Blair isolated by quasi-pinkos

Doug Henwood dhenwood at
Fri Oct 23 08:59:24 PDT 1998

[Are the Maastricht criteria about to be bent/revised/scrapped?]

< _FOLLOW_ON=/98/10/23/weu23.html&pg=/et/98/10/23/weu23.html> DAILY TELEGRAPH (London) ISSUE 1246 Friday 23 October 1998

Franco-German lurch to the Left isolates Blair By Toby Helm in Brussels and Andrew Gimson in Berlin

TONY Blair's chances of forming a "triple alliance" with France and Germany were receding last night as Paris, Bonn and Brussels hatched plans to revive Socialist economic policies reminiscent of the heyday of Jacques Delors.

Yesterday, the French Socialist finance minister, Dominique Strauss-Kahn, met his new German counterpart, the Left-winger Oskar Lafontaine, as support grew in mainland Europe for an economic lurch to the Left to boost job creation and growth, and counter the world economic downturn.

This "New Deal" for Europe - backed by Lionel Jospin, the French Prime Minister and Mr Lafontaine - will be high on the agenda at a heads of government summit in Austria this weekend. The 15 European Union leaders will discuss the health of Europe's economy and how to make the EU more relevant to its 370 million citizens. The summit will be the first attended by Gerhard Schröder, the new German Chancellor, and Massimo D'Alema, the even newer Prime Minister of Italy, who is a former Communist. It will be, therefore, Mr Blair's first opportunity to assess the new political power-game in Europe after Helmut Kohl.

Last night, EU diplomats predicted that Mr Blair would be appalled by the emphasis on neo-Keynsian remedies and pressure for more co-ordination at EU level of economic and employment polices. One official said: "It will look to him very much like 'Old Labour'. They are talking about policies that were the stuff of Jacques Delors in the 1980s."

The idea of a new European loan to boost trans-border transport projects in the EU has been floated in recent days by Mr Jospin. Similar ideas are supported by Mr Lafontaine, who believes in loosening the government and EU purse strings to give Europe's economy a Keynsian shot in the arm. Mr Lafontaine also supports reviving the concept of "social Europe", with more protection and rights for workers at EU level, another notion opposed by Mr Blair.

Yesterday, apparently sensing that Britain was not in harmony with Paris and Bonn, Mr Blair's official spokesman claimed that Britain was, anyway, not seeking to bolt itself on to the Franco-German axis, the traditional motor of EU integration. He said: "We have no desire to break into the Franco-German relationship, which we see as a very important relationship for the whole of the EU."

Another sign of the new mood in Europe came yesterday with news that Mario Monti, the commissioner for the single market in Brussels, had called for EU nations to renegotiate and loosen the German-inspired "stability pact" - the system for enforcing budget discipline in single currency countries. Mr Monti said in a letter to Brussels colleagues that countries should be allowed to run deficits over three per cent of GDP (the Maastricht limit) without incurring fines under the "stability pact" so long as the purpose of the spending was to invest.

Since Mr Schröder came to power last month, the German government has abandoned Mr Kohl's staunch insistence that job-creation was an exclusively national task and intends to use the German EU presidency, starting in January, to press for action at European level. The coalition programme agreed this week between the Social Democrats (SPD) and the Greens states: "The new government will place the fight against unemployment at the centre of European policy. Its aim is a European Employment Programme."

In an interview yesterday, Mr Lafontaine said he wanted a European social policy that "sets minimum standards. For example, in employment protection or other employee rights." Mr Lafontaine also wants more tax harmonisation, so that Germany, which will retain relatively high rates under the new government's tax reform proposals, cannot be undercut by neighbours.

Mr Schröder adopts a much more moderate tone than Mr Lafontaine. He said this week that European employment policy should be a "supplement" to national policy, not a replacement for it. But Mr Schröder has not contradicted Mr Lafontaine's line on Europe, and a large part of the SPD parliamentary party will back almost anything that can be sold to them as European.

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