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Jewish World Review June 11, 2001/ 21 Sivan 5761

Wesley Pruden

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Measuring Britainīs risks by the pound -- THE good news for American tourists in Britain in the wake of Tony Blairīs triumphant re-election is that the pound is sinking. The bad news is that the good news will eventually be bad news for nearly everyone else.

If whatīs happening to the pound is a forerunner of whatīs to happen to Britain, Mr. Blairīs troubles are just beginning. He spent most of the monthlong campaign, which ended last night with a Labor Party landslide, insisting that the election was not a referendum on keeping the pound. The currency markets didnīt believe him.

The pound, worth $1.50 on New Yearīs Day (and nearly $1.70 only two years ago), closed yesterday at $1.38. It looks good only against the euro, but nearly everything does, and probably not for long.

The currency traders think Mr. Blair wants to throw out pound sterling for the anemic euro as a prelude to making Britain a province of the new Europe, where life will be one happy round of sauerkraut and sausages washed down with the new beaujolais. Life may not have more oomph, but a lot more oom-pah (oom-pah). The implications for the United States, NATO and the "special relationship" are enormous.

Mr. Blair has promised that he wonīt abandon the pound unless Britain votes "yes" in a national referendum. He told a newspaper interviewer on election eve that he would pose the question as "Do you want a single currency, or not?"

This wording naturally infuriates the Euro-skeptics, most of them defeated Tories, who argue that the question should be framed in a straightforward way as, "The government proposes to replace the pound with the euro as Britainīs national currency, do you agree?" This is the English language at its plainest, stripping bare the threat to British sovereignty, independence and whatever is left of Britainīs bulldog pride.

Early returns and exit polls suggested that Laborīs 179-vote margin in the 659-member Parliament would shrink a bit, but the landslide will make Mr. Blair comfortable in the short run, demonstrating once more that voters everywhere usually vote first with their bellies and their pocketbooks. In the welfare states itīs sometimes the only consideration, turning John F. Kennedyīs famous injunction on its head: "Ask not what you can do for your country, ask instead what your country can do for you."

Mr. Blair campaigned relentlessly on promises to improve government services, some of which, including foremost the decrepit and deteriorating National Health Service, declined dramatically during his first term. Any Briton will tell you that health care is free for all, "just donīt get sick." But voters reckoned the Tories couldnīt fix what needed fixing, and might make things worse. For their part, the timid Tories campaigned like Republicans in America: "Vote for us, weīre not as bad as you think."

Nearly everyone thinks Mr. Blair will now press his advantage to do what he wants most to do, to integrate Britain once and for all into Europe, beginning with establishing the euro as the coin of the realm. He has spent the last week denying it, saying on election eve that "I wouldnīt place any store by that at all."

But of course nobody believes him, figuring that he is trying to drive the value of the pound down to the level of the pallid euro to make convergence easy. "Mr. Blair will not have to do much," says a currency analyst at the Royal Bank of Scotland. "If he creates enough perception in the markets that the United Kingdom is going in, dealers will trade the pound much lower." There was rampant speculation in London last night that several large foreign companies are dumping shares in British companies in favor of dollar-denominated stocks.

The worry over the currency, and the prospect that the Labor landslide will amount to a dramatic devaluation of the currency, does not even address what the landslide augurs for Britain as a province of the new Europe (which of course wonīt at first be described that way). Lionel Jospin, the French prime minister, offered a preview in a speech a fortnight ago. He seeks "a full-scale economic government along socialist lines" to buttress the euro, and -- hereīs the scary bit for Britons accustomed to the guarantees of their common law -- a single criminal-justice system. If the national-health service is good enough for anyone who doesnīt get sick, a Franco-German criminal-justice system will be safe enough for anyone who never has to go to court.

George W. is off to Europe next week, to meet his counterparts for the first time. Heīll find them riding high in the wake of the Blair landslide unlike Mr. Blairīs constituents, who are sleek, sated, satisfied and riding only for a fall.

JWR contributor Wesley Pruden is editor in chief of The Washington Times. Comment by clicking here.

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