POLITICS
Margaret Thatcher would have relished the Helsinki challenge; Tony Blair is close to panic
BRUCE ANDERSON
Aglance at the headlines might suggest a typical British build-up to a European summit. Led by Lady Thatcher, the Eurosceptics are denouncing the govern- ment for cowardice. In response, ministers are insisting that they are prepared to use their veto. In response to that, the Euro- peans are becoming audibly irritated. Yet again, the government seems trapped, unable to decide whether to appease its domestic critics or its European partners. Yet again, it will end up by satisfying nei- ther. Tony Blair is in a hole, but that is his own fault. He dug it.
Almost as soon as he became leader of the Labour party, Mr Blair assured Euro- pean governments that he would be the first prime minister since Ted Heath to be a devout European. He would not only say that Britain should be at the heart of Europe; he would mean it, and he would join the single currency. On that, he would need to sort out some little local difficulties, but no one should doubt his commitment. It was a matter of when, not whether.
That was how Tony Blair used to talk, and he did not confine himself to practicali- ties. The Europeans believe that Euro- building is a moral project: one reason why they are so intolerant towards dissidents. A high moral tone comes easily to Mr Blair; he had no difficulty in convincing the Euro- peans that he was sincere. Hence their cur- rent disillusion with Britain.
As they come from countries in which the Euro-nomenklatura controls debate and in which Europe has long since been absorbed into the domestic political bloodstream, the Eurocrats cannot understand the con- straints which British democracy imposes on any PM, even a Europhile with an enor- mous majority. If the Brits insist on trying to hold us back, grumble the Eurocrats, we must find a way of marginalising them. We are certainly not going to allow them to pick and choose only the aspects of Europe which suit them; forget a la carte, they will eat the same table d'h6te as the rest of us.
In the run-up to the Helsinki summit, the British government is being subjected to moral, emotional and political blackmail, and it is working. Margaret Thatcher would have relished such a challenge. Albeit with reluctance and foreboding, John Major would have accepted it, but Tony Blair is close to panic. He assumed that he could use his charm to finesse any problems on the European agenda. He also assumed that, sooner or later, he would be able to per- suade the British electorate about the mer- its of the euro. He now finds that the voters are unpersuaded, the difficulties unre- solved. As so often with a complex issue', he has failed to think the matter through.
The two questions most immediately in dispute illustrate Britain's difficulties with Europe, and vice versa. The droit de suite is a levy on the resale of modern works of art; the proceeds would go to the artists or their heirs. But if such a tax were imposed, much of the British modern art market would dis- appear; in future, the sales would take place in New York. The resulting disappearance of dealers and galleries would make life harder for young artists who are naturally more concerned about making their first sales than about any suite. In opposing the droll de suite, the UK is trying to preserve a buoyant international market which is con- stantly aware of the threat of extra-Euro- pean competition. But in the rest of the EU, there is no such market, partly because of droit de suite. As so often, the Europeans cannot see why we should enjoy a benefit which they are denied and, given the cur- rent mood of anti-British feeling, that is rea- son enough for them to punish us.
But we should never have given them the opportunity. They have no important inter- ests at stake in droit de suite; we do. So we should have played rough, making it abso- lutely clear that any attempt to inflict droit de suite on us would be fiercely resisted and would provoke retaliation. That is how the French and the Spanish would have behaved and, if we had done so from the outset, the matter would have been resolved long ago, and in our favour. Now, however, it has been linked to another international market question, and we may well find it impossible to win both battles.
The German government is upset because its savers are in the habit of moving their capital offshore, especially to Luxem- bourg, an easy drive across a common bor- der. So the Germans would like to impose a withholding tax, obliging all banks to impose a 20 per cent tax on interest pay- ments. But that would be seriously damag- ing for Britain. From the Sixties onwards, we captured the Eurodollar market precise- ly because the Americans were unwise enough to impose a similar tax. But if a withholding tax were imposed by Europe, the trade which migrated from New York to London would migrate again. It does not seem to have occurred to the Germans that they also have a common border with Switzerland, where there are a lot of banks adept at protecting the interests of rich for- eigners who do not like paying tax. A with- holding tax would do nothing to help the German treasury, but it would damage the British one. Yet again, however, the Conti- nental onslaught on British interests is driv- en not by practicality, but by envy. Like droit de suite, withholding tax reminds the Euro- peans that we are an open trading economy with strong transatlantic ties.
Droit de suite is subject to qualified major- ity voting but on withholding tax we have a veto. From the outset, however, our new masters deprecated any talk of vetoes; such desperate Tory measures would not be nec- essary now that New Labour was collaborat- ing with New Europe. That naivety is now being punished. Again, we should have made it clear from the start that there was simply no point in discussing a withholding tax; we would have nothing to do with it.
As it is, Mr Blair may well feel obliged to compensate the Europeans for agreeing not to damage vital British interests by making concessions in other areas, especially defence. That could be seriously damaging to the Nato alliance. Even if Mr Blair refus- es to admit it, the Americans are fully aware that France's interest in a common Euro- pean defence policy has little to do with defence and a lot to do with anti-American- ism. When the Americans insist that they are in favour of an equal partnership with Europe, they are being disingenuous; they are not as keen on partnership as they would like to claim. But they could learn to cope with it as long as there was equality. At present, however, Europe has no intention of making an adequate contribution to its own defence, and will remain just as depen- dent on the USA as it has been since 1945. So it would be the height of foolishness for Tony Blair to agree to any European initia- tive which would alienate our American benefactor. In Britain, we take it for granted that the USA will continue to defend Europe, but not every American taxpayer shares our complacency.
If the Europeans pretend to have a com- mon European defence policy, some future American administration might pretend to believe us. Then we could be in a real mess.
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