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A tidal wave of euros would drive up the Swiss franc, devastate Switzerland’s export economy, and devalue its vast wealth invested in other countries.

Already in August, the Swiss National Bank instituted a currency peg and swore to defend it by acquiring “unlimited” amounts of euros, a risky strategy if the euro were to collapse (for the debacle leading up to the peg, read... Swiss Franc Wreaks Havoc In Switzerland).

Meanwhile, 27 heads of state convened in Brussels for another European Union summit to find that elusive solution to the debt crisis. It began with dinner at around 8 pm and will continue on Friday. Goal: changes in the EU treaty that would impose Germany’s new religion of budgetary discipline on all 27 member states. Violators would be hit with automatic sanctions.

The European Court of Justice would have final control over national budgets. (Ironically, Germany was one of the first EU members to violate the existing 3% deficit limit and was the primary reason existing sanctions have never been applied). Short-term measures to keep contagion at bay are also on the agenda.

“Europe has never been in so much danger,” said French President Nicolas Sarkozy a few hours before the summit (Le Figaro). He worried about “the risk that Europe will explode” and urged that an agreement be found because there were only a few weeks left to make the decisions. He called for more solidarity, more discipline, and more governance within the Eurozone. “An agreement on Friday is crucial,” he said. “We won’t have a second chance.”

But Angela Merkel’s fiscal-union dictate of belt-tightening and central control over budgets isn’t going down all that well elsewhere.

“I don’t have any support in Sweden for changing the treaty,” said Fredrik Reinfeldt, Prime Minister of Sweden upon his arrival in Brussels (Le Figaro). Sweden is one of the 27 EU members but not in the 17-member Eurozone. To contain the debt crisis, he proposed instead the reinforcement of existing bailout funds and more IMF involvement.

David Cameron, Prime Minister of the UK, had already thrown down the gauntlet: he threatened to veto any measures that would hurt London’s financial industry or would shift sovereignty from the UK to the EU.

“A new treaty can’t be imposed,” said Vivian Reding, Vice President of the European Commission (Le Figaro). Instead, measures should be implemented on the basis of existing treaties. She contended that Angela Merkel’s plan of centralized economic governance was “just a copy of the Stability Pact that France and Germany had torpedoed in 2003-2004. The mechanisms to contain the excesses that have led to this crisis existed for a long time but were never applied.”

Treaty changes require participation of the European parliament, the EU Commission, and all 27 national parliaments. Then the treaty must be ratified by all member states—by referendum in some cases. It would take years and could be derailed by the referendum of a single country.

A less onerous alternative: treaty changes that would impact only the 17 Eurozone countries. Sweden, the UK, and other non-euro countries would not have to agree to the changes. It might speed up the timing a little, but if successful, if might split Europe in two: the Eurozone with iron-clad budgets in Merkel’s sense, and the remaining ten EU countries with no such restrictions.

A simplified procedure has been bandied about: decision by EU countries and ratification by member states. But even that takes time—at least one and a half years, according to an expert cited by the Handelsblatt—as national parliaments might not readily agree.

But deep changes, such as outside control of national budgets, would require the normal procedure, rather then the simplified one. In addition, they might require constitutional changes in some countries, which would add to the uncertainty for years to come.

Yet everything must be squared away by March, according to Merkel—a deadline, actually: Sarkozy may lose his job during the elections in April/May, and his potential successors to the left and to the right have vastly different ideas and might not bend as easily to Merkel’s will.... French Presidential Election: Coup De Grâce For The Euro?