Britain's role in a reformation of Europe

Europe is in a mess. The Franco-German alliance, that great motor of unification, common currency and all, is stuttering. The recent meeting of European christian democrats paralleling the socialists' lovefest in Sweden disclosed, not for the first time, deep divisions in basic concepts of Europe. The intellectual underpinnings of post-Maastricht European unity, never very secure, are coming adrift. British commentators and politicians must not gloat - especially Labour ministers who owe their present good Euro-fortune to opt-out clauses negotiated by the Tories. We cannot simply play the innocent bystander. If the project for a common currency on the existing timetable comes a cropper, some pieces will have to be put back together - not for the sake of some mistaken historicist conception of European unity, but for the sake of national security promoted by trade, continental harmony and shared sovereignties. The Blair government ought to go to the Amsterdam summit determined to protect our position, on borders as on defence. But at the same time Britain's representatives need not just to be thinking ahead to the next move in the Union diplomatic game but thinking hard about the reformation of Europe in the new century.

Never say never. Helmut Kohl is a determined and resourceful politician. So too, though he has shown little sign of it lately, is Jacques Chirac. On Europe, Lionel Jospin and the Socialists are already showing signs of being - as the Germans politely put it - oszillierend. It is conceivable that, over the next few days, the recent raucousness surrounding the common currency will die down. The Christian Social Union, the party to which German finance minister Theo Waigel belongs, may stop sniping across the Rhine. The new French government meanwhile may complete its "re-reading" of the stability pact that is to accompany the establishment of an independent European central bank, and which is due to be signed in Amsterdam next week. Some anodyne form of words about jobs and social stability may by added in Amsterdam. The train gets back on track. It's conceivable.

But it's inconceivable that the Kohl government will cut and tax to meet the convergence criteria without opening its political flank to the left. It's inconceivable, also, that the Italian state will undergo a miraculous transformation and get its fiscal act together. That means, unless Lionel Jospin swallows his election promise that the euro would not go ahead without Italy, that the common currency will be born soft - and that in turn means most of the fiscal fear and loathing in France and Germany over recent years will have been in vain.

All of that has to do with the practical problems of EMU. Perhaps more telling is how during the past few days profound gaps have opened underneath the theory. This is about more than the French government being social- conservative while the German coalition is conservative-liberal. Fundamental questions about the size and capacity of government are being prompted; questions which, thanks to the Thatcher experience, seem to have been answered to the electorate's satisfaction here. The paradox is that the common currency comes from the political right, from the neo-liberal side of economics. It is four square with the original common market idea, defined (according to a German Social Democrat who wanted nothing to do with it) as conservative, capitalist and clerical. The conceit of Jacques Delors as Commission president was to suggest that somehow, without changing the basic institutional landscape or profound renegotiation, Europe could become a "socialist" guarantor of jobs and employment rights. Prime Minister Thatcher made the great error of believing him. Naturally the French government is confused. It is signing up to a banker-dominated Europe with one hand while with the other using its position as a Renault shareholder to demand the postponement of the closure of its Vilvoorde plant, as if governments can will consumers into buying Meganes and Espaces.

The same kind of attempt to square circles is visible in Brussels. The main argument for a single currency is that it will allow the European countries better to compete, globally, by facilitating internal trade and empowering European companies to beat the Americans, Japanese and other Asians. This is a good argument, though not a guaranteed outcome. But how does it line up with the philosophy of high employment costs, exemplified in remarks by the Social Affairs Commissioner reported yesterday, to the effect that worker participation in European companies was "a necessity". Perhaps there is, as the Socialist International at Malmo proposed, "a new economic and social model sufficiently supple to consolidate the position of Europe in the world without prejudicing our environmental and social norms." But the European Union is many miles away from conceptualising such a thing, let alone agreeing it.

There are indications this week that the Germans may now agree to delay the euro, pushing into 1999 the tripwire decision to go ahead that is due next May. Amid present confusion this seems like common sense. The would-be Social Democrat contender Gerhard Schroder raises the intriguing thought that a functioning stability pact could then precede the move to a common currency.

Such a delay is the least of what is needed. The idea that the Brits can come riding in on a charger is anachronistic and arrogant. But somebody is going to have to put up papers and say awkward, realistic things. Like, is Maastricht II actually needed, especially when it seems to contain nothing to address the question of EU expansion to the East beyond some tinkering with majority voting in the council of ministers. The British presidency next year will prove its worth not by saying no, nor unthinkingly yes, but by practical, limited proposals for rescuing European integration from its muddles and evasions.