Leading article: Le problem: Europe needs leadership, not a petty squabble

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The French for club is le club. Our word. You invented clubs, said Prime Minister Lionel Jospin the other day, and should know how they work. Go and ask those gents loitering on Pall Mall: if you aren't a member, you can't come in. The French position on British membership of the committee handling the Single Currency (Euro-X) is definite, obvious and completely justified. The other potential joiners of next May may be less upfront than the French, their finance ministers more silver-tongued than finance minister Dominique Strauss-Kahn (who with French sauciness compared the British attitude to that of a voyeur trying to get into a married couple's bedroom) but they are obliged to share the view. If the United Kingdom won't join, it has no business on the steering committee.

Of course Gordon Brown is right: the creation of a single currency will have immediate and specific consequences for the British economy, especially its financial sector. In the interests of stability, those need to be discussed, whether in Euro X with the British attending by invitation, or in Ecofin, the regular seminar of finance ministers. But Britain really cannot have it both ways. The official Labour position, which we applauded, is that after the euro is up and running the British government will conduct a review. If it decides in favour of membership it will consult the British people in a referendum. Until popular assent is given, Britain stands by choice on the outside. It would be somewhat inside out if we were allowed to be outside in.

So what is it Gordon Brown wants? Labour's greatest task is going to be convincing a sceptical public in Britain. It is not at all clear how membership of esoteric committees will help that. Meanwhile Tony Blair's scurrying round behind the back of the French in a bid to secure a different decision at next weekend's Euro summit smacks of the bad old days of Thatcher- Major amateurism in Euro-diplomacy. The French and the Germans may disagree about who heads the European Monetary Institute, and M Jospin may be putting careful distance between himself and the German Chancellor (who could lose power next year), but the Franco-German axis remains immune to Blairite blandishments.

The Government is ill-advised to prosecute this campaign against rejection. One reason is that there is a danger of making a profound mistake about the likely future shape of the European Union. It may be politically incorrect to say so (in Paris and Brussels as well as London) but the era of "variable geometry" is already with us. The single currency, defence co-operation and the Schengen Agreement on border traffic and controls are three conspicuous examples. Europe is being built at different speeds in north and south, and, shortly, east and west. We cannot fail to see the problems of creating a core and concentric Europe that are presented by the accession of the eastern European candidates.

There is a very strong case for the EU to secure Europe in a geopolitical sense by taking in the Czech Republic, Poland and the Baltic States. But their immediate accession is impossible, inconceivable without structural reform which has not even yet begun. Structural reform is the jargon: the reality will be cutting payments to farmers across Europe, including Wales, and swingeing reductions in the regional aid programme, which the Spanish and Portuguese, let alone local politicians in Newcastle-upon- Tyne, do not like one little bit.

But where, in this great battle of institutions and attitudes, is New Labour? Tony Blair, as Lionel Jospin put it in crisp but unattractive franglais, is "un newcomer". However attractive a figure our Prime Minister cuts among the social democrats in Rome, Bonn and Paris, his stock of political capital is not infinite. He needs to use it wisely and well, and save most of it for his domestic audience. As Dominique Moisi pointed out the other day, the need to embed Europe in the hearts and minds of real Europeans grows, as the problems of reform and expansion are taken up.

Under Labour, Britain could and should lead in Europe. It could and should forge a new path for Britain by explaining why union is good for Britain, why membership of the Union will aid the sometimes painful adjustment of regions and economies, why we need to reach out to the former Communist countries of the East and assist their necessarily long-term processes of reconstruction. That is what Gordon Brown and Tony Blair should be about, not maundering ineffectually about membership of a Euro-money club from which we have, frankly, excluded ourselves.