Third Way? They'll Do It Their Way

Article excerpt

Europe has turned pink and now it is hurtling towards integration; once more, Britain finds itself dangerously isolated, reports John Lloyd

This week the British government made it crystal clear that it does not believe that its fraternal parties on the Continent have understood that socialism is dead. It was made crystal clear to the British government, meanwhile, that most of Europe's new ruling class thinks socialism still lives, and wishes to pursue it.

This growing split can be healed only if new Labour, untrue to itself, adopts the rhetoric and policies of the social democratic and socialist parties which now run the European Union; or if- as British ministers devoutly believe they should- their Continental counterparts realise that their measures will not work, and turn to a British, or third, way. However subtly this shift was achieved, it would represent a defeat of one model or another.

The alternative is increasing divergence.

The truth has finally emerged from beneath the honey that has coated relations between Britain and its partners since the SPD victory in the German elections two months ago. On Tuesday, Oskar Lafontaine remarked, after the monthly meeting of European finance ministers, that "we eventually must go to qualified majority voting on the sensitive issue of taxes. I believe the unanimity rule cannot be maintained."

This was after the French and German leaderships had agreed to "campaign for stronger co-ordination in economic policy, particularly in the framework of the 11 euro-countries, for rapid progress in the harmonisation of taxes and for the formation of a real European social model". That, said the Chancellor, Gordon Brown, at his press conference, "is simply not going to happen". Brown and Tony Blair had already sought a protective alliance. Earlier this week Britain issued a joint declaration with Spain - the only European country, apart from Ireland, with a government of the right - to stress their preference for "flexible" policies on employment.

Four iron laws threaten to further separate Britain from a left-dominated Euroland. First, it is not a member of EMU and may not be for another five years. The 11 members of EMU now largely agree that the adoption of the common currency from next month will bring with it an agenda of fiscal and other harmonisation in its train.

Second, since it is not a member of EMU, Britain remains excluded from the Franco-German duo. Thus it can do nothing to modify what seems to be a burgeoning relationship between Oskar Lafontaine and Dominique Strauss-Kahn, the German and French finance ministers. Both agree on the need for tax harmonisation; both also agree - and got EU ministerial approval for it - on a French plan that the chairman of the euro-11 should be represented in international institutions such as G7 and the IMF - the first move in a strategy which will substitute individual representation on these bodies with a unified European one.

Third, Britain has not prepared itself for the integrationist wave which is now rolling through the ministries of Europe. It finds itself in the now familiar position of persuading the electorate to agree to a change already accepted and all but implemented by the rest of the EU.

Fourth, it is not social democratic in the European sense. However vague the Third Way is, it remains a guide-rope for the Prime Minister and the Chancellor, and remains unique to Britain.

Though the Franco-German alliance remains at the heart of the EU, it is changing: Gerhard Schroder, the German Chancellor, made it clear that the days when Germany could be expected to give assent because it needed to expunge its Nazi past were over. Germany is now post-war and post-guilt. Much of the discussion between Germany and France is about the reduction in Germany's contributions - and about the difficulties in reforming the central EU institutions to permit an expansion to the east. …