European Affairs

Summer 2005

 

Cover Story:

Blair Seeks to Reshape EU in Britain's Image

By John Palmer

 

As the European Union struggles to resolve one of its worst ever crises, the country presiding over the efforts to get European integration back on track in the months ahead will be Britain, traditionally one of the least enthusiastic supporters of the Union's goals of political union. In such circumstances, it might not be surprising if the UK government regarded its six-month stint in the EU presidential chair with distaste. And yet British Prime Minister Tony Blair is throwing himself into the presidency with newfound enthusiasm, believing that the crisis presents him with a unique opportunity to steer the future of the European project in a direction much more to British liking. It will not be easy.

As Britain took over the reins from Luxembourg on July 1, the debate in Brussels was not so much over whether European integration was in crisis as over the seriousness of the crisis and how long it would last. Plans approved by all 25 member states for a new EU constitutional treaty have been brought to an uncertain halt by voters in France and the Netherlands, and EU leaders are locked in a bitter dispute over the future financing of an ever-enlarging Union. The most recent summit meeting of leaders in the European Council ended in recriminations and mutual suspicion.

Britain's task is rendered even harder in that Mr. Blair will have to overcome deep-seated suspicions of its intentions, especially in France. It is not as if Britain is neutral in the disputes that are feeding the crisis. British voters, if given their chance, would also almost certainly reject the constitution, and the failure of the European Council in Brussels in mid-June was widely blamed on the narrow and intransigent stands taken by Mr. Blair and French President Jacques Chirac in defense of their national interests over the EU budget.

What's more, for most of the past 30 years, the UK has been regarded by many continental leaders as a somewhat "semi-detached" member of the European Union. Britain has stayed out of the euro and the Schengen agreement abolishing EU internal borders, and fought frequent battles in Brussels against the cherished European social model.

Successive British governments have been at odds with their European partners over Europe's political future, culminating in the damaging split with France and Germany over Mr. Blair's support for the U.S. invasion of Iraq.

Despite all this, Mr. Blair is latching onto the Presidency as something of a godsend. He hopes to use it not only to advance his own conception of Europe, but also to gain the lasting reputation for European statesmanship to which he has always aspired. In his pre-Presidency address to the European Parliament in Brussels on June 24, Mr. Blair displayed a positive zeal for what he sees as his new mission-no less than the modernization of the European economy and root-and- branch reform of one of its most important "common" policies, agriculture.

"At the heart of Mr. Blair's approach is acceptance of globalization and the need to adapt to it"

Mr. Blair acknowledges the depth of the crisis in the European Union. But he insists that, "In every crisis there is an opportunity. There is one here for Europe now, if we have the courage to take it." Looking to the future, he told the Parliament, "if we agreed on real progress on economic reform, if we demonstrated real seriousness on structural change, then people would perceive reform of macro policy as sensible and rational, not a product of fiscal laxity but of commonsense. And we need such reform urgently if Europe is to grow."

At the heart of Mr. Blair's approach is acceptance of the reality of globalization and the need to adapt to it rather than to seek protection from its impact. His theme has been expressed even more bluntly by his arch political rival and likely successor, Chancellor of the Exchequer Gordon Brown, who recently told bankers in the City of London, "Here in Britain, we have had to make and continue to make hard, long-term choices to achieve stability, growth and flexibility. Now to be globally competitive, the European Union must make these long-term choices too."

Of course, in preaching this gospel, Mr. Blair is fully aware of the serious economic difficulties in France, Germany and Italy - in part because of their failure to take the very steps he recommends to improve competitiveness, free up labor markets and abandon outmoded protectionist policies. He also knows that - in large measure because of slow economic growth and unacceptably high levels of unemployment - his key critics over the Iraq war, Mr. Chirac in France and Chancellor Gerhard Schroeder in Germany, are in dire political straits. This is also true, however, for Mr. Blair's Iraq war allies, Prime Minister Silvio Berlusconi in Italy and Dutch conservative premier Jan Peter Balkenende.

Mr. Blair is being careful not to name names in his critique of the European Union's failures. He has gone out of his way to insist that he remains "a passionate pro-European," dismissing the fears of integrationists that he wants to reduce the European Union to a mere free trade area, and declaring his faith in the "political project" of closer European unity. After his speech to the European Parliament, some European politicians and important sections of the European media praised the energy and sense of strategic vision he displayed, and some even wondered whether a new political Messiah might have arisen from the ruins of Europe's collective political leadership.

Much of the British Presidency's program will appeal to the dominant center right in EU countries. Among the UK's priorities are getting "the best possible result" with regard to the Doha round of trade negotiations at the Hong Kong ministerial meeting of the World Trade Organization in December, putting Africa at the center of global development policies, pushing through more radical world action on climate change, reform of the common agricultural policy (CAP) and especially its controversial sugar regime, structural economic reform, progress toward a single EU market in services, and cooperation among EU member states in the fight against terrorism and international crime.

But in pursuing his European objectives, Mr. Blair must perform a difficult balancing act to maintain political backing at home, where his position has been severely weakened by a sharp fall in support for his leadership in Parliamentary elections in May. The unabashedly pro-European tone of Mr. Blair's speech to the European Parliament raised eyebrows in Britain, where the largely euroskeptic media questioned his apparent commitment to EU institutional reform despite the derailing of the constitutional treaty. Indeed a Kremlinological reading of the Blair text suggests that he might be willing to have many of the treaty proposals reexamined and presented again for ratification in the member states at a future date - perhaps after the 2007 French Presidential election. In this he may face the opposition of the more euroskeptic Gordon Brown, who might even have succeeded him as Prime Minister by then.

As far as Mr. Blair's EU leadership claims are concerned, however, could it be a case of "cometh the hour, cometh the man?" Is it possible to imagine Mr. Blair as a sort of latter-day John the Baptist - preparing the way for the gradual "Anglo-Saxonization" of the European Union? There are signs that political developments in other EU countries may be moving in Mr. Blair's direction. If, as expected, the Socialist Mr. Schroeder goes down in defeat in the German general election in September, his Christian Democratic successor, Angela Merkel, may prove a more sympathetic partner for the UK. She wants to put more stress on improving Transatlantic relations, favors structural economic reform and has even talked about cutting spending on the CAP.

"Mr. Chirac will be seeking to regain political points at home by obstructionist tactics in Brussels"

A win by Ms. Merkel could certainly help Mr. Blair in the remaining months of the British EU Presidency, which lasts until December 31. It will not, however, remove the greatest single obstacle to a successful British turn at the EU helm, which is likely to be inveterate opposition to British initiatives by Mr. Chirac, whose term does not expire until 2007. Not only are Mr. Chirac and Mr. Blair openly antagonistic in their personal relations, but Mr. Chirac has been deeply wounded by his defeat in the French constitutional referendum and will be seeking to regain political points at home by obstructionist tactics in Brussels. That is another reason, in addition to the difficulty of the task, why Mr. Blair's plans for EU reform must inevitably have a longer term perspective than the current British presidency.

"Among the biggest beneficiaries of EU farm spending are British royalty, aristocrats and the landed gentry"

In London there are those who hope that Nicolas Sarkozy, the rising star of the French center right, may succeed Mr. Chirac in 2007. Like Ms. Merkel and Mr. Blair, Mr. Sarkozy is something of an economic liberal. In a recent interview he said it was an "absolute and urgent priority'' to create jobs and push down unemployment from a five-year high in order to boost growth in France, Europe's third-largest economy after Germany and Britain. "There is not enough work in France and that is mainly because it is not rewarded, valued and heralded enough,'' Mr. Sarkozy said. "Rewarding and encouraging, there is nothing more important to revive the French economy.''

All three leaders also believe that nation states should remain the dominant forces in the European Union and share a distaste for anything resembling federal-style European political integration. Might these developments create a new economically liberal, more inter-governmental, less pro-integrationist European Union led by a British/ French/German troika? Such a troika might expect support on at least some contentious issues of EU reform from the new member states in central and eastern Europe and from the Nordic and Baltic countries.

Some skepticism is in order here. Claims that the UK, France and Germany may soon be on converging strategic paths can be overstated. In the EU budget debate, Ms. Merkel has already had to dilute her commitment to farm policy reform - mindful of the importance of rural lobbies to the German Christian Democrats. Mr. Sarkozy has declared he supports Mr. Chirac in the stand-off in which Mr. Chirac is demanding an end to Britain's EU budget rebate and Mr. Blair is insisting that the rebate can only be discussed if the CAP is reformed to ensure big cuts in farm spending. This may explain why Mr. Blair has already started to tone down his assault on the CAP, saying that he is only looking for gradual change, to be decided at some point during the budget period 2007-2013.

There may be another reason why Mr. Blair is approaching CAP reform with care. There is growing support for a ceiling to be put on the compensation farmers are paid in recompense for the loss of production subsidies. At present, however, by far the largest beneficiaries of CAP payments are the biggest landowners - prominent among them British royalty, aristocrats and the landed gentry. That was one reason why Britain, not France, blocked a European Commission proposal to limit such payments last year.

Ms. Merkel and Mr. Sarkozy will probably support a measured shift toward more liberal and flexible EU economic policies. But they are most unlikely to sign up for the British approach to social and environmental regulation. In fact, the Nordic approach has greater appeal for the French, Germans and others than Britain's "Anglo-Saxon model," characterized by what are seen as poor social and public infrastructure standards. According to the World Economic Forum, the Nordic countries top the world league table for competitiveness and innovation, while maintaining very high levels of social welfare and environmental sustainability.

As the economic debate gets under way, France, Germany and Britain, too, may find themselves under pressure to adopt the Nordic approach. Such a development would be popular among many of Mr. Blair's Labour Party supporters. But both Mr. Blair and Mr. Brown feel instinctively closer to U.S. economic and social policies than they do to Nordic-style social and environmental policies - however successful the Nordic economies may be.

There are other problems. Ms. Merkel and Mr. Sarkozy are openly hostile to admitting many more countries into the European Union - a key strategic plank in Mr. Blair's EU policy platform. These differences are likely to come to a head, though not immediately, over the negotiations on Turkish EU entry due to begin in October. Both Ms. Merkel and Mr. Sarkozy have threatened to veto full Turkish membership of the Union, although, with the accession talks likely to last between five and 10 years, such a prospect lies relatively far in the future. To complicate matters further, the mainly small and medium sized central European countries are more integration-minded than Britain. They share with other smaller EU countries a suspicion of anything smacking of a " Political Directorate" of the big states running the Union.

All of this assumes that Mr. Blair will remain prime minister until close to the next UK general election in 2009/2010. But this is very far from assured. Mr. Blair has only managed to keep the open hostility between himself and Mr. Brown within tolerable limits by promising, or appearing to promise, a handover of the keys to 10 Downing Street to Mr. Brown well before the next election. Before the crisis sparked by the "No" votes in the French and Dutch referendums, it seemed that the handover might come later this year. Mr. Blair's domestic unpopularity - partly because of his close relations with President George W. Bush - cost Labour two thirds of its Parliamentary majority in the May elections.

By setting out a dramatic new European reform strategy, however, Mr. Blair may be serving notice to Mr. Brown and his supporters that he intends to hang on much longer. In this sense, Mr. Blair is in a desperate race against the clock. He is looking for his place in the history books. After the traumas of the Iraq war, he now sees a chance to write his political epitaph as the man who transformed the European Union and finally reconciled the British people to their European future. But such a transformation will take a lot of time, more time than Mr. Blair can count on.

John Palmer, a former senior editor and correspondent for The Guardian newspaper, is Political Director of the European Policy Centre in Brussels: www.theepc.be