Next step: Put on happy faces

So what happens now?

European leaders have become accomplished at papering over disagreements, and I'm sure that they'll manage to produce language that downplays disagreements at this meeting.

But I think these disagreements are coming to a head, soothing language or not. The European Parliament has just rejected a budget -- one that took a year to put together -- with modest cuts in spending for the European Union. Politics may preclude the formation of a new government in Italy until after a new round of elections in June, which could raise the large vote total recently garnered by anti-euro parties. Auditors from the International Monetary Fund, the European Central Bank, and the European Commission have just left Athens without approving the next, relatively small, 2.8 billion euro rescue payout for Greece. The approval ratings of France's President François Hollande and Spain's Prime Minister Mariano Rajoy continue to sink. Politically, these leaders can't accept calls for greater austerity.

June brings a series of important deadlines for eurozone policy on budget rules and strengthening economic coordination among member countries. It's hard to see how an agreement on those rules comes out of June meetings.

Most discussions of the breakup of the eurozone focus on the forced exit of one of the troubled economies -- Greece -- or a decision by Spain or Italy that the pain of staying in the eurozone just isn't worth it.

But I think it's increasingly likely that the effective end of the eurozone will result from actions by its stronger economies. For example, Finland's government has made clear its unwillingness to fork over any more rescue money. Looking at the needs of its own aging population, the country can't afford it, the government has said.

And this most recent German budget has made it clear that Germany -- or at least, the German government before its national elections in September -- isn't willing to sacrifice one centimeter of its insistence on fiscal discipline.

The first step in a breakup coming from Germany and it allies is a deadlock in the eurozone that prevents any movement -- on growth, on increased economic and monetary integration, and on the development of eurozone-wide banking regulation. I think we're close to that gridlock now. The results of this summit and progress on the June deadlines will tell us how close.

Gridlock isn't a tenable long-term strategy. Recessions continue to grind down economies and governments in Italy, Spain and, most importantly, France. Voters are moving toward parties that reject the euro. Germany, rather than becoming more willing to compromise, seems to be locked into its position that austerity is all that's needed.

Gridlock leaves the euro and the eurozone technically intact but unofficially marks the end of the eurozone project. I don't know how long it will take for gridlock to become so intolerable that somebody leaves officially. But if the eurozone countries can no longer agree on anything, the euro as a unified currency for a unified monetary bloc is done.

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Jim Jubak's column has run on MSN Money since 1997. He is the author of the book "The Jubak Picks," based on his market-beating Jubak's Picks portfolio; the writer of the Jubak's Picks blog; and the senior markets editor at MoneyShow.com. Get a free 60-day trial subscription to JAM, his premium investment letter, by using this code: MSN60 when you register at the Jubak Asset Management website.

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