Europe in crisis after Dutch, French reject treaty

AMSTERDAM, Thursday (Reuters) The European Union was in disarray on Thursday after the Netherlands followed France in resoundingly rejecting the bloc's new constitution, possibly stalling future expansion and disrupting decision making.

The rejection of the charter by two of the six countries that founded the bloc in the 1950s could deal a fatal blow to a treaty designed to make the EU run more smoothly following its enlargement from 15 to 25 states last year.

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

The Dutch "No" vote of 61.6 percent was even more decisive than the nearly 55 percent scored by French opponents of the treaty. Turnout was also a strong 62.8 percent, well above the 39 percent in last year's European parliament election.

EU leaders urged member states to press on and ratify the constitution, but analysts said they should admit the document is dead. EU leaders are due to decide how to proceed when they meet for a regular summit on June 16-17.

"To have such a very, very large turnout after the French vote but also to have such an overwhelming "No" is really crushing for the constitutional treaty," said Richard Whitman from the Royal Institute of International Affairs in London.

Dutch Prime Minister Jan Peter Balkenende, who was criticised for a lacklustre "Yes" campaign, could face a parliamentary vote of confidence on Thursday but it has little chance of success. Balkenende has said he would not quit. Latvia's parliament is expected to approve the treaty with a big majority on Thursday, meaning 10 members representing almost half the EU's 454 million citizens will have approved it.

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

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

Poland said on Wednesday it would decide how and when to ratify the constitution after the EU summit. It had planned a referendum in October, but the opposition has demanded a delay.

The Czech Republic said on Wednesday it would seek an extension of the November 2006 deadline for ratification to give countries that vote "No" more time to reconsider. Luxembourg Prime Minister Jean-Claude Juncker voiced concerns on Wednesday about the July 10 referendum on the treaty in his broadly pro-Europe state after the Dutch "No".

"I myself and others must plead the European cause with lots of vigour," he told reporters in Brussels.

Juncker, whose country holds the EU presidency, also said the Dutch and French rejections do not alter the economic fundamentals underpinning the euro, despite the single currency touching a new eight-month low after the Dutch result.

"The political uncertainty created will hamper the efforts in Europe to introduce more structural reforms which are so very, very necessary," Duisenberg told CNN television. "It will take us a couple of years at least to reassemble ourselves."