Opportunity knocks for Blair…and for Europe

Former UK prime minister Tony Blair’s speech at the conference of President Nicolas Sarkozy’s UMP party on 12 January left little doubt that Blair is now a candidate (albeit undeclared) to become the first long-term president of the European Council next year.

In terms of both his political experience and what the EU needs, Blair seems to fit the job-description. A Briton who can also win over the members of the UMP National Council by telling jokes, in French, and is then praised by Sarkozy may have a head start on any rivals.

And, if the entente between Sarkozy and Blair is as significant as some suspect, its timing could also be fortuitous given changing attitudes to Europe among the French elite and the baleful prospects confronting the UK economy.

Take French attitudes first. According to Jean Pisani-Ferry, director of the economic think-tank Breugel, signs of a shift in France’s traditional approach to the challenges of EU integration should be taken seriously.

Presenting a new report on the eurozone by a group of Bruegel experts last week (11 January), Pisani-Ferry said that the old idea that the single currency would lay the ground work for a more centralised European political economy looks outdated.

The exclusive responsibility of the European Central Bank in the formulation of monetary policy will, of course, continue. Although Pisani-Ferry himself has long advocated a bigger role for the Eurogroup of eurozone finance ministers in macroeconomic policy, he now acknowledges that fiscal policy and structural reforms "are going to be increasingly decentralised". So he agrees that the idea from the age when Jacques Delors was Commission president, that monetary union would lay the foundation for a centralised political union, no longer looks credible, even to many opinion leaders in France.

Jean-Pierre Jouyet, the French minister for Europe, seemed to be saying something similar in an interview earlier this month. He suggested that France had not only ditched its traditional scepticism about enlargement but was also adjusting its European vision. If so, this would bring French attitudes closer to the thinking of the UK, so tending to undermine the federalist nightmares of British Eurosceptics.

The terms of the debate about Europe’s future could soon be changing in Britain too. For much of the past decade the apparently stellar performance of the UK and American economies has dazzled many European policymakers. It has also allowed UK Eurosceptics to point the finger at allegedly sclerotic Europe and proclaim that it is the flexible, so-called Anglo-Saxon, economies that have discovered the formula for dealing with the competitive challenges of globalisation.

Now, those of us who have maintained that flexibility is fine but debt-fuelled consumption and housing and asset price booms were not economic miracles, are being proved right. The pound is crashing, raising the spectre of sterling once again becoming a major policy constraint. The UK current account deficit has soared to more than 5% of gross domestic product, inflation is, according to some measurements, well above 4%, the banking system has been on life support for months with contagion from the Northern Rock collapse barely contained and growth is about to collapse.

The UK’s prospects look as bad as - if not worse than - those in the US where the subprime mortgage debt crisis is now triggering an unsustainable build-up in credit card debt, debt delinquencies are now soaring as they have been in the mortgage market, threatening to add another twist to the securitisation nightmare on Wall Street.

No wonder President George W. Bush is about to put his name behind calls from the likes of former US treasury secretaries Robert Rubin and Larry Summers for an emergency fiscal stimulus and Wall Street is screaming "recession" and trying to bully Federal Reserve Board chairman Ben Bernanke to cut interest rates again.

Paul Krugman, one of America’s smartest economists, concludes: "The fact is that Europe’s economy looks a lot better now - both in absolute terms and compared with [the US] economy - than it did a decade ago."

If the economic pillar underpinning British Euroscepticism, a naive belief in the superiority of the ‘Anglo-Saxon’ model, is indeed about to crumble, the debate about the UK’s relationship with Europe will change too, especially if Blair, a transatlanticist as well as a Europhile, becomes European Council president next year. Perhaps the UK’s pro-Europeans can seize this opportunity.

• Stewart Fleming is a freelance journalist based in Brussels.

Former UK prime minister Tony Blair’s speech at the conference of President Nicolas Sarkozy’s UMP party on 12 January left little doubt that Blair is now a candidate (albeit undeclared) to become the first long-term president of the European Council next year.

BBC News, 6.5.08: Sarkozy 'non' to Blair presidency http://news.bbc.co.uk/1/hi/uk/7386891.stm

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