New Labour—New Europe?

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New Labour—new Europe?

KIRSTY HUGHES & EDWARD SMITH

Within two weeks of the  British general election, the new Foreign Secretary, Robin Cook, issued a foreign policy mission statement which included the aim of making the UK a ‘leading player in a Europe of independent nation states’. Tony Blair, in his first major European speech as British Prime Minister, called for the creation of a ‘people’s Europe’ and announced that the British government ‘shares the goal of a constructive partnership of nations in Europe’. A few weeks later the Chancellor, Gordon Brown, called for Britain to be ‘leading in Europe’ and rejected ‘both the federal way forward and the regulatory way ahead’; and in November, the point was reiterated by the Prime Minister, stating that ‘we must end the isolation of the last twenty years and be a leading partner in Europe’. These statements have a familiar ring. John Major also famously called for Britain to be ‘at the heart of Europe’. The key question being asked of Britain’s approach to Europe under its first Labour government for a generation is whether this is new Labour, new Europe or new Labour, old Britain.The determination of the government to be a leading player combined with a rather typical British unease with supra- national structures (though not the outright hostility of the Conservatives) rais- es again the question of whether Britain will lead in a direction that no one else wants to take or whether it can promote and gain support for a new approach to the EU. As yet, the answer to this key question is unclear. Ruling out the prospect of Britain becoming a strong proponent of ever closer union, there remain three potential routes down which Labour may take Britain in Europe—the choice among which will also depend on the decisions, preferences and views of

 Mission statement for the Foreign and Commonwealth Office (FCO),  May .  Speech by the Prime Minister, the Rt Hon.Tony Blair MP,to the Party of European Socialists Congress, Malmö,  June .  Speech by the Rt Hon. Gordon Brown MP,Chancellor of the Exchequer, to the Royal Institute of International Affairs,‘Britain leading in Europe’,  July .  Speech by the Prime Minister,The Rt Hon.Tony Blair MP,at the Lord Mayor’s banquet, London, Guildhall,‘The principles of a modern British foreign policy’,  November .  The Rt Hon. John Major MP,former prime minister,‘The evolution of Europe’, Conservative Party News,  March .

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Britain’s European partners. First, Britain could act on the rhetoric of the government and indeed play a leading part in promoting a new political vision and role for the EU in the twenty-first century, drawing on the lessons, successes and strengths of its domestic position. Second, it could be a constructive but pragmatic European player, offering elements of new thinking and positive ideas but without an overall vision and without being a dominant player.There are already signs of this approach.Third, Britain could—without replicating the bitter divisions of the preceding Conservative government—be a side player in the EU, left behind as Europe develops in directions it cannot support.There is some evidence in support of each of these three routes, but so far the second is the most appropriate characterization. In this article, we assess the main elements of Britain’s European policy under the Labour government, how it compares with earlier British approaches and how it relates to the challenges Europe faces.

A change of approach? In comparison to the previous administration, the current British government has adopted a new, positive tone in the EU.The importance of the change in both tone and behaviour should not be underestimated.The deep splits in the Conservative Party over Europe—splits that went to the heart of the cabinet— left Britain isolated in the EU, with its influence much reduced even in areas where it had common policy goals with its European partners.The fiasco over ‘mad cow disease’ in , and then Britain’s threat to veto all non-essential EU business in order to get the export ban on British beef lifted, must rank as one of the most damaging British foreign policy episodes in recent history. The obstructive behaviour of the Major government was an important factor leading to calls for more flexibility in policy-making in the EU; the other member states did not want future development of the EU held back by a negative, non- cooperative Britain. The election of the new Labour government was generally welcomed in the rest of the EU,enabling a swift conclusion to the intergovernmental conference and offering the likelihood of more positive, constructive and reasonable behaviour.The professional election campaign, Labour’s huge majority in the new parliament and the dynamism of the early months of the incoming government were both impressive and a cause of envy for many continental politi- cians on left and right alike. Britain also joined the ranks of the majority of EU member states which have centre or centre-left governments. However, given the range of political approaches among these broadly defined social democratic parties, this itself may be cause for conflict as much as for consensus. Despite pressure for change in the various manifestations of the continental social market model, there remain many differences between this model as a whole and the Anglo-Saxon economic approach. This has naturally led to caution over how Blair’s attempt to marry the two models—the so-called ‘third way’—

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differs from the economic policies and social inequalities associated with Thatcherism. The new government does differ from its predecessor in its overall approach to the EU. Labour is not plagued by serious splits on Europe: there is a broad consensus around the view that Britain should have a major role in the EU. There are dissenters on the single currency but, as discussed further below,these doubts are principally on economic rather than national sovereignty grounds. The three leading figures in the cabinet—Blair, Brown and Cook—all recog- nize that Britain increases its global status and influence by being a serious, influential EU player. At the same time, both Cook’s mission statement and Blair’s first major foreign policy statement have made it clear they still see Britain as a global player, particularly given its position as a permanent member of the UN Security Council, and its role in other bodies including the Commonwealth and the G.There is, therefore, a combination here of a modern approach, recognizing the importance for a medium-sized country like Britain of working with and through the EU, with a more traditional emphasis on Britain’s independent global role. It will be important to observe how the balance or tension between these two emphases develops. The new British government is not an uncritical supporter of all of the current EU structures and policies.The Prime Minister made this clear in his key Malmö speech to the Party of European Socialists Congress, where he criti- cized both old left and old right approaches, calling for a ‘third way’ in economic and social policy and criticizing EU institutions for being ‘out of touch, out of date, not responsive to the people’s needs’ Labour’s European rhetoric emphasizes the need to renew and redefine Europe, to create a ‘people’s Europe’, tackling the dominant challenge of European unemployment and making the EU relevant to European publics. Reducing levels of unemployment and remedying the democratic deficit are aims that will be generally supported across the EU, but Labour’s sometimes critical language and its emphasis on leading, on being a dominant player—and Cook’s ill-advised talk of triangles—have not been altogether welcomed. Concerns that Britain may seek to form a directoire of large EU states or adopt a balance of power approach have been fuelled by Labour rhetoric and signal an initial naiveté in the new government’s approach. And while the aims of creating employment and making the EU relevant are uncontroversial, differences of outlook surface in the specifics of the policy approaches. Britain’s overall approach to its six-month presidency of the EU, starting in January , is not likely to cause much dissension.The government has said its priorities during this period will be jobs, crime and the environment. It has promised to work to ensure successful moves towards the single currency, to give a ‘flying start’ to enlargement negotiations and to work to complete the single market.The Foreign Secretary has also announced that Britain will aim

 FCO Mission Statement,  May .  Blair,‘The principles of a modern British foreign policy’.  Blair, speech Malmö,  June .

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for the EU to coordinate its foreign policy more effectively in order to give Europe ‘more clout’ in the world. The impression given is one of a positive, constructive British government engaging with EU concerns and trying to inject new approaches and priorities into the discussion. However, once we consider both the content of specific policies and the extent to which the government has an overall conception of the political role or purpose of the EU, a less clear-cut picture emerges.

Employment as top priority While there is consensus across the EU that unemployment must be addressed, there is less agreement on specific policy approaches to the problem and the appropriate level for policy action.The Amsterdam treaty included for the first time an employment chapter, but there was disagreement over its contents and the types of policy approach to which it should refer. Like its predecessor, the Blair government insisted that the treaty’s objective should be ‘high’rather than ‘full’ employment, and that reference be made to competitiveness. It was also keen to include labour market ‘flexibility’ as one of the objectives of the new EU employment title, but in the face of opposition from the French socialist government, the phrase was changed to ‘responsive[ness] to economic change’. Overall, while it is recognized that the EU must be seen to be doing some- thing, individual member states are seen as primarily responsible for addressing unemployment; nor is there widespread support for increasing the EU’s budget for employment measures. The EU job summit in Luxembourg in November  agreed to institutionalize the exchange of best practice between member states, and to formulate recommendations and targets for tackling unemployment in each state.There is, however, nothing binding in these recommendations. Britain can support such an approach quite easily. Labour’s main ideas for tackling EU unemployment are, on the one hand, to work to complete the single market—thus improving competitiveness and, so the argument goes, prospects for employment—and, on the other hand, to increase flexibility and employability in labour markets. Labour’s signature of the EU social chapter at Amsterdam—applying EU social legislation to Britain in areas such as the working week and maternity rights—has lowered some of the ideological bar- riers between Britain and its partners erected by the previous government. Labour in power has also been careful to qualify calls for greater flexibility, aware of continental suspicions of the concept.The new buzz word—‘employability’—essentially refers to improving the skills, knowledge and adaptability of job-seekers. Aside from completion of the single market, Labour’s main emphasis is on each individual country adopting the right labour market policies (which it considers Britain already to have done); the British government

 Speech by the Rt Hon. Robin Cook MP,Foreign Secretary, Institute for European Affairs, Dublin:‘The British Presidency—giving Europe back to the people’,  November .

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is not arguing for new powers, policy competences or expenditure at the EU level. Irrespective of the merits of different economic views, it is difficult to argue that Labour’s emphasis on completing the single market and transferring employment best practice between member states represents either a radical new departure for EU policy or a radical new British approach to the EU. It would be a major shift if EU member states reorganized their social market sys- tems to take on the main elements of the British system. Not only is this unlikely, but if it were to happen (and some changes are under way), it would be a consequence of individual countries’ choices and not of EU policies or developments. Overall, the emphasis on the single market reflects a strong ele- ment of continuity in British European policy.

The single currency The Labour government has adopted a positive stance towards economic and monetary union (EMU), albeit one hedged in with provisos. The continued ability of the single currency to wreak havoc in British politics was seen very clearly in the weeks of confusion and contradictory messages from Labour’s spin doctors in the run-up to Gordon Brown’s definitive statement to the British parliament on  October . Meanwhile, EMU remains at the heart of the divisions splitting the Conservative Party apart. The government position is now that it is in principle in favour of EMU and that a successful single currency would be good for the EU and for Britain. However, it will recommend that Britain join EMU only if the economic benefits to the country are clear and unambiguous. On the basis of five economic tests—of convergence, flexibility, and the impact on investment, financial ser- vices and employment—the government has concluded that joining the single currency is not yet in Britain’s economic interests and is unlikely to be so until after the next general election (due at the latest in ). On the basis of this stance on EMU, the government is aiming to persuade business to prepare for membership of the single currency and to change public opinion in favour of entry. While all the public emphasis is being placed on the economic issues, there are central political questions and decisions here. First, it is clear that the longer Britain remains outside the single currency the more political influence in the EU it will lose—there is no prospect of Britain being the ‘dominant actor’, as Tony Blair intends, while the country is not in EMU. Second, the government cannot take Britain into EMU without winning the referendum on the question that it has promised.The decision to rule out early membership of EMU rests as much on the political calculation that a referendum cannot be won in the next one to two years as on any economic calculations.

 For full text of the statement see Financial Times,  October .

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Although there has been criticism of the government’s decision to rule out an early referendum, there are a number of important strategic advantages to waiting. Having declared support in principle, while ruling out immediate membership, the government can set about campaigning positively for the single currency (as it has already begun to do)—and argue that business should be ready by , without having to face a referendum immediately.The absence of an imminent decision also defuses much of the power of the media opposition to entry. The party political calculation is no less important. While the Conservative opposition has ruled out membership of EMU for ten years, the issue will continue to divide the party for as long as it is left open. In the process, the Conservative Party could lose the support of much of its traditional business constituency and of its pro-European wing. The argument is frequently advanced that a referendum held now could be won by a government at the height of its popularity, with a vast majority in parliament, and with the support of business and trade unions for EMU. However, not only has about  per cent of the public been consistently opposed to EMU, but the opposition to it reflects serious economic concerns about the impact on taxes and unemployment; the British public is particularly hostile to Brussels having a say over taxes. It may take some time to shift public opinion, but views could change more readily once the single currency has actually started and the UK is excluded. An election in  could be followed swiftly by a referendum, conceivably allowing Britain to join in .This assumes that business is ready to join (if not, entry could be deferred to /), that Britain continues to meet the economic criteria, and that at some point it joins the new exchange rate mecha- nism. Whether any or all three of these assumptions will prove correct is far from certain. Furthermore, if public opinion remains hostile, the single currency is liable to dominate the next election and could lead Labour to be cautious on Britain’s readiness to join, possibly giving rise to a considerable time lag before a referendum.While the Chancellor is now calling for business to prepare for entry, the Prime Minister’s message remains somewhat more reserved: ‘[Britain’s] position will be judged on a hard-headed assessment of the economic benefits.They must be clear and unambiguous.’ Overall, the new government’s strategy represents a substantial change in Britain’s approach to the single currency.It opens up the possibility that Britain could join shortly after notes and coins are in circulation.The decision to join or remain outside the single currency area will be a defining one for Britain’s position in the EU. If a renewed integration dynamic develops in the wake of the single currency, Britain may continue to find itself at odds with EU developments; however, a broad EMU does mean that countries participating

 British Social Attitudes Survey , Social and Community Planning Research, reported in An equal partner: Britain’s role in a changing Europe, final report of the Commission on Britain and Europe (London: Royal Institute of International Affairs, ).  Blair,‘The principles of a modern British foreign policy’.

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will have a range of views on further EU development, especially in the context of enlargement, and Britain need not be isolated. Timing is critical. Joining three years late, in , would not be particularly damaging economically; but, notwithstanding the welcome for its new constructive stance in the EU, Britain’s political influence will continue to fall for so long as it does not participate in this key policy.As policy discussions, bar- gains and coalitions develop around EMU, these will impact on other areas as deals are done. Delay in joining until / would leave Britain increasingly marginalized in the EU, in the company perhaps of Denmark and the central and east European applicants/entrants.

Enlargement Labour was already emphasizing its strong support for the enlargement process while in opposition. Enlargement negotiations for five of the central and east European applicants, as well as Cyprus, will start during the British presidency, together with the opening of the so-called European Conference in London for all the current applicants to the EU, including those not yet in negotiations. Britain has generally supported the approach to enlargement set out in the European Commission’s document Agenda . It has argued in favour of the Commission’s approach of starting negotiations only with those countries that are sufficiently advanced, and also stresses the importance of safeguarding the single market and the need for policy reform, particularly of the Common Agricultural Policy (CAP). In common with most other member states, Britain is not arguing for an increase in the budget. Britain has no substantial economic interests in central and eastern Europe, nor does it face immediate border issues; its support for enlargement, is therefore, broadly based on more general geopolitical considerations concerning sta- bility in Europe and adapting European institutions to the post-Cold War environment. Despite these underlying motivations, the British government has as yet developed no overall political strategy for enlargement, nor does it have a clear view of the political role or institutional and organizational structure of an EU with  or  member states. It is not alone in this. Faced with a lack of clear political leadership from the member states on enlargement, the European Commission has adopted a fairly pragmatic, tech- nocratic approach to the subject.This approach stresses the need for applicant countries to meet objective criteria before negotiations start and before entry can occur; the Commission has also laid out some of the policy reforms that will be necessary.While this should be adequate to ensure the commencement of negotiations with some of the applicants, commitment to the process of enlargement varies among the existing member states. Even countries such as Germany with strong economic and geopolitical interests at stake are not push-

 Agenda , European Commission, Bulletin of the European Union, Supplement , .

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ing for swift enlargement; the initial accessions could be as late as , with subsequent accessions occurring over the next decade. If the enlargement process is to stay on track, if adequate support and commitment is to be offered to all the current applicants, and if the EU is to face up to the major challenges of reform and restructuring required, then more political momentum and leadership will be necessary. There is a potential role for Britain here in maintaining the EU’s commitment to enlargement and in developing a genuine strategic approach to the new,post- Europe. Britain shares neither the ambivalence or doubts about enlargement felt by some member states, nor the immediate interests and concerns of those in closer geographical proximity and with greater economic interests.Thus it could be in a position to try to mediate between the conflict- ing interests of different member states. However, despite Labour’s emphasis on enlargement—and on leadership—there is little sign as yet of this happening. Labour’s policy on enlargement is essentially a continuation of that of the previous government. It emphasizes the need for CAP reform and for bud- getary stringency while ignoring or downplaying the institutional issues involved, and without developing any overall strategic vision of the twenty-first century EU.As Gordon Brown said in July , in a speech on Britain’s role in Europe, ‘it is solving the problem of our post-imperial and post-Cold War role that is the real challenge for Britain as we look towards the twenty-first century’. Developing an overall strategic approach towards enlargement and a view of the political role of the enlarged EU would provide a major contribution to addressing that challenge. However, doing this involves at least three main requirements. First, Labour would have to address the question of institutional and organizational structures: will the enlarged EU be a multi-tier, flex- ible structure? How might this work, and what are the implications? Secondly, Labour would need to develop a political and not simply an economic con- ceptualization of the EU: what is the political role and purpose of the twenty- first century EU, and what alternative political dynamics to the integration dynamic can be proposed? Third, to take a lead in promoting a committed and strategic approach to enlargement, Britain will need to show an excellent grasp of the subtleties and complexities of building coalitions and alliances within the EU. Responding to these demands would be extremely difficult but since Britain will be a late and somewhat reluctant adherent to EMU, the critical issue of enlargement provides the appropriate area for Britain genuinely to redefine its approach to, and role in, the EU.

 Heather Grabbe and Kirsty Hughes, Enlarging the European Union eastwards (London: Royal Institute of International Affairs/Pinter, ).  Brown,‘Britain leading in Europe’.

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Institutions Although the new Labour government moved swiftly to shift Britain’s position in the intergovernmental conference, thus facilitating an agreement at Amsterdam, it clearly feels irritation at what it sees as the obsession with institutional issues in the EU: in Robin Cook’s words,‘the EU seems to spend too much of its time discussing things that do not touch the people’s lives, abstrac- tions and institutions rather than a concrete agenda’. Nonetheless, it is equal- ly clear, particularly in the case of enlargement, that there are serious institutional issues that need addressing. Furthermore, given Labour’s dissatisfaction with the institutional issues and its stress on a ‘people’s Europe’, this represents another area where new ideas and approaches would be valuable. Labour’s approach to institutional issues is different from that of the previous government. At Amsterdam, Britain supported an increase in powers of the European Parliament and supported an extension of qualified majority voting (leaving Germany,to general surprise, as the country blocking some of the proposed extensions). Britain was, however, cautious on both the principle and specifics of flexibility in decision-making, and maintained its traditional position of continued opposition to the integration of the Western European Union into the EU.In the important and rapidly developing policy area of borders and immigration, Britain remains on the outside of the continental consensus—with unanimous agreement of the participating countries necessary if Britain ever did wish to join the Schengen area within which EU citizens may cross national frontiers without passport control. The government returned from Amsterdam proclaiming a British success story both in the measure of agreement reached and in the opt-outs (which it calls opt-ins) and the vetoes it achieved; the failure of Amsterdam to take even the first institutional steps necessary for enlargement did not loom large in the government’s view. Overall, while Britain will remain cautious on institutional issues, it is clearly now more in the mainstream and not isolated. With the IGC ended, institutional issues are no longer on the short-run agenda; but these matters will resurface in the context of EMU and enlargement, and Britain needs to start to develop new thinking in this area. A further reason why Labour might have been expected to give more attention to institutional issues is precisely its emphasis on a people’s Europe.While the government’s current approach is that the excessive institutional focus con- tributes to the ‘democratic deficit’ and that the British presidency will focus on ‘people’s issues’, notably jobs, crime and the environment, it had in opposition placed more emphasis on democracy and openness.There is substantial scope to improve both in the EU, but this requires attention both to institutional structures and to operating procedures. Perhaps still wary of the sovereignty arguments which plagued the last government, the new one does not at pre- sent appear to be focusing on these issues.

 Cook,‘The British presidency—giving Europe back to the people’.

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In the long run, British constitutional modernization could play a crucial role here. Already there are signs that Labour’s domestic constitutional agenda is connecting with European policies. The incorporation of the European Convention on Human Rights into domestic British legislation will mark a further alignment of the British legal system with European norms.As a possible forerunner for proportional representation (PR) in British national elections, the government will apply PR in the British elections to the European Parliament in . Finally, and most importantly, the popular agreement to devolve power to the regional level with a parliament in Scotland and an assembly in Wales may,over time, lead to a substantive shift in attitudes towards transferring powers of governance both up to the EU and down to the regions. This could transform both the politics of Britain in the EU and public attitudes towards the sovereignty question, but what matters is how long it may take.

Public opinion and the media Given the importance in domestic politics in recent years of the bitter and divi- sive debate over Europe within the Conservative Party and government, it is relevant to ask to what extent Labour’s initial European policy approach reflects caution and the aim of slowly building up a new consensus on European issues. On the single currency, this is clearly the case: the government has embarked on a strategy aimed at building up a broad base of support for EMU, changing public opinion and (if possible) sidelining the Eurosceptic media. On other issues, survey evidence suggests that public opinion, despite recent debates, is not generally hostile to the EU. However, although British membership of the Union continues to be supported, there are widely differing views as to whether there should be more integration or a return to a trade bloc. This disparity of opinion may be problematic in trying to define a new overall approach. On specific policy issues, though, opinion is often much less divided, and reasonably pragmatic.Thus, there is support for the EU having a role not only in trade but in the control of crime and the protection of the environment.There is support for the role of the European Court of Justice and welcome for the right to work in other countries.The greatest opposition is to Brussels having a role in taxation—and the greatest fear is that EMU may mean precisely this. Overall, this suggests that the government may expect to receive public support for a pragmatic and constructive approach to the EU.It also suggests that there is scope to try to define a more ambitious, overarching political view of the purpose of the EU, building on the areas of policy consensus. The advantages of a pragmatic approach rather than an overall European vision are clear in terms of consensus but not so compelling in terms of influence. Whether the government can find an approach that receives general support in

 British Social Attitudes Survey .

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the UK and provides a basis on which the UK can play a serious role in the EU is the challenge.

Conclusion The Labour government has moved rapidly in its first six months in office to establish a more positive and constructive British approach to the EU.There is both substantial continuity in policy with British approaches in the past, notably in the emphasis on the economic aspects of the EU and on economic liberalism, and development of some new policy approaches.While the positive stance on the single currency represents a big shift, the current position nonetheless remains one of maintaining the opt-outs on both the single currency and the border controls.The new government, while showing traditional British reluctance to focus on institutional issues, is much more prepared than the Conservatives to agree to some institutional and social developments, and is more at ease discussing a range of questions, including human rights, the environment and crime, at European level. The issue at the top of Labour’s European agenda—jobs—reflects again a fairly traditional British approach with its emphasis on the single market and on responsibility lying with individual member states. The picture that emerges from this analysis is principally one of Britain play- ing a constructive and pragmatic role in the EU. However, Labour’s aim of being a leading player is severely constrained by Britain’s non-participation in EMU; and its rhetoric of a people’s Europe needs more policy substance to underpin it. If Britain maintains its EMU opt-out in the medium term, it will find itself once again on the sidelines in Europe. Labour—despite its support for enlargement—has yet to develop an overall political vision of the role and structure of the EU in the twenty-first century. Britain’s future role in the EU will depend on when and whether it participates in EMU, what sort of political strategy it does develop, and how strategies towards the EU develop in other member states. While the results of Amsterdam suggest little support for substantial further steps towards integration, debate on many of the key issues on the EU’s agenda—EMU, enlargement, borders—could renew integrationist pressures which Britain would find difficult to accept. Alternatively, if integrationist attitudes are changing—notably in Germany—the EU will need to develop a different political strategy and vision; the challenge for Britain will be whether it can make a significant contribution to this process.

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