EUobserver.com reports that Germany, which has historically paid a hefty share of the EU budget, is dropping its demands to have it's dues lowered. There is also a report in IHT (its amazing how IHT can have such spot-on new stories, and yet consistently weak analysis columns by Cohen, Vincour, et al) that France & Germany are pushing for remaining countries to proceed with a Constitutional vote (read: Britain, where its sure to fail).
At the same time (and perhaps not coincidentally), the Merkel-led CD is standing firm on its position barring Turkey from full EU membership (that move in itself would have probably saved the French & Dutch votes if Schroeder had taken it a week ago), while also taking a less supportive stance towards Russia (read: Central & Eastern Europe, we're on the same team).
Taken together, these actions could dramatically bolster Germany's position in Europe, by re-aligning it with CEECs (and in effect, pulling them away from Blair), which is their "natural" position anyway, while at the same time using a definite British loss on the Constitution to undermine the watered-downed, neoliberal EU scenario led by Blair.
This strategy hinges on forcing the Blair gov't to take hold a referendum, which would seem preposterous, except for the fact that so far, every country left to vote has been moving forward with plans to do so. Even the non-EU Swiss appear to be voting for closer ties.
Schroeder knows he won't win his upcoming election, and in effect fell on a sword by backing down on the budget, allowing Merkel a free hand to strengthen Germany's hand when the CD likely assumes power.
With a little luck, the Germans, who can still count on a strong French relationship, can actually remove both the British and Turkish issues (that are the source of most of the EUs contemporary problems) in one stroke, creating a new era where a collaborative Germany sets the tone and pace of EU development. A Turkey barred from full membership, and a Britian that votes down the Contsitution (keeping with its recent role of obstructionsim) could be the founding planks of a second tier to the EU.
Whether this succeeds or fails, you have to admire the gamesmanship, when US foreign policy has been relegated to dropping bombs on people.