Collective sigh of relief at resignation

RARELY HAS one politician made such an impact in Europe in such a short time, and rarely has one gained such notoriety in so many quarters.

Oskar Lafontaine, dubbed by one British tabloid as the "most dangerous man in Europe", sparked the biggest ideological debate over the continent's economic policy in years. But his achievements are questionable and his departure leaves the German government in disarray, only two weeks before a vital summit, called to resolve the seemingly intractable problems of Europe's financing. German prestige has taken a battering at a crucial time, halfway through both its EU and Group of Seven presidencies. It is also a key moment in the EU's history, the Agenda 2000 discussions to expand and reform the Union.

In the corridors of Brussels, not many tears will be shed for an outspoken figure who brought controversy to the usually drab discussions of the finance ministers' council, Ecofin. One diplomat summed up his contribution last night, saying simply: "He was a disaster".

Even as Europe was launching the new single currency, Mr Lafontaine paid little heed to the sensitivities of the exercise. Indeed tact and diplomacy were in rather short supply.

Despite his position as Germany's Finance Minister, he failed to turn up to the launch party of the Euro on New Year's Eve on the basis that he had already booked an overseas holiday. When he was rumoured to be in the running for the presidency of the European Commission he failed to quash the stories. But it was on policy that Mr Lafontaine's presence was most widely felt.

Adversaries included the British Chancellor, Gordon Brown, who fell foul of Mr Lafontaine's desire to harmonise business taxes, and remove the effects of "social dumping" - where countries give preferential tax concessions to foreign companies.

When Mr Brown let it be known that he would veto Mr Lafontaine's plans, the German minister turned up the rhetoric, causing a feeding frenzy in the British press. The row even affected British opinion towards the Euro, leading British ministers to make urgent appeals to Mr Lafontaine to desist from using the word "harmonisation".

"I can't talk about this, Mr Lafontaine quipped, "I'll have to call it the `H' word."

This was only part of an economic agenda which presented difficulties for the UK. The changes of government in Germany and Italy last year, both with sharp moves to the left, produced a new push for a more Keynesian approach to jobs and growth.

In any debate over economic policy, Mr Lafontaine would be on the side of those pushing for growth and job creation, rather than stressing the need for structural reform of Europe's economies. But his arguments were a challenge to Brussels too, because he was regularly at odds with the rules which the euro is meant to operate under, the Growth and Stability Pact.

In a typically robust mood Mr Lafontaine recently took his argument to the European Parliament, making the case that successful economies are not always based on low borrowing or balanced budgets, as the EU decreed. Look at Ronald Reagan's economic policy, he told MEPs: "he ran up enormous debts - of the type that would have made the guardians of the Growth and Stability Pact tear out their hair - combined with massive tax cuts.

"I don't think the European Commission would have let Reagan loose on the streets."