Britain may yield on EU reforms

Tony Barber says IGC success is crucial if Europe is to be united

A CONVERTED Fiat car plant in Turin is the unlikely venue for the launch next Friday of the European Union's latest marathon effort to redesign its institutions and gird itself for the 21st century.

John Major, President Jacques Chirac, Chancellor Helmut Kohl and leaders of the 12 other EU states will attend the opening ceremonies at the factory- turned-conference centre, before handing over the real work to foreign ministers and teams of specialists in such abstruse matters as "variable geometry" and "qualified majority voting".

The negotiations, known formally as an Inter-Governmental Conference (IGC), are expected to last for more than a year - beyond the UK's next general election - and all 15 states agree on the basic objective: to reform the EU's institutions and working procedures so that the union can expand in the next century to admit as many as 12 new members, ranging from Cyprus, the Czech Republic and Estonia to Bulgaria, Poland and Slovenia.

It is on the nature and extent of reform that the 15 member states are divided - and not for the first time Britain is regarded as the one most resistant to radical change. However, Britain's desire to see the EU embrace the former Communist countries of central and eastern Europe is so strong that the next government - be it Tory or Labour - may be tempted to cut a deal and make concessions to its partners on deeper EU integration.

This could mean more decisions taken by majority votes in the Council of Ministers, representing national governments; more powers for the European Parliament, though without its turning into a genuinely pan-European legislature; and more harmonisation of judicial and domestic policy affairs. Given the scale of Europhobia in the Tory party, and the latent Euroscepticism in Labour ranks, it may seem absurd at this point to predict that Britain will make such a deal.

But the lesson of history since 1973, when Britain joined the then European Economic Community, is that British governments tend eventually to fall into line, if after a little kicking and screaming. To take one example: although Britain secured an opt-out at the 1991 Maastricht conference from joining a single currency, it nevertheless agreed that other qualifying countries could start the project in 1999.

This was a momentous decision, since monetary union is almost certain to bring with it some form of closer political union. It was a price Britain had little choice but to pay, in return for the earlier EU decision to create the Single European Market - a much-valued prize in free-trading British eyes.

Some Continental diplomats are gloomily predicting deadlock at the IGC, with British recalcitrance and Mr Major's tiny parliamentary majority to blame. But the basis for an IGC agreement is already emerging in outline: in return for French and German concessions on specific policy issues, Britain will yield ground on institutional reform.

Understanding how such a deal might be reached requires a look at the attitudes of EU member states to IGC topics. On the underlying issue, enlargement to the east, all EU states are nominally united, but Germany and Britain appear more enthusiastic. For Germany, this is mainly because it views enlargement as a way of stabilising its eastern flank. For Britain, it is partly for EU reasons - the bigger the union, the less centralised and Brussels-driven - and partly for wider security reasons.

"The European Union is the basis upon which we must consolidate democracy and prosperity across the whole of Europe, healing the historic divisions which scarred our continent through the Cold War, and cementing peace," said the Government White Paper on the IGC. "Enlargement is at once an historic responsibility for Europe and a long-term British interest."

Of course, many EU states hold that enlargement cannot proceed unless the IGC agrees steps to closer union among the current 15 members. Germany and the Benelux countries are among those advocating a bigger role for the European Parliament, pressing the case for a common foreign policy, and generally receptive to the idea of pooling sovereignty in pan-European institutions.

France has adopted a more ambiguous stance. On the one hand, the Gaullist- led government has stressed the importance of the nation-state and the need to restrict the powers of the European Commission and Parliament. On the other hand, France is keen that those countries favouring deeper integration in certain areas, such as monetary union, should be allowed to go ahead. From the French point of view, the value of such a "two- speed Europe" is that it would keep France and Germany locked together - a fundamental aim of French policy since the 1950s.

Britain shares France's doubts about giving the Parliament more powers, but suspects that Paris may swallow some of its objections in order to keep Germany on board for the single currency. Where Britain is more isolated is on the question of qualified majority voting.

Under this system, the 15 EU governments have 87 votes distributed among them according to their size (Britain, France, Germany and Italy have 10 each, little Luxembourg only two). Sixty-two votes constitute a "yes" decision by the Council of Ministers; 26 votes form a blocking minority.

The White Paper says the Government will oppose an extension of qualified majority voting, even though it is already used to decide policy in such important areas as agriculture and external trade. However, like France and Germany, Britain recognises that unless the system is changed, the voting influence of the largest states will steadily diminish as more and more small countries join the EU.

The answer is for the largest states to be given more votes to reflect their size. If, however, Britain supports this reform, it may have to trade an extension in qualified majority voting in return. But on some institutional questions, it should be easier for Britain and its partners to reach a compromise.

All see a need to reform the influential Council presidency, which at present is held every six months by a different EU state. In a 27-member union, Britain, France and Germany would get their turn only once every 13 years or so, the same as Lithuania or Malta. Britain has suggested "team presidencies" of three or four countries, holding office for a year or more.

The European Commission, which now has 20 members for 15 states, already looks unwieldy. A 27-member EU, with 33 Commissioners, would be even worse. But whereas Britain appears to favour enhancing the influence of the larger countries at theCommission, it may come under pressure to accept a system allowing the Commission president (Jacques Santer, at the moment) to appoint his team on the basis of talent rather than nationality.

British concessions on such issues could be traded for an agreement by other EU states not to press too hard for a common defence policy diluting the role of Nato and national European governments. Reform of the Common Agricultural Policy and of the "structural funds" programme, under which rich EU states transfer money to poor ones, could also be offered to Britain, even though these matters are strictly speaking not up for negotiation at the IGC.

But the bottom line is that the Inter-Governmental Conference simply must succeed if the EU is to achieve the historic feat of uniting the western and eastern halves of Europe. The implications of failure are so enormous - a divided Europe, a return to nuclear-tipped confrontation - that history will not forgive Britain and its partners if a solution eludes them.