In the wake of the failed EU summit in Brussels, Prime Minister Tony Blair was reported to be drafting a speech to the European parliament that aims to placate fears he favors US-style capitalism.

Before delivering his speech in Brussels on Thursday, Blair will address the House of Commons at 3:30 p.m. (1430 GMT) explaining the stand he took at the summit that collapsed in acrimony on Saturday.

The speech in Brussels aims to outline his vision for Europe before he takes over the six-month rotating presidency of the European Union from Luxembourg, which chaired the summit.

"Blair recognizes that he is caricatured in Europe as being free market. He will take on this idea that you have to choose between a social Europe and a market Europe," a senior Downing Street figure told the Financial Times (FT) on Monday.

He will refer to the minimum wage introduced in Britain, as well as plans to extend maternity and paternity leave as examples of how the two models can co-exist, the source told the FT.

Prime Minister Jean Claude Juncker of Luxembourg touched a chord when he spoke of two irreconcilable visions of Europe at the summit.

"There are those who, in fact without saying it, want the big market and nothing but the big market, a high-level free trade zone, and those that want a politically integrated Europe," he said. "I have felt for a long time this debate would blow up one day."

The two-day summit broke down when having rolled back the deadline to ratify the moribund EU constitution, EU leaders failed to agree the bloc's budget for 2007-13.

Many in Europe blamed Blair for the collapse over his refusal to give up Britain's long-cherished EU rebate without an iron-clad guarantee of a thorough re-think of the way the European Union spends its taxpayers' money.

Blair had taken aim at France's "own rebate," the subsidies contained in the Common Agriculture Policy that benefit French farmers the most.

The Guardian newspaper also quoted a source in Blair's Downing Street office as saying: "The prime minister will challenge the idea that Britain is some Dickensian society with no social protection."

Blair, in his speech in Brussels will make clear it is a "false choice" to promote a "market Europe" versus a "social Europe," according to the Downing Street source who spoke to the Guardian.

"We need an effective Europe, we need a social approach which boosts the economic approach. They work together," the source said.

In an interview with the Guardian, Peter Mandelson, British EU trade commissioner, said "Europe is faced with a fundamental choice. One way, we sink into economic decline, losing the means to pay for our preferred way of life.

"The other way, we press ahead with painful economic reforms that can make us competitive once again in world markets," said Mandelson, who is a Blair ally.

"A new consensus can be found in Europe. You don't have to know much about the political situation in France and Germany to realize that".

© 2005 AFP

###