Hague's game of Grandmother's footsteps with the Tory grandees

FOR PERHAPS the first time since he became Tory leader William Hague is showing some tentative signs of setting the electoral agenda. His decision to call for the scrapping of the National Changeover Plan to prepare for the euro carries considerable risks, not least because he is sorely trying the patience of the party's pro-European grandees who queued up to applaud the plan when it was unveiled in February. But he may be more calculating than he usually looks. The prize at the end of the campaign could just be worth it.

The Tory leader is playing Grandmother's footsteps with those same grandees. It is true that he was dismissive of the changeover plan when it was first launched, and that the Tories did not take up their seat on the all-party committee devised to oversee it. In theory he has not really changed policy; he has doggedly refused to take the one step that would certainly provoke his pro-European critics into open denunciation and rule out for ever entry by a Tory government into a single currency. But, before the European election campaign began, there was supposed to be a truce in which the euro would not be made the central issue of the campaign. In return, the big beasts of Tory pro-Europeanism, Ken Clarke, Michael Heseltine, Lord Howe, would not disrupt the campaign by saying what they thought of his policy.

To say that he is now straining that truce to the limits is, if anything, to understate the case.

In this strategy he has been partially helped by a Government anxious to keep the European content of the elections to a minimum. Today, the five-yearly European election campaign begins its last week. Today and tomorrow, the British Government will be among those agreeing in principle to press ahead with long-term plans, of which Tony Blair has been a principal architect, and which the war in Kosovo has if anything accelerated, to give the European Union a role in defence for the first time since the Treaty of Rome was agreed. Of course the initiative which will be debated in Cologne today has been overshadowed by a war which, even on the most pessimistic forecast, could not end in time to be remotely affected by it. It will probably take a decade or more to be realised. But it offers the first prospect of limited excursions by the military powers of Europe that does not depend on the fluctuating willingness of the United States to act in cases in which its own interests are not threatened. In the European defence initiative, in other words, the Government has a story to be quietly proud of. The Labour Party has not exactly - so far - highlighted its achievement in the current campaign.

But if this is true of defence, it has been much truer of the euro. Yesterday the Prime Minister robustly rebutted Mr Hague's call on Tuesday for the changeover plan to be scrapped, pointing out that it amounted to saying that even if Britain were to decide to go into a single currency, it would not be ready to do so when it does so decide; and that if Hague is serious about renegotiating the terms of British EU membership, then the logic of his position leads to withdrawal. But it is still an open secret that Labour has been determined not to allow the election campaign to descend into a dress rehearsal for an eventual referendum on the single currency, and that so far it has been largely successful in this aim.

There are understandable, if unheroic, reasons for this. The most high- minded is that European policy, both collectively and at the level of the member state, is made much more by governments than by the European Parliament, and that, paradoxically, it is therefore better fought over in general elections. The tactical ones, however, are more pressing, and are not confined to the still significant strain of Euroscepticism in the electorate. Labour expectations of the election outcome have been depressed by several factors, including a relative shortage of party funds and a considerable lack of enthusiasm for the fight among activists appalled by a selection process that has surgically extinguished the chances of many hard-working potential candidates. (One of the more idiotic decisions was that to exclude the Blairite Charles Grant, director of the Centre for European Reform, seemingly on no better grounds than that he has intellect and imagination). Add to that voter apathy, and there is every danger of a pretty low turn-out limited to those who have strong and, in many cases, hostile attitudes to Europe. Moreover, the press campaign to exploit the weakness of the euro has been effective, despite the economic fallacies on which it partly depends, and which Diane Coyle described here on Tuesday. There is therefore every incentive, so the argument goes, for the Government not to see this campaign as the great opportunity to rally pro-European opinion, least of all in relation to the single currency.

But there are real dangers for the pro-EMU cause, not least for those who espouse it inside the Tory party. If William Hague does relatively well next week - and is able to argue that he would have done better, were it not for the United Kingdom Independence Party, then he will surely be emboldened if not to harden his anti-single-currency policy line still further, at least to make it an even more paramount issue for his party than it is already. Having taunted his pro-Europeans to the limit, and got away with it, he will be on something of a roll, armed with a mandate and the hope if not for a general election victory, at least a successful crusade to prevent a decision in favour of a single currency.

None of this may happen, of course, Squeezed between two fringe parties, one pro-European and one anti-European, Hague may perform much more dismally than he hopes. But the fear that he may do well raises two big and related questions, one for the long term and one for the short. How will Blair react once the elections are over? Will he launch the high-profile pro- euro campaign he may well need in order to turn opinion round against an internally strengthened Hague if he is to be confident of winning a post-general-election EMU referendum? Or decide that discretion is the better part of valour and simply go on watching and waiting for public opinion to adjust to the euro's performance, good and bad?

The fear that the Prime Minister may react in the latter fashion will prompt some serious thought over the next few days, especially among those so-far Trappist pro-European Tories who have in the past complained that the Prime Minister has been more cautious than he should have been about the euro. Their fear will be that a Hague success next Thursday could encourage Blair to be more cautious still. The temptation, after Hague's declaration on Tuesday, to launch a pre-emptive strike and halt, or at least disrupt, his europhobic march to polling day, must be growing. Will they able to resist it?