Tories in Turmoil: Oskar is far more of a worry than William

HAROLD WILSON'S well worn remark that a week is a long time in politics has been thoroughly vindicated once again.

At the start of this one, Tony Blair was facing the prospect of a backlash in his own party against a decidedly dodgy-looking secret deal with a Tory arch toff, Lord Cranborne, to preserve at least an element of the hereditary peerage unless and until the government gets round to introducing an elected second chamber. At the end of it William Hague shows every sign of having snatched a leadership crisis from the jaws of what might have been credibly presented as a Tory triumph, brilliantly achieved against almost impossible parliamentary odds.

By not swallowing his pride and gratefully accepting Lord Cranborne's deal - however imperiously negotiated behind his back - Mr Hague has ended up with the peers in revolt and almost certainly the same outcome as if he had taken Lord Cranborne's advice in the first place. If your position isn't all that strong, it doesn't make much sense to behave as if it was. It was Lord Cranborne who had the troops in the Lords, not Mr Hague. So it's not that surprising that Mr Blair was allowing himself just a passing gloat in St Malo yesterday.

Nevertheless, talk of a Tory leadership challenge may be, to put mildly, just a little premature. True, there will be no shortage of MPs who wonder deep down whether it wouldn't have been better to elect a truly dangerous politician like Kenneth Clarke in the first place. But it's sometimes forgotten that leading the Conservative Party isn't necessarily the most appealing job in the world at the moment.

Mr Clarke, if Tory MPs could overcome the Europhobia which appears to be their one common characteristic at present, might be willing. But if you were Francis Maude - or even Michael Portillo - you might just calculate that it would be better to go for the job after, rather than before, a general election which most Tories expect to lose.

And that's apart from two other important points: one is that the new system makes it quite difficult to dislodge a Tory leader and secondly that Mr Hague may well have some modest but unmistakable electoral successes to his name - in the European Parliament and local councils, by this time next year.

In any case Mr Blair won't - and shouldn't - gloat for too long. For though it is taking some Labour politicians, still mesmerised by 18 grinding years in opposition, quite a long time to realise it, the Tories are not, and haven't been for some time, their main problem.

One day they will be again, though whether this will come to pass under Mr Hague's leadership is a little less probable than it was. But the tough business of government does not necessarily get less tough just because the main Opposition party seems to be visibly disintegrating before your eyes. The early years of Margaret Thatcher's administration, at the beginning of the Eighties, were no less traumatic for the Conservatives because the Labour Party spent most of the period coming up with ever more novel ways of making itself unelectable.

Counter-intuitive though it may seem to say so, this has actually been rather a difficult week for the government.

Because Mr Blair is, supremely, a politician who understands the big picture, it's a safe bet that he will have spent rather more time this week thinking about Oskar Lafontaine than he has about William Hague. And he's right to have done so.

The German Finance Minister, by loudly proclaiming this week what he sees as the need to remove obstacles, including the British veto, to harmonisation of taxes in the EU, has sharpened the focus on what remains the central dilemma likely to face the Government during 1999: what to do about Europe, in general, and EMU, in particular.

What Mr Lafontaine has done is to call into question what was beginning to look like Mr Blair's strategy of edging, albeit slowly and imperceptibly, towards EMU, allowing a consensus slowly to build up without deliberately picking a fight with the Eurosceptic press by doing too much to stimulate it.

The outlines of all this are well known: as Britons became increasingly used to the euro as traders, tourists, and perhaps employees they would feel less and less threatened it and - hey presto! - suddenly a referendum would look quite easily winnable.

Mr Lafontaine has now made this quite a lot more difficult to sustain as a strategy, not least because he has become the new hate figure for the Eurosceptic press.

There are answers to what Mr Lafontaine is saying, though they involve being a little more grown up than pro-Europeans have so far been in admitting that joining EMU will inevitably have at least some effects which go beyond exclusively monetary policy.

One answer is that Britain is not the only country in the EU which will be reluctant to turn away inward investment by raising business taxes. Another is that if Britain really wants to influence the general direction of economic policy in Europe - and it surely does - towards flexible labour markets and all the other goals that Mr Blair and Gordon Brown want, then it will have much more chance of doing so inside than outside EMU.

But that would almost certainly mean the British Prime Minister being more up front about the virtues of Britain's membership of EMU than he has so far - perhaps even firmly announcing, sometime in the next twelve months, that Britain intends to join.

There are no cost free options, of course. It means taking on the Eurosceptic press. But if he doesn't, Mr Lafontaine may be the politician who dominates the British Euro-debate between now and the election - with the chances of winning an EMU referendum diminishing as a result.

Which may be the real, long term, meaning of this week's Tory crisis.

The less effective the one truly Eurosceptic party in British politics becomes, the easier it is to ignore it. What has changed this week is that it looks just that bit more difficult to postpone a decision.

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