TOMORROW MORNING, when Tony Blair takes over the six-month presidency of the European Union, he will enjoy an opportunity enjoyed by no other British leader, at least since the Second World War. The question is how he can play the strong hand that fate has dealt him.

Mr Blair can start by explaining why the EU constitution has failed. The voters of France and the Netherlands did not reject the principle of a constitution. What they voted against was the particular constitution offered by the EU’s governing elite. The reasons for this rejection are clear. The proposed constitution would have reinforced and then entrenched forever the worst features of the EU status quo: lack of democracy, excessive centralisation and economic dysfunction.

These are the three great evils that Mr Blair must now try to overcome. The first two — the loss of democratic control and of national identity — are closely related. Mr Blair could understand this interaction by reading two of the most important books written in recent years. The first, Democracy in Europe, is the influential book by Larry Siedentop, the Oxford political historian, which laid the intellectual foundations for the failed constitutional convention. The second, less well known but equally enlightening, is The Missing Heart of Europe, by Tom Kremer, a Hungarian-British entrepreneur who made his fortune by making Rubik’s Cube a global craze.

Siedentop argues persuasively that only an invigorated national politics can establish democracy in Europe. Kremer explains with equal eloquence why diversity, rather than integration, is likely to be the outcome of a more democratic Europe. He suggests there are broadly two polities in Europe, divided not just by history, but by culture and even humour. On one side there are French-style “concentric” countries, respectful of order and authority, rigorously rational and politically centralised. On the other side are British-style “eccentric” countries, characterised by liberal individualism, pragmatism, grassroots democracy and disdain for authority. The differences go as far as linguistic structure: the open vocabulary and unstructured grammar of English contrasts with French linguistic rigour, as supervised by the Académie Française.

Mr Blair’s challenge is to recognise such concepts and use them to redefine the “European project”. Instead of trying to create a homogenised euro-culture or single economic “model”, European countries should turn their inherent diversity to mutual advantage through economic competition and cultural exchange.

How could Mr Blair move Europe in this direction? By doing something unthinkable to Europe’s political classes, but blindingly obvious to voters: demanding the return of powers to nation governments from Brussels. In diplomatic jargon, he must start to unravel the acquis communautaire. The acquis is a convention that asserts that any responsibility transferred to Brussels can never be renationalised. It guarantees an irreversible accretion of power to the EU. Mr Blair should, as a matter of principle, announce his opposition to this anti-democratic juggernaut. He should show what he means in practice by proposing repatriation of specific policies, starting with issues such as regulations on working time and consumer protection, but aiming eventually for the biggest and most expensive policy — agriculture.

Even more important than disavowing the acquis, Mr Blair could emphasise the diversity of Europe by rejecting the concept of a single economic model to be followed by every EU country. The EU’s official economic policy (known as the Lisbon Agenda) is to create “the world’s most competitive economy by 2010”. This objective is not just embarrassingly unattainable, but deeply misguided. Europe is not a single economy. It is a single market; a community of democratic nations, whose citizens choose different economic and social priorities.

Exhortations from Brussels will not make European nations more efficient. Far more effective is national policy independence, reinforced by competition and awareness of what works or fails in other countries. Britain cannot force France or Germany to adopt an Anglo-Saxon model, but it can teach them about privatisation and financial reform. Britain, in turn, has much to learn from France on health, energy and transport or from Germany on training, export-promotion and research. In other areas, such as labour law and taxes, the nations of Europe can agree to differ, continuing to follow the different social traditions their voters want to preserve.

By emphasising diversity, Mr Blair would have a genuine chance of emerging as a European leader, since he could then dispel French anxieties about imposing Anglo-Saxon economic values. But he could do more than that. He could point to one British experience that all European politicians, whether of Right, Left or Centre, would now be happy to follow. French and Italian politicians, in particular, have for years been demanding more support for growth and employment from the European Central Bank — and monetary policy is now an area where Britain can offer useful and convincing guidance. In the five years since the euro was created, Britain’s monetary policy has been universally recognised as superior to Europe’s. In this period, Britain has shot ahead of the eurozone, overtaking Italy, France and even Germany on all the key measures of performance. Because Britain has done so well outside the eurozone, it is now ideally placed to comment objectively on where the single currency has gone wrong.

Britain’s experience has shown that an active, growth-oriented monetary policy, is essential if economic reform is to succeed and win democratic support. An initiative from Mr Blair for big reforms at the European Central Bank, to replicate the open and democratic monetary management in Britain, would be warmly welcomed by every government in Europe. It would be good economics and good politics. Great political leaders sense which way history is moving and put themselves in front of the trend. That is Mr Blair’s opportunity.

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