Giscard offers Blair concessions - but disputes continue

Valery Giscard d'Estaing, the former French president, urged Britain yesterday to make up its mind about its engagement in Europe as he prepared to offer Tony Blair concessions in his plans to revamp the European Union.

M. Giscard will unveil draft proposals from his convention on the future of Europe today which include several changes designed to take the heat out of British eurosceptics' campaign against the blueprint.

In a major speech in Warsaw on Friday, Mr Blair will seek to allay fears that the constitution will lead to a United States of Europe. He will update the vision for Europe he mapped out in Warsaw three years ago, when he said that the EU should be a "superpower not a superstate."

Asked why Britain had such a tortured relationship with Europe, M. Giscard said on BBC1's Breakfast with Frost: "Because you never made up your mind. That's the point. The problem is with you." He added: "If you want to be a leading country I think you should make up your mind in the next 10 years." He said he would be pleased if there was a referendum in Britain on the proposals, but did not demand one. Playing down claims about an EU superstate, he said his blueprint would make clear that "democratic legitimacy is enshrined in our national parliaments."

Even before publication of his latest draft constitution, M. Giscard had come under fire for caving in to the UK. However his package of measures is carefully crafted and the 105-member convention may still give its broad backing. Ultimately, though, it will be for EU leaders to take final decisions.

Today's draft will include most of the constitutional text - although disputes have held up publication of plans for a big shake-up of institutions - and most of a preamble spelling out the EU's objectives.

After talks in Downing Street last week, M. Giscard made one key concession to Mr Blair - removing the word "federal" from the draft constitution's first article because the word has politically explosive overtones in the UK.

Instead the document will say that the EU should exercise its powers through the "community method" - EU jargon for a system involving the European Commission and Parliament as well as member states. M. Giscard's spokesman, Niklaus Meyer Landrut, said the new formulation "said the same thing" but avoided the "additional meaning" which made the term federal offensive in some languages. In exchange the objective of "ever closer union", which is in the existing EU treaty, is expected to be in the preamble.

The wording of the text has also been changed to clarify the fact that powers come from member states, rather than from the EU.

These alterations did not satisfy Iain Duncan Smith, the Tory leader, who renewed his demands yesterday for a referendum, saying: "This is not just tinkering. We think this is a huge change to the way in which British people will be governed."

But Peter Hain, the Cabinet minister who sits on the convention, said talks were going well: "We have achieved over the last few days a lot of the things which we thought we would but which the Tories and their friends in the media said we wouldn't," he said.

Today's text also includes elements which will not be welcomed in Downing Street. It will suggest that some key decisions on the eurozone economies should be taken without the UK and other "outs".

Meanwhile, the Government has problems with how the EU's Charter of Fundamental Rights is written into the draft constitution, and wants it to be included in a protocol rather than the body of the text. Whitehall fears that the document will give EU citizens the right to appeal to the European Court of Justice over welfare entitlements and the right to strike.

It is also concerned about M. Giscard's plan to create a new EU foreign minister's post, and worried that he will extend majority voting to politically sensitive areas including tax and social security.

Gisela Stuart, who represents Parliament on M. Giscard's praesidium of close advisers, said: "We are getting towards the end of the first stage of this negotiation ... but there are some areas where, from the British point of view, we still need to get it right."

Search for a compromise

THE WORD 'FEDERAL'

Mr Blair's agenda:The ultimate of all "f" words, it implies a superstate structure. Has to be excluded from the text at all costs.

The federalists' agenda: Means a decentralised system to most Europeans. Should be included because it expresses reality of what is happening.

The Giscard compromise: "Federal" excluded, replaced by a reference to the "community method".

ECONOMY

Mr Blair's agenda: To maintain Britain's veto on taxation decisions. Wants the UK to have as much say as possible in the EU, including decisions in the eurozone.

The federalists' agenda: In favour of majority voting on as many issues as possible. They also want to give more decision-making powers to eurzone ministers.

The Giscard compromise: No plans for tax harmonisation. Britain and other non-eurozone countries excluded from decisions on certain policies in the 12-nation eurozone.

PRESIDENT OF THE EUROPEAN COUNCIL

Mr Blair's agenda: Very keen and, before the Iraq war, some even suggested that this could be a potential post for a dynamic prime minister - such as Mr Blair.

The federalists' agenda: Not keen, unless it is combined with the post of the president of the European Commission, which would then be greatly enhanced.

The Giscard compromise: Will propose such an idea, though still has a battle to win the backing of small states, and his convention on the future of Europe, over the idea.

EU FOREIGN MINISTER

Mr Blair's agenda: Not opposed in principle, but wants safeguards to ensure that this is not a slippery slope to a single EU foreign policy. Hates the term "foreign minister".

The federalists' agenda: In favour, but are determined that the new post will be inside the European Commission.

The Giscard compromise: The plan will go ahead but the details have yet to be worked out.