Comment: Taming the Franco-German behemoth

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They lied through their teeth. So says Sir James Goldsmith, whose confused propaganda is about to flood the country. Of course they didn't. The politicians of both main parties who took us into the European Community, and kept us there, did not lie to us. They made a difficult, compromised and pragmatic judgement of the balance of national advantage. But central to their case was the argument that Britain would not be absorbed into a bigger country called Europe. It was always accepted that there were some misguided foreign Johnnies who wanted to create a United States of Europe, but they were not many, and, besides, there was always trouble with the translations. Even if many in the German and French political elites did want to go further than was strictly reasonable, they would not be able to, because the different languages and cultures, especially of an expanded Community, would make it impractical. That was a reasonable belief then, and it has not yet been proven to be wrong.

But now we do have to reconsider. Our exclusive report yesterday (so exclusive that even the British Foreign Office struggled to grasp its truth) is an important breakthrough in our understanding of the Franco-

German engine at the heart of the European project. We need to be clear about what is going on across the Channel, because the view has been well and truly fogged by wild Europhobe language, and by obscurantist Eurocrat jargon ("flexibility", "pillars" and other inter-governmental mumbo-jumbo).

Taxes and wars are the two defining features of nation states. In the past 500 years, modern countries created themselves by waging wars, and to pay for those wars they raised taxes. Now Germany and France want the inner core of Europe to harmonise tax policy - not just VAT on sales, already subject to upper and lower limits, but also income tax. This is not only the stuff of nation statehood, it is the very meat of modern politics, the issue that dominates democratic elections: how much will the voters pay to run the state? Later, the Franco-German elites will want to merge defence policy, the war-making machinery. It is time to face up to the fact that this is precisely what British pro-Europeans always argued and hoped would never happen. Of course the trite response to our story in yesterday's newspaper is to declare, as Downing Street and the European Civil Service did, that it could not happen under the terms of the Treaties of Rome and Maastricht which are the founding documents of the European constitution.

This is beside the point. Or rather, it may actually be the point, in that it is clear that the French and German governments are thinking beyond those treaties, and that constitution. It is now obvious that the governing elites in Germany and France really do intend to create a fully integrated core Europe, and it is possible that they will create new structures, separate from the European Union, to do it. The Benelux countries, and Italy, Austria, Spain, Portugal and Ireland will want to go along with the core Europe project, leaving Britain, with Denmark and possibly Sweden, outside.

Now, the splitting of the EU into two unequal parts is deeply unappealing to British eyes, and it may never happen. We have argued for some time that the governing elites in Germany and France are dangerously out of touch with their own peoples, let alone the peoples of the rest of Europe. But that has not stopped them in the past and is no guarantee that Tax and Social Security Union will fail.

If it goes ahead, it would not be the European superstate of sceptic propaganda. It would be something much harder to stop: a close-knit group of nations governed by consensus and majority voting. The further away we get from Maastricht, 1991, the clearer it becomes that it was not, as John Major argued at the time, the turning of the European tide; it was merely a holding operation.

In principle, outer European countries could be members of a single currency without being members of a tax union. In practice, it is unthinkable. The case for Britain joining a single currency is already fragile. In order to argue that meaningful national sovereignty could be retained, it depends on the EU being an association of states of roughly equal status existing co-operatively in a single currency area. The dominance of the area by a core-Europe behemoth, in a possibly antagonistic relationship with Britain, a lone, medium-sized nation on its periphery, is not a scenario that either Tony Blair or Mr Major's successor could possibly contemplate.

It looks as if we might arrive at a point where even a future Labour government might after all be faced with a form of the "in or out" question. Not in or out of the EU, which could become an increasingly redundant organisation of hangers-on. The real question will be whether Britain should be in or out of the European core.

But all is not yet lost. This apocalyptic vision of a future of two Europes ought to spur us on to pose deep questions. In particular, one assumption ought to be challenged. Robin Cook, the shadow Foreign Secretary, appears to agree with Mr Major that our role in the EU ought to be to put ourselves at the head of an alliance of peripheral nations against the Franco-German conspiracy. Surely, this is a flawed strategy on two counts. Surely Britain should either join a core troika that sets the direction of Europe, or find another more positive route to the future? And is part of the problem not the lack of an alternative project around which the smaller nations could unite?

That is why it was significant that Tony Blair yesterday came out against the idea of "flexibility" in the new treaty to be signed in Amsterdam in June. But that only raises the question of what he and Mr Cook favour. The challenge is to come up with a credible vision of Europe's future and work for it from within the core. By coincidence, this newspaper has argued consistently for such a vision over the past year, a model of a democratic constitution for what we call a confederal Europe, which is in tune with the desire of the majority of the peoples of Europe to preserve their independence while being part of something greater.