UK Ponders Hitching to US Economy, Snubbing Euro

Merger of oil giants on Aug. 11 and campaign by media tycoon raise doubts of country's loyalty to EU.

Britain in NAFTA?

The very idea of throwing its economic future to North America has touched off a hot debate among the British and fueled a campaign to block the island nation from joining the single European currency.

The proposal was made last month by one of Britain's most powerful media tycoons, Conrad Black, chairman of the London-based Telegraph newspaper. He says Britain's future lies in joining the North American Free Trade Agreement.

His views mesh with trade and investment figures showing the British economy is being driven closer toward the United States than toward continental Europe. On Aug. 11 British Petroleum announced an agreement to buy the US oil company Amoco for $47.9 billion in stock, the largest industrial merger ever.

And in April, US House Speaker Newt Gingrich said Britain could become an "associate" in NAFTA.

Mr. Black's idea marks a significant shift in Britain's debate over its membership in the European Union.

Unlike many proposals by "Euroskeptics," Mr. Black's advocacy for the "American option" is proactive rather than reactive against EU membership.

As Britain prepares for next year's referendum on joining a single European currency, both Euroskeptics and Europhiles are gearing up for what promises to be an angry season of confrontation. Eleven of the European Union's 15 members currently are poised to launch a single currency in January 1999, but Britain will not be among them.

Significantly, advocates of Britain's "ever closer union" with Europe, which Prime Minister Tony Blair's Labour government officially supports, are having to wheel out big guns to counter Black's backing for British membership in NAFTA and a more hands-off approach to the EU.

At the heart of Black's case is his insistence that by forging closer links with the EU, Britain will have to give up its sovereignty and loosen its ties with the US. He also argues that American enthusiasm for the EU is waning. There is concern in the Clinton administration, he says, that EU "attempts to manage a monetary union and subsequent development of a political union" will lead to increased tension between Europe and the US.

Current developments on the trade front tend to bear him out. The EU is now confronting the US on a range of issues from Caribbean bananas to beef from hormone-enhanced American cattle. It is threatening to take the US to the World Trade Organization over American attempts to enforce sanctions on countries that trade with Cuba.

Black's arguments received a boost when Eurostat, the statistical arm of the EU, reported last week that the US invested nearly twice as much in Britain as in the rest of the EU. And Britain accounted for two-thirds of all European investment in the US, Eurostat said.

Black fired his first salvo in a speech entitled "Britain's Final Choice: Europe or America?" when he told the Centre for Policy Studies in London that instead of wading deeper into the EU, Britain should apply for membership in NAFTA, which currently consists of the US, Canada, and Mexico. At the same time, by remaining a member of the EU, Britain should use its veto to block further attempts by Brussels to draw it into a united Europe.

Britain, Black claimed, was being "herded and prodded into a European cul-de-sac." This was out of line with the nation's history. If the process went further, Britain would be "torn away from its Atlanticist moorings."

But it was Black's decision to publish his speech July 10 in his own London Daily Telegraph that transformed his personal comments into a full-blown argument. The Telegraph's 1-million-plus circulation makes it Britain's most widely read daily "broadsheet," or serious paper.

Michael Heseltine, deputy prime minister in the Conservative government that was voted out of office in May last year, demanded space in Black's paper to launch a counter-blast.

Black's "political naivete," he wrote, was "breathtaking," and as a Canadian citizen Black was not well placed to talk about European issues. "I believe we serve our self-interest by seeking to influence the direction of Europe from within," Mr. Heseltine added.

Britons have been arguing about their place in Europe since the end of World War II. Winston Churchill, the wartime leader, advocated a united Europe, but Britain stayed out when the European Economic Community was formed in 1951.

Though Britain finally joined in 1973, today Tony Blair's Labour government is hesitant to adopt a single European currency. Opinion polls consistently show a majority of Britons unhappy about or hostile to membership in the EU and opposed to adopting the euro.

Last weekend, sources close to British Conservative opposition leader William Hague said he plans to reaffirm his opposition to adopting the euro soon.

Many voters appear to agree with Black in thinking their country has more in common with the US than with the EU. And many senior politicians, including former Prime Minister Margaret Thatcher, apparently think along the same lines.

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