Analysis: Britain is key to euro's future

BRUSSELS, Dec. 30 (UPI) -- (This is the fourth story in a series on the introduction of the euro, the European single currency, on Jan 1.)

While Brussels and other European capitals greet the arrival of the euro with fireworks and other celebrations at midnight Monday, the British government may be bracing itself for fireworks of a different kind.

This follows the apparent confirmation in the British press this week that Prime Minister Tony Blair is embarking on a "secret" campaign to get the British people to accept both the euro and the European Union.

It's an open secret in Brussels that London had engaged top public relations specialists. The British ambassador to the European Union, Sir Nigel Shinewall, gave a party in the run-up to Christmas for a new, purportedly independent magazine aimed at the British market that sets out to "demystify" the European Union to businessmen.

"There is clearly a game plan to sell the euro to the British and a massive effort is to be launched in the New Year and the European Union is working closely with 10 Downing Street," an EU official told UPI, referring to the official residence of Tony Blair.

The British government is reported in a largely hostile press to be planning changes to school curriculum's in order to win over young people. Peter Hain, Britain's Europe Minister has been told by Tony Blair to "go out and sell the euro". According to press reports this weekend the British government is planning to spend millions overcoming public opposition.

Unfortunately, Germany's finance minister Hans Eichel has chosen this week to back the creation of a "Europe tax" for the 300 million citizens in the 12 EU member countries in the euro zone -- an endorsement which, observers say, is not calculated to make any easier Blair's PR task of converting a largely euro skeptical British public to the new currency whose notes and coins come into being on Jan 1.

Not that the Europe tax is a new idea. Romani Prodi, the President of the European Commission -- the European Union's executive branch -- has mentioned it before. But Prodi has a reputation for sometimes not getting the facts quite right, much to the irritation of the European Union's 15 member states.

Eichel admitted that it is a difficult issue, because: "It strengthens spending discipline in Brussels if responsibility for expenditure and income is put together," he said.

Why Eichel should have announced his support for a Europe tax at this time is a puzzle. But Prodi's public utterances on a Europe tax now apparently supported by Germany will serve to confirm British fears that rather than Mr. Blair's "Europe of cooperating nation states" they will soon be handing over sovereignty to a European super state.

Derek Thorpe a businessman in the South of England said Saturday: "I and many other business people have joined the League for Independence which aims to recover sovereignty from Brussels not to hand more over. We don't want the euro and we don't want to be swallowed up in a European super-state run from Brussels.

But opponents of British entry may be up against more powerful forces than they realize. Ever since New Labour took power in Britain the country's posture towards Europe has changed from one of hostility to one of dialogue. It is unclear whether Tony Blair is in favor of a federal Europe or not. Currently he says not, and certainly the Labour party he leads has its fair share of opponents to Europe.

A key plank in Blair's relation with Europe has been the establishment of closer relations with Germany, to some extent splitting the Franco-German axis that set EU agendas in the days of Conservative leader Margaret Thatcher.

Recently the German Chancellor Gerhard Schroeder was reportedly urging Britain, the world's fourth largest economy to join the euro. This can be read as a desperate plea in the light of the gloom facing the German economy.

German economic prospects are at their most bleak since unification that led to recession in the early '90s. A survey by the German economic institute shows that business leaders believe that production and sales will fall in 2002, and this conflicts with European Central Bank forecasts that euro zone recovery will begin in early or mid-year.

Underlying Germany's economic prospects is a failure to restructure and end outdated industrial practices. The German government successfully blocked the EU takeover directive, which would have allowed hostile takeovers of German companies.

As a Brussels based economist, who preferred not to be named remarked last week: "You could buy up Germany quite cheap based on market statistics but they have protected themselves from being taken over and that is not good".

Now the country is the engine of the euro zone and German problems are taking some of the shine off the New Year celebrations for the new currency.

There is no secret that the euro is designed to promote what Romano Prodi loves to call "ever closer European Union". The harsh reality as E-Day approaches is that Britain is key to the euro's future and the biggest ever single currency experiment could fail unless Briton's can be persuaded to take part.