Blair has damaged Europe

Wolfgang Munchau: Blair has damaged Europe
By Wolfgang Munchau
Published: June 19 2005 19:06 | Last updated: June 19 2005 19:06

Taking a step back from the heat of last week’s gruelling two-day European Union summit, what is remarkable is how many political priorities some countries are willing to sacrifice in exchange for such a small sum of money.

The summit collapsed after the failure by EU leaders to agree the 2007-2013 EU budget. When Tony Blair, the British prime minister, rejected a proposal to freeze the annual budget rebate to Britain he saved his taxpayers a mere €2.5bn each year. The UK was not the only obstacle to a compromise. But if Mr Blair had accepted, neither the Dutch nor the Swedes would have stood in the way of a deal. If the EU ever needed a budget agreement, it was last weekend. The failure to reach agreement compounds the political crisis following the French and Dutch rejection of the European constitution.

For €2.5bn Mr Blair will be sacrificing at least four political goals that seemed to be important to the UK. The first is future enlargement of the EU. A union without a constitution and a budget will almost certainly delay the enlargement talks with Turkey that were scheduled to start during the upcoming British EU presidency. With rising opposition to Turkish EU membership in France and Germany, I would not be surprised if the EU now closed its doors to Turkey once and for all. Nor would I bet at this stage on whether the already agreed enlargement to bring in Romania and Bulgaria will go ahead as scheduled. The extent of the continental European backlash against enlargement is still underestimated in the UK.

The second consequence of Mr Blair’s decision is a fundamental shift in political alliances within the EU. The east Europeans feel let down by Britain. On Friday they courageously proposed a compromise deal under which they would have sacrificed some subsidies to alleviate the pressure on Mr Blair. They wanted this deal so badly that they effectively agreed to co-finance the British rebate. They understand perfectly well that, without an EU budget, their integration into the EU will be at risk. Mr Blair’s diplomacy has driven them into the arms of Jacques Chirac, the French president.

Third, Mr Blair’s agenda for economic reform in Europe is also likely to get derailed. It will make everything that is bad in the EU worse. French farmers will continue to receive subsidies. The EU will continue to build empty motorways through Spain. All the old spending commitments will continue. But the EU will not spend money on infrastructure projects in east Europe, or on those connecting east and west. It will not spend money on research and development, which Mr Blair and his European colleagues identified as essential to reviving the European economy at their summit in March.

Mr Blair’s veto will not even accelerate reform of the Common Agricultural Policy, which he insisted should be a condition for renegotiating the British rebate. He is right to criticise the CAP. The EU should not focus on agriculture, which accounts for 40 per cent of its budget. The CAP is a hugely wasteful policy that keeps food prices artificially high and distorts the world market for agriculture. It would make a lot more sense for the EU to develop a common foreign or immigration policy and spend resources to improve Europe’s scientific and technological base.

But three years ago Mr Blair himself accepted a deal to let the CAP continue until 2013. Until a couple of weeks ago he had never even hinted at a link between the British rebate and CAP reform. He sprang this idea on an unsuspecting European Council far too late in the game. Reform of the CAP will eventually happen, but not in this way.

Fourth, the decision makes it almost impossible for the next generation of political leaders in continental Europe – Angela Merkel in Germany, Nicolas Sarkozy in France – to form a strategic alliance with Mr Blair. They, too, might be open to reform in Europe, including reform of the CAP. Ms Merkel had even expressed some sympathies with the British rebate before the summit. But from the point of view of Germany, whose per capita net contribution to the EU’s budget exceeds that of Britain – with or without the rebate – it is difficult to align with Mr Blair under these circumstances. Ms Merkel is also strongly opposed to Turkish EU membership.

Before this debacle there was a chance that Mr Blair might have taken on the mantle of political leadership in the EU. After the French and Dutch No to the constitution Mr Blair had a unique opportunity to fill a political vacuum left by weak leadership in the EU. But Mr Blair has chosen to give up this chance in exchange for a paltry €2.5bn a year and a few cheers from the UK’s tabloid press.

I have no doubt that Europe will eventually heal the multiple wounds it has inflicted on itself in the last few weeks. The one good thing about this episode is that it has brought old and new Europe closer together. But no matter how the EU chooses to fix its deepest crisis ever – through a relaunch of the constitution, a redefinition of its policy priorities or through a move towards core Europe – it is difficult to see how the UK can play a central part in any solution now.

wolfgang.munchau@ft.com