John Rentoul: Blair has been consistent in his approach to Europe and deserves his breakthrough now

It is salutary to go back to the arguments of the Blair government's first presidency of the EU in 1998
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"I am an optimist about Europe's future," said the Prime Minister, in a speech setting out Britain's priorities at the start of its six-month EU presidency. "For the path of reform and modernisation is not just something peculiarly British but part of a movement for change in Europe."

"I am an optimist about Europe's future," said the Prime Minister, in a speech setting out Britain's priorities at the start of its six-month EU presidency. "For the path of reform and modernisation is not just something peculiarly British but part of a movement for change in Europe."

All right, it is a cheap journalistic trick. That was Tony Blair, setting out his vision of "a modern Britain in a modern Europe" at The Hague in January 1998.

It is a salutary exercise to go back and look at the arguments that swirled around the Blair government's first presidency of the EU. That was in the first half of 1998, seven and a half years ago (because there were, until last year, 15 member states who took half-year turns in the chair).

How little has changed! Even before the presidency began, Helmut Kohl told Blair off for being rude to the French, who were trying to restrict economic decision-making to eurozone members. In his speech in The Hague, Blair described the Common Agricultural Policy as "a manifest absurdity" and said: "It is time to grasp fully the nettle of reform." And he set out the "seven principles of the new European consensus" towards which he thought the EU was "edging".

It is a familiar list. "Macro-economic stability", which Blair thought would be reinforced by the introduction of the euro at the start of 1999. "Competition, liberalisation and open markets" rather than state subsidy, over-regulation and burdens on business. And "active labour market policies" rather than welfare dependency and the "unfocused expansion of the public sector". But "edging" turned out to be not quite the right word.

The enlargement of the Union to take in 10 mostly former communist bloc countries should have been a decisive moment to tilt the European centre of gravity in favour of what Blair then called the third way. But the Nice Treaty of 2001, which agreed the expansion, was hijacked by the French. Jacques Chirac managed to get a codicil added committing the EU to drawing up an entirely new constitution.

For Blair, this came as an unpleasant surprise. As recently as March 1999 he had told Paddy Ashdown in the Commons: "I am hesitant about trying to draw up a new constitution for the whole of Europe, and the Right Honourable Gentleman would find that other countries would also be hesitant."

So they were, but they went along with it for a mixture of reasons, many of them morally coerced by the same French hypocrisy about "solidarity" used today to defend the inequities of the CAP. Blair, determined to end the long years of British isolation, went along with it too, but it was a long and unnecessary detour that has only just arrived back where the story started.

The French cannot say they were not warned. In an article for this newspaper in April 1998, Blair set out his vision of the EU as a "practical necessity" but said: "We have to explain and justify our vision. Our people will accept or rebel against it depending on how and where we move closer - and how well we as politicians explain our vision." Well, the constitution was the wrong vision for Europe, however explained, and the French and Dutch rebelled against it.

Peter Mandelson, who in 1998 was Minister Without Portfolio with responsibility for the yet-to-be-built Millennium Dome, even gave a thoughtful speech in Bonn in which he speculated about how the European élites that had dominated politics were of "an age that has passed away". He said "more direct forms of involvement" such as referendums and internet democracy were growing in importance.

When Blair and Mandelson speak, therefore, they deserve to be listened to with the respect accorded to those who have been proved right. Mandelson's speech to the Fabian Society earlier this month was important, because he recognised - on Blair's behalf - that "Britain has sounded neo-Thatcherite". That was a concession of tone to old Europe. And he said it would be "wrong" to ask the poorer new accession states to pay for the British rebate. That was a concession of substance to new Europe.

And Blair's address to the European Parliament yesterday was potentially historic. He did not bother much with the Brussels talking shop when Britain last held the presidency, hardly disguising his contempt for the institution (especially the Labour members of it, two of whom were expelled for thought crimes in January 1998). But the Parliament has gained slightly but significantly in power since then.

Of course, the airwaves and comment pages are full of the fashionable pessimism of Those Who Know Better telling us that Blair is wasting his time, he is isolated, he was heckled by MEPs, we might as well either (a) hand over the rebate now or (b) declare UDI and close the Channel Tunnel.

If response (a) is driven by the liberal media's pathological hatred of the Prime Minister, I would draw attention to the Chancellor's Mansion House speech on Wednesday. In it, he made the Blairite case, if anything more forcefully than the PM himself. He listed five areas for reform that echoed the seven principles Blair set out in 1998. This government has been consistent, and if Gordon Brown succeeds Blair, it will continue to be for the foreseeable future.

Yes, the debate in Europe now looks remarkably similar to that of 1998. But since then, the euro has been introduced, CAP reform finally began - in the 2002 deal that Chirac claims Blair is going back on - and the Union has expanded from 15 members to 25. The question is how to make the Union work better, and there are more soundly based grounds for hope than the naive optimism of the early Blair years. In the past seven years Europe has tried the French élite's grand symbolism and did not like it.

Despite the conspiracy of Chirac, Schröder and Jean-Claude Juncker, who abused Luxembourg's supposedly neutral presidency, Blair was not isolated in Brussels last week. His attempt to appeal over the heads of Schröder and Chirac to the peoples of Europe may not come to much - the French are impervious to reason on the subject of the CAP. But making a speech to the European Parliament is a clever way to take the battle to the heart of Brussels. And winning the endorsement of Bild, the mass-market German tabloid, is a striking Labour gain. After a long detour up the dead-end of closer political union, the way ahead is now clear for what Brown called "pro-European realism".

A more honest press coverage of the fallout from the "no" votes in France and the Netherlands might have been headlined: "France isolated in Europe." My guess is that is certainly how it will look from the perspective of 2019, which is when, if the rotating presidency is not reformed, Britain will next take the chair at European summits.

The writer is the chief political commentator of 'The Independent on Sunday'