Leading Article: A resignation that is good for Germany and all Europe

WITHIN MINUTES of the news of Oskar Lafontaine's abrupt resignation as German Finance Minister, the value of the euro went up by two cents against the dollar on the foreign exchanges.

Whatever the reasons for Lafontaine's dramatic resignation, that simple fact illustrates why his going had become so important, and so necessary. It is not that Lafontaine was a "leftie", the red menace of British tabloid venom and German cartoonists' delight. In reality he wasn't nearly as far to the left as he was painted. Nor does one accept his departure so easily because the man was so unpredictable in his behaviour and so flamboyant in his private life, although those traits too are becoming less acceptable in today's world. Indeed it is possible to have a great deal of sympathy with a politician who cared deeply about issues such as unemployment, restrictive monetary policies, and the launch of a euro that put the credentials of the new currency above the need to prevent a slide back into recession.

But the reality is that Oskar had become a liability to Germany, to the fledgling project of monetary union, and to the political health of the union. While the British became obsessed with his ambitions to extend German levels of tax and social welfare payments throughout Europe, and to Britain in particular, the rest of Germany was far more concerned with his constant and public rowing with the German Chancellor Gerhard Schroder. Like Gordon Brown, Lafontaine never forgave Schroder for beating him to leadership of the Social Democratic Party, and hence to the top job in the country, while Schroder never forgave Lafontaine for driving out his friend Jost Stollmann from an economic ministership almost as soon as he had been appointed.

With division at the top, the German government has been unable to produce an acceptable new tax programme for the country. Even worse, he has ensured his nation has been unable to present a solid face to Europe, whose presidency Germany now has for the first half of the year. At the same time Lafontaine, partly in concert with his French counterpart, has launched a damagingly public campaign to get the new European Central Bank to temper its monetary terms in view of faltering European growth. It was not a silly campaign. The Americans, after all, also want Europe to drop interest rates in order to promote growth. But the hostility of Germany's economic chief did much to undermine the first months of the new euro.

So how much better will Europe now be without him? Germany, the pivotal country in this fledgling project, will be stronger without a divided leadership. Blair will undoubtedly be happier too, solidified in an undisputed leadership with Schroder, who is his political soulmate, rather than Lafontaine, whose pro-French tendencies got in the way. The French prime minister, Lionel Jospin, is probably more comfortable with a quieter tone of economic conservatism than Lafontaine allowed him. The euro will become - and indeed already is - stronger for the cessation of hostilities.

Yet to blame Lafontaine for all these problems, and to hope that they will evaporate with his departure, would be to misread the situation. Schroder's handling of government since taking office, and his first efforts in the presidency of Europe, have been uncertain and at times inept. German growth is slowing alarmingly and the pressure for a relaxation of monetary discipline will go on, albeit less publicly. For Europe, and for Britain, this provides opportunities. But Lafontaine's departure only makes it more urgent that Blair throws himself wholeheartedly into an enterprise that now needs British support just as Britain needs its success.