You have to pinch yourself. Instead of Britain as eternal curmudgeon of the European Union, here is Britain acknowledged-even in France-as a constructive partner in leadership. Instead of reading about the British disease and the German model, we read about the British model and the German disease. And we read this not in Britain but in Germany. Britain leads the debate on subjects like "employability" and welfare reform. British diplomats in Bonn and Paris report an extraordinary change of atmosphere. "People return your calls," says one, indicating how low we had sunk before. Continental media coverage of Britain has changed too. In place of stories about sleaze and royal scandal we have devolution, independence for the Bank of England, adopting the European Convention on Human Rights, Irish peace initiatives-all well received. Young, dynamic Tony is contrasted with tired old Helmut and Jacques.
So as Britain takes on the six-month EU presidency, one might ask: have we ever had it so good? Has there been any time in the past 25 years when Britain's prospects in Europe looked so rosy?
In part, the transformation over the past six months has been a gift from the government's predecessors; in two quite different ways. First, the new British model is built, economically, on the foundations that Margaret Thatcher laid. Tony Blair's modernising counterparts on the continental left, such as Germany's Gerhard Schr?der, can only dream of inheriting such foundations. (That Thatcherism had a high social cost and shrank the manufacturing sector qualifies, but does not disqualify, this statement.) Second, Margaret Thatcher, John Major and the Conservative party ultimately produced so much resentment in Europe that any half-way reasonable successor was sure to be welcomed with relief.
None the less, the opportunity has been seized with skill. By all accounts, Tony Blair has managed to establish with Helmut Kohl the kind of personal relationship by which the German chancellor famously sets much store. They have not yet gone to the sauna together (as Kohl did with Boris Yeltsin). So far, the prime minister has not even had the pleasure of sampling Kohl's favourite delicacy-pig's stomach. But they talk quite often on the telephone and, when they meet, have long quasi-philosophical chats. The distance in political philosophy between a British, Christian, centrist social democrat and a German, centrist, Christian-social democrat is not great. And Kohl's real desire to see Britain back in the inner circle is indicated by his unofficial promise to keep a seat warm for Britain on the directorate of the European central bank (ECB). Similarly, when France approached Germany with proposals for a common defence industry, Kohl insisted that Britain must be involved from the outset.
Although the prime minister speaks French rather than German, the relationship with President Jacques Chirac and Prime Minister Lionel Jospin is, we are told, not yet as warm or close. Partly this is because the differences in political philosophy between British New Labour and French Socialists often seem greater than those between German "right" and British "left." Figures such as Dominique Strauss-Kahn, the French finance minister, are privately quite close to the position of their British counterpart. But the old dirigiste traditions die hard. Partly, too, it is because France is somewhat more ambivalent about turning the exclusive Franco-German "couple" into an eternal triangle, whereas the Germans privately welcome the chance to have another partner to play off against the French. Yet with France, too, the relationship is much better than it was.
New Labour would not be New Labour without some visionary packaging, but the agenda for the British presidency which the prime minister unveiled at the Eurostar terminal at Waterloo station on 5th December is a bundle of British pragmatism, much of it familiar from the previous administration. (It would not have been a good idea to unfold a more strategic vision for Europe in what would have become known as "the Waterloo speech.") Blair talked again of a "third way" between Anglo-American unregulated free market capitalism and continental European corporatist, welfare capitalism. As well as the usual stress on flexibility and training to reduce the EU's 18m jobless total, there were specific proposals for closer European co-operation in fighting crime, drugs, terrorism and improving the environment. The government rather grandly described this as an agenda for bringing Europe "back to the people." (Will "the people" really make the connection between some measure taken at the European level and a decline in drug-peddling or unemployment in their neighbourhood?)
On Emu, Britain hopes to be in the tactically comfortable position of helpful chairman. Ourselves disinterested because of the British opt-out, we can ensure that crucial decisions to be made at a special summit in Brussels in early May-which countries should participate, at what exchange rates, and with which directors of the ECB-will be made as smoothly as possible. As "honest broker"-the role Bismarck once envisaged for Germany-we will sort out the unseemly squabbles between the French, the Germans and the Dutch about who should be chairman of the bank. The Blair government will show that, unlike its predecessor, it genuinely wishes the enterprise to succeed.
Eastward enlargement is, I am particularly glad to see, a proclaimed priority, emphasised by the foreign secretary in a whistlestop tour to Budapest, Prague and Warsaw. In March, Britain will preside over the opening of negotiations with the first round of candidates, including Poland, Hungary, the Czech Republic, Slovenia, Estonia and, in a small class of its own, Cyprus. The government will face an argument-forcefully restated by the European parliament-that the EU should, in fact, start negotiations with all current applicants so as not to d?courager les autres: Romania, Bulgaria, Slovakia, Latvia and Lithuania. The prospect of enlargement also gives an added urgency to an old British familiar: the need for reform of the common agricultural policy (CAP). Closer co-operation is also sought in foreign and security policy, although this is given a rather low priority. In sum: sensible, constructive, pragmatic-a real Hush Puppy of a programme.
talk of britain's "strong leadership in Europe" and even, as Robin Cook put it, of Britain being "in the driving seat" can get up continental noses. None the less, British diplomats report with glee the way in which Britain is startling its partners by tabling new proposals for European co-operation. As many people predicted, other countries are no longer able to hide behind Britain's obstinate resistance. At the Amsterdam summit there was the almost incredible spectacle of Britain supporting an extension of majority voting and Germany opposing it.
But do we really have it so good? And even if we do, will it last? After all, John Major also had a honeymoon with Europe, specifically with Helmut Kohl. "Britain at the heart of Europe"-remember? There are two immediate reasons for thinking that this honeymoon may not be so shortlived as Major's was. The first is that Tony Blair does not have a parliamentary party full of vocal Eurosceptics. Second, our continental partners are not pressing for further steps towards more or less "federalist" integration, as they were before Maastricht. With Emu they have bitten off quite as much (if not more) than they can chew.
But there are a number of obvious clouds in the honeymoon sky. For a start, Britain will not simply, overnight, be accepted once again as a leading player in Europe. This becomes clearer when seen from outside. Friendly Americans such as Raymond Seitz, former US ambassador to Britain, have long been warning us that by marginalising ourselves in Europe we were also diminishing our importance to the US. In his remarkable new work of unabashed geopolitics, The Grand Chessboard, Zbigniew Brzezinski says bluntly that "Britain is not a geostrategic player," whereas France and Germany are. Britain has, he writes, "largely dealt itself out of the European game." In east-central Europe, I am struck by how absent Britain is from discussions of European policy. For all the polite diplomatic noises made on Robin Cook's visit to the political ?lites in Warsaw, Budapest and Prague, "Europe" has, over the last eight years, come to mean essentially France and Germany. Meanwhile, for all the initial goodwill in Paris and Bonn, old suspicions remain there too. It would only take one crisis, with Britain as the obstinate blocking party, to revive them.
British public opinion seems to be quietly supportive of the new line-or indifferent to it. In the media "Europe" is no longer the great political story it has been for a decade, except in so far as it continues to divide what remains of the Conservative parliamentary party. It is remarkable how few news stories about European policy there are when correspondents are deprived of the leaks and counter-leaks from inside the ruling party. But have popular prejudices, strengthened by important parts of the media and by the government over recent years, really evaporated so quickly? Can a majority of public opinion be won over to vote for joining a single currency in just three or four years?
Then there is Emu itself. The most obvious problem is that, if it goes ahead on 1st January 1999, we shall not be part of it for at least three years, probably longer (unless there is an early election followed by a referendum and rapid entry in 2002). We have already had a taste of what this may lead to-in the argument between Gordon Brown and his continental counterparts about whether Britain should have a seat on the "Euro-X," the political council to be established at France's insistence to co-ordinate the fiscal and economic policies of Emu members (and whatever else they might think Emu requires them to co-ordinate).
There is plenty of material here for old-style "us and them" rows between the "ins" and the "outs" of Emu, with Britain probably having only Sweden, Denmark and Greece for company. We can hardly expect the insider group to wait for us as they deepen their co-operation, less out of any hidden federalist agenda than in a practical effort to make it work. And what of sterling's exchange rate with the euro in the meantime? Too low-and they will complain that we are flooding their market with underpriced goods. Too high-and vice versa. For this reason among others, Norbert Walter, chief economist at the Deutsche Bank, argues that what he terms the "pre-ins" should have their currencies linked to the euro by what he describes as an "ERM II"-a popular notion in Britain?
The best way to convince British public opinion to join would be for Emu to seem overwhelmingly successful for those inside it and somewhat painful for us outside it. With economic growth picking up on the continent and a powerful political will to "make it work," this may yet be the case. The government's referendum-winning campaign would argue: "We are being left out, as so often before in the history of our relations with Europe. This is to our economic disadvantage. And as a result of our non-participation, the US now thinks we are a second rank European power." Yet, given the tensions which preparing for Emu has already caused, and the clear flaws in the project, it might not work. The Emu boat might begin to rock alarmingly precisely at the moment when we are ready to jump aboard.
eighteen months ago I argued in these pages that at Maastricht, our leaders set the wrong priority for Europe after the end of the cold war. Emu was not essential for the single market. It was a great gamble, which did not command popular support, especially in Germany. It threatened to divide Europe where it was meant to unite it. Above all, it was no response to ending the division of Europe, nor to the historic opportunity to build a peaceful liberal order for the whole of Europe. We had fiddled in Maastricht while Sarajevo began to burn.
This remains my view. At the time I felt that there was a real possibility that Germany and France would not finally proceed with monetary union. Now it looks almost certain that they will. But if so, Germany will go in with immense doubts. I think Germany's state of mind today can be described as Faustian (two souls in one breast). On the one hand they are rebuilding in Berlin the grandiose capital of a restored nation state. On the other hand they are about to give up the national currency which for postwar Germany, more than for anyone else, is a focus of national identity and sovereignty. And the euro-this much is abundantly clear-will be softer than the Deutschmark, despite protestations to the contrary. When the government moves to Berlin in 1999, the country will wake up in its new bed, scratch its head and ask itself: "Why on earth did we just give up the Deutschmark?" It will not, I think, be satisfied with Kohl's implicit answer: "Because Germany needs to be bound into Europe, because history shows that we cannot trust ourselves to behave responsibly when standing alone in the centre of Europe." A younger generation will ask, with reason: "Why shouldn't we trust ourselves?"
Altogether, the argument for monetary union is made in an extraordinarily backhanded way. It is amazing how often French, German or Italian friends will admit the dangers of the project-concede, even, that if we had our time again we would not have embarked on it in this decade-but then say: "None the less we must go ahead with it, because the cost of failing now would be so high." The case for Britain joining thus becomes a double negative: "It would be worse if it failed, and it would be worse if we stayed out." There is force in both arguments, but it is hardly a ringing endorsement.
It now seems likely that Emu will indeed go ahead, but fraught with tensions which may, sooner or later, accumulate into outright crisis. What if the circumstances of the Spanish or Italian economies call for higher or lower interest rates than would be optimal for the German or French economy? The well-known critique of monetary union, by leading economists such as Martin Feldstein and Milton Friedman, is a powerful one: how does a single currency area cope with "asymmetric shocks," affecting one state or region worse than another? The US has high labour mobility and large fiscal transfers from the federal centre to any adversely affected state. Europe has notoriously low labour mobility-Britain's campaign for liberalisation is not going to change this very fast. Meanwhile, the EU can only redistribute 1.27 per cent of member states' GDP, and much of it is committed already. Even if we assume that some monies will be released by reform of the CAP and the reduction of structural fund payments, will it be anything near enough? There may be a growing "liberal consensus" on economic policy, but vested interests in Brussels remain formidable.
So what happens when a part of France (or Belgium or Spain) is badly hit, the disadvantaged French go on the streets (as they are rather inclined to do), and their government appeals to its better-off partners-above all, Germany-for larger financial transfers via the EU? Since 1989 we have seen how reluctant west German taxpayers have been to pay even for their compatriots in the east. Do we really expect that they would be willing to pay for the French unemployed as well? The Eurosceptic Bavarian leader Edmund Stoiber has already made a point of saying that Germany should not finance any such transfers. One can easily imagine a situation in which politicians in both France and Germany would win strong popular support by criticising the effects of Emu: the French blaming it for their high unemployment, the Germans complaining that they are being asked to pay for others' weakness; then each blaming the other. Far from cementing unity, Emu could lead to new rifts even inside the "core," as well as between those inside and outside.
The economics and the politics are inseparable. Historically, successful monetary unions have followed, not preceded, political union. The cost of transfers inside the US is accepted by its citizens because they belong to the same nation as those being helped, they speak the same language, they would expect the same in return; these habits have grown up over a long period of shared history in one state. But that trust and solidarity which is the fragile treasure of a democratic nation state does not yet exist between the citizens of Europe. At Maastricht, EU leaders put the cart before the horse. It is therefore going to be, at best, a bumpy ride. The real question for British policy is not whether a crisis of Emu will come, but when. In three years, or in seven-after we have gone in?
Meanwhile, what happens to the rest of Europe while we wrestle with Emu? If only six countries start negotiations to join the EU in March-and those negotiations are unlikely to be finished until 2000 at the earliest-and if only three countries join Nato in April 1999, where does that leave the rest? Why should they bother to get on with marketising their economies, building democracy, treating their minorities better and so on, if the prospect of membership is so remote?
The new government is trying to address this problem. Robin Cook has suggested the slightly unfortunate image of a "pipeline" in which all the applicants are proceeding towards entry, albeit at different paces. (I'm not sure that I would want to stand in a pipeline at all, let alone for ten years.) The heads of government of all EU states and all applicant states are to be invited to a "European conference" in Britain at the end of February. At the time of writing it is not clear whether Greece will allow Turkey, the longest-waiting applicant of all, to attend. The idea is that this should be the first in a series of regular meetings at which the progress of applicants towards entry would be reviewed-a process rather than a conference. It is hard not to be sceptical about the need for yet another acronymic body. (Indeed, I sometimes wonder how European heads of government manage to run their countries at all, so much time do they now spend attending bilateral, European and international summits.)
Of course we must wish success to this new layer of diplomatic incentives for good behaviour. But it would be foolish to imagine that it can prevent local leaders or groups in eastern or southeastern Europe from behaving badly. We cannot emphasise too often that the years since 1989 have seen the return of war to the European continent. Bosnia has not been "solved"; British troops are still there. Kosovo, Macedonia, even Ukraine and the Baltic states have the same explosive combination of ethnic diversity, economic distress and post-communist politics. Russia's relations with its former satraps and colonies are far from stable.
The image of "new Britain, old Europe" recalls Ernest Gellner's image of "time zones" through which nations pass, on their way to the kind of institutional co-operation between liberal states which we have in the EU. It would be absurdly arrogant to suppose that Britain at the end of the 20th century is once again what it seemed to be in the mid-19th century: the epitome of European modernity. This can only be said of the restructuring of our economy. But it is clearly true that, out there, there is an old Europe in which the politics and technologies of the late 20th century mingle with issues and ideologies of the 19th.
Our New Labour leaders represent a generation with no personal memory or experience of war, and for whom even the dramatic confrontations at the front line of the cold war, in Berlin and behind the iron curtain, were very remote. With their fascination with communications and "connexity," they may be better prepared than most of their continental counterparts for the challenges of the 21st century. But I wonder how they will cope with those left from the 19th. Of course we cannot predict exactly when or where the crisis will come, but there is dynamite enough lying around on the fringes of Europe. So one more test of Tony Blair's capacity to participate fully in the leadership of Europe will be this: can he be tough on war, tough on the causes of war?
the europe in which Britain has to find its role at the end of the 20th century is only in small part of Britain's making. We have too long stood apart. If one had to name a single architect of this Europe it would have to be Helmut Kohl. To a large extent, what in British political debate is called "Europe," is Kohl's Europe. If Emu goes ahead as planned, the giant of Oggersheim will be able to retire from his new capital of Berlin in the year 2000, claiming that his historic mission is accomplished. He will be the "chancellor of unity"-of European, not just of German, unity. Ten years ago we might have found him wanting in comparison with Konrad Adenauer. Now the only comparison is with Bismarck.
Yet Bismarck left a deeply flawed legacy: a system of delicate balances which soon lost its balance without him. Any likely successor to Kohl will, I trust, be wiser and calmer than Wilhelm II. But Kohl's system, too, has deep flaws, though of a different kind-flaws in its internal construction and in its relations with the rest of the continent. Like the proverbial Irishman at the crossroads, the successor generation of European leaders may feel that they "wouldn't start from here." But here is the only place they can start from. Their task is to ensure that the existing union does not collapse under the internal tensions which the forced march to unification will have created; that it can modernise economically and socially to face the challenge of globalisation; and, not least, that it forms the solid basis for a peaceful order extending across the whole continent.
Blair is the first among this new generation. Not just Britain's position in the EU, but the EU's position in Europe, and Europe's position in the world will-to a significant degree-depend on him.
