On April 11, 2003, the day Baghdad fell, British prime minister Tony Blair’s big gamble seemed to have paid off. Blair had sent British forces into Iraq in defiance of strong popular and parliamentary opposition—and without the UN Security Council resolution he had so desperately sought. But none of the horror scenarios predicted by critics had occurred: no Iraqi use of weapons of mass destruction on the battlefield, no terrorist attacks on coalition cities, no uprisings on the “Arab street.” Saddam Hussein’s ugly regime had fallen to coalition forces in just three weeks, and with only 31 British casualties among the 45,000 British soldiers and airmen in the Iraq theatre. As in World War II, Britain had proven America’s effective and indomitable ally.

Yet what seemed Blair’s finest hour was not fated to last—indeed, it posed a mortal threat to the larger goals he had set for himself. He had come to power in 1997 with the mission of transforming modern Britain and reorienting its place in the world. He pledged to end Britain’s status as a metaphorical island-nation, and, before Iraq became the central issue of international affairs, he had been pretty successful in making Britain not only an integral part of Europe but one of its leaders. But the Iraq War has done more than delay implementation of Blair’s grand strategy. It has threatened to unravel it—and even to bring Blair down. Britain now seems at times more an island than ever.

Of course, Britain is an island nation in the literal sense, but it hasn’t always been one in a strategic sense. From the Norman Conquest in 1066 to around the time Queen Elizabeth I took the throne in 1558, Britain’s destiny was closely tied to Europe’s. As every reader of Shakespeare’s histories knows, Britain was engaged for centuries in a struggle to conquer France. Only in the centuries separating the reign of the current Elizabeth from that of her 16th-century namesake was Britain an island nation in the strategic sense—indeed, an island empire.

Four things made Britain an island empire. First, it possessed a superior blue-water navy, which could provide absolute security. Second, it defined its key interests as lying across the seas rather than across the English Channel. Because the empire was the promise and the Continent the threat, British policy toward Europe was largely negative, to prevent the emergence of a potentially hegemonic Continental power. The goal was not to act as a European power from within Europe but as a balancer from without. Third, Britain gave birth to the Industrial Rev­olu­tion, an engine that in the 19th century made it the world’s greatest pow­er, the first great empire based on free trade. Fourth, Protestant Britain felt its very es­sence to be dif­ferent from—and better than—the Con­tinent’s; its great historical enemies, Spain and France, were Catholic.

Moreover, England followed a different pattern of political development from the 17th century on. While royalist absolutism on the Con­tinent was undermining incipient forms of representative government and customary law, England was overthrowing kings, establishing parliamentary sovereignty, and reaffirming a common-law system. But the nation saw its political system less as a model for the rest of Europe than as a happy exception, based on the special virtues of the English people. The struggles against the Spanish Armada, the France of Louis XIV and Napoleon, and the Germany of the Kaiser and Adolf Hitler were meant to preserve “this other Eden, demi-paradise,” “this blessed plot,” “against the envy of less happier lands.”

Yet even before the coronation of the second Queen Elizabeth in 1952, the underpinnings of British strategic exceptionalism were coming undone. Most obviously, with the rise of submarines and airplanes in the 20th century, Britain’s navy could no longer guarantee the nation’s security, as Hitler’s fearful onslaught showed. Perhaps more important, Britain failed to achieve the “Second Industrial Revolution,” which involved the application of science and technology to manufacturing, and so lost its competitive edge by the late 19th century. Having invented the Industrial Revolution, shaped the laissez-faire state, and created a liberal international economic order in the 19th century, Britain by the second half of the 20th century had itself become the economic sick man of Western Europe.

The tragedy of the post-World War II period was that Clement Atlee’s government (1945–51), the first Labor government with a strong popular mandate and a majority in Parliament, tried to resolve Britain’s social problems without confronting its underlying economic maladies. As historian Correlli Barnett argues, Labor made a grave mistake by choosing this course while attempting to maintain Britain’s status as a global power. In contrast, France, while waging costly and ultimately futile colonial wars in Indochina and Algeria, was able to modernize its economy and develop an effective welfare state because, unlike Britain, it put together a coherent program of national economic planning. Its nationalized industries played an integral role in the plan, and the French economy was stimulated by early participation in the European Coal and Steel Community and its successor, the Common Market (which Britain did not join until 1973).

Britain, a state no longer liberal but not dirigiste either, experienced the worst of all worlds. There was no real economic planning, only short-term intervention. The increasingly obsolete nationalized industries—such as coal, steel, telephone, gas, electricity, and the railroads—were supported but not modernized, and became a drag on the economy. Segments of the British infrastructure (such as transportation and health care) fell further and further behind their Continental counterparts, as did the educational sector. An unfortunate co­dependency developed between feckless management and trade unions committed to the preservation of a welter of archaic work rules. Governments, both Labor and Conservative, blessed their unfortunate modus vivendi. But relative economic decline does not make for a happy society, and British politics radicalized in the late 1970s. The Labor Party, taken over by a motley coalition of defenders of the welfare state, opponents of nuclear weapons and NATO, and the “loony Left,” went beyond the pale of electability.

Under Prime Minister Margaret Thatcher (1979–90), the Conservative Party, which had lurched to the hard right, engaged in a “class against class” strategy aimed at recreating a classical 19th-century liberal state. Thatcher had some success in encouraging a more entrepreneurial economy, but at great social cost. Her prescription for Britain’s chronically ailing manufacturing sector was to privatize nationalized firms and to take the entire sector off government life support. It was sink or swim—and much traditional manufacturing sank. She tried to break the power of the trade unions to create a less restrictive and less expensive labor market. What she could not do was force British manufacturers to become entrepreneurial. And while Thatcher seemed determined to force the working class to accept the exigencies of a renewed British economy, she refused to spend on education the money that was needed to create a more skilled work force. Her hapless Tory successor, John Major (1990–97), brought little change to these policies.

The great paradox of Britain’s economic situation when Blair came to power in 1997 was that the country was both worse off and better off than the Continent: worse off because it had not enjoyed the high postwar growth rate and renewal of infrastructure achieved across the Channel; better off because Thatcher had freed it from the Procrustean bed of labor market restrictions impeding the transition to a modern information and service economy. Britain was still out of phase with Europe, but that now worked in its favor.

It’s no exaggeration to call Blair’s strategy “grand.” He not only wanted to bring the nation into the information economy of the late 20th century, but aimed at nothing less than giving Britain a new sense of national purpose and ending the age-old insularity of British thinking and behavior. His “New” Labor Party proposed a state that promoted economic growth by not meddling in the economy but that fought for social justice as well, believing that the social advancement of its citizens would in turn contribute to economic productivity. The new British state was also to reform its archaic political institutions and renegotiate its ties to the non-English areas of the United Kingdom (Scotland, Wales, and Northern Ireland). But most important of all, Blair’s Britain would finally accept that its destiny lay with Europe. Europe had to become the promise of Britain’s future, not the threat. And by embracing Europe, the prime minister believed, Britain could become one of its leaders.

One key to economic success was fiscal policy. Chancellor of the Exchequer Gordon Brown vowed to exorcise the demons of unsound economic and monetary policies that had haunted Labor (but not only Labor) governments in the past. He immediately granted independence to the Bank of England, giving it freedom comparable to that of its U.S. counterpart, the Federal Reserve System. To prove that Labor would pursue sound economic policies, he pledged not to raise taxes or exceed the spending guidelines the Conservatives had set for what would be the first two years of Labor’s term. To enforce budget discipline, he extended his control over virtually all government departments. As the economy grew, revenues increased and the government won credibility, and Brown was able to free up new resources for infrastructure and social welfare. By then, however, public patience had worn thin with the lack of obvious improvement in public services, notably transportation and public health. While voters returned Labor to a second term in 2002 (few felt that the Conservative Party’s standard-bearer, William Hague, offered a real alternative), there were loud complaints about the state of such services.

A second goal was reform of the work force. “Britain must be the world’s number one creative economy,” Blair declared in 1997. “We will win by brains or not at all. We will compete on enterprise and talent or fail.” A strong and effective state would strive to create a dynamic civil society whose members contributed their skills to the new economy and, in turn, benefited from it. Traditional welfare would be replaced by efforts to help people get jobs. So Blair focused on investing in education and developing programs to increase workforce skills. But in a low-tax economy there’s not a lot of money available for education. Thus, an irony: The Tories, wanting to maintain free university education, would restrict expansion of the student body and thereby keep the education a preserve of the upper and middle classes, whereas Blair, seeking to expand working-class enrollment, initiated tuition charges.

On the whole, the Blair government’s economic and financial policies were a great success. Britain achieved levels of growth, currency stability, and employment unparalleled in the postwar period, and superior to those of the major Continental countries. Britain no longer faced boom-and-bust crises; the pound was not threatened by currency speculation and devaluation. There was a real sense that everyone was on the same side, and Britain seemed, once again, to be riding the tiger of economic progress. This brought a new sense of self-assurance, with positive consequences for British relations with Europe. Yet the fact that Britain was doing so much better than the Continent raised doubts about whether it was in Britain’s interest to surrender control of its currency to a distant, Frankfurt-based European Central Bank. And because Britain’s success was based on low taxes and a more fluid labor market, the government was determined to maintain national control over these sectors of economic life as well. Thus, success reinforced island empire old-think.

Another target of Blair’s reforms was the British constitution, long seen as embodying everything that was excellent and unique about Britain, a locus classicus of Britain’s island mentality. The Revolution of 1688 established the basic principles of parliamentary supremacy, and, after the signing of the Act of Union with Scotland in 1707, a sense of British identity was successfully superimposed on the old national identities of England, Scot­land, and Wales, if not that of Ireland. In Britons (1992), historian Linda Colley brilliantly describes the creation of this new identity but concludes that, after World War II, the process reversed itself, and, as elsewhere in Europe, subregional nationalisms re­turned. So political reality forced Blair to be a constitutional reformer. The result was a system of devolution that gave Scotland its own parliament, with limited powers of taxation, and that accorded a lesser degree of autonomy to Wales. In addition, a constitutional frame­work had to be developed to resolve the long and deadly conflict in Northern Ireland. In dealing with these immediate problems, Blair could not escape fundamental questions about the nature of the British constitution and British identity.

Since 1688, changes to the constitutional system have never been “across the board” but only fixes (even the great Reform Bill of 1832 fits into this category). Britain’s constitution was as full of anomalies and as asymmetrical as its Gothic cathedrals, whereas the constitutions of Continental countries, based on universal principles, resembled neo-classical temples. But the former was made of tough stone that resisted the ages, whereas the latter often turned out to be cardboard palaces. Of the large states of Europe, Britain alone made a peaceful and enduring transition to democracy, thereby giving the impression that the virtue of its system, arising from inherited layers of institutions, laws, and traditions rather than a written document, lay in its uniqueness.

Blair’s reforms might have foreshadowed the creation of a federal Britain with three levels: strengthened local government, subnational and regional governments, and the British Parliament at Westminster. The House of Lords might even have been transformed into a chamber of regions, like the German Bundesrat. Such a vision of British governance would have made Britain far more compatible with the rest of the European Union (EU) and, presumably, less terrified by the threat of a federal Europe. Instead, Blair’s constitutional reforms dealt with issues piecemeal, and the result is a system more complex than before. Scot­land and Wales are both devolved, for example, but they have different models of devolution. There are different forms of proportional representation for the parliaments of Scotland and Wales and the British seats in the EU Parliament, whereas the Westminster Parliament still retains the first-past-the-post system (as in elections for the U.S. House of Repre­sentatives, whoever wins the most votes in a district is elected). Scottish members of Parlia­ment at Westminster can vote on strictly English questions, but English MPs cannot do the same for Scottish and Welsh issues. England has no regional government, but areas that seek regional status may attempt to secure it via referendum. London has an elected mayor, but no other large British town has one. The uncompleted House of Lords reform has produced an incongruous, interim body composed of life peers. There are also 92 hereditary peers chosen by the former hereditary members. The failure of Lords reform explains why Labor’s constitutional forays have been faulted for a lack of imagination, vision, and coherence—and for a failure of will, too. Instead of learning from experience, Blair has created a new muddle by an abrupt announcement that he intends to abolish the ancient and much debated post of Lord Chancellor, which combines the powers of chief justice, cabinet member, and MP.

Blair’s approach to constitutional reform has implications for policy toward Europe. To the extent that the British constitution is seen as the unique product of fortunate circumstances, two conclusions apply: The constitution cannot be exported to or adopted by other countries or the EU, and it would be tragic for Britain to come under the authority of a European constitution, which would surely be inferior to its own. These beliefs have helped perpetuate British ambivalence toward Europe. Nor has the government been frank with the public about the significance of the draft European constitution recently prepared by the European Convention, preferring to minimize its importance in order to deflect calls to put it to a referendum. These calls emanate from Tories, who wish the European constitution ill and who would like to put an end to it. But they also come from pro-Europeans who want the British people to make a conscious and educated choice for Europe.

The end of the empire and economic decline reduced Britain’s political power. Yet the consciousness of being different from Europe—and better—remained so strong that Britain could not even imagine wanting to become part of the European integration process that began after World War II. Britain supported integration—for the others. Dean Acheson’s famous quip that Britain had lost an empire without finding a purpose was all the more unkind for being true. One of Tony Blair’s major goals has been to make Britain an integral part of Europe, even a leader. But to embrace Europe, Britain has to reconcile itself with its old nemesis—and frequent ally—France, which, more than any other nation, has shaped European integration.

In a famous passage of Charles de Gaulle’s war memoirs, the general relates a conversation with Winston Churchill, in June 1944, in which Churchill states: “How do you expect us British to take a position different from the United States. . . ? We are going to liberate Europe, but that’s because the Americans are with us to do it. For, understand this, every time we must choose between Europe and the open sea, we will always choose the open sea. Every time that I have to choose between you and Roosevelt, I will always choose Roosevelt.” Making peace with France thus forces Britain to rethink its relationship with the United States.

In the critical debates of the past 200 years, Britain and France have almost always represented antitheses: reform versus revolution, economic liberalism versus protectionism and statism, empiricism versus rationalism, Shake­speare versus Racine. After 1945, France and Germany, great enemies since 1870, turned their relationship into a privileged partnership. But Britain and France, even though they were allies in the two world wars, remain at loggerheads over the great current debates in Europe, which have been intensified by the Iraq war: What should Europe’s role in the world be? And what should its relationship with America be?

Ironically, these debates occur because the two nations now have so much in common. Of the EU states, only Britain and France are seriously involved in global security and think that Europe should be so involved, and only they have the independent military means to support such a role. Their respective conceptions of what the EU should be in institutional terms are no longer very different. Britain was late to enter the EU’s forerunner, the Common Market, and remained deeply ambivalent toward an institution that seemed to reflect French predilections (not unnaturally, since integrated Europe was largely a French idea). But today, as demonstrated by the recently completed work of the EU’s Constitutional Convention, Britain and France have a common vision of a Europe structured along largely intergovernmental lines (i.e., key decisions are made by top national leaders meeting together in the European Council). What divides the two states is whether Europe should act in partnership with the United States, as the British think, or, in the French view, as a separate pole in a multipolar world, with the capacity and the will to be a countervailing force to the United States.

This difference of opinion stems in large part from the experience of World War II. The collapse of France in 1940 left Britain alone and threatened, and dependent for its survival on U.S. support. The ensuing Anglo-American alliance was the basis of the postwar “special relationship,” in which a diminished Britain hoped to influence the new American superpower by playing Greece to its Rome. The United States, forced into a global role because of France’s unexpected collapse, no longer regarded France as a great power, and Franklin Roosevelt disliked what he took to be de Gaulle’s delusions of grandeur. De Gaulle—and all presidents of the Fifth Republic—sought to reinforce France’s great-power role by standing up to America. He opposed the perpetuation of a bipolar world, which he believed weakened the role of the nation-state, the basic unit of politics. After the end of the Cold War, his successors decried the American-dominated unipolar world and hoped that Europe would play the global role that France no longer could: Europe would be a France writ large.

The symbol of France’s aspirations for Europe was the concept of an autonomous all-European military force. After the 1992 Treaty of Maastricht established the legal basis for this so-called European Security and Defense Identity, an often fatuous debate raged about whether such a thing should be created and, if so, how. It got off the ground only when Tony Blair reversed British opposition at the 1998 Saint Malo summit meeting. France and Britain advocated the development under the EU of a military capacity for “autonomous action, backed up by credible force,” to act, generally in peacekeeping operations, at times when NATO as a whole was not engaged. A militarily stronger Europe, speaking with one voice, would presumably be taken more seriously by the United States and give Europe more leverage in dealing with America. A fine balance was sought between British wishes to strengthen European capacity but not to undermine NATO, and French wishes to give the EU a more independent role in international security. Starting in 1998, it seemed that a synthesis might take place between British and French conceptions. The debate over Iraq, however, tore asunder the prospect of that synthesis.

For many years the British supported close transatlantic ties, not only because influencing the United States seemed the best way of affecting global security, but because they believed in a genuine community of values spanning the Atlantic. Some of that belief remains, but since Iraq there is much more doubt. The Iraq War may represent the high-water mark of Anglo-American cooperation. There is a growing belief among policy elites in both Britain and France that the United States is no longer the generally benevolent power it once was, and that Europe must prevent it from doing dangerous things. The British and French remain divided over whether it is better to try to influence or to confront the United States.

America does not respond well to French confrontation, but it does not seem prepared to listen much to its friends either. There is intense discussion in Europe about whether Blair’s support for American policy in Iraq has given Britain significant influence with the Bush administration. Downing Street asserts that President George W. Bush is far more pragmatic than he is generally portrayed to be, and that Blair enjoys great access and credit; critics insist that Britain has sold its birthright for a mess of pottage. British public opinion was not initially favorable to war, especially without a Security Council mandate, and much of the Labor Party was opposed, even though most Labor MPs reluctantly gave Blair a vote of confidence on Iraq.

But the postwar debate about the existence of weapons of mass destruction and allegations of the misuse of intelligence materials to justify in­ter­vention in Iraq have gravely damaged the prime minister. He has faced little real opposition from the inept Tory front bench but serious opposition from Robin Cook, former foreign secretary and more recently leader of the House of Com­mons, from which position Cook resigned because of government policy on Iraq. Blair’s increasing tendency to define foreign policy in terms compatible with U.S. neoconservative thought, and reflections emanating from Downing Street to the effect that it is better to have a Europe divided than one aligned against the United States, do not help relations with his own party. It has become much more common for serious members of the policy establishment to question the special relationship with the United States. There is also a real danger that Britain could relapse to some extent into its pre-1997 situation, when it had close U.S. ties but exerted little influence in Washington, and when its influence in the EU was undercut by its own ambivalence.

If Britain wants to exert maximum influence in the debate over the future of European security and the relationship with the United States, Blair must bring Britain into the European Monetary Union (EMU), which means abandoning the pound for the euro and placing the Bank of England under the European Central Bank. But EMU seems to have suffered collateral damage as a result of the Iraq War. Blair was not prepared to take the risks required to fight an EMU referendum in the fall of 2003, having to face the opposition of the media moguls who harangue against Europe in general and EMU in particular, and to overcome as well the powerful obstruction of Chancellor of the Exchequer Gordon Brown. Curiously, Blair, who professes a deep commitment to EMU, stacked the deck against a referendum by agreeing not to go ahead without Brown’s agreement. Brown professes support for the concept of EMU (a profession widely doubted), but claims that he will base his decision to move forward on a series of allegedly objective economic tests that are, in fact, highly subjective. It is certainly legitimate to be concerned that entry into EMU take place under the right economic conditions. No one wants to repeat the monetary debacle that occurred when the government last placed the pound within a European currency framework, only to suffer an onslaught on Sterling in 1993 that forced Britain to leave the system and devalue its currency. This humiliating experience crippled the Major government. But it’s not obvious that there ever will be a magic moment to join EMU.

On June 9, 2003, Blair and Brown agreed to agree, or agreed to appear to agree, that the time was not yet ripe. They concurred that the sacrosanct tests were not yet satisfied. In truth, this was not the time to contest a referendum. The Continent was suffering from low growth and high unemployment—Sweden’s voters would reject EMU in a September referendum—and Blair had only recently been bashing France for its position on Iraq. The two leaders held open the possibility of a referendum before the end of the current Parliament, by 2007 at the latest, but few saw that as more than a fig leaf. They promised to campaign actively for public acceptance of EMU, but signals have been mixed. If EMU is the test of whether Blair has led Britain to the point of abandoning its island identity and truly embracing Europe, he has failed—although, in all fairness, the fault is not his alone. There is something disturbing about a prime minister committed to EMU who cannot manage to bring Britain in despite two smashing electoral victories and an immense majority in Parliament, a politician with conviction who is willing to risk all in war yet is seemingly paralyzed over EMU.

There was a Blair moment. It occurred when nostalgia for an island Britain past gave way to a vision of a postmodern Britain. It was based on the notion that progress could be made by cooperation rather than conflict, and that it was time to move beyond archaic ideological and social enmities. Blair was said to be an unconscious Hegelian. His Third Way was a kind of synthesis. Britain could have its cake and eat it, too. This was a notion that was bound to please baby boomers and the young, who, never having experienced an economy of scarcity, do not understand that hard choices must sometimes be made.

Blair and Brown (with the help of the Tories) succeeded in making Labor appear the natural party of government, the guarantor of prosperity and financial responsibility. Blair has also had some success in molding Labor into a broad party whose appeal extends into the middle classes and the City (London’s world financial center), a kind of modern version of 19th-century “New Liberalism,” committed to activism and the pursuit of social justice. He consolidated Thatcher’s return to liberal economics but eliminated the adversarial edge: Prudent financial management, an end to boom-or-bust, and a sound currency were seen as being in everyone’s interest. His efforts to strengthen education and equality of opportunity are significant, but they cannot always counter the tendency of modern capitalism to increase inequality. Infrastructure reform has lagged. At times the government’s policy seems too doctrinaire in its commitment to private-sector solutions, whether they work or not. To be sure, Britain fell so far behind Europe after World War II that it has not been easy to catch up. As for social services, it is a truism that a nation that chooses low taxes cannot afford social services at the level enjoyed in high-tax states.

The Blair government has dared look the identity question in the eye, and there’s little doubt that in the coming decades the outlines of a new British identity and political system will emerge. Through piecemeal and often poorly thought out reform, the Blair government has destabilized the old system. But it is important that the new political system that emerges be both internally consistent and compatible with a European identity for Britain. This will not happen unless that compatibility is a conscious choice of government—as it should be.

Blair seemed well on the way to successful cooperation with France and to acting as a bridge between Europe and the United States. But the rise of a unilateralist United States and the Iraq War made that bridge role improbable. The Iraq War badly damaged British ties with France and undid much of the “confidence building” that had occurred since 1998. Many policymakers in Britain believe that the special relationship with America has reached the end of the road, that it is no longer in Britain’s interest, that at the minimum it must become far more conditional. It certainly makes sense to consort with the only global superpower if you can influence it. But if you can’t? A Europe that speaks with one voice and acts effectively will have more influence.

Blair crafted a superb grand strategy based on the international context of the last years of the 20th century. The Iraq War has changed the political context and undermined public confidence in his leadership, yet he seems to go on as if nothing has changed, as if he emerged strengthened from Iraq. Even if Blair is politically still very much alive, he should realize that many of his natural supporters don’t like where he’s heading. He needs to heed Guardian columnist Polly Toynbee’s message: “It’s not another leader we want, it’s a better Blair.” He needs to rethink his grand strategy, and, if he wants a European Britain, he needs to make some tough choices. But unless a “better Blair” emerges soon, his effectiveness as a leader, even his tenure as prime minister, may be ending. And that will defer the day that Britain is truly part of a united Europe.