London ? As midnight passed on Friday, and hope for a budget deal collapsed for good at the crucial European Union summit, a historical anniversary was rung in: That of the Battle of Waterloo, in which Britain punctured France’s dreams of a pan-European superstate.

The fierce feud between today’s leaders of France and Britain over the direction of Europe was not fought with cannons and muskets, but it has, nonetheless, left many Europeans anxiously asking about the future of the half-century effort to unite the continent.

For many, the dream of creating a European superpower built from peace, not war, now seems seriously dented, making it increasingly unlikely Europe can one day become an effective counterweight to the United States.

“We were entering a union that was supposed to be effective and united, and it proved to be ineffective and in perpetual conflict. This is not what the new members dreamed about,” said Jolanta Wojcik, a 48-year old accountant in Poland, a new member of the expanding EU.

The failure to find a way to salvage the EU constitution, deeply wounded by resounding rejections in France and Holland, or to resolve a budgetary impasse, has left the 25-nation bloc in a crisis.

At the summit, British Prime Minister Tony Blair and French President Jacques Chirac argued vehemently over Britain’s budgetary refund and France’s generous agricultural subsidies.

But at the heart of the dispute was a fundamental difference of vision: Britain believes in an American-style free-market system and is fighting to reform the bloc’s spending system. France remains intent on preserving time-honored social protections.