That crisis extends far beyond France. The European continent today confronts a prolonged era of austerity, and it is not going to go down easy–in any country. After World War II, says Gary Geipel of the Hudson Institute, an Indianapolis think tank, “the ‘social market’ economy became Europer’s reigning ideology.” In the minds of many Europeans, the notion of “civilized” has actually come to mean “subsidized”–and their governments can simply no longer afford it. Looming over the 15 countries of the European Union is their agreement (signed in Maastricht, the Netherlands, in 1992) to merge their various currencies into a single one by 1999. To accomplish this, every country will have to hew scrupulously to limits on budget deficits, inflation and government spending. As protests swell across the continent, that looks less and less likely. The dream of a united Europe is fading into tear gas.

Europeans prefer their good life to what they consider the vicious competition of the United States and the Asian worker-bee mentality. And who wouldn’t enjoy short work hours, generous wages, long vacations and luxuriant pensions? Hermann Zorz, employed by a Vienna ministry as a driver, recently retired with fun benefits at the age of 56. He now collects 80 percent of his prior salary, and since retired persons pay less in social duties, the net difference in his income every month is just $100. If he gets sick, there are no financial worries. He, like all other Austrians (retired or not), enjoys inexpensive health care. The problem for Austria, and for nearly all of Europe, is that there are more and more Hermann Zorzes–retirees ready to earn handsome benefits for lots of years–and relatively fewer workers to pay the taxes needed to support them.

Government deficits are massive almost everywhere in Europe, while taxes, for the most part, are already suffocatingly high. The cost of maintaining these subsidy states has become oppressively burdensome to European business. In Germany, for every dollar companies pay in wages to their workers–the world’s highest paid, at an average of more than $20 an hour–management must also pay out about 80 cents in welfare benefits. These include retirement, health, unemployment and nursing-care insurance-national schemes for which German companies are required to pay half the cost. This year the bill is going up again, by a staggering $11 billion. Meanwhile, in the 15 European Union countries, unemployment averages more than 9 percent (11.5 percent in France). That only puts more strain on state budgets, as unemployment payments rise steadily. Adding to the general alarm, growth in Europe’s two largest economies–Germany and France–has stopped cold in the middle of what was supposed to be a solid recovery.

It wasn’t meant to turn out this way. The threads binding Europe under the 1992 Maastricht Treaty, which sought to create a much tighter economic and political union, were supposed to be made of gold: unity would bring growth in trade and enhance European competitiveness. The most important symbol of unity was–and still is–to be a single currency, the evidence that the wars that have plagued Europe were a thing of the past. When German Chancellor Helmut Kohl, the Father Christmas of European federalism, said recently that monetary union was a “matter of war and peace in Europe in the 21st century,” he meant it. A single currency was evidence of a new Europe so real and concrete that you could, quite literally, take it to the bank.

But now, as politicians across Europe confront the tough choices that austerity demands, Maastricht’s golden threads look more like a hangman’s noose. Under Maastricht, by 1997 European countries must, among other things, reduce their budget deficits and national debt to no more than 3 percent of their overall economies. Many of Europe’s national leaders originally thought the Maastricht targets would give them desperately needed political cover (“Don’t blame me, Brussels made me do it”) to pass tough budgets and please the financial markets. They could not have been more wrong. On Oct. 12, the Austrian government fell when the ruling coalition could not agree among its partners how to slash the country’s deficits. Last August, Sweden’s Social Democratic Prime Minister Ingvar Carlsson stepped down after a grinding term trying to rein in Sweden’s bloated state budgets. And in France, Jacques Chirac’s popularity is in free fall.

Fiscal duty: German and French officials insist that neither recession nor fiery street demonstrations should deter Europe from its fiscal duty. Financial markets demand it, lest debt-ridden European countries suffer the sort of capital flight inflicted on less “civilized” countries–like Mexico. Yet the politics of the new austerity look ominous. At the moment Europe is full of bland, centrist leaders–few of whom are either popular or charismatic enough to make a diet of budget cuts seem palatable. Germany’s Kohl is the most entrenched and powerful, but he dislikes change profoundly, and is not yet convinced the social-market economy requires a major overhaul–just some tinkering at the edges. Only France’s Chirac might plausibly have fit the description, but his campaign promise to protect social benefits only increased the rage of French voters who feel betrayed. “The political will in Europe to address the structural problem is quite limited,” the Hudson Institute’s Geipel argues. “There is only a limited constituency for change in countries where almost every company and individual benefits from pub-lie largesse.”

The opening for political demagoguery–cloaked in nationalism and populism–is growing wider. In Austria, Jorg Haider of the right-wing Freedom Movement is making a strong showing in the run-up to that country’s national election on Dec. 17. He has made his opposition to a single currency, and to austerity in general, a central part of his campaign. And in France, the government’s clear determination to stare down the unions and pass the tight budget has triggered incendiary class-war rhetoric from opponents on the right and left.

Europe’s leaders insist calmer heads will eventually prevail. The scenario, simply, is this: as deficits are reduced, interest rates come down everywhere, reducing the debt burdens on everyone. Lower rates in turn bring in an era of investment-led growth; unemployment shrinks, tax receipts surge and budgets–even in Europe’s fiscal basket cases, like Italy–are balanced. The mid-’90s, in this view, will be a barely remembered bump in the road on the way to a more united, more prosperous Europe. It could, just barely, still happen. But Europe’s leaders, as Jacques Chirac above all now knows, have badly underestimated just how seductive the good life was-and just how tumultuous it will be to discard it.