GERHARD SCHR�DER inflamed
the fierce British debate over the euro last night by
suggesting that the European Union should determine taxation
policies in member countries.
In an interview with The Times that will be used as
ammunition by the anti-euro campaign the German Chancellor
called for the �Europeanisation� of �everything to do with
economic and financial policy�.
At the same time Jack Straw refuelled the domestic argument
by suggesting that the ultimate decision on the euro would be
for the Cabinet and not the Treasury.
The Foreign Secretary said that even if the Treasury failed
to deliver a �clear and unambiguous� verdict on the five
tests, the Cabinet could still take a political decision to
call a referendum.
Speaking to BBC News 24�s One to One programme, Mr
Straw said that the extent of the Cabinet debate would depend
on the �complexity and ambiguity of the issues�.
He added: �If the choice is a very tricky one and there�s
ambiguity in it, then you will spend time and there is a point
where there has to be a political decision. It�s a decision
informed by an economic assessment . . . but everyone knows
that economics is a branch of political science.�
In his interview with The Times, Herr Schr�der,
knowing that his words were controversial, suggested that
there was a need for more �co-ordination and co-operation,� in
economic affairs, words which he said should be used in order
to �soothe British feelings�.
He was clearly referring to �harmonisation� of financial
areas, presumably including taxation and social security.
Tony Blair successfully fought at the Nice summit in
December 2000 against a prolonged campaign to end the British
veto on tax and social security.
Herr Schr�der�s remarks will bolster the claim of the
sceptics at that time that Germany and France would in future
try to reopen the issue.
Herr Schr�der injected further contention by suggesting
that euro membership meant signing up for political union,
which ministers have always denied and the sceptics have
always claimed. He added fuel by suggesting that Mr Blair was
the man best equipped to lead the country into the euro.
Herr Schr�der declared in his interview: �I am absolutely
sure that there is nobody who can deal with the process of
entry � which I would welcome � better than Tony Blair.�
But the Chancellor stressed that euro membership meant
signing up for political union. �European monetary union has
to be complemented by a political union � that was always the
presumption of Europeans including those who made active
politics before us.�
For the past four years the Chancellor has taken a rather
pragmatic view, avoiding any hint of a European vision. This
was left to his Foreign Minister, Joschka Fischer. Now the
Chancellor has abandoned his cautious tack and is declaring
Europe to be one of the main pillars of his next term of
government � if he wins the general election in September.
The reason, he said, is that the constitutional convention
in 2004 � determining the continent�s power lines after Europe
has expanded eastwards � and many new entrants will change
Europe as surely as the introduction of the euro has done.
�These are the big tasks in the coming decade,� he said,
making plain they were tasks in which Germany should play a
leadership role. Germany was historically close to Eastern
Europe and is chairing the constitution conference.
Britain, he suggested in the interview, was essential to
this reordering of Europe. Certainly he was willing yesterday
to adapt his language to reduce the possibility of domestic
friction in Britain on key European controversies � and thus
allow it to take part in the mainstream debates.
His most controversial words were on the economy. �What we
need to Europeanise is everything to do with economic and
financial policy. In this area we need much more, let�s call
it co-ordination and co-operation to soothe British feelings,
than we had before. That hangs together with the success of
the euro.�
Before his remarks on the euro Mr Straw yesterday accepted
for the first time the idea of a European constitution, at
which British politicians have previously balked, He said:
�There is a case for a statement of principles, which sets out
in plain language what the EU is for and how it can add value,
and establishes clear lines between what the EU does and where
the member states� responsibilities should lie.�
His words on the euro echo those of other leading ministers
who are known to be concerned that Gordon Brown's caution
could rule out entry into the euro until after the next
election.
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