Blair travels full of hope

The news of Mr Gerhard Schroder's election triumph in Germany sent a shiver of excitement through the British Labour Party

The news of Mr Gerhard Schroder's election triumph in Germany sent a shiver of excitement through the British Labour Party. The arrival of a man apparently cast in Mr Tony's Blair's image offered the prospect of a new era in Anglo-German relations, challenging, if not actually supplanting, the Franco-German alliance in the engine room of Europe.

Indeed, there was instant speculation that the new German Chancellor might inaugurate this new golden age with a quick courtesy visit to the Labour party conference in Blackpool.

It always seemed highly fanciful that the Chancellor would choose Blackpool over Paris for his first out-of-town jaunt. So it proved to be. And despite recent problems, and the current difficulties and disagreements over the EU budget, seasoned commentators here readily mock any suggestion that Mr Blair occupies one half of an Anglo-German driving seat.

That said, recent events - the departure of Mr Oskar Lafontaine and the mass resignation of the European Commission - have been extremely helpful to Mr Blair as he seeks to shift British attitudes toward Europe in general and the prospect of eventual membership of the euro in particular.

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He travelled to Berlin last night confident that the reform agenda had effectively undermined the Euro-sceptic case at home, while probably ensuring that the EU summit will be judged a success.

On some perennial questions, the British position is familiar. The CAP needs to be contained if EU financing is to be stabilised. The British government wants to see structural and cohesion funds set below the proposed €239 billion for the period 20002006. And on the British rebate, the position remains as before, with Mr Schroder expected to back away from a row over a payback on Britain's budget contribution, routinely put at £2 billion sterling.

Britain supports suggestions to move from VAT to GNP as the basis for calculating budget contributions. The effect of that would be to reduce the size of British and German contributions and, correspondingly, the rebate would also fall. However, Downing Street is insistent that the mechanism for correcting a situation in which the second largest contributor is by most accounts only the 10th richest will stay.

For Mr Blair, the question is how to finance an enlarged EU, not how to finance the process of enlargement.

Assuming no battle on the rebate, and some success on Objective 1 and Objective 2 funding, Mr Blair's big enthusiasm is to have the summit move rapidly to fill the vacuum left by the collapse of the European Commission. While apparently "second to none" in his admiration of the Dutch Prime Minister, Mr Wim Kok, Mr Blair has given clear indications that he would like to see Mr Romano Prodi, the former Italian prime minister, as the next president of the Commission.

Mr Blair considers Mr Prodi "a real reformer", just the man to serve as Europe's chief executive into the next century. If possible, he would like to see his nomination agreed in Berlin.

In any event, he wants his fellow heads of state and government to seize the opportunity for EU renewal. He regards the events of last week as "a turning point, which must be used as such". And he wants the EU leaders to mandate the new president to drive through wide-ranging reforms.

The Blair agenda embraces tightening protection against fraud, greater professionalism in running budgets, the increased accountability of senior officials and greater transparency overall. Ringing declarations to that effect, and agreement on Mr Jacques Santer's successor, would send Mr Blair home smiling on Friday.

For a Europe speaking as one the language of reform is not what British Euro-sceptics expect, or want, to hear.

That said, the famous smile will remain somewhat strained. For the reality of the Franco-German powerhouse will remain, at least for as long as Britain, on the key European questions, remains on the sidelines.