Web exclusive 7/11/02
Dinner at Granita
By Michael Barone
LONDONI went to dinner at Granita because it is the site of a great historic event in recent British political history. One night in May 1994, shortly after the sudden death of Labour Party Leader John Smith, two young Labour front benchers, Gordon Brown and Tony Blair, went to dinner at a new restaurant called Granita (pronounced not like the Italian gelato graniTAH, but graNEEta) to decide which of them would be the next Labour Party leaderand thus, though it wasn't utterly certain at the time, though clearly likely, the next prime minister. Both had claims on the job. Brown was the shadow chancellor, a former academic of dour disposition, gifted at handling numbers and determined not to make the mistakesoverspending, debasement of the currencythat Labour governments had made in the past. Blair, the shadow home secretary, a former barrister of cheerful disposition, was gifted at phrasemaking"tough on crime and tough on the causes of crime"and determined to respect the values of Middle England, which so many young Labourites were eager to flout. Both were at the center of the New Labour Project, the group of talented young Labourites who had been working since the middle 1980s to reshape their party, to accept most of the achievements of Margaret Thatcher's Conservatives and to slough off the features of the Labour Party that made it unacceptable to most voters in the elections of 1979, 1983, 1987, and 1992.
They could hardly have chosen a place for their crucial meeting more atypical of Ye Olde England. Granita is in Islington, a neighborhood just north of the City of London full of trendy young professionals restoring old row houses and of dilapidated council estates, a borough which had elected a famously Loony Left local council held up to ridicule by Thatcherites. The restaurant is one in a row of dozens that line commercial Upper Street, a place where nary a suit jacket nor tie is to be seen on a weekday evening. Granita has replaced its front wall with a single glass window; its long side walls are taupe, with a cheery red wall at the back; the floors and most tables are blond Scandinavian wood, with a few stainless steel tops; the menu is what the British call new European, with California accents. I sat in the front and had rocket (arugula) salad and red mullet; Brown and Blair (the Polish waitresses will tell you, though they weren't here then) sat in the back, behind the bar, out of view of the street.
There they made their fateful decision. Blair would be leader of the opposition and so, after the May 1997 election, prime minister, with a wide ambit to set foreign policy. Brown would be shadow chancellor and so, after May 1997, chancellor, with wide powers over domestic spending and policy. Together, they would campaign on New Labour principles: no income tax rise in the first term, tough policies on crime, asylum for refugees, tight controls on spending increases, independence (declared by Brown his first week in office) for the Bank of England.
It has been a very successful partnership. Britain has a booming economy, low unemployment and interest rates, rapidly increasing housing values and increased wealth for ordinary people. Labour's ratings in the polls, except for a single drop in September 2000 over a petrol crisis, has remained high; in June 2002 polls it led Conservatives by margins statistically indistinguishable from the virtually identical popular vote in the May 1997 and June 2001 general elections.
Yet inevitably there is tension. It is widely assumed that Brown, who turned 50 last year, wants to be prime minister some day, and that Blair, who does not turn 50 until next year, does not want to relinquish the job. It focuses now on the question of whether Britain should join the European Community's currency, the euro. Blair and Brown finessed the issue in 1997 by promising that Britain would not abandon the pound and enter the euro without a popular referendum. Blair in 1997 announced that the government would not call a referendum unless and until Brown certified that entering the euro clearly and unambiguously met his five testsa sustainable convergence between the British and major European economies, a British economy flexible enough to deal with interest rates set by a European bank which might not meet Britain's short-term needs, increased attractiveness for investment in Britain, a favorable impact on Britain's thriving financial service industries, and a favorable impact on employment in Britain. The exchange rate, Brown's top aide Ed Balls recently said, "is integral to arriving at each of the tests." Britain should not enter when the pound is very strong against the euro (as it has been for most of the time from its launch in 1999 to mid-2002) or when it is very weak.
Blair wants to go to the euro, as he made clear in a recent speech; Brown's position is more Delphic, and often speculated upon. British voters' view has been fairly clear: They are against. A June 21-24 NOP poll in the rightish Telegraph put opposition at 63 to 32 percentsimilar to results for many years. Three months ago Blair's people put out stories that New Labour pollster Philip Gould said that opinion could be shifted, especially if the euro were endorsed by Brown, and Blair made his statement clearly welcoming the euro. But he must wonder whether he can swing opinion around. Tony Blair has been careful on most issues to take stands which have wide support among the voters, or at least do not have wide opposition. The euro, at least initially, would be different.
And, evidently under the terms of their dinner at Granita, he has left the decision to Gordon Brown. Brown in October 1998 declared that the five tests would not be met in Labour's first term and that no referendum would be held. Now Brown's people say he must make a decision on whether the five tests are met by June 2003. Most insiders expect a decision sooner, and believe the government will not go to referendum after June 2003: too close to the next election. A successful euro campaign would be a triumph for Blair and Brown. A unsuccessful referendum would be a disaster for both, and conceivably make the Conservative party, united now against the euro, competitive as it has not been since September 1992 (when Britain went off the European Rate Mechanism, interest rates rose sharply, housing values as a result plummeted and millions of Briton lost much accumulated wealth). A decision not to go to referendum would suggest a certain weakness in the government, with unclear political results. But there are risks even if voters approve the euro. If it results in a weaker currency, that means higher interest rates, lower housing prices, loss of wealththe same things that sunk the Conservatives.
House prices are particularly important in the politically critical part of the country, southeast England. North of Oxford and Cambridge and west of Gloucestershire, housing prices in Britain today are at or under 128,000 pounds in every county north and west of this line. South and east of the line, they are higher in every county except rural Suffolk and Norfolk, where they are just a little under. In some cases, much higher: 249,000 pounds in greater London, 252,000 pounds in Surrey. Before Labour's breakthrough in the 1997 election, it held virtually no parliamentary seats in this south and east of England except in inner city London. In 1997 and 2001, it won most of the seats in this region: It turned from almost entirely Tory blue to predominantly Labour red. A plummet in housing values could result in a sharp drop in Labour votes here, just as the collapse of the European Rate Mechanism resulted in a sharp drop in the Conservative vote there.
So the euro decision could undermine the success of the decision taken at Granita. And it could exacerbate or bring out into the open the inevitable tension between Blair, who walked out into Upper Street and went around the corner home to his wife with the prime ministership in hand, and Brown, who walked out and returned home alone (he was then unmarried) without it.
Do the Conservatives have no chance for revival? Duncan Smith, elected leader last September, is not well known and receives little coverage in the press. He is dismissed with scorn by New Labor strategists. But he is trying to remake his party somewhat as New Labor strategists remade theirs. No longer do Conservatives concentrate on the euro and European Community issues, partly because they are no longer split on them (few Conservative MPs support the euro). Instead, Duncan Smith is aiming to challenge New Labor's competence in improving serviceshealthcare, transport, crimeand to argue that Conservatives, far from being cruel, are seeking above all to protect the vulnerable. New Labor, in for five years, can no longer credibly blame problems on the previous Conservative government, and it cannot be denied that there are problems with services. Street crime is now worse in London than in New York and is bad outside the capital as well. Transportation is a mess: Labor Transport Minister Stephen Byers was forced to resign in June, after a clumsy renationalization of Railtrack that seems likely to cost taxpayers far more than promised. There are constant horror stories about the National Health Service, which has longer waiting lines and less available treatment than other European health services, in which some care is provided by the private as well as the public sector. New Labor is confident that it can solve these problems and be seen to have done so; Conservatives say they are confident that New Labor's solutions cannot work.
And here is the real significance of Brown's and Blair's dinner at Granita. It brought to power a prime minister who is viscerally and intellectually spontaneously pro-American. All Americans saw that after September 11, when Tony Blair rallied to America's support far beyond any political imperatives in Britain. Much of Britain's governing class, in both Labour and Conservative parties, is viscerally anti-American or inclined to be critical of American policy and grudging in its support. I have asked well-placed people in both major parties whether Brown would have responded to September 11 as Blair did. No one is sure, but the general belief is that he would have been generally supportive of America, but not so generously and probably with more private reservations.
There is good reason to believe that Blair will support American military action in Iraq, as he has supported it in Afghanistanindeed, volunteering more troops than have been used. Would Brown do the same thing? He is widely considered more sympathetic to the traditional old left in the Labour Party, a group that would of its own accord vote against such support; it is believed that about 40 Labour MPs (of 400-plus) would vote against their party whips on a vote (which may not come up in such a form) and not approve an Iraq operation. There would be no danger of such a motion being rejected; Conservatives would support it nearly unanimously. But Brown might not move in that way, while Blair certainly would.
The dinner at Granita was not the first time that happy accident has given Britain a leader who is viscerally pro-American rather than one whose support of America would be much more grudging and conditioned. It happened on May 9, 1940, when Winston Churchill was chosen to replace Neville Chamberlain. The king and Chamberlain preferred Lord Halifax. "Usually I talk a great deal," Churchill noted in his account of the crucial meeting that included him, Chamberlain, and Halifax. But when Chamberlain asked who should succeed him, Churchill remembered, "As I remained silent a very long pause ensued. It certainly seemed longer than the two minutes which one observes in the commemorations of Armistice Day. Then at length Halifax spoke," and said he couldn't serve because he was in the House of Lords. "By the time he had finished it was clear that the duty would fall upon mehad in fact fallen upon me." The eloquent Churchill prevailed by keeping his mouth shut.
It happened again in November 1974, when the free market enthusiast (and not especially pro-American) Keith Joseph came to Margaret Thatcher's office in the Houses of Parliament and told her, "I just can't run" for party leader against former Prime Minister Edward Heath (the most pro-European of all recent British prime ministers). In the February 1975 vote Thatcher led Heath by a 130 to 119 plurality; in the runoff a week later, Thatcher was elected over William Whitelaw (not notably pro-American) by 146 to 79. Had Heath won a few more votes, he might have held on.
And it happened again in May 1994, at dinner at Granita.
God supposedly looks after drunkards and the United States of America. He has been particularly busy looking after America in Britain, in the 17th century severity of 10 Downing Street in May 1940, in the Gothic precincts of the Houses of Parliament in November 1974, and in postmodern Granita in trendy Islington in May 1994. It was a good meal.