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Can John Major Keep Playing Both Sides Of The Channel?


International Outlook

CAN JOHN MAJOR KEEP PLAYING BOTH SIDES OF THE CHANNEL?

In late November, a year after Margaret Thatcher's shocking resignation as Prime Minister, her successor, John Major, will give an address in the House of Commons that could seal his own political fate. At the end of a two-day debate on Britain's role in Europe -- a subject that helped bring down the Iron Lady -- Major is expected to spell out his personal vision of British relations with the Continent.

So far, Major's smooth negotiating has mollified his European counterparts and his Conservative Party colleagues at home. But with a crucial European summit looming on Dec. 9-10 at Maastricht in the Netherlands, and an unofficial election campaign under way, he faces daunting challenges. At issue is not just whether Britain becomes a fully paid-up member of Europe -- too complex a question for most voters -- but also whether Major can exert firm control over his own party and avoid a fatal row. "The government must lead on this," says pro-European Tory MP Hugh Dykes, who doesn't think Major can afford to dance around the question anymore.

Aides say Major may burnish his European credentials by agreeing to a treaty on monetary union that commits Britain to a single European currency and central bank later in the decade. But he will provide a sop to die-hard Thatcherites by insisting on an escape clause requiring Parliament's endorsement.

BRUISING BATTLE. Major faces a much tougher dilemma in deciding how to act on a controversial European political treaty. This package would give European institutions in Brussels a far greater say on labor relations and environmental regulations in Britain, as well as in defense and foreign policy. Major will seek a compromise that will give these Eurogroups more power -- but within strict limits, insiders say.

In this way, he hopes he can carry along Thatcher, who is expected to inveigh against too tight a union in the upcoming Commons debate. But if he fails, he risks both a bruising internecine battle in his party and a wider gulf opening up between Britain and the Continent. Ultimately, it could mean that France, Germany, and other Continental players go their own course toward a deeper form of integration, leaving Britain an also-ran in Europe.

Deft handling of the hot Europe question is crucial for Major, because he is being saddled with several highly unpopular Thatcher legacies -- among them the botched reforms of the health system and sell-offs of state industries. With a close eye on a general election, which must be called by next June, the Tories' once-tightfisted financial management is giving way to steep spending increases to try to lift the country out of recession and win votes. On Nov. 6, Chancellor of the Exchequer Norman Lamont announced a $37 billion spending increase for the coming fiscal year, doubling the deficit, to $35 billion. There is, however, some concern that these measures will undo British efforts to bring its inflation in line with other EC members.

While the first glimpses of recovery can already be seen, unemployment, now at 8.6%, continues to rise, and any bounceback from the 2% decline in gross national product this year is likely to be slight. In addition, the banks, staggering under bad loans, may be unable to finance a strong recovery.

But the latest polls show that Major still has a good shot at winning his first general election -- if he can survive the next couple of months of jawing over Europe. The key, says Tory loyalist Sir Marcus Fox, is having favorable economic results to show the electorate soon. While he is doing that, Major will have to find a position on Europe that doesn't split his party -- or deal Britain out of Europe's future.EDITED BY STANLEY REED; Richard A. Melcher in London


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