What Cameron should push for in Brussels
Mats Persson 9:30am
As David Cameron stays in Brussels for his third European summit as PM, it’s
becoming increasingly clear that the EU's approach to the eurozone crisis – put up short-term cash and pray – isn’t convincing anyone.
On Wednesday, Moody’s threatened to downgrade Spanish government bonds another notch, citing the fact that,
between them, the country’s government and banks have to raise €290bn next year to keep the party going. And, across the eurozone, banks and governments face daunting refinancing targets
in 2011, which begs the questions: at what cost? And what happens if they fail to meet them?
Taking into account the countries that themselves have received support and the need to maintain retain a ‘triple A’ rating for the rescue fund, the real amount available in the EU/IMF bail-out pot could well be something like €410bn, as opposed to the
€750bn outlined on paper earlier this year. This will probably not be enough to put Ireland, Portugal and Spain on life support at the same time, should things get messy.
Viewed from London, it’s worrying that the Cameron government has so few ideas and strategies in place for how to take Europe out of this mess. They may have circulated a letter calling for spending restraint, and received the backing of France and Germany. But, given
the interconnectivity of Europe’s trading books, without a fundamental solution, the eurozone’s problems will remain Britain’s problems.
So what, then, should Cameron be pushing for at today’s summit?
Firstly, he should back Angela Merkel’s attempts to allow for a restructuring of eurozone (Greek, Irish and Portuguese) debt in the medium term, including hair-cuts for investors. At the same
time, Europe’s banks, not least Spanish ones, should be pushed to come clean on their loan losses, so that we can flush out Europe's sick banking system once and for all (here genuine,
rigorous stress tests could help to identify how big the problem really is).
Secondly, make common cause with fiscal conservatives in Germany, Scandinavia and the new member states, in arguing against more fiscal harmonisation in the EU, which, predictably, there are now
calls for. Perpetual bail-out outs and common eurozone bonds merely collectivise irresponsible fiscal behaviour
while doing nothing to strengthen Europe’s competitiveness. Cameron is also right to seek legal assurances that the UK will not automatically be liable for future eurozone bail-outs –
the EU Treaties were flagrantly ignored to implicate the UK last time around.
The ECB must also stop acting as a rubbish dump for bad government and bank debt and become a solid, independent central bank again – its current role is simply unsustainable and poses a
long-term threat to stability.
Thirdly, while not saying it in public, Cameron should explore the possibilities for a complete restructuring of the eurozone, including changes to its membership. The fact is that Greece, Portugal
and others will never be able to compete with Germany inside a currency union. An orderly solution before the patchwork unravels is far better than a chaotic end to the venture in the midst of a
crisis.
But, perhaps most importantly, it’s time for Cameron to play European politics. As we’ve argued on Coffee House before, the eurozone crisis, and the fluid situation it has created,
presents a huge opportunity for a British Government to finally make some headway in the EU. It’s not entirely clear if Cameron actually got anything substantial in return for backing
Merkel’s calls for changes to the EU treaties, but he should have. There’s a power vacuum in Europe just waiting to be filled with new ideas.
A radical reform agenda for growth, jobs and democracy (including bringing powers back home) wouldn’t obstruct Europe’s efforts to save the eurozone, as some have argued. If the end
result is a more adaptable, legitimate and competitive Europe, it will do far more for the euro – in whatever form it’ll exist in future – than any of the proposals that have been
floated so far.
Cameron must show enough confidence in the UK’s diplomatic and political capabilities to push this line.
Mats Persson is director of Open Europe
Previous
David Bouvier
December 17th, 2010 9:56am Report this commentWell, he is now faced with a treaty modification. So he should be using it at the very least to ensure that non-euro countries have strong treaty protection about any liability for euro-related debts. Otherwise, he can tell his colleagues he will need a referendum.
Vulture
December 17th, 2010 10:05am Report this commentThis post is full of 'coulds' 'woulds' and 'shoulds'. Yes, we all know what Dave 'should' do in Brussels - the question is what he is actually going to do.
Sadly, the answer is clear: Rien. Zilch. Gar nichts. Nada. Zero. He has already surrendered, sold the pass, and broken his pledges to hold a referendum on Lisbon or amend the disgraceful Human Rights legislation that forces us to play host to murderers and terrorists at our expense forever.
Heath-Cameron, not to put too fine a point on it, is a treacherous, lying slimeball who much prefers to see this country a powerless province of the EUSSR than a free and independent nation.
Rhoda Klapp
December 17th, 2010 10:21am Report this commentThat's right, just one more push and we'll get them to see our way if thinking and initiate a series of reforms..Oh, such reforms!..which will bring democracy, and fairness for our farmers and fishermen, put an end to debt, suspend the laws of supply and demand, and the laws of physics, and turn around that fickle human nature thing that makes us tend to irresponsibly favour our own over strangers. Yes, one more push is all it will take. Probably be over by Christmas.
TomTom
December 17th, 2010 10:39am Report this commentHow is Cameron going to back haircuts for debt holders ? The City will not permit it. Even with AIB Senior Debt experienced no haircut because it would increase pressure on PIIGS sovereign debt yields.
Journalists write gibberish. There is nothing Cameron can do since London is where the hedge funds who are shorting this debt operate and he is a puppet for banking interests.
The EU will stumble along to capital controls and Cameron is an irrelevance. He will go with the flow
se1man
December 17th, 2010 10:43am Report this commentDream on.
Liz Brown
December 17th, 2010 10:49am Report this commentNow is the time for Cameron to negotiate our way out of Europe. The last thing we need is a restructuring - of any sort that is lala land and will do nothing to resolve the underlying problems of an undemocratic and totally corrupt entity
Neil Turner
December 17th, 2010 10:53am Report this commentLeave the EU, it's as simple as that
How many times do we hear that the reason for nonsense is EU policy..... ?
- A Human Rights law that allows an immigrant criminal who runs over a child to avoid deportation
- Carbon targets that will massively increase our electricity bills in the midst of a Siberian winter
Only two examples from yesterday's news, but there are many
What Mr Cameron needs to understand is the intense and growing fristration of a political class and Mainstream Media that avoids honest debate, and destroys democracy
Ghengis
December 17th, 2010 11:09am Report this commentand the sky is is full of pies
europhile
December 17th, 2010 11:46am Report this commentStaggering. Quite staggering. If our PM was as good as his word he would take advantage of the crisis in the EU to negotiate what he lead us believe he wanted. The current crisis may be the best and only chance he has to put Britain first and give us a new kind of relationship with Europe. The kind of relationship he pledged he would work towards. Yet 3 summits in he looks rather like he has gone native.
PayDirt
December 17th, 2010 11:46am Report this commentThe problem is still the banks. The FT publishes overall “liquidity gap” (I’m not a finance person but I can guess what this means) of 2.3 trillion dollars (world’s largest banks). And this is just what they dare to report. Any guesses as to what the true numbers are, no because they still have not worked out who owes who what. And the Spanish banks for good measure have lost 28% share price this year. Cameron needs to find a way to plug the drain on the UK’s finances of this continuing banking crisis. It’s a crash in slow motion, you see it happening, Greece or whoever defaults and all the banks who lose money will ask for yet more handouts from the public purse. Cameron, say no now and give the public proper banks where we can put our savings safely. If they won’t be regulated let them go bust and set up new ones which will abide by regulations.
AF
December 17th, 2010 11:47am Report this commentVulture,
Sadly this is true.
As for the loss of trade as we are constantly reminded(should we pull out or become a token member)Well I dont see any problem with China doing trade with the E.U. The one thing that unites and is uniform in Europe is that you can purchase identical products anywhere curtisy of The Republic of China.
They clearly dont experience any drawback in non-membership.
Sui Juris
December 17th, 2010 12:10pm Report this commentWhat about "no more bailouts to anyone; no more subsidies of any kind"? If we could force that policy on the EU we would do a lot of good for all its members, ourselves included. What other benefits are we hoping for from our membership of the debt union?
Since the opposite result will be expected, I conclude we are Better Off Out. Sadly that option is not yet on the Prime Minister's agenda, and equally sadly I fear Vulture is right to say that he has already decided to do nothing. I dare say he will protest about some things, but he won't cause trouble or threaten to rock the boat, and that is what will be needed.
Norman Dee
December 17th, 2010 1:08pm Report this commentI have given up hoping Cameron will do anything positive for the UK, he will call supporting the Euro good for us, whilst knowing full well it isn't. The Cameron toboggan has crested the hill and is sliding down to the inevitable end, if this toboggan has brakes, which it doesn't look like at the moment someone either has to use them or we need to get off, it's already along way back to the top.
TGF UKIP
December 17th, 2010 2:09pm Report this commentAs Dave heads to Brussels the only real question is, to polish his LibDem/SocDem credentials, what's our Polenta Eating Surrender Monkey going to give away this time.
Rhoda Klapp
December 17th, 2010 2:54pm Report this commentI apologise for repeating that when the comments show a degree of unanimity (if there can be such a thing) as great as this, the Spectator should consider the possibility that the unwashed just might have a bloody point, and if it doesn't fit in to the current political narrative, it's the narrative that's wrong, not us.
But no, Fraser will probably discover the ANTIs again in a couple of weeks, if one of the broadsheets blogs it as a new phenomenon.
Verity
December 17th, 2010 3:25pm Report this commentI don't want to fiddle while Rome burns, so I won't be addressing what Dave should notionally do, other than mention that as we are in the EUSSR illegally, we have decieded to bugger off.
Good luck, and thanks for all the junkets.
Verity
December 17th, 2010 3:50pm Report this commentPay Dirt - "The problem is still the banks."
Incorrect. The problem is David Cameron, whose bum is itching for a seat at the top table.
TrevorsDen
December 17th, 2010 3:52pm Report this commentDear Rhoda ... as you might guess I was just about to comment that all this is a load of ....
Cameron has limited and indeed ended then blank cheque negotiated by Brown. He has started the long business of curbing the EU budget.
Some people want out of EU some though want in. Most don't care. I think the referendum freaks should be careful what they wish for.
What the Eurozone does is there business.
There was a rant against the ECHR - which has nothing to do with the EU. Things need changing - not least with our own judges - but it has nothing to do with the EU.
denis cooper
December 17th, 2010 4:35pm Report this commentSo far the news from Brussels suggests that Cameron should be hauled into the board room and fired ...
"This task was all about negotiation. You were sent to Brussels provided with a veto on treaty change, which you could use to get the best possible deal for your country.
Instead you've come back here having given other countries everything they wanted, and got zilch in return. They must have bloody well seen you coming, they're laughing up their sleeves at you.
Dave, you're fired."
Rhoda Klapp
December 17th, 2010 5:00pm Report this commentTD, you seem yo blow a bit hot and cold on the EU. or at least the immediate leaving of it. Fair enough. But it helps no one, not you, not me and not even the most rabid europhile, when our glorious leader goes off to Brussels in his Lockheed 14 and comes back having been comprehensively screwed over by the team. It looks bad. It cements discontent on all sides, it leaves the problem unresolved. Every time, without fail.
yank
December 17th, 2010 5:43pm Report this commentThis will likely end your David Cameron problem, folks. Just give it time.
Agree though, that the sharks in London and New York are shorting the living hell out of the PIGS and their banks, and cashing in handsomely. Osborne was over here today, and opaquely commented on that very thing. A smart man, I still think, but he's going to get sucked down in the undertow.
The euro is toast, and now it's just a matter of tabbing up collateral damage.
Cynic
December 17th, 2010 6:18pm Report this commentWe all know what Cameron OUGHT to do, but he won't. There's an amendment to be made - in other words, effectively a new treaty - in order to fund the bailouts (which are illegal under Maastricht) so he should be saying "I'll be having the referendum I promised on any new powers." And while he's about it, he should have an in or out referendum as well. What he's likely to do, however, is metaphorically roll over and have his tummy tickled.
Boudicca
December 17th, 2010 10:05pm Report this commentVulture
December 17th, 2010 10:05am
Well said.
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Matts. Cameron needs 'push' for nothing in the EU. He should simply tell the Politburo that the UK is paying no more and it is now time for the the British people to make the decision on whether to stay in or get out.
Then he should call the Referendum.
The EU is beyond reform. France and Germany won't reform it because it suits them just as it is. We should simply get out and leave them to it - because it doesn't suit us.
David Barneby
December 22nd, 2010 5:37am Report this commentThere are some excellent posts here .
John Majors signing Maastricht was an outragious betrayal of Britan , as was Ted Heath's joining the EEC .
I am appalled at the state of Europe today ; EU rules and regulations that are destructive of our nation state societies .
The Euro a currency that could be seen to have major errors from its conception .
David Cameron perhaps has his hands somewhat tied by Clegg ; but he appears a total wet in his dealings and ability to stand up for Britain . I have a feeling he rightly has a fear , that if the Brits like rats leave the EU ship , or rock the boat , it will immediately sink . The best thing that could happen now is for Greece and Ireland to default , also in their own interests . The banks deserve it ! It is the combination of governments operating beyond their means hand in glove with banks that provide the borrowing . Both have got to be stopped . I can understand the fear of if the Euro fails , its devastating effect on those countries involved as well as Britain and others . It is my belief that the Euro cannot survive and that it would be better for us all to " Bite the Bullet Now ". Never mind struggling on , the Euro should be abolished now and everyone return to their original currencies . It is time for the EU to be wound up in its present form ; to be rethought . Europe should have a loose association of Soveriegn States managing their own affairs .
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