Blair to promote UK's pro-growth agenda across EU

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Blair Seizes on EU Deadlock to Promote U.K.'s Pro-Growth Agenda

June 16 (Bloomberg) -- U.K. Prime Minister Tony Blair is seizing on the European Union deadlock over the constitution and budget as a chance to push British pro-business and Free-Market policies on the slower growing continental economies.

With French President Jacques Chirac hobbled by France's veto of the constitution and polls predicting the ouster of German Chancellor Gerhard Schroeder in elections in September, Blair comes to today's EU summit in Brussels with more bargaining power than ever during his eight years in office.

"You can argue that Chirac is a lame duck, Schroeder is a dead duck, and Blair has the game for all himself,'' Alexander Stubb, a Finnish member of the European Parliament, said in an interview. ``This is where we really, really are calling for Blair's leadership. It is his 1,000-pound chance.''

Declaring a ``sharp disagreement'' with Chirac over EU priorities, Blair this week called on EU leaders to drop the debate on the constitution and gear the bloc's 106 billion euros ($128 billion) in annual subsidies toward research and business promotion, saying this is Britain's recipe for faster growth.

``An awful lot is going to hang on how well Blair plays his hand and how badly Chirac plays his,'' Richard Whitman, head of the European program at the Royal Institute of International Affairs in London, said in an interview. ``There's going to be blood on the carpet. The question is whose blood?''

Deregulation

Blair is trying to make the French, German and Italian economies look more like Britain's, which the European Commission estimates will expand 2.8 percent in 2005, outpacing the 12 countries using the euro for the 13th year. Blair says a flexible labor market is why the commission says U.K. unemployment will average 4.7 percent in 2005, compared with 10.4 percent in Germany and 10.1 percent in France.

After coming to office in 1997 with the promise of putting Britain at the ``heart of Europe,'' Blair faced growing opposition to close cross-Channel ties at home and split with Chirac and Schroeder by joining the U.S. in the Iraq invasion.

The three patched up their differences in February 2004 in Berlin by laying out a pro-growth manifesto in the first of what was intended to be several meetings to steer policy in the now 25- nation EU. The triumvirate hasn't met since.

Reelected to a third term in May, Blair doesn't plan to run again, increasing his political leeway. The French and Dutch vetoes of the EU constitution also assisted him from having to hold a referendum in the U.K.

Treaty Pause

With polls showing the risk of more no votes in Luxembourg, Denmark and Ireland, momentum is growing for EU leaders tonight to declare a ``pause'' in the ratification process. European Commission President Jose Barroso joined Blair in calling for a delay yesterday.

Editor's Note : Blair right again, Chirac and Shroeder wanted to continue and bulldoze it through. More reasons they are bad leaders.

``Some reality had now dawned'' on European politicians who are trying to rescue the constitution, Blair said yesterday. French Prime Minister Dominique de Villepin said France, originally in favor of continuing with ratification, would now respect the will of individual governments.

Blair, who will get increased power to shape the EU's agenda when serving as the bloc's president for the second half of the year, proposes boosting growth by deregulating the service industries that make up two-thirds of the $13 trillion EU economy.

Chirac and Schroeder have teamed to gut the services initiative, and fears of low-wage workers from eastern Europe stealing jobs helped defeat last month's EU referendum in France.

Setting the Agenda

Calling for a ``political direction on Europe,'' Blair told the U.K. parliament yesterday: ``People will find it difficult to vote for the constitution or other things that are important to the political class but don't necessarily answer people's concerns.''

France garners a quarter of the EU's 44 billion euros in farm subsidies, twice the French share of the bloc's population. French leaders say the handout is justified because France has a fifth of the EU's land under cultivation.

After bowing in 2002 to French demands for a freeze on farm spending during the 2007-2013 EU budget period, Blair over the past two weeks has gone on the offensive against the agricultural programs.

The seven-year budget is on the agenda for the second day of the summit. The chairman of the talks, Luxembourg Prime Minister Jean-Claude Juncker, said yesterday that he is ``pretty sure'' there won't be an agreement.

Stalemate

``Now may not be the time to produce a deal,'' former U.K. European Affairs Minister Denis MacShane said in an interview. ``People need to realize that the budget for expenditure was devised for the Europe of the 1960s and 1970s, but not for today's Europe, which needs to spend on research and infrastructure, not cows and wine.''

Blair is also reacting to Chirac's attack on Britain's rebate from the Brussels budget, won by Margaret Thatcher in 1984 on the grounds that the U.K. got only a small share of EU farm aid, then the biggest chunk of European spending.

One area where the U.K. may give ground on the 5.2 billion- euro rebate would be to waive money taken from the 10 countries which joined the EU last year. That was proposed this week by EU Trade Commissioner Peter Mandelson, a former member of Blair's cabinet.

"Chirac is in trouble with these new countries,'' Hugo Brady, an analyst at the Centre for European Reform in London, said in an interview. "He's been quite arrogant toward them, and also fixed the agriculture spending before enlargement.''

France benefits from a decision to deny the new countries their full share of farm aid until 2013, and Chirac told the eastern European leaders who backed the Iraq war in 2003 that they ``missed a good opportunity to be quiet.''