While the deal could help save the euro, the political implications of the rift are enormous. Germany and France had hoped to persuade all 27 EU countries to agree to change the treaty that governs their union. But Britain, which doesn't use the euro, led the push. Hungary, the Czech Republic and Sweden said they were undecided, though the prime minister said Swedish participation was unlikely.
Britain's leaders argued that the revised treaty would threaten their national sovereignty and damage London's esteemed financial services industry. Germany and France, the eurozone's biggest economies, made clear that a deal among the 17 euro countries and whoever else wanted to join was better than nothing.
French President Nicolas Sarkozy laid the blame at the feet of British Prime Minister David Cameron.
There's no question Britain was the most forceful in its opposition to the proposal, and it seems doubtful that Prime Minister David Cameron will change his mind and then sign on to the plan. And that has left the Financial Times to wonder how long Britain will remain part of the European Union.
"David Cameron made a proposal that seemed to us unacceptable, a protocol to the treaty that would have exonerated the United Kingdom from a great number of financial service regulations," Sarkozy said shortly before dawn, after what he called a "difficult" dinner meeting had dragged through the night.
Governments and corporations beyond Europe must now ask themselves a question which, for all the occasional spats with Brussels, has hitherto seemed unthinkable. Will Britain still be part of the Union five or ten years from now? I am not at all sure. Why, one banker asked on Friday, would companies selling into Europe now invest in Britain?
Through one end of the telescope, Mr Cameron’s veto was the moment Britain signalled the beginning of a long goodbye to Europe; through the other it was Europe bidding its farewell to Britain.
The effect is the same either way. Ever since it negotiated the single currency opt out at Maastricht nearly 20 years ago Britain has managed by dint of power and skilful diplomacy to be both within and without the European club. Mr Cameron’s decision to leave an empty chair at negotiations for a fiscal union in the eurozone marks the end of that road.And as to the question of whether failure in Brussels would have meant a doomed European Union, the Los Angeles Times reports that there is a sizable population that says that question is nonsense.
For a moment-by-moment look at how the events unfolded, consider accessing this blog from the Globe and Mail.