"the dangers of a Balkanized internet"
Dangers ? What dangers ?
I see no problem in Euro TCP-IP traffic staying in Europe instead of being routed through California (or wherever) and coming back. Nor do I have any issue with Euro citizen data being stored in Europe and not being sent anywhere without consent.
Of course, today the situation is that everything is sent to the US and the US is taking advantage of that to liberally peruse anything they want. So yeah, the US is in danger of not having such easy access to other people's private lives, but that ship actually sailed with Snowden and won't be coming back, so it's no use complaining about it now.
I see no danger to people with a "balkanized" Internet security scheme. I do understand that the US government doesn't like the idea, but I couldn't care less about that. As far as I'm concerned, the White House has no right to look at me when I'm not on American soil or declaring my intention to go there.