The clear votes in France and the Netherlands against the European Union’s Constitutional Treaty were, of course, bad news for Europe. At the very least, they ushered in a period of uncertainty which can only harm the European Union’s standing, in the world and with its citizens. The concern now must be to start a remedial process, not to make things worse, and the escalating budget debate threatens to do just that. The real issue here, partially obscured by the perennial debate over Britain’s rebate on European Union subsidies, is that the total proposed budget of €994bn apparently has already been significantly eroded. Important policies – proclaimed as recently as the European Council’s spring meeting as essential for EU competitiveness, such as boosting investment in research and innovation – have been jettisoned. Additionally, ad hoc solutions are being sought to buy off difficulties. New sweeteners (or rebates) for some older Member States have already been included and other Member States are lining up to demand them also. The idea of reclaiming as much as possible of what you contribute is seriously undermining the integrity of the system. The commitment to common policies that transcend borders is essential for the EU. For example, enlargement has increased the number of farmers by 50 per cent and the debate over the Common Agricultural Policy must be viewed in the context of existing commitments to the new Member States.

It may transpire that the European Commission President and later, the European parliament in the intra-institutional phase, would be justified in refusing to support the proposed compromises.

Fear that obstructing an agreement would intensify the crisis now pervading the European Union may be legitimate – but that would have to be balanced against concerns about the lasting effects of an inadequate agreement, if it only serves to compound the disenchantment of many Europeans. In this regard it should be recognised that although the EU’s popularity is generally high, at well over 50 per cent throughout the Union, it is volatile. France’s Eurobarometer polls indicate that only 14 per cent think the EU is “a bad thing”. So, the French rejection was primarily a voter protest against the “Anglo- Saxon” economic liberalism which the Constitution purported to incorporate and, more broadly, against Jacques Chirac, the French president. The majority of French voters would reject the parochial nationalism of the National Front or the French Communist Party and they cannot be described as Euro sceptics.

The current debate on the budget and the future of the Constitutional Treaty underlines the fundamental failure of the European Council members to achieve a balance between conflicting views. It is hard to remember a period in recent history when Europe’s political cupboard was so bare of the statesmanship of compromise and reconciliation that should be at its core.

The brutal truth is that all too often, the majority of Europe’s leaders take the European Union for granted. To some extent, this is a tribute to the Union’s successes. It is fatally easy to assume its evolution will continue uninterrupted. There is a temptation for minimalist solutions that avoid uncomfortable confrontations with domestic electorates or the media. But the EU’s peoples need to understand that the Union is confronted with difficult choices that no single member state can effectively make its own.

What is the right balance for Europe between economic liberalism and social responsibility? What should be Europe’s response to the emerging economic superpowers of Asia? Does it have the institutional structures to enhance Europe’s prosperity and position in the world? These are difficult and sensitive questions on which the genuine differences of view within the European Union must be reconciled.

The European Union must start with a reasonable agreement on its budget. Next should be to recognise that elements of the constitutional treaty can and should be rescued. Not all would need to be enshrined in formal treaty revisions. By simple agreement, formal or informal, between member states, there is scope for progress in areas including more efficient and transparent functioning of the Council; greater involvement of national parliaments in the legislative process; a bigger role for the European parliament in choosing the Commission president; and even better co-ordination of European foreign policy.

Two conclusions can be reached about the current impasse. First, Europe’s leaders must explain to their electors the nature of and reasons for the continuing process of European integration. Second, their national preoccupations should be balanced by a recognition that the European Council should make decisions in the common interest. Finger pointing or triumphalism have no part to play. This weekend should begin to put things right rather than to make them worse.

This article first appeared in The Financial Times on 15 June 2005