Jean Monnet's advice to Europeans negotiating with Britain when the EEC was founded in the 1950s was simple and to the point: "First establish your facts and then rely on their celebrated pragmatism to recognise them." His observation springs to mind this week as the Blair government appears to have decided not to join the European Single Currency during the lifetime of the current parliament.
Unfortunately, but characteristically, the news was delivered not directly but through selective newspaper spins and leaks. It would be difficult to imagine a less appropriate way of presenting such an important decision.
A firm parliamentary statement is expected next week to clarify the timing and, more important, set out the government's attitude in principle. After a meeting with the German Chancellor, Dr Kohl, on Monday, Mr Blair's spokesman said Britain "would not seek to undermine or sabotage others who were pressing ahead with the EMU and that we would use our position constructively". This is the very least that could sustain goodwill during Britain's forthcoming EU presidency, as it chairs the summit meeting to decide on EMU membership.
Assuming Britain's decision to delay is confirmed and that it is not made clear that it is going to join EMU at a later date, this could be potentially as significant an event as that in the late 1950s not to join the EEC.
For Britain not to be directly involved over the next five years means it will be much less able to influence the new currency's design and the emerging policy regime to govern it. This is a serious matter for a government which wishes to exert a leadership role in Europe and a state which values its continuing international influence. No wonder insiders report the evident desire of Britain's central bank negotiators to settle EMU issues in advance.
It is now assumed internationally that EMU will succeed, after a prolonged period earlier this year when it looked much more uncertain. That made it easier for British scepticism about EMU to coexist with the Labour Party's more positive attitudes towards Brussels. Crucially, the US government now assumes EMU is going to happen.
Washington is beginning to evaluate the consequences for the dollar as a reserve currency. A successful EMU will quite rapidly attract international funds currently held in dollars. Even over these five years, this would lead to an equalisation of trade and reserves proportionalities between Europe and the US.
Both regions have roughly the same percentage of world output and trade - the US 27 per cent and 18 per cent, respectively; the EU 31 per cent and 20 per cent. But the dollar's share of 50 per cent of world finance far exceeds the economic weight of the US. Over the next five years it is expected there will be a portfolio diversification of between $500 trillion to $1,000 trillion towards the euro, giving it and the dollar each a 40 per cent share of world finance.
Such shifts are geopolitical as well as geoeconomic. Writing the new rules of the game becomes a matter of inscribing new international relationships at a time when they are changing rapidly.
For Britain not to be involved will affect its wider role in the world, including particularly its relationship with Washington. To have influence there it will be increasingly necessary to have it in Europe it as well.
New institutions are being created to write the rules of the EU game. They include the executive board of the European Central Bank, on which Britain will not have a vote; nor will it have a say in the ECB's monetary policy or its representation at Group of Seven meetings and other international forums, where the ECB will speak as a group and will be taken seriously by the US, China and Japan.
Since the Prodi government has survived, strengthened, in Italy, that country now looks certain to participate in a broad-based EMU with 11 members. Nor will Britain be part of the new, informal institution emerging within the Ecofin Council, the "euro council" which will meet ahead of it. The French government aims much of its ambition to concert economic policy politically at this new forum.
Inevitably, in the trade-offs characteristic of EU politics, the "ins" are likely to reach agreements on issues such as taxation, budgets, state aids and competition policy. The "outs" will find their policies on employment, labour market flexibility, open markets and free trade less influential.
The intensive argument about flexibility in EU decision-making over the last year was driven by fears in France and Germany that Britain would block future integration by use of the veto. The Amsterdam Treaty inserted new clauses making it possible for some states to go ahead towards integration objectives further than others.
After Labour's victory and the more positive orientation towards Europe, it was assumed it would not be as necessary to use these clauses so intensively. But they could now be resorted to if Britain insists on some form of unanimity in some of these fields because it is on the outside.
Ireland's position will be more difficult if Britain stays out of the euro for five years, even if it does adhere to its external disciplines. Just as negotiations on Northern Ireland are set to conclude next May, a new barrier would be erected between the two parts of the island. This should reinforce the case for closer co-operation between North and South in Ireland's relations with Brussels.
The same applies to relations between Britain and Ireland, covered in Strand 3 of the talks process. Could the potential difficulties over a volatile sterling not become a point on that agenda? Strand 3 needs a lot more discussion than it has yet received.
Monnet's advice does not apply as easily to Anglo-Irish relations, which are bilateral; here it will be necessary to create institutions if agreement is to be reached. Within the multilateral framework of the EU, however, it is clear that official Ireland is determined to participate fully in the EMU. This will consolidate the break from Anglocentricity, which has been one of the main features of Ireland's EU membership.
Those who say Ireland should stay out of EMU until Britain joins advocate an uncertain relationship with a less influential state which still has to find its role in the post-imperial world.
