Leading Article: The currency question is not spent

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You almost certainly did not notice, but yesterday was Europe Day, celebrating the anniversary of the historic speech in 1950 in which the French statesman Robert Schuman proposed an integrated European coal and steel community. The French, ever enamoured of the stylish gesture, marked the occasion with much trumpeting of the brave new euro, with blue and gold Europe flags festooning Paris buses and even free Euro-drinks at a generous bar in Chambery. Instinctively more pragmatic, Britain took a less spectacular approach, as Mr Blair held talks at Downing Street with the Dutch Prime Minister, Wim Kok, the most likely broker of a deal between Britain and its partners at the forthcoming Amsterdam summit. But the cause for rejoicing is no less. Labour's victory has brought us in from the European cold, and for the first time in ages eyes across the Channel look to this country with fascination, hope and - dare one say it - admiration. As the rush of local claimants to the Blair mantle in France, Germany and beyond shows, the election result has the potential to revitalise and reshape the European left.

Unlike Bill Clinton, who occupies a comparable place in the American political spectrum, but is shackled by Republican control of Congress, the Prime Minister's huge majority gives him a rare chance to forge a new brand of European centre-left politics. The first impact could be felt as soon as 25 May, in France, where President Chirac's gamble in calling early elections looks more perilous by the day. But the consequences might be even more momentous in 1998 in Germany, where Labour's success offers the Social Democrats something that has eluded them for 16 years - a formula for ending the rule of Helmut Kohl.

A fresh spring in the step is no less visible at the Foreign Office, long constrained to defend barren Tory policies which ran against every instinct of its soul, quite apart from rendering all but irrelevant the diplomat's cherished art of deal-making.

"Nothing succeeds like political success in changing the dynamics of a negotiation," declared one jubilant official the other day as he surveyed the first 100 hours of Robin Cook's Foreign Secretaryship: "Domestic strength does mean foreign policy strength." We shall see. The new government's swift adherence to the social chapter of the Maastricht treaty notwithstanding, the changes thus far have been mood, not substance. Unarguably, however, the Foreign Office is back in business - and there is much business to be done.

In the short term, the outlines of a possible bargain in Amsterdam have become clearer this week. The beef ban seems set to be lifted, and that would be a more than symbolic blessing born of the new mood. Britain would be granted permanent exemption from plans to abolish European Union border controls, and integrationist Franco-German designs for European defence would be put on ice. In return this country would accept a -modest extension of majority voting. The prime uncertainty surrounds quota-hopping. But for all the campaign thunder on the issue, Labour in government has carefully avoided threatening to block an overall deal if it does not secure satisfaction on fish catches. Increasingly, Amsterdam looks a summit condemned to succeed.

Still to be addressed, though, is the matter of monetary union. Ah, murmur the wise men at the Foreign Office, but the federalist tide in France and Germany is starting to recede. Perhaps: but nothing is more federal than a shared currency and its management. Labour will not join in the first wave, but, like the Tories in their less immoderate days, promises an open mind thereafter. In this stance they are right, as were their predecessors. The common currency might just work - but it would be better not to experiment. The benefits of the single currency venture abandoned are mostly symbolic; at worst it could turn into an anti-democratic strait- jacket. Alas, barring a deadly broadside from the Bundesbank or a reversal of French public opinion, the scheme seems likely to go ahead in 1999 - not least because of the misguided "bicycle theory" which holds that if the vehicle of European integration ceases to move forward, the riders will fall off.

Unlike the Conservatives, whose stubbornness on other issues generated such ill will that no one in Europe listened even when they did have a point, Labour will doubtless gain a hearing, if only from delight that Margaret Thatcher's Euro-sceptic successors have left the stage. But the final outcome will surely be the same, and sometime early in the next millennium, a first or second Blair administration will have to make up its mind on whether to join. Mr Cook vows that Britain will take its proper place alongside France and Germany in European affairs. But how can it belong to the inner triangle, if it shuns the scheme that, for better or worse, has become the yardstick of European progress? Governments come and governments go. But even in this sun-lit honeymoon for Labour, the European dilemma will not.