Cameron may have more leverage in Europe than he thinks
Mats Persson 6:05pm
There's just over a week to go until the crunch EU summit on 8-9 December, so David
Cameron has to decide how best to play his cards — and quick. The problem, as Daniel Korski has pointed out, is that Britain faces the risk of ‘structural
isolation’ in Europe in the short-term. To counter this, Cameron effectively has two options. First, work with allies on both sides of the euro divide to seek political assurances —
formal or informal — against the formation of a two-tier Europe with a more integrated eurozone in the driving seat. Or, second, press ahead with UK-specific carve-outs from the EU structure.
The former would be supported by euro ‘ins’ (including Germany, to a certain extent) and ‘outs’ alike, but essentially involves seeking to lock in the status quo — which may prove futile given the rapidly worsening euro crisis abroad, as well as public opinion at home. The latter would be more in line with events and public opinion, but faces strong opposition from even natural allies such as Sweden, who want London’s help to keep the EU-27 intact.
To date, Cameron has been notably inconsistent. He has stated that his over-arching aim is to safeguard the single market, while simultaneously seeking to explore UK-specific assurances over intrusive EU financial rules — which, by definition, would fragment the single market (his lecturing of the eurozone has also been thoroughly unhelpful). Clearly, he needs to be smarter than this moving forward.
So should Cameron use his veto over EU treaty changes to ask for something in return? And if so, what?
As has been widely pointed out, if Cameron asks for too much in return for Britain’s agreement to EU treaty change, Germany could push for a treaty involving only the 17 members of the currency area, stripping Britain of its veto. It’s a bit more complicated than this, however. Berlin has three broad options for beefing up the budget rules in the eurozone (which we discuss in greater detail here): a treaty for all 27 member states, requiring a UK signature; a eurozone-only treaty (possibly with some others such as Poland); or a Pruem-style treaty involving a limited number of countries. At the moment, all of them are possibilities.
However, the level of ordnungspolitik that the Germans want will be very difficult to achieve outside the existing EU-wide architecture. Giving the European Court of Justice final say over EU budget rules and introducing automatic sanctions for states that break the rules — which the Germans are very keen on to avoid history repeating itself — really does require a treaty change among the EU-27. Berlin knows full well that arrangements outside the EU treaties tend to be awkward and subject to political wrangling; exactly what its wants to avoid moving forward. And though it may opt for a temporary, inter-governmental solution to kick start the process, I suspect that, sooner or later, Germany will want to anchor stronger budget rules in the EU treaties. Cameron may therefore have more leverage over a treaty change than he thinks.
What, then, should Cameron ask for? Guarantees around the Working Time Directive would be virtually pointless, as this law is subject to qualified majority voting among EU ministers and co-decision with MEPs — and therefore out of both Merkel’s and Cameron’s hands. Repatriating EU employment law in any meaningful way would also be difficult through the ‘limited’ treaty change that Germany is pushing for.
Rather, as the eurozone crisis continues to give rise to misdirected financial laws, an ‘emergency brake’ to insulate the City of London from growth-damaging intrusions should clearly be a priority. Open Europe will set out how this could work in practice in a report to be published next week.
Though not always easy to love, financial services alone accounted for 10 per cent of the UK's GDP last year, in addition to contributing a £35 billion trade surplus (and, remember, Britain doesn’t generally do surpluses). In comparison, fishing and agriculture — both governed by disastrous EU polices — together accounted for only 0.7 per cent of UK GDP. Both must be reformed, but in terms of economic priorities, a UK veto over financial services would not be ‘a hill of beans’, as Jeremy Warner incorrectly suggested in the Telegraph last week, but a significant and meaningful achievement.
Mats Persson in director of Open Europe.
Previous
disenfranchised
November 28th, 2011 6:26pm Report this commentand there may be a father christmas.....
Heartless Curmudgeon
November 28th, 2011 6:29pm Report this commentThe H2B has total leverage, - he merely has to grab hold of the disengage lever - and we're free!
But it does mean he has to SHIFT HIS ARSE! - no mean feat for a shifty, time-serving self-interested little lackey.
Chris Rose
November 28th, 2011 7:01pm Report this commentI am sure you are right: protecting the City is the most important thing for Cameron to do. Sabotaging it will harm the EU as a whole as well as us.
I question the value of attempting to repatriate powers. It will consume a huge a mount of effort and, in the end, it's going to be a futile exercise. We shall find ourselves being forced to negotiate with every member state and get completely bogged down in detail. The question we face is: do we really want to stay in the EU or not?
London Calling
November 28th, 2011 7:36pm Report this commentWhat, then, should Cameron ask for?...
Can we have the whole list?, only we have given away so much already, otherwise Oliver and a begging bowel comes to mind…in which case I would prefer the silence rather than asking for more…
Cynic
November 28th, 2011 8:31pm Report this comment"To counter this, Cameron effectively has two options. First, work with allies on both sides of the euro divide to seek political assurances — formal or informal — against the formation of a two-tier Europe with a more integrated eurozone in the driving seat. Or, second, press ahead with UK-specific carve-outs from the EU structure." Actually, he has three options. His strongest bargaining point is the elephant in the room that nobody seems willing to mention. Third, he could offer the country a referendum on in or out of the EU and he would be armed with a mandate from the country. Still, we mustn't let the people have a say, must we?
Mudplugger
November 28th, 2011 8:33pm Report this commentHeartless Curmudgeon is absolutely right.
Cameron's leverage is all in the phrase "We're leaving" - issue that, then stand back and watch all the inducements, returned powers, abandoned rules et al being showered down upon him in an attempt to keep us in at all costs.
Don't forget we pay vastly more into that corrupt club than we could ever get out of it and we import twice as much from them as they import from us. Basically, the EU cannot survive without us, a fact which Cameron seems incapable of acknowledging.
Trouble is, Cameron's got no nerve, negotiating skills or poker-playing capacity. But then he is just another EU-toady placeman, so he'll never play that ace anyway.
Wouldn't it be refreshing to have a conservative PM ?
Boudicca
November 28th, 2011 8:51pm Report this commentHaving leverage is only useful if you use it: Cameron won't. He is committed to the EU and keeping the UK inside: we know it and so do they, so they will offer a tiny morsel for Cameron to fling to his tame Europlastics and the takeover of the UK will continue unabated.
The ONLY way to retain control of any competence already handed to Brussels is to leave the EU. They may permit postponement of the Tobin Tax and gaining complete control of the City, but that is all it will be; a postponement.
We should get out. Vote UKIP.
TrevorsDen
November 28th, 2011 9:14pm Report this commentHow dumb do you have to be, Heartless?
Even disengaged we are faced with a moribund Europe. How does that help us?
Mr Rose - what you miss is that even out of the EU we will have to negotiate with them to obtain trading rights and we will have to abide by pretty much all their rules in order to produce goods which we can sell to Europe.
Immigration is a different matter - but Norway is not in Europe but is in Schengen. Such are immigration issues in Norway that a right wing loon went on a bombing and shooting spree.
We face economic problems from the EU in the guise of the Euro - even though we are not in it.
Economic problems without the Euro can be bad enough but at least with different currencies different countries can adapt to suit themselves. With one currency if it is managed badly the consequences are horrendous.
Its hard to see how the Euro can survive, but its even harder to see how it can survive without crippling half its members.
As such its hard to see how the great EU Project can survive.
Yow Min Lye
November 28th, 2011 9:39pm Report this commentThe Europhiles always maintain when it comes to EU membership that we need to be in to influence it. However, for nearly forty years we have been in it, trying with varying degrees of conviction to influence and each time coming away with crumbs from the table in exchange for which we have had to surrender huge swathes of our birthright to govern ourselves.
Perhaps this time, if the will if there, we can make the ultimate game-changing move and break free altogether. We know the 'inner core' of Euro members are determined to move towards 'ever closer union' whatever Britain says or does. So until we do give notice that we want out of this project we will always remain in a constant heads-you-lose-tails-they-win situation.
But of course, 'if the the will is there' are the operative words, as is the choice for Cameron when it comes to Britain's relationship with the EU of whether he wants to go down in history as a Heath or a Thatcher, a Churchill or a Halifax.
daniel maris
November 28th, 2011 9:48pm Report this commentSounds like Cameron wants two impossible things before breakfast, a tighter fiscal union for the Eurozone that doesn't exclude the British, and British influence on central EU economic policy that doesn't involve the UK in surrendering any more sovereignty. :)
JohnPage
November 28th, 2011 10:18pm Report this commentAny strategy must bear in mind that the eurozone will fracture, come what may.
Will be interested to see how you'd stop France and the eurozone shafting the City by the back door. Best of all, get the City & Docklands to secede from the EU :)
Hexhamgeezer
November 28th, 2011 10:42pm Report this commentRepent, Repent Sinners!!! 'Britain faces the risk of ‘structural isolation’ in Europe'
Is there no end to the horrors we face if we dont recant and follow in the steps of those Titans, Barrosso and Rumpy?
Danielle
November 28th, 2011 11:25pm Report this commentReducing immigration and changing the rules for EU immigrants eligability for housing and benefit, must be the number one priority.
Richard Calhoun
November 28th, 2011 11:55pm Report this commentRepatriating powers will be a time wasting and inevitably a futile exercise.
Cameron must give the UK voters a referendum as they have been repeatedly promised from all political parties.
The single act of announcing a Referendum in this parliament prior to the EU summit on Dec 8 would give him huge leverage.
Verity
November 29th, 2011 12:11am Report this commentDanielle - Close. But I would halt all immigration under any circumstances. There are plenty of other countries they can go to that are closer. I would also begin a massive repatriation programme.
Austin Barry
November 29th, 2011 7:51am Report this commentCameron is a self-centred, self-interested coward. He will do nothing.
Tarka the Rotter
November 29th, 2011 8:18am Report this commentIf we are structurally isolated in Europe's naughty corner, can we please keep our hands in our pockets and stop distributing largesse???
dorothy wilson
November 29th, 2011 9:02am Report this commentThe biggest leverage the UK has is the vast sum we hand over to Brussels.
The biggest problem with trying to find a solution to the euro mess is that there is no solution. All of the countries in the EU - including the UK - and indeed the rest of the global economy face a choice between the devil and the deep blue sea.
Publius
November 29th, 2011 9:30am Report this comment@TrevorsDen
I'm afraid your wearisome posts read as though they're always written from a script -- except for the occasions when you seem to throw a childish tantrum.
The trouble with your slavish unthinking adherence to what I suppose is the Party line is that you don't understand it, and the line changes too fast for you to keep up.
Bullgod
November 29th, 2011 9:36am Report this commentThis all makes enough sense, but in looking at what Germany (keenly supported by France) may threaten should we be deemed to be too greedy you need to also look at how the substance of such threats would play out in other Eurozone countries, namely Ireland. I don't know if a Treaty amendment to Lisbon would require a further Irish referendum, but any new Treaty between the 17 presumably would. What are the chances of an Irish 'yes'? Slim? How would the delay whilst a referendum is held play with the markets? Probably not well. If it is the case that Ireland would require a referendum to enter into a 17(+) Treaty then I would suggest Cameron's hand is quite strong. The only risk would be creating considerable bad will by overreaching ourselves.
Bob Dixon
November 29th, 2011 10:50am Report this commentThere will be no referendoms in the member states.The advantages of being out of the EU are huge.
1.Look at the money we save.
2.Immigration almost disapears.
3.We reclaim fishing in our own seas.
4.Our leaders can concentrate on our problems.
So lets get out asap.
michael
November 29th, 2011 11:09am Report this commentAt 9 billion pro rata pa the EU have milked us for c. 300 billion quid, most of our industry, and now they have really set their sights on London .
If we leave we just might make it all back-
at their expense.... its called leverage
michael
November 29th, 2011 1:34pm Report this commentSentiment:(all for one blah blah). Well if we haven't learnt by now we never will...The EU is merely a money go round, and for us that means: who gets ours? Sentiment is proving unaffordable , largely because our club members use it against us
"well YOU signed up to it" is the stock spiel as Brussels rubs its hands.
David Mathieson
November 29th, 2011 3:25pm Report this commentIt seems that the EU is splitting into two camps:
The majority, who are in the Euro or intend to join it, who will be supervised by Brussel and subsidised by Germany
The minority, such as Germany, and possibly others, who pay the subsidies.
IF the UK remains in the EU it will be required to join the Euro and subsidise the poorer countries. If the UK leaves the costs fall even more on Germany.
Is that not a strong bargaining position? Would not Germany be willing to negotiate to keep us in?
bikebill
December 7th, 2011 4:17pm Report this commentSelling debt won't cure any problem,just delay the day the Euro fails.We should be planning to be out right now and hold a quick referendum to gain public support to do just that.I would like to see the figures that support the claim that EU trade accounts for 50% of our overseas output.We export 82% of our output with a very minor part going into the EU.
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