The Sunday Times December 18, 2005

Blair set out for Waterloo and found himself at Dunkirk
Simon Jenkins

The European Union is ghastly. It poisons all it touches. Europe sabotaged Margaret Thatcher’s last government. Europe mugged John Major to death. Now Europe has driven Tony Blair to make a complete ass of himself in Brussels. This protectionist cartel is internally corrupt and externally a menace to global trade and peace. Britain’s leaders
are humiliated whenever they try to reform it.

So far, so miserable. The deal that Blair struck yesterday morning with his European partners is impossible to defend. Such a way of disposing of the future governance of an entire continent is inexcusable. Overtired and overfed politicians negotiate stupendous sums of other people’s money into the night, finally agreeing to any nonsense so as to get home for Christmas.  It is like some medieval field of the cloth of gold. Amid much posturing and jousting, peace is declared and the parties go home to prepare for war.

Blair’s policy on the European budget was sound. He championed the expansion of the EU into eastern Europe. He acknowledged that the new states would need subsidy to convert from primitive socialism to turbo-capitalism.

This subsidy could come only from the West’s gigantic farm budget. Since this would lose money to the French, Britain would ease the path by agreeing to scale down its 1984 budget rebate. This had been incurred to compensate Britain for the EU’s redistribution being so heavily skewed in favour of farming, which is only a small part of the British economy.

Britain accordingly proposed that the EU budget be frozen and “fundamentally reformed”. States should pay into it what they could afford, not what was stipulated in some long-past deal. The common agricultural policy (CAP) should be altered so that farm support drastically declines. In return Britain would sacrifice its rebate. The package was neat and tidy, financially and politically.

From the start Blair was hoist with his own petard. Back in 2002 he had persuaded Jacques Chirac not to veto the accession treaties of the new eastern states for fear of what they might do to farm support. Blair meekly agreed that expansion should in no way damage French interests. He signed the 2002 CAP reform to last until 2013. This promised farmers continued EU subsidy to roughly 40% of the total budget.

Blair personally agreed this lunacy. He signed it. It was his Munich. Like Neville Chamberlain he thought he could somehow bluff his way through the short term and leave the long term to worry for itself. At least this time the Czechs and Poles were beneficiaries of his appeasement.

As Blair’s “legacy moment” approached this autumn the 2002 deal came to haunt him. He hoped that he could put moral pressure on the French by getting his new friends in the east to gang up on Chirac. A plan to rescind 2002 might be lubricated with the proceeds of Britain’s rebate. It was at least bold.

Had Blair hit the ground running when he took over the presidency last July, he might perhaps have isolated Chirac. The moment was opportune. The new EU constitution, designed by France to entrench a Holy Roman Empire of Franco-German bureaucracy, was in ruins. The eastern hordes were pouring into Brussels to rape and pillage western Europe’s taxpayers. The Scandinavians were hungry for leadership. Germany was in disarray.

If this was an opportunity, Blair let it pass. He failed to capitalise on the French and Dutch referendums and expended political capital in Europe by further cosying up to George Bush. Chirac may be a tiresome bore but he is no fool. France’s relations with Europe have long been disastrous militarily but never diplomatically.

Europe is always the theatre in which French interest is the star. Blair’s belief that Chirac would somehow tear up a farm agreement intended to last to 2013 was recklessly naive. That Chirac would do so to help glorify a British presidency was even more so.

Blair nonetheless had one shot in his locker — the rebate. Its “indefensibility” neatly mirrored that of the French farm subvention. Under it Britain would by 2013 be the lowest net contributor to the EU budget other than Cyprus. This was absurd.

Yet to a prime minister set on reform the rebate was a negotiating tool beyond price. Protected by veto, it was not just a stick but a magic sword, a lever, a wedge and a bribe, all in one.

By the start of this month Blair’s budget reform policy was looking threadbare. He had alienated eastern Europe by proposing to deny it cash in favour of a frozen budget. Paris had not budged an inch. Britain duly started to desert its bargaining positions one by one. Blair abandoned the budget freeze. He abandoned fundamental reform of Europe’s finances.

Finally, and in clear desperation, he starting throwing British money across the Danube. On Friday night he was forced, in effect, to surrender his chairmanship to Angela Merkel, the new German leader, to broker a final deal.

By now Europe’s leaders were swilling extra money back and forth like bank robbers after a successful heist. Merkel and reaction were the heroes of this crisis, not Blair and reform.

Blair should never have agreed this deal. In 2002 he may have felt that Europe was better off with the eastern states fully aboard than with a saner CAP. He may have felt that enlargement was worth any price in French appeasement. But if so he should not have forced the budget issue this month. He should certainly not have sacrificed 20% of the British rebate.

Early yesterday morning the prime minister tried to spin the debacle as a victory for his old friend, common sense. He pointed out that Britain’s net donation to Europe will rise by only some £2 billion a year in line with the extra to go to eastern Europe. There will be no cut in the element that is due in CAP compensation.

The rebate would continue to rise, albeit from a lower base, so that Britain and France will converge in net payments to the EU. There is also a vague French agreement that future European leaders may review the budget, although not before 2008 and with no guarantee of action.

This is flannel. The CAP, and France as its great beneficiary, remains supreme. European farming and finance are unreformed and Europe’s trade practices stand condemned before the World Trade Organisation. Blair offered Chirac a glass jaw to punch. Punched it was.

There is only one way to play Europe. It is a trade association through and through. It accepts only what is in the financial interest of its leading members.

The EU displays none of the moral concern that informs, however wrongly, British and American foreign policy. Its view of the outside world is strictly pecuniary.

No European state plays this game of self-interest better than France. For half a century Paris has squeezed Brussels for all it is worth and has been granted remarkable immunity from the economic forces swirling across Europe.

When Chirac recently asked his people if they would really prefer Britain’s cities and Britain’s countryside to that of France, it did not occur to a single Frenchman to contradict him. France has used Europe to grant its people (or most of them) a uniquely good life.

Blair’s attempt to use his presidency to dismantle the 2002 agreement with France was implausible. This battle was never going to be Waterloo, but rather Dunkirk.

Certainly success would take more than a late-night poker game. When the French called Blair’s bluff he should have held firm. He should have quietly removed his rebate from the table, packed his bags and returned home. It would have left the states of eastern Europe empty-handed in the short term but that would have taught them not to play games with their future paymasters. Instead, Blair has merely taught them to speak French.

A European budget crisis postponed to next year would have infuriated Europe and spoilt Blair's forthcoming job application as globetrotting statesman and peacemaker. That should be of no concern to Britain. It is inconceivable that Thatcher, Blair’s heroine, would have let personal vanity get in the way of national interest, which in this case was also Europe’s interest.

When he set out on this venture Blair promised the British people that he would use their money to lever long-term reform of the EU. He has not done so. He has failed.