Blair's unsentimental commitment to Europe

Britain finishes its presidency of the European Union more at ease with Europe than when it started

THE SIX-MONTH British presidency of the EU hasn't been the smooth run ministers expected when it began. The beginning of the end of the beef ban is a welcome prize at the end. But the handling of the Gulf crisis left some of Britain's European partners feeling bruised and neglected.

The summit which ushered in EMU was by Tony Blair's own confession "messy". Some European egos were ruffled by the warmth of Blair's ideological love- in with Bill Clinton. And now the Prime Minister arrives at next week's Cardiff summit with a a developing agenda of his own, to increase the democratic legitimacy of European institutions.

This hasn't proved easy to formulate. Blair's contempt for the European Parliament, the one body formally entrusted with the task of making up the democratic deficit, is pretty boundless, underpinned by his abrasive encounter with the more fundamentalist Labour MEPs in Strasbourg shortly after he became the party leader. Instead the internal "wither Europe" summit recently convened by Downing Street concentrated on two alternative ways of giving the EU greater political accountability: a second chamber made up of senior members from the parliaments of each member state, and the possibility of a working committee of European ministers, each regularly accountable to their own legislatures.

But if the task isn't easy, there is a pressing domestic need to make at least a start on it. The second part of Blair's current European agenda, which will unfold in the few months after next week's summit, makes it daily more so. For all the ground Blair's lieutenants claim to be gaining in persuading their EU partners to adopt a third way between laissez- faire capitalism and the traditional Continental model of rigid labour markets, they acknowledge quite freely now that their influence, though real, is circumscribed by not being in EMU.

Here, there is a subtle change in the air. Blair intends to do more to emphasise Britain's preparedness for EMU. This doesn't, of course, mean abandoning the rider that UK entry is dependent on the Euro's success. But even for Blair to go as far as Gordon Brown has done in emphasising how ready the UK will be if and when the economic circumstances allow will have an impact on public opinion.And he is casting around for the right opportunity to do just that.

Ministers, anyway, believe that the growing familiarity, to travellers and traders, of the Euro will help to reduce some of the alienation from EMU still visible in the opinion polls. So much so that the prospect of a referendum before the next general election cannot absolutely be ruled out; although the scenario of a 2001 election followed quite swiftly by an EMU referendum remains very much more plausible.

For the order of the two events to be reversed would require not only a detectable shift in public opinion - not to mention, perhaps, as an extra reassurance for a chronically media obsessed government, a softening of Rupert Murdoch's opposition to the single currency - but also enough confidence in the Bank of England that the inflationary threat had been averted to allow a real reduction in interest rates, aligning them much more closely with those enjoyed by the EMU participants, and reducing the value of sterling accordingly.

Each of these conditions would be necessary for a pre-election Cabinet decision to enter; both of them might well not be sufficient. But while it is virtually impossible to find any minister prepared to admit it, there remains just the slimmest of outside chances that the "unforeseen circumstances" which formed the one proviso in Gordon Brown's otherwise blanket preclusion last October of EMU entry in this parliament could yet come to pass.

But even without that still remote possibility, the growing proximity of a decision creates its own dilemmas. Some pro-Europeans think an EMU referendum can be won on purely economic grounds, reinforced by what are likely to be measurably faster growth rates in the EMU countries two or three years hence; and that the political or constitutional arguments can simply be buried. But Blair, by all accounts, believes that the pro- single currency campaign will not be able to pretend away the further political integration, however piecemeal, which will be the natural consequence of EMU.

To take just one example, the rapid increase in trans-national mergers the single currency will bring in its wake may require new forms of EU- wide regulation and perhaps employee consultation. Beyond that there are tough questions, if not about personal tax, at least about business taxes, that ministers have yet to confront. If the latter aren't harmonised, competition for inward investment will mean competition to bring tax rates down, to the extent that even a modernised welfare state could prove unsustainable. And so on.

These are not reasons for fearing EMU. But they are reasons why the issue of popular legitimacy has taken on a fresh importance. And the timing of the summit is in Blair's favour. This week, with much fanfare, Helmut Kohl and Jacques Chirac delivered their initiative in favour of reconnecting Europe's institutions with its electorates and of breathing more life into the idea that decisions that can be taken by the member state at least as well as in Brussels are best left to the member state.

This no doubt owes much to Kohl's nervousness about the forthcoming federal elections in Germany. But it means that Blair will be going much more easily with the grain of European opinion than he might have been even a year ago.

Blair is distinctly unsentimental about Europe. He is visibly and frequently irritated - sometimes over-irritated - by the European Commission. Britain's successful lawsuit against the legal basis of some EU discretionary spending, which came to light this week, testifies to his hard-headed approach.

There are problems ahead - not least a fight by the UK to keep its precious rebate. But Blair shows no sign of cutting back on his vision of Britain's European destiny, EMU included. And he is also, for all the ups and downs, finishing the presidency with Britain more at ease in Europe than when it started. And that, especially given a pre-election atmosphere that verged permanently on the Europhobic, is a real achievement.