European Union's woes a storm in a teacup?

Reports of the European Union's death are greatly exaggerated.

That is the message that European leaders are hammering home. But after a punishing week that saw French and Dutch voters reject the union's Constitution, the EU has lost much of its luster.

"Europe no longer inspires people to dream," said Luxembourg Prime Minister and current EU president Jean-Claude Juncker after Dutch voters rejected the charter by a margin of 62 to 38 percent.

The charter's next steps won't be decided until an EU summit June 16-17. And some observers say no substantial action will occur until 2007, when Germany and France are expected to have new governments. But as they rouse themselves from this week's nightmare scenario, proponents of greater European unity say that the EU's work will go on.

"It is not as if we were starting with a blank sheet," says Peter Ludlow, a veteran EU watcher and founder of the Eurocomment consultancy in Brussels. "There is a huge accumulated mass of business that will simply have to go on, and there is built-in momentum."

Despite reaching an eight-month low against the US dollar this week, the euro will persist as Europe's common currency. Greater military cooperation, negotiation as a single bloc at the World Trade Organization, and efforts to create a common immigration policy will also continue.

"I don't see any major strategic changes in direction" if the Constitution dies, says Mark Leonard, director of political studies at the Center for European Reform, a think tank in London. "I think this is a storm in a teacup. People won't remember it in 10 years' time."

At the same time, Mr. Leonard suggests, some elements of the Constitution might be extracted and implemented without the need for referendums. The EU could, for example, apply a proposal to allow European citizens to initiate legislation themselves if they collect enough signatures.

But such cherry-picking "would be very risky, politically speaking," warns Thyss Berman, a Dutch Socialist member of the European Parliament. "It would be criticized by all those who are against top-down hierarchical decision-making."

Meanwhile, the most important institutional reform in the Constitution - changes in voting systems designed to streamline the EU and facilitate decisions - would be impossible to introduce, politicians and analysts agree, since they were negotiated as part of a delicate package.

That means that a previous deal, under which Poland - with 8 percent of the EU population - has only two votes fewer than Germany, with 20 percent, is likely to remain in force.

Observers recall that past EU crises have sometimes served as springboards for further progress. At the end of the 1960s, for example, French President Charles de Gaulle's refusal to allow Britain to join the EU paralyzed the six-member community. Widespread frustration at this led to pressure for new initiatives, which resulted in the Union's first expansion.

"The EU has emerged strengthened from crises before, and I see no reason why that should not be the case this time," says Mr. Ludlow.

Though the Latvian parliament ratified the text Thursday by an overwhelming margin, it is far from certain that EU leaders will agree with European Commission President Jose Manuel Barroso that the 13 nations who have yet to voice an opinion should be allowed to do so. So far, 10 countries have approved the charter.

Since all 25 EU states must approve the charter, future parliamentary votes or referendums would not count unless France and the Netherlands voted again - an unlikely prospect, observers say.

And efforts to redraw the charter - to make it more acceptable to its ideologically disparate doubters - warns Mr. Berman, "would lead to endless talks."