ACCORDING to some newspaper reports, after much useless squabbling over the future constitution of Europe, Mr. Tony Blair, the British Prime Minister left the three-day Thessaloniki (also known as Salonika) summit of the European Union leaders in a hurry (or was it in a huff ?) to go back to London, before the meeting came to an end. He and his friend, Mr. Jose Maria Aznar (who together with Mr. George W. Bush have the dubious distinction of forming the Axis of Azores to restart Western colonialism in faraway Muslim countries) were the only leaders who were not present at the final ceremonial dinner attended by not only the leaders of the fifteen EU members but also the leaders of the thirteen other European countries who are seeking membership of the EU club.

There is no doubt that Mr. Tony Blair, the Oxford-educated Labour party leader (I have difficulty in understanding how he squares his religious fundamentalism and passion for jingoism and colonial adventures with the Labour values, so steadfastly upheld by Sidney Webb, Beatrice Potter, Harold Laski, Clement Attlee, Hugh Gaitskell and Harold Wilson) is a man of great courage and firm convictions. He is also a smooth talker, a persuasive debater (presumably because of his training as a barrister) and a charmer. No wonder, he has been so popular with the British electorate for such a long time. But lately things have not been going very well for him. He is a man, who seems to have lost his charm.

Although the quick military victory in the Iraq war has halted the massive anti-war demonstrations across the country (which took place before the start of the war), his

popularity keeps plunging and the credibility gap between what he preaches and what he practises is wider than ever. He is now perceived as a manipulator and a spin doctor, who at best speaks halftruths and at worst lies through his teeth to deceive the public. His famous last words at the end of every speech, "Trust me, I know the right thing to do", no longer resonate among the British people in the same manner as it used to do in the past. (According to a recent poll, if the elections are held now, the Conservative Party will win more votes than Mr. Blair's party.) Even within the party, he is considered by many as an arrogant opportunist. (Only last week he introduced major

changes in the British constitution and the cabinet without much consultation.) For someone who continuously brags about moral leadership (again I have difficulty in understanding how he can brag about his moral leadership and yet at the same time openly wage an illegal and unjust war ignoring the advice given by the keepers of Christian morality like Archbishop Rowan Williams, Pope John Paul II and Cardinal Cormac Murphy O'Connor), these are serious accusations.

The main reason (which later turned out to be the main excuse) given by Mr. Blair for invading Iraq was to disarm Iraq, whose president, according to him had developed weapons of mass destruction and was capable of launching an attack on the United Kingdom in forty-five minutes. More than two months after the fall of Baghdad and despite the presence of several hundred thousand British and American troops in the area, no weapons of mass destruction have yet been found. Most people are now convinced that Mr. Blair not only overestimated Iraq's capabilities but also deliberately manipulated intelligence reports to influence public opinion in favour of war. According to The Independent

(an important British newspaper), " intelligence agencies on both sides of the Atlantic were furious that briefings they gave political leaders were distorted in the rush to war they (the leaders) ignored intelligence assessments which said Iraq was not a threat." It is also coming to light that Bush and Blair deliberately tried to link the Iraqi regime with the 9/ 11 attack, even though their intelligence agencies had reported otherwise. As Paul Krugman of the New York Times puts it, "Starting a war on false pretenses is, to say the least, a breach of trust".

In February of this year, close to 90 per cent of the British public were against the war. There was a strong belief (which now been proven as a

fact) in Britain that President Bush and his neo-conservative advisors had already made the decision, sometime in the summer of 2002 to invade Iraq and were merely going through the motions until they were ready to attack. But by the end of March, Mr. Blair with his half-truths and lies (refer to the BBC's recently published nine-page letter) and the help of his highly efficient propaganda machine was able to change the trend completely. It was indeed a remarkable feat. By then 56 per cent of the British public thought that President Saddam Hussein posed an immediate threat to the UK, therefore a pre-emptive war was necessary to destroy Saddam Hussein's highly dangerous weapons before he could strike Britain. Now, in light of the subsequent events, even if weapons of mass destruction are found in Iraq, will anyone trust his words ?

Even if Mr. Blair can survive the current review (investigation) of the alleged manipulation and misuse of intelligence reports to swing public opinion in favour of war, there is no doubt that his reputation as a trustworthy leader has been seriously damaged. Actually many Labour party members feel that he has destroyed the United Nations,

damaged British relationship with other major EU countries, deceived the British public and lost the confidence of the party. Tam Dalyell, the longest serving member of the House of Commons, who happens to belong to the Labour Party, has openly called for his resignation as the Prime Minister. There are many others, who even though have not come out so openly, also feel the same way.

On the economic front, the credibility gap is also widening. During his second term, each successive year has brought higher deficit than forecasted. Actually the overall economic picture does not look very promising. Although now, ,after the end of the war, the stock

market is rallying on hopes of a stronger recovery in the United States (whose stock market, according to many experts is still suffering from an " irrational exuberance") is still far below the record highs of previous years, industrial production is falling, the construction industry is contracting and the unemployment situation is not getting any better. First warning of the deteriorating economic situation came several months ago from the Bank of England, when it lowered the interest rate to 3.75 per cent. (In the United States, the interbank rate now stands at 1 per cent, lowest since 1958. The European Central Bank has recently made two cuts to bring it down to 2 per cent, maintaining a difference of 1.75 per cent between the two. This is a far cry from the situation in 1997, when the gap between the interest rates of Britain and its major European competitors, France and Germany, was nearly 4 percentage points.) This warning was later confirmed, when it was stated that in fiscal 2003 the British economy will grow by about 2.5 per cent, if everything goes well, which is lower than what was originally forecasted by Mr. Brown, the Chancellor. Actually according to a recent OECD report, the growth will most probably be

even lower (maximum 2.2%). The prospects for fiscal 2004 are even gloomier -- growth will fluctuate between 2 per cent and 2.5 per cent (not by 3.5 per cent as initially projected).

Under normal circumstances it will be considered as bad news if the economy does not grow as budgeted. But it is worse when a country has decided to maintain an occupation army of tens of thousands of troops in a faraway land, which may easily cost several billion euros or more. The slower growth will also have a negative impact on the government's investment plans. The Labour government had finally decided to rebuild the country's infrastructure made worse by the

legacy of years of neglect during the days of Mrs. Thatcher by increasing government investment in public services like healthcare, education and transport. In this, however, Mr. Blair did not follow the fancy American example (supply-side economics) of introducing huge tax-cuts for the wealthy. Instead, his government quite rightly tried to claw back money from increased taxes and social security contributions to finance these projects. The brunt of tax increases will, however, be borne by the middle classes, who in the mid-nineties, attracted by Mr. Blair's New Labour agenda flocked to the Labour ranks and brought Mr. Blair to power. But among these supporters, there has been a slow but steady erosion of confidence in Mr. Blair because of the growing burden of tax increases, unsatisfactory public services and the prospect of having to pay the full cost of education for their children.

In any case, under the new circumstances of lower economic growth, these measures (tax increases) are not going to be enough because the tax revenues will certainly be lower than expected. Therefore, the budget deficits will grow. Now, the inevitable question is: By what percentage

point of the GDP? It is difficult to estimate an accurate figure because of so many unknown factors. Britain has a history of record budget deficits. In 1992, it reached a peak of 8 per cent. Later it levelled off at an annual average of 6 per cent. Actually, at a recent meeting of the finance ministers of the European Union, it was estimated that in the current fiscal year the British budget deficit will go over the 3 per cent limit set by the Growth and Stability Pact of the European Union for its members.

This brings us to the other question: What is happening to Mr. Blair's dream of joining the euro? Mr. Blair is a man of divided loyalties. Politically, he has given his unflinching loyalty to the United States. So much so that in the British press he is often dubbed as "Bush's poodle ". But, from an economic point of view, he understands that Britain's future lies with the EU, hence his enthusiasm for the euro. He wants Britain to become a member of the euro as soon as possible. He has been trying hard to convince the British public and his strong-minded Chancellor that joining the euro will bring huge economic benefits to Britain. In this, he has had limited success. Mr Blair wants to call a referendum on this issue as soon as possible, while Mr. Brown wants to put it off as long as possible. A few days ago, the government announced the postponement of the referendum until further notice. The Chancellor feels that although the British economy is slowly converging with the economy of the euro area, there are still significant divergences on issues such as an acceptable exchange rate between the pound and the euro (which will become fixed, once accepted), interest rates, inflation and the budget deficit limit of 3 per cent of GDP. It is inevitable that if things do not work out as planned Britain will either have to scrap its idea of rebuilding its infrastructure or take the unpopular measure of raising taxes even further to maintain its budget deficit under control. So it is highly unlikely that the referendum on the euro will be held in the near future. Actually Mr. Blair has been talking about holding this referendum for such a long time and later postponing it that there are growing doubts in Britain and elsewhere -which does not help his falling credibility rating -- as to whether it will ever take place under his leadership.