The current quarrel could be the spur to EU renewal

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It seems an eternity since the French voted "no" to Europe's constitutional treaty and set the present crisis in train. In fact, it is just two and a half weeks - two and a half weeks in which Dutch voters have added their "no" to that of the French and something akin to diplomatic warfare has broken out between Downing Street and the Elysée. The Prime Minister's admission of "sharp disagreement" after his meeting with President Chirac is among the strongest expressions of discord likely to come from one European leader about relations with another.

It seems an eternity since the French voted "no" to Europe's constitutional treaty and set the present crisis in train. In fact, it is just two and a half weeks - two and a half weeks in which Dutch voters have added their "no" to that of the French and something akin to diplomatic warfare has broken out between Downing Street and the Elysée. The Prime Minister's admission of "sharp disagreement" after his meeting with President Chirac is among the strongest expressions of discord likely to come from one European leader about relations with another.

Thanks to the untimely intervention of Italy's Northern League, even the viability of the euro has been questioned. Altogether, the impression has been created that the European Union is in terminal disarray and that the European project is doomed. In the Commons yesterday, the Tories could scarcely contain their glee. It was time, Michael Howard said cheerfully, to rethink the whole European Union.

How far this bleak picture reflects the real state of the EU will be tested at the summit that opens today. But it is important not to yield to panic. What we have been witnessing is precisely the sort of posturing and brinkmanship that so often precedes a European summit, especially a summit such as this one, where the budget heads the agenda. This time, for very many reasons - some of them relevant and most not - the arguments have been conducted loudly and in the open.

Thus we know, as in more clement circumstances we might not have done, that the French (and most other EU members) believe that the British rebate, won by Margaret Thatcher 21 years ago, should be an issue. We also know that, in defence of the rebate, Britain will slam down its own traditional trump card - the iniquitous effects of the Common Agricultural Policy. These are satisfactorily simple issues that play well at home at a time when both Mr Blair and M. Chirac could do with a boost. But they are not the whole issue.

When both leaders insist that they will make no concession on their pet EU benefit unless the whole budget is rethought, that approach may not be as negative as it sounds. It could also mean that Britain and France are - perhaps as yet only tentatively - coming to accept that there must be a thorough overhaul of the budget, including the basic principles on which it is set. If this recognition has been triggered by the débâcle of the constitution, that would be no bad thing.

The "pause for reflection" called for by Mr Blair - an echo, as it happens, of M. Chirac's first public response to the French "no" - might also be beneficial. As several national leaders note, failure to agree the 2007-2013 budget this weekend need be no catastrophe. There is time, and so much is currently in flux that it might be worth waiting for passions to calm. France has a new prime minister; Germany faces an election in September; the Italian government looks shaky, and Britain takes over the EU Presidency next month.

On the other hand, the 25 leaders might surprise us. Downplaying expectations is hardly unknown as a pre-summit tactic. And even if there is no agreement, it is worth recalling that only a tiny number of the French and Dutch "no" votes were Eurosceptic in nature. The constitutional treaty was mishandled and poorly sold, if at all, by national leaders. But the EU does not collapse without it. It merely reverts to the clumsier arrangements agreed at Nice. The real vindication of the EU, and evidence of its durability, is the number of countries still so eager to join that they are rewriting their laws, reforming their economies and advancing their citizens' rights. Even if Europe's future is as uncertain as it seems today, this is an historic achievement, and it should not be forgotten.

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