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Britain: As Labor Smells Blood, Foreign Companies Tremble


International Outlook

BRITAIN: AS LABOR SMELLS BLOOD, FOREIGN COMPANIES TREMBLE

Time is running out for John Major. The British Prime Minister wants to postpone national elections until May, 1997, when his five-year term is up. By then he hopes an improving economy will change the minds of voters who now rate him one of the least popular leaders in British history. But the hapless Major may not be able to last that long.

Two members of Parliament from his Conservative Party recently deserted. Several others have died in the past year. Major's majority in the 651-seat House of Commons is now down to five votes. February special elections will likely cut it to three. It seems only a matter of time before the harried Prime Minister loses his majority or a confidence vote and is forced to call a snap election that he is almost certain to lose. The Conservatives trail Labor by 30% in opinion polls.

VULNERABLE. At stake is Britain's attractiveness as a low-cost base for American, Asian, and Continental companies. If he becomes Prime Minister, Labor leader Tony Blair is likely to adopt a minimum wage as well as the Maastricht Treaty's costly pro-worker rules. Thousands of foreign companies with some $100 billion in direct investments in Britain are watching closely. So are the 14 other European Union states, because a Labor government is likely to favor tighter ties with Europe.

Major's precarious position leaves him vulnerable to special interests. For instance, he increasingly needs the votes of nine Protestant Ulster Unionist MPs. But their leaders recently warned that their support cannot be taken for granted. That means the Northern Ireland peace talks are likely to be held hostage to Unionist demands.

Seeing Major totter, Labor's Blair is closing in for the knockout. He misses no chance to issue sound bites about the Tory disarray. "It is difficult to see how [the government] can stumble and stagger on for another 16 months," he says. Another good opportunity should come soon: A damning report is expected from a special investigative panel, following a two-year inquiry into whether Margaret Thatcher's government condoned weapon sales to Iraq during an international embargo and just prior to Saddam Hussein's 1991 invasion of Kuwait. Several key Thatcher aides at the time are still in government. Moreover, local elections in May are almost certain to erode Conservative power even further.

BICKERING. Major's own Conservatives are almost as big a problem for their supposed leader as Labor. Almost any issue, no matter how trivial, produces a party fight these days. In late December, for example, a handful of Conservative Euroskeptics sided with Labor to defeat Major on a vote allowing Spanish fishermen to enter British waters. But the matter wasn't considered important enough to trigger a confidence vote.

Fed up with this bickering, Major abruptly quit last July as party leader. He thought an election would flush out troublesome right-wingers and restore his credibility. While he won by a comfortable margin, his efforts to placate the right on crucial social issues, such as restricting immigration and cutting benefits for single parents, alienated some longtime Tories. For instance, Conservative MP Emma Nicholson, a former deputy party chairman, made a big splash on Dec. 29 when she blasted the Tories and switched to the Liberal Democrats.

All this makes Major look more and more like a lame duck while Blair plays the budding statesman, jetting off to Japan and Singapore. Major's hopes for another 15 months are looking increasingly unrealistic.EDITED BY STANLEY REED By Paula Dwyer in LondonReturn to top

GERMAN AMBIVALENCE

Germany's sending troops to Bosnia is being hailed as a significant first step toward assuming a bigger world role. But at the same time, the country's military leaders are beginning to question how well prepared the country will be for future operations of this sort. In the 1996 compulsory draft, the majority of candidates opted for alternative social service on conscientious objector grounds. The German brass doubts that it will be able to keep the Bundeswehr staffed at its current level of 340,000 troops.EDITED BY STANLEY REEDReturn to top


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