In Greek mythology Prometheus went up to Mount Olympus and stole the gift of fire for mankind. Today Greece is once more playing with fire, but the consequences may well be dire. Stock markets are plunging. And European unity? It's starting to look rather mythical as well. Soon the blue and yellow flag of the European Union flying proudly close to the Parthenon may be hauled down and cast into oblivion. The drachma may return, along with the trusty deutsche mark.

The dream of European unity was at the heart of western Europe during the Cold War. Recently, former German chancellor Helmut Schmidt and former French president Giscard d'Estaing were on a television show where they thundered about the threat to the euro and declared that it was purely political. Well, maybe. But there has always been a discrepancy between the political class, on the one hand, and the one that is actually governed, on the other. Those tensions came to the fore with Greek leader George Papandreou's declaration that he would put a vote on a bailout of Greece to a popular referendum. In essence, he is asking the Greek population if it wants to be part of the European Union or to go it alone.

In the chancelleries of western Europe, this is seen as a schism on par with Luther nailing up the 95 theses onto the door of the cathedral at Wittenberg. But there really is no modern equivalent of the Diet of Worms that can exile Greece. Instead, it may simply go bankrupt and wave goodbye to the European dream. Or, in a spasm of realism, voters may choose to swallow the fiscal medicine being prescribed them from abroad and accept a generous writedown of Greek debt. But either way, Mr. Papandreou has exposed some of the core problems at the heart of the European Union. It is not really a democratic construct. It was constructed by and for elites who are now grappling with an economic tsunami that threatens to wash away the very real progress that Europe has made in recent decades. The fear all along has been that the virulent nationalistic hatreds that were hidden behind the carapace of European unity might reemerge and plunge the continent back into feuding factions.

Perhaps Papandreou is trying to extort more concessions from France and Germany. He could then return to Athens and say that he had struck an even better deal. But it's not clear that France and Germany, having granted unpopular concessions to Greece, are in any mood to deal with an extortionist. The most likely scenario seems to be that the EU will devolve into a new core—France, Germany and...what? For awhile it was predicted that Italy might be part of a smaller EU. But now it, too, appears to be a malingerer when it comes to economic reform.

For Frau Merkel it could hardly be a greater disaster. Germany is dependent on exports to the rest of Europe. French banks are overexposed to Italian loans. European unity could start to look like a poisoned chalice. Countries may conclude that the most dangerous thing isn't being sovereign, but being too closely tied together. Meanwhile, Britain gets to watch the entire debacle in not-so-splendid isolation. Tempers are fraying, economies unraveling. The end of Europe could occur much more quickly than anyone had anticipated. Greece, the father of democracy, could be about to demonstrate what happens when power truly devolves to the people.