BERLIN — Two years ago, the sign scrawled on a wall along ''sniper alley'' in Sarajevo was ''Welcome to Hell.'' Now the graffito says ''Welcome to 21st Century Europe.'' The course of the war in the former Yugoslavia, and the consequences of the European and American failures to deal with it, have lent that forecast its dark plausibility.
Europe's inability to cope with the Yugoslav crisis was due to the European Community members' inability to agree, which was chiefly the result of Germany and France's failure to agree. Had those two been united in their opinion of what should be done, Europe might have found a policy.
Its failure to do so may have been decisive. It is not inconceivable that ''Europe'' today is politically finished: that it was a response to postwar needs, but has now been fatally undermined by German unification and the Yugoslav catastrophe. Franco-German reconciliation motivated and sustained the construction of ''Europe'' from the 1950s through the 1980s. The agreement and cooper- ation of these two countries is indispensable to continuing European Union.
The bewilderment and disarray of Franco-German opinion, evident in an Aspen Institute conference held here last weekend, inspires serious concern about Europe's future. This bears on the American future as well, since Europe, not North America, is where preponderant economic and industrial power lies today.
The French fear that the European Union's expansion to Eastern Europe will mean enlarged German economic and political influence there and will threaten the integrated Western Europe of the last four decades. The Germans, on the other hand, believe that ''Europe's'' expansion eastward can give Germany the same security on its eastern borders it already has in the West. They want to be totally surrounded by the European Union and think that all their neighbors then will be friendly and peaceful. They are keenly conscious that as a nation they consistently have gotten into trouble in the East, and the think they can solve that problem by westernizing the East. It is not a particularly realistic program.
In this situation, Washington's obsession with Moscow causes further damage. The Clinton administration's insistent assumption that it has to settle European problems by dealing with Moscow actually destabilizes Eastern Europe, making the East Europeans think they are again in danger of subordination to Russia. It thereby feeds German anxieties and, by doing that, makes France anxious as well.
Both the French and Germans are pretending that Europe today merely needs institutional progress. They want to believe that when a mechanism is set up to draft a common European foreign policy, such a policy will emerge. It will not. The German and French governments could have a common policy today if they agreed on what to do. The search for a mechanism is a way to avoid addressing the disagreement.
Enlarging the European Union cannot be combined with ''deepening'' it, which is what the Maastricht program is intended to do. Either more members are admitted on looser terms, or with several classes of membership, or the existing Union pursues its avowed goal of federal government, with the rest outside. These contradictions have to be addressed, but it is not happening.
The new Franco-German military unit, the Eurocorps, is camouflage for the lack of a common security policy. It is no answer to the threat of ''new Yugoslavias,'' which is what everyone claims to fear. The Eurocorps, had it existed three years ago, would have contributed nothing to a solution of the present Yugoslav crisis.
If you ask what France and Germany, and ''Europe,'' actually propose to do when a new Yugoslavia occurs -- when ethnic war erupts elsewhere on Western Europe's frontiers -- there is silence. Ask what they would do if Greece invaded Macedonia or Albania, and there not only is silence but a refusal even to contemplate the possibilities. These are, however, real possibilities -- not of 21st-century Europe, but of the five years that remain in the 20th century, and perhaps of the eight months that remain in 1994.
8, William Pfaff is a syndicated columnist.