The EU presidency shifted from a powerless and lackluster Luxembourg to a dynamically anti-federalist United Kingdom on July 1. On all the major questions -- the constitution, the budget, relations with the United States, reforms of Europe's lumbering social model -- London comes down on the opposite side from the European Union's pro-integrationists. And for the entirety of the third (and fourth) quarter, London will be setting the EU agenda.

In fact there are two Europes: One is Europe as an economic union, the other is Europe as a military entity with a common defense position. The two are completely separate, but the Central Europeans are in the tough position of trying to straddle the division between economics and defense. These countries realize the benefit of economic ties to Europe, but they rely on the United States -- all the way across the Atlantic -- to guarantee their national security. The Central Europeans will run into a problem if a situation arises in the next decade in which an economic relationship with Europe and a military relationship with the United States are incompatible.

The EU-3 talks with Iran will stop, accession negotiations with any potential new members will be held in abeyance, EU efforts to jumpstart World Trade Organization negotiations will cease, bilateral relations with powers such as China and Russia are on hold. In short, cease thinking of the EU as a political institution. The phrase "cataclysmic failure" is not too far off the mark, although we have no doubt that Brussels will whip up a new bit of eurospeak such as an "organizational pause" so that, officially at least, Europe will appear to be in a state of political flux instead of the collapse it faces in reality.

Exogenous shifts make a European common position - on anything - much harder to achieve. A resurgent Russia forces Europe to choose what it hates more: U.S. troops on the ground, the costs of rearmament or Moscow calling the shots. Some countries would not mind U.S. troops, but for others, they would represent the complete destruction of national sovereignty. Islamist militant attacks force the Europeans to take action against immigration - but some states need Muslim immigrants to make up for declining populations. These difficulties add to the probability that the political union of the EU will break apart in the next decade.

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