Twelve nations, one currency: is this what's in the stars for Europe?

The current government's rhetoric on Europe is enthusiastic, but the challenges facing Europe are immense. So, will reality live up to the rhetoric?

	THE EURO: UK's FIVE ECONOMIC TESTS:
- Are business cycles and economic structures compatible? - If problems emerge, is there enough flexibility? - What impact on the UK's financial services industry? - Would it be better for long-term investment in the UK? - Would it promote growth, stability and jobs?

But there have been persistent reports that the Chancellor of the Exchequer is less keen than his boss to sign up for monetary union.

For him it represents the loss of one of the key levers of control over the British economy.

The official government line is that five economic tests must be passed before a referendum is held on whether to join the euro.

Europe: the challenges

A question of Sovereignty

	THE COUNCIL OF MINISTERS:
Britain is now so closely integrated with Europe that relations with the EU do not usually count as Foreign Affairs. Decisions are made, not by the Foreign Secretary, but by the relevant Ministers across Europe. So, at the height of the BSE crisis, it was the Agriculture Minister Douglas Hogg, who went to Brussels to plead with his colleagues to lift the export ban on British beef.

At the heart of the debate about Europe is the question of national sovereignty and independent action.

If Britain wants to work with other European states, does it need to surrender control over its own economy, foreign and defence policy?

Can you share sovereignty?

Historically, Britain has been unwilling to surrender any powers of decision-making without a struggle.

	VIDEO
How to be foreign secretary, 1999 How European meetings drove the former Conservative Foreign Secretary Lord Carrington "up the pole"

But, as the pace of change quickens in Europe, the Labour government has been making increasingly pro-European noises.

The Council of Ministers, as it's called, is a meeting of the relevant ministers from each member country.

Progress can often be slow - old hands often say that the best business is conducted over lunch.

OPPOSING VIEWS
..we must stand up for our interests in shaping a free-market Europe of sovereign nation states. Conservative party manifesto 1997	In today's world, by sharing sovereignty, a people may end up with more, not less independence of action; more, not less internal self government and more, not less control over their lives…Closer co-operation with our friends and closest neighbours in Europe is an essential safeguard as much for our security as our prosperity. Jack Straw, November 2001

Defence Policy

Under Tony Blair, Britain has been at the forefront of efforts to establish a European rapid reaction force, which could act independently of NATO and therefore without the consent of the US. The Conservatives regard this with deep suspicion, and - before the events of September 11 - it was reported that the Bush administration too, was unhappy.

So far, Britain has committed 12,500 troops to the force, but has been pressing for extra money and a better focus. Given Germany's chequered past, Britain and France can expect to be the leading members of this force.

Europe has set itself a goal by 2003 of being able to deploy collectively up to 60,000 troops within 60 days, and to keep the force deployed for at least a year. EU members have pledged up to 100,000 troops so far.

OPPOSING VIEWS

The European Rapid Reaction Force "has nothing to do with the defence of our country and everything to do with going with the flow in Europe and building a European super-state William Hague, November 2000

Our emphasis all the way through on this is that it is about making sure we improve our collective defence capabilities. We don't have a budget the size of the American defence budget. What we need to do is spend our collective budget more wisely and effectively to deliver a contribution. Nobody will be required to commit forces without whatever national approval process they have to go through Geoff Hoon, Secretary of State for Defence

Enlargement

Thirteen countries are currently queuing up to join the European Union, many of them from the former Eastern bloc. Six are considered serious contenders - Cyprus, the Czech Republic, Estonia, Hungary, Poland and Slovenia. Another six - Bulgaria, Latvia, Lithuania, Malta, Romania and Slovakia have also begun preliminary negotiations.

A union of 28 separate states would clearly be a very different creature from the current fifteen. To take one minor example, with 11 separate languages, the European Commission - a rough equivalent of the Civil Service - employs about 20,000 people, many of them translators. If the EU were to retain its policy of treating every language equally, this figure would have to rise exponentially.

Voting

A review is currently under way of which decisions should be taken at national level, and which can be made at European level. It's due to conclude in 2004,