The European Union is now over two decades old, so it is easy to forget what an unlikely, ambitious and historic endeavor it is. With 27 countries spreading east to west across the storied continent, over half a billion people within its borders, a growing array of languages and dialects, diverse economies, and a patchwork quilt of cultures, it is a marvel—seemingly the answer to centuries-old yearnings for a peaceful, unified Europe.

Within the EU, the Schengen Zone allows free “borderless” travel between 22 states. This has been one key to the strength of its economy. While its growth has been modest when compared to shooting stars like China, its gross domestic product surpassed that of the United States years ago. This made it the world’s largest economy—partly due to the convenience of trade between EU nations and a common currency, the euro.

But the global financial crisis threatens to topple the union from that lofty position, with repeated credit downgrades and the specter of bankruptcy now hanging over Greece, Portugal, Spain, Italy and Ireland.

Europe takes pride in being a prosperous, enlightened and civilized place—the Old World, rich in history and tradition, yet still firmly positioned at the forefront of mankind’s progress. In the post-World War II era, it was overshadowed by a young, giant United States as the lone superpower. But now, amid the threat of financial meltdown and the vacuum left by a weakened America, opportunity presents itself to Europe—or at least to those with power to determine the EU’s direction.

Since the contagious crisis-bailout-crisis cycle struck the power bloc in early 2010, governments have been ousted, anti-bailout/anti-austerity parties have gained ground, and leaders have resigned or lost confidence votes in many member-states—Slovakia, Ireland, Portugal, Finland, Spain, Italy and Slovenia.

The trend for 2012 appears to be an uprising against nearly all incumbent office-holders and majority parties. But will the EU’s real power brokers lie down and accept this?

Dutch Government Collapses

Recent months have seen a continued routing of “old guard” political leaders and governments, even if they have not been around long at all. On April 23, the Netherlands’ 18-month-old coalition government, led by Prime Minister Mark Rutte, fell apart. The cause was the Freedom Party, led by controversial right-wing MP Geert Wilders, withdrawing its support for a plan to meet the requirements of the EU Commission’s March 2011 fiscal pact, which formalizes EU austerity standards. The small party’s votes had been required for the plan to become law.

The Netherlands projects a 4.5 percent budget deficit for 2012, while the fiscal pact imposes a 3 percent annual cap. This violation could subject the country to EU sanctions and endanger its highly valued, and increasingly rare, AAA credit rating.

What kind of conditions preceded the political turnover?

“The $800 billion Dutch economy, the fifth largest in the euro area, entered its second recession in three years during the second half of last year,” Bloomberg reported. “House prices have fallen more than 10 percent since 2008. While unemployment is less than half the euro-area average, it rose to 5 percent in March from 4.1 percent last June, according to Eurostat.

“Unemployment among non-western European foreigners living in the Netherlands was about 13 percent in 2011, compared with 4 percent for native Dutch citizens, according to figures provided by the Central Bureau of Statistics...

“Standard & Poor’s changed its outlook on the Netherlands on Jan. 13 to negative, saying it sees at least a one-in-three chance that the country will lose its top grade in 2012 or 2013 should the economy deteriorate further.”

Mr. Wilders has cited the state of the Dutch economy, the European economy as a whole, and the pressures of the austerity pact as evidence that the euro—and even the union itself—should be dismantled.

Greece Rejects Austerity

Greece, one of the EU’s most cash-strapped nations, has struggled with its internationally supervised financial restructuring since 2010. In a country not known for financial discipline, citizens resent the idea of outside groups—the so-called Troika of the European Central Bank, the International Monetary Fund, and the European Commission—dictating the terms of their recovery.

On May 6, the electorate vented their ire by ousting Lucas Papademos’ unity government after less than six months. However, its replacement is a disorienting band of strange bedfellows—the center-right New Democracy party thrown together with radical leftist former adversaries—and far-right groups (including one that has been called neo-Nazi).

Bloomberg reported, “New Democracy leader Antonis Samaras is trying to put together a government after a Greek election that raised fresh questions about the country’s euro membership and triggered the biggest stock-market rout in four years.

“Samaras will be given three days from today to put together a coalition from an assembly split down the middle on whether to renege on the terms of bailout agreements negotiated since May 2010.”

“As voters across Europe rebel against austerity measures imposed to stamp out the debt crisis, Citigroup Inc. said today that the risk of Greece leaving the euro by the end of 2013 has risen as high as 75 percent. [The] election propelled into parliament one party that wants to put land mines on the border with Turkey to stop illegal immigrants and another that wants Germany, the country’s biggest donor, to pay World War II reparations. [Greece’s] benchmark ASE Stock index plunged 6.3 percent.”

Greece faces choices that are bad or worse—either leave the eurozone and face economic isolation, or continue under austerity measures that virtually guarantee that the nation’s economy will stagnate. This will spark more violent unrest among the youth, over half of whom are unemployed—stewing in a dangerous brew of limited opportunity, an entitlement culture, and too much free time.

France’s About-face

While smaller nations such as Greece are considered to be at Europe’s fringes (the “southern periphery”), at the heart of the union stand two nations: Germany and France.

Recent allies but historical foes, the pair has the EU’s biggest populations, are among the largest in territory, and are considered the dual engines of the eurozone—nations using the euro. They have long been Europe’s pacesetters and decision-makers.

On May 6, while Greece went to the polls, a robust turnout of 80 percent of France’s voters denied President Nicolas Sarkozy a second term, the first incumbent to lose office since Valery Giscard d’Estaing in 1981.

A conservative with the UMP (Union for a Popular Movement) party, Mr. Sarkozy maintained themes of limited government, boosting France’s economy, and a tougher stance on immigration, spurred by tensions in the nation’s banlieues (city suburbs with large immigrant populations). He expanded the nation’s entrenched 35-hour workweek and raised the retirement age from 60 to 62, which he maintained was necessary for France to stay competitive.

But Mr. Sarkozy was elected just ahead of the global economic downturn of 2008. While he is credited with taking measures to address the crisis, he presided over a country in an extended rocky period: “Public debt is high and rising, the government has not run a surplus in over 35 years, the banks are undercapitalised, unemployment is persistent and corrosive and, at 56% of GDP, the French state is the biggest of any euro country” (The Economist).

In yet another vote seen as a rejection of EU-led austerity, French voters replaced Mr. Sarkozy with Francois Hollande, their first socialist president in 17 years. Mr. Hollande has not previously held a national office, but is familiar with this type of campaign—the mother of his four children, Segolene Royale, ran against Mr. Sarkozy as the socialist presidential candidate in 2007.

Much of his rhetoric could not be more different from his opponent’s. He stated in a speech, “My real enemy doesn’t have a name or a face or a party. He’ll never run as president, and so he’ll never be elected, although he does govern. My enemy is the world of finance” (Democracy Now!).

Mr. Hollande plans to implement a 75 percent tax rate for those making more than one million euros per year, prompting many affluent French to prepare for an exodus across the Channel to London. He also intends to raise the minimum wage and hire 60,000 teachers—an aggressive move in the best of times, but with France having serious exposure to toxic eurozone debt, it is even more surprising.

Franco-German Ties

The French election can be seen as a rejection of the EU fiscal pact but also as a thumb in the eye of this plan’s prime architect and advocate—Germany.

During Mr. Sarkozy’s time in office, France and Germany reached a high level of cooperation. His partnership on many issues with German Chancellor Angela Merkel led media to dub the pair “Merkozy.” This partnership included the French commitment to comply with the German-led austerity pact. Ms. Merkel even endorsed Mr. Sarkozy for re-election, a highly unusual step across a neighbor’s border.

Ahead of the vote, Mr. Sarkozy floated the unpopular idea, in lockstep with German Interior Minister Hans-Peter Friedrich, of reintroducing border controls in the Schengen Zone, stating, “At a time of economic crisis, if Europe doesn’t pick those who can enter its borders, it won’t be able to finance its welfare state any longer…We need a common discipline in border controls...We can’t leave the management of migration flows to technocrats and tribunals” (The Wall Street Journal). While such border checks would slow commerce, this was seen as a necessary tradeoff to limit an influx of immigrants displaced during the Arab Spring.

With Mr. Sarkozy’s exit, a “Merkollande” pairing looks unlikely. Just one day after Francois Hollande’s victory, Ms. Merkel dismissed his proposition that Europe’s fiscal pact—signed after prolonged talks by all EU countries minus the Czech Republic and United Kingdom—could be revised to be less austere. Volker Kauder, the leader of her parliamentary party, added sharply, “Germany is not here to finance French election promises” (Reuters).

France has the second-largest economy in the EU. This gives it considerable clout in policy discussions. But when the largest economy, by a margin of almost 30 percent, is Germany, a showdown is inevitable.

Between its economic shakiness and its subordinate position under Brussels’ umbrella, France is no longer in a position to chart its own course: “The creation of a monetary union was, among other things, supposed to harness the economic strength of a reunified Germany and the strong political will of France. Berlin would gain a powerful driver of growth, and Paris would keep a measure of control over its historically troublesome neighbor. However, after 20 years of the German economy outperforming France, this relationship is out of balance. Paris’ political power is no longer commensurate with Berlin’s economic strength” (Stratfor).

Germany truly holds the cards, and is playing them. Its rebuke of Mr. Hollande was followed by this message to Greece, recipient of a bailout largely funded by Germany: “Aid can only flow if the [austerity] conditions are met” (Reuters).

Europe in Prophecy

While few understand it, the Bible identifies two sets of peoples who live side-by-side in modern Europe. One is a group of nations that descended from the 10 “lost” tribes of Israel, now occupying most of North America, much of Europe, and certain other areas. (The modern Mediterranean nation known as Israel is mostly comprised of descendants from only one tribe—Judah.) These nations are allies.

This inspired Book also describes a non-Israelite (“Gentile”) world power that would reappear in various forms over millennia. The book of Daniel describes Chaldean King Nebuchadnezzar seeing a symbol of this power in a dream: “This great image, whose brightness was excellent, stood before you; and the form thereof was [formidable]. This image’s head was of fine gold, his breast and his arms of silver, his belly and his thighs of brass, his legs of iron, his feet part of iron and part of clay” (Dan. 2:31-33).

The publishers of this magazine have for decades explained that this “metal man” image represents a series of empires, beginning with the Neo-Babylonian (head), continuing through the Medo-Persian (breast and arms), Greco-Macedonian (belly and thighs), and finally the Holy Roman Empire (legs of iron). Its final revival, the last of seven, is represented by the feet of iron and clay. It is to appear in the near future, situated in that empire’s historical stronghold.

The mixture of clay and iron shows that it will be both weak and strong—weak because it forces together very different peoples; strong because it has access to manpower, resources, capital, technology and industry. Remember that munitions have historically been made with iron, or iron alloys such as steel.

Though this image represents many millions of people, it takes the form of a single man. So where is the figurehead, the clear leader in the EU?

At present, nowhere. But that will soon change.

British newspaper Daily Express reported that “…two senior EU bureaucrats, Mr Barroso and Mr Van Rompuy, are locked in a bitter power struggle to determine who is the true big cheese or ‘grand fromage’ in Europe. Former Portuguese premier Mr Barroso, who heads the EU’s executive arm and was elected to his post by members of the European Union, is understood to resent the rival fiefdom of Belgian Mr Van Rompuy, who was chosen by the heads of government of EU member states to represent them.

“Under the plan, a single figure would be elected by Euro-MPs to perform both roles.

“Supporters of the move believe that the rival presidencies are undermining the EU’s ability to speak with a single voice. They argue that merging the two jobs will create a powerful European leader who is capable of pursuing the federalist dream of a united Europe which has been severely shaken by the eurozone crisis.”

This does not surprise those who understand prophecy. The following appeared in the January 2010 Real Truth article, New Face of the EU – What Does the Future Hold?: “Ultimately, Mr. Van Rompuy will be as strong as the 27 leaders behind him make or want him to be. This new position paves the way for the ‘one voice’ Europe has lacked on international issues that could rival the power of the United States president—especially since no provisions are made to stop the European Commission president from being elected president of the Council, effectively combining two leading positions into one.”

The Express article also stated, “Opponents fear the plan could create a modern-day equivalent of the European emperor envisaged by Napoleon Bonaparte or a return to the Holy Roman Empire of Charlemagne that dominated Europe in the Dark Ages.”

Europe’s sea change, in development for years, is now appearing and accelerating. In the years ahead, European nations will have to choose: stay in the eurozone, or leave. Remain a member of the European Union, or depart. The alliances and rivalries of history will reappear and shape this process.

To understand Europe’s future, keep reading The Real Truth, and read David C. Pack’s book America and Britain in Prophecy.