When the going gets tough, Charlie gets going

European Diary: Charlie McCreevy was prepared for changes when he came to Brussels but he can hardly have predicted last week…

European Diary: Charlie McCreevy was prepared for changes when he came to Brussels but he can hardly have predicted last week's dramatic transformation that has made him, for the first time in his political career, a whipping boy of the right and the toast of the left.

Mr McCreevy's extraordinary attack on European Commission colleague Günther Verheugen last Thursday took many European observers by surprise. To an Irish audience, however, it was a return to familiar form for a politician who has thrived on conflict since his earliest days in the Dáil.

The trigger for McCreevy's impromptu press conference was a report in the Financial Times suggesting that commission president José Manuel Barroso had ordered him to make changes to the services directive, a far- reaching proposal to liberalise the EU market in services.

At a meeting of the commission the previous day, Verheugen had led an attack on the directive, which he said was overshadowing all the commission's other activities and threatened the success of the EU constitution referendum in France. McCreevy reminded the German commissioner that he had been a member of the Prodi commission which approved the proposal in the first place.

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Later that day, the two men sniped at one another during a meeting of a group of commissioners responsible for economic competitiveness.

When the Financial Times report appeared on Thursday morning, McCreevy's advisers believed - probably wrongly - that Verheugen was behind it.

Barroso encouraged McCreevy to call an unscheduled press conference to clarify the commission's position on the services directive, which has faced fierce criticism in the European Parliament and in some EU countries.

Barroso may have been taken aback when he saw McCreevy in full flow, telling the press that some commissioners (Verheugen) spoke "out of both sides of their mouth". McCreevy said that the services directive "would not fly" in its present form and laid the blame firmly on the Prodi commission.

"Maybe the previous commission didn't know a lot about aerodynamics. There are commissioners who have commonality with the two commissions, the Prodi commission and this one," he said, in a further reference to Verheugen.

If McCreevy's oratorical style came as a surprise to the journalists listening to him, the content of his remarks on the services directive shocked many economic liberals who had long been his most fervent admirers.

McCreevy said he was willing to exempt healthcare and some other public services from the directive and to water down the "country of origin" principle which would allow firms to operate throughout the EU according to the rules of their own country. He promised to ensure that "conditions and standards for workers will not be affected in any way", adding that he would not stand over any measure that would lead to "social dumping".

Martin Schulz, leader of the socialist group in the European Parliament, welcomed what he described as "the commission's climbdown on services" and praised McCreevy. "I was pleased by the commissioner's assurance that the main demands of the socialist group will be met and that there will be full social safeguards," he said.

In an editorial on Friday, however, the Financial Times accused McCreevy of "flunking" the first test of his free market credentials. "No one . . . would have expected Charlie McCreevy, the supposedly liberal commissioner in charge of the internal market . . . to have so cravenly sounded the retreat before battle had even formally commenced with the EU's member governments and parliament."

Ann Mettler, executive director of the Lisbon Council, a pressure group that campaigns for economic reform in the EU, said that McCreevy had disappointed his former admirers.

"I think it was a staggering sign of a lack of leadership," she said. "He used the political capital he needed to deal with the European Parliament . . . This amounted to unilateral disarmament."

McCreevy still has Barroso's support and that of the most influential economic liberal in the commission, the nominally socialist Peter Mandelson. However, German chancellor Gerhard Schröder has called for the services directive to be withdrawn altogether, a move Mettler believes is not unlikely.

Such an outcome would be a humiliation for McCreevy but his fiery performance last week suggests that he may at last have found his feet in Brussels and is ready for the fight ahead.

As his former political adversaries in Ireland, inside and outside Fianna Fáil, can testify, McCreevy in fighting form is a formidable sight, whether viewed from left or right.

Denis Staunton

Denis Staunton

Denis Staunton is China Correspondent of The Irish Times