The future lies with herring Europe

All across Paris, on television screens in cafes and private houses, a huge oval face announced that it intended to become President of France. Edouard Balladur, with his placid gaze, London tailoring and air of massive calm, is keenly admired by John Major and his ministers. He is awarded the ultimate verbal honour of "pragmatism" and described almost as an honorary Englishman.

Here, Whitehall hopes, is that prize beyond gold or pearls, a dull and visionless leader of the French. Given the fix that British policy has been in, the idea of a man in the Elysee who is not committed to the German-dominated European superstate has glorious implications for the Tories. Major's hopes for a revival in 1995 owe much to this. So the glasses chink in London and the toast is given: Balladur the Saviour! King Edouard the Expedient! But as Balladur was making his announcement, I happened to be sitting not so far away, listening to a senior French politician addressing a private meeting of the Franco-British Council. He liked Britain, he insisted. The French feared the Germans. They didn't fear the British. Then his tone hardened: "But I hope that never again do we have to choose between the UK and Germany. Sentimentally, I would choose the UK, but politically, I would always choose Germany."

And there was, around the table, firm nodding from the French. The mood about British policy was the same mixture of weary incomprehension and frustration one always finds at such gatherings. Someone said that he had argued hard for British membership ofthe Community. "Now I have to ask myself if I was right." At such gatherings, someone generally does.

The British politicians and civil servants in attendance were left in no doubt that the French were still committed to monetary union, and to the primacy of their relationship with Germany - committed, in other words, to the foundation and core of European integration.

Douglas Hurd said recently: "In our interests, in our assets, in our view of Europe ... there are no two substantial countries as similar as France and Britain." One could add a list of key examples of co-operation; but none of it cancels out the deeper strategic truth. The French grand strategy points one way, to Germany and integration; the British another. All the rest is decoration.

So far, so familiar. For the British Tories, Balladur (whom everyone thinks is a virtual certainty for the presidency) will play much better domestically than Jacques Delors, who has said he will not run. Balladur is not a socialist, he is not a tabloid hate-figure, he is not a grandiose architect of institutions; all these things matter a lot to Major's public presentation of the European debate and are likely to be of real, practical advantage at the 1996 inter-governmental conference.

But behind the great pink face, which would look so at home in Wilton's restaurant in St James's, and behind the reputation for pragmatism, there remains Balladur's familiar post-war assessment of French national interest. His British fogeyness is just tweed-deep. The story, though, doesn't end there. For it is not only Tory Britain which faces hard choices.

The French relationship with Germany is becoming a less equal one, and is going to become more unbalanced still. The contract between the two can be likened to the economic specialisation of nations, lauded by free-traders - except that this one has beenabout policy specialisation. In the cause of peace, France subcontracted the management of its economy to the Germans; and the Germans subcontracted politics and diplomacy to the French.

This happy arrangement allowed the Germans to get on with creating their economic powerhouse undisturbed, and allowed the French political classes to enjoy the benefits of integration without any diminution of their own power. Indeed, as Europe seemed tobe the political extension of France, these powers grew. Whereas for London, European integration challenged national status, in Paris the reverse was the case. This simple difference explains a lot.

Balladur, announcing his candidature this week, spoke in the old way; Europe was part of a French national mission. Et cetera. But the rebirth of a united Germany now threatens, and must ultimately undermine, the old relationships, because Germany is reaching the stage where it will reclaim its political power.

In September last year, Karl Lamers and Wolfgang Schauble, senior members of Chancellor Kohl's Christian Democrats, produced a paper on the German agenda which was, perhaps, just a little too blunt for some tastes. (It was later suggested that the paper was unimportant and not taken seriously by Kohl. This is not true: Kohl's copy is, apparently, closely annotated in his own hand.)

It identified a potential split in the EU between a "South-West grouping, more inclined to protectionism and headed in a certain sense by France" and "a North-East grouping, more in favour of free world trade and headed in a certain sense by Germany." These are groups we can all recognise. For simplicity, we could call them Baltic Europe and Mediterranean Europe - or, easier still, herring Europe and olive Europe.

With the arrival of a single currency, the importance of herring Europe is bound to grow. The same German paper identified a hard core of five countries that were likely to go ahead and merge their currencies. This group includes France, but none of the other Mediterranean countries: olive Europe is to be divided. If the single currency comes, it is likely to come like this, partly because the Bundesbank would be bitterly opposed to a wider version.

To this should be added one further key fact: Germany sees monetary union as the foundation stone for political union. There is disagreement about how much political authority will be required to oversee a single monetary authority. But political authority will coalesce around the hard core of single-currency nations.

And this political authority can hardly help but feel radically different from the French-dominated politics of earlier phases of the European Union. Germany is recovering its political self-confidence and nerve. This is the fruit of economic success, aswell as unification, and is unlikely to be much hindered by anything planned in Paris.

Canada's position vis-a-vis the United States was described as "like being in bed with an elephant". So France, if she keeps to her long and faithful marriage, may find herself similarly discomfited.

Predicting any politics, never mind a politics as complex as that of modern Europe, is a mug's game. But a Union based on a hard monetary core is most unlikely to be one in which the French political classes maintain their former authority. For the firsttime they, like the British, would be paying a real political price for integration. That, not the character of Balladur, remains Tory London's last card.