BRUSSELS – It is one of the grandest traditions of the European project: On the eve of any European Union summit, the leaders of France and Germany meet to thrash out a joint approach before descending, like gods from Olympus, to tell the other countries what they have agreed.

On Saturday, Jacques Chirac and Gerhard Schroeder will meet in Berlin to discuss the current crisis gripping the European Union after France and Holland’s “no” votes. But this time, there will be a distinct stench of mortality in the air as the two men ponder the straits in which they, and their nations, find themselves.

Both leaders have suffered electoral defeats in recent days. Mr. Chirac saw French voters reject the draft European constitution. Mr. Schroeder is scrambling to arrange an early general election for the autumn, after a regional election defeat deprived him of all authority.

This week, Mr. Chirac’s opinion poll numbers fell to their lowest point since his election in 1995, with 74% of voters saying they did not trust him. The two men could compare unemployment rates: 10% in France, and almost 12% in Germany, as opposed to roughly 5% in Britain.

If all this gets too gloomy, they could cheer themselves up with one thought: However bad their economies and political fortunes are looking, at least they are not Silvio Berlusconi of Italy, whose economy is poised to go into free fall.

The “no” votes in Holland, and especially France, exposed not just dislike of the direction Europe is taking, but insecurity about the ability of Old Europe to survive competition from the low-cost economies of New Europe.

The overwhelming problem faced by Old Europe remains its inflexible, strike-prone labor markets, which have prevented several nations from reviving their economies after the collapse of traditional manufacturing and heavy industry.

Belgium has never recovered from the death of its coal and steel industries, while Portugal has failed to see tangible rewards from austerity measures imposed in recent years and is now set to break the rules governing the euro once again.

Faced with the bogeyman of the cheap “Polish plumber,” French workers could only suggest laws and rules to keep that plumber out, or make him more expensive by harmonizing taxes and working rules across the European Union.

Assuming the E.U. constitution is dead, its demise may be as much a question of bad timing as bad drafting. Recent referendums found the heart of the old European Union in a truculent, uncertain mood.

The crisis, for many experts, dates back to the day the Berlin Wall came down. A former European minister, Denis MacShane, said: “The three big economies – France, Germany, and Italy – never adjusted to the post-1989 era, to the free movement of capital, people, goods, and services.”

“There’s a three-way crisis in Europe, an economic crisis, a labor-market crisis, and one of leadership,” Mr. MacShane said. “There’s plenty of good examples of successful economies to follow in Europe: Britain, Spain, the Nordics, Ireland. Everyone in France and Germany knows what needs to be done, and it’s a puzzle for more than a decade no one has done anything about it.”

Italy, France, and Germany left behind the horrors of wartime occupation and dictatorship by erecting systems of checks and balances, where economic power was shared between companies, trade unions, and the state, with a large dose of meddling on each side.

Mr. MacShane said: “Paris, Rome, and Berlin have never got away from that system. Employers have their chunk of power, and will not share it, the unions have their power, and will not give it up, the state has its role, even the church has its role – look at Sunday opening in Germany, and how that cannot happen.”

It is still a struggle to buy a loaf of bread after 1 p.m. on a Saturday in Germany, concurred Alasdair Murray, deputy director of the Centre for European Reform, a London think tank.

German reunification was “botched,” with West Germany’s high cost model imposed on the eastern half. Mr. Schroeder has credible reform plans but cannot get them past his own party, Mr. Murray said.

Mr. Berlusconi came to power vowing reforms, but has spent his time shoring up his billion-dollar business interests and fighting legal battles.

Between now and 2007, all three nations will have elections, offering some hope of fresh thinking, said Mr. Murray. If that fails, there is always the hope the Polish plumber’s low-cost flexible model will frighten European workers into change.

Competition from new Europe “may be causing distress to voters now, but in the end it will create dynamism,” said Mr. Murray.