Blair forced to go slow on joining euro

With Kosovo crisis over, Britain's prime minister finds trouble on

Alarm bells are ringing at 10 Downing Street, giving a wake-up call to British Prime Minister Tony Blair.

Opposition Conservatives, after repeated failures over the past two years, appear to have hit on an issue in tune with British voters: rescuing the humble pound sterling.

Following his ruling Labour Party's dismal showing in elections for the European Parliament June 10, Mr. Blair has been forced to back away from his commitment to the single European currency. He has also made it clear he now has no intention of leading a pro-euro referendum campaign in the near future.

The British leader signaled his wait-and-see stance in interviews at the Group of Eight summit of leading industrial nations plus Russia in Cologne, Germany, over the weekend. It would, he said, be "daft" for Britain to join the single currency straight away. He called for further economic reform in Europe before Britain can contemplate membership. He was also critical of the Conservative view, however, that Britain should remain out of the single currency for at least a decade.

The remarks were seen as a response to the European Parliament vote, in which the Conservatives won 36 seats compared with Labour's 29. It was Labour's worst performance since 1983.

In Cologne, Blair denied suggestions that he had "lost focus" on domestic issues because of his preoccupation with the Kosovo crisis. But he conceded that Kosovo had prevented him from playing a prominent part in the European election campaign.

Anxious over a drop in support in Labour Party strongholds, Blair has told key advisers that in the future he will now give top priority to domestic affairs.

And in an alarming development for a leader who has consistently notched up popularity ratings near 70 percent or higher, Blair has come under fire from the leader of Britain's Trades Union Council. In an interview June 20 with London's Independent newspaper, John Monks accused the British leader of treating his party's loyal voters like "embarrassing elderly relatives."

Mr. Monks warned that Labour's political troubles would "intensify" if the party kept wooing the middle-class voters it attracted in the 1997 general election and failed to concentrate on traditional working-class and blue-collar support.

This year, Conservative leader William Hague and his party campaigned on a strongly anti-euro, pro-pound platform, while Blair argued that Britain should join the single currency "at the right time." This was widely interpreted as meaning soon after the next general election, due in two years. A majority of British voters, however, have signaled that they do not favor joining the euro in the forseeable future.

Lord Owen, a former Labour foreign secretary and founder of the pressure group New Europe, which opposes joining the single currency, told the London Times June 21 that Blair would abandon his pledge to call a referendum on the euro in the next parliament. "It's because he knows he could not win it," Lord Owen said.

Many in Britain's business community are also making it clear that joining the euro, which has declined in value since its launch Jan. 1, isn't a good idea. A survey published June 21 by the influential Institute of Directors in London shows that 30 percent of directors believe Britain should "probably never, or never" join the European single currency. Another 25 percent ruled out membership in the "foreseeable future."