Europe faces crisis after France votes 'no'

PARIS - France overwhelmingly rejected the European Union's constitution in a referendum today, plunging the EU into crisis.

The rejection dealt a potentially fatal blow to a charter designed to make the enlarged bloc run smoothly.

President Jacques Chirac swiftly conceded defeat in an address to the nation as the "No" camp celebrated projections by polling groups showing about 55 per cent of voters opposed the EU's first constitution.

Chirac, 72, said the defeat, which EU leaders fear could stall European integration, weakened France in the 25-member bloc but the gradual process of ratification by member states would continue and France would remain in the Union.

He promised a fresh impetus for the government, signalling he was ready to dismiss unpopular Prime Minister Jean-Pierre Raffarin.

"France has expressed itself democratically. You have rejected the European constitution by a majority. It is your sovereign decision and I take note of it," he said.

"Nevertheless, our ambitions and interests are profoundly linked to Europe. France, a founder member of the union, remains, naturally, within the union.

He ignored calls by some members of the "No" camp to step down but is clearly badly wounded two years before presidential and parliamentary elections.

The euro fell just over half a cent in early trading in Asia to 1.2516/19, down from 1.2573 in New York on Friday.

Such a heavy defeat in a country that has been one of the main pillars of the EU reduces the chances of a repeat vote, which French leaders had ruled out anyway before the referendum.

"The constitution no longer exists" said leading eurosceptic Philippe de Villiers, who demanded Chirac quit or dissolve parliament.

Centre-right leader Nicolas Sarkozy demanded policy changes.

Many voters wanted to punish Chirac and his conservative government over unemployment that is at a 5-year high of 10.2 per cent and other economic problems. Other critics were angry at what they see as France's declining role in the Union, especially with the expansion to 25 members last year.

The constitution was signed by EU leaders last October in Rome but requires the approval of all member states to go into force. Nine countries have approved the treaty, including Germany.

- REUTERS