The Economist 1998 January-December I-IV. [antikvár]

january 3rd 1998 Britain's place in Europe ALTHOUGH the presidency of the Euro. pean Union confers no real power, it does seem awkward that during the coming half-year the job will be held by Britain. In May Europe's governments will decide which among them will take part in their planned monetary unión. Exercising titular leadership at this momentous time will be one of the four countries not taking part (and one moreover which is choosing to stand aside, rather than being obliged to because of fiscal mismanagement). It looks bad. It will crimp the celebrations. And it is especially awkward for Britain's new government. Tony Blair is not one to exult over disagreements with his European friends. Rather he seeks harmony and consensus under his own enlightened leadership. Sustaining that conceit during the coming weeks will strain even Mr Blair. Yet, inconvenient as it is going to seem, it is salutary that the presidency will push Britain's reluctance over emu into the spotlight. More than any other unresolved question regarding the single currency (and there are many), Europe's governments need to settle the relationship between the single-currency "outs" and "ins". And this is only one aspect of the broader but no less urgent question of what kind of Union Europe is building. An exercise of intellect is required, and woefully overdue. Anything that may prod governments to embark on it even at this late hour is welcome. Multi-system, not multi-speed Unfortunately, seeking to minimise his embarrassment, Mr Blair is unlikely to press the questions very hard. He recognises that neither public opinion nor the economy is ready for emu, and so has ruled out British membership in the first wave. Quite right. But the Blair variant of "wait and see", in the interests of harmony, plays down the possibility that Britain may choose never to jóin. This is a pity, because that may prove to be what Britain's voters want. Other countries, including somé that commit themselves to the euró this year, might decide in the end to retain (or restore) their currencies. Depending on how things go, they may be right to do so-even if the euró is judged a success in the core of Francé, Germany and the Benelux countries. This is not just a matter of the economic risks attaching to the project. The future of emu is shrouded alsó in political uncertainty. The right kind of emu would leave governments maximum sway in other aspects of policy. There is no reason in logic why a single currency should obiige governments to "harmonise" their tax or labour-market policies, for instance, and one good reason of political economy why any such thing should be opposed-namely, that harmonisation enlarges the power of the state at the expense of individual freedom, whereas competition among governments (the alternative to harmonisation) does the opposite. Yet many of Europe's politicians seek harmonisation as an end in itself. Others would accept more of it as the price for (in their view) more effective action to reduce unemployment, promote competitiveness or what have you. The battle to build a liberal Europe is by no means lost. Politicians opposed to the expansion of state power, who take seriously the principle of subsidiarity as a check on cartelised government, are to be found across Europe. But now that Britain has ditched the Tories, these ideas are no longer expressed so forcibly by any European leader. One of Labour"s first acts was to opt in to the social chapter of the Maastricht treaty, a measure which cannot be reconciled with the idea ofsubsidiarity, or for that matter (given Europe's unemployment) with common sense. True, Mr Blair and his ministers, when not affirming their zeal for Britain-in-Europe, have so far seemed commendably liberal, on the whole; they insist that worries about a European drive for more interventionist economic policies are unwarranted. Britain's foreign secretary says that "the high tide of integration has passed." But this may be wishful thinking. In Europe his view is not widely shared. Whether the single currency spurs new and bolder efforts at political integration within Europe remains an open question (see pages 33-36). Whatever the answer, it cannot be taken for granted that all of the eu's members would want to take part in a faster-integrating Union. In all likelihood Britain and somé others would prefer to stand aside from aspects of it. Enlargement of the Union to new members in Eastern Europe, countries with profoundly different economies and fragile new demócratic institutions, makes the idea of a multi-system eu seem all the more necessary. Yet Europe is entirely unprepared for this possibility. Its guiding philosophy remains "ever closer unión". The eu's architects may not know what that phrase means, but they are sure that whatever it means must apply in the end to everybody. This philosophy must be abandoned, or be smashed by force ofevents. Ad hoc gestures offlexibility- notably, the optouts written into the Maastricht treaty-will not suffice. As much as anything, it is a matter of attitudes: governments must accustom themselves to the idea that Europe will need more than one, and possibly several, European Unions. At the core, if electorates want it (a big if), a federation of states with substantial political power devolved to the centre; beyond that, maybe, a single-currency system with power retained at the national level; beyond that, something like the present arrangement, an enhanced customs unión. But whatever the geometiy, this should not be seen as a stop-gap multi-speed ' THE ECONOM1ST JANUARY 3RD 1998