country to declare it dead," he told BBC Radio.

But Czech President Vaclav Klaus, an outspoken critic of the treaty and of deeper EU integration, said the Dutch vote proved that there was wide opposition to the constitution.

"If anyone interpreted the French vote result as an exceptional occurrence, they can no longer say this after the Dutch vote result," he said on a visit to Helsinki.

The votes cast doubt on the EU's aspirations for a stronger foreign policy and its plans to expand further into the Balkans, Turkey and Ukraine, and raised questions about its appetite for economic reform amid mounting global competition.

EU Enlargement Commissioner Olli Rehn said enlargement would proceed despite the French and Dutch votes, but letters would be sent to Bulgaria and Romania, expected to join in 2007, warning them the pace of their pre-entry reforms is insufficient.

Luxembourg Prime Minister Jean-Claude Juncker, whose country holds the EU presidency, said the Dutch and French rejections did not alter the economic fundamentals underpinning the euro.

Nevertheless, the currency shared by 12 members of the EU touched an eight-month low after the vote in the Netherlands. The euro has lost nearly 10 percent against the dollar since mid-March but it rebounded on Thursday to trade at $1.2284 after falling to $1.2158 in New York late on Wednesday.

An economic adviser to Barroso told the Belgian financial daily De Tijd that the euro zone's monetary union was in danger of falling apart if it was not backed by wider political integration, a key aim of the constitution.

"Without political integration, the eurozone is a roofless house that becomes increasingly uncomfortable. Many inhabitants will want to leave the house sooner or later," said Paul De Grauwe of Leuven University in Belgium.

"The current situation is dangerous ... The euro does not offer clear advantages to some countries and is considered there to be a source of economic slowdown," he added.

Former European Central Bank chief Wim Duisenberg said the euro should not suffer lasting damage, but the votes would stymie economic reforms in the bloc. "It will take us a couple of years at least to reassemble ourselves," he told CNN television.

The referendum results may also make it harder for EU leaders to reach a deal on the long-term EU budget.

Finance Minister Gerrit Zalm signaled the Netherlands would toughen its demands for a cap on EU spending after the "No" vote and push for a cut in the Dutch contribution, which is the highest per capita of all 25 member states.

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