Europe has reached a crucial crossroads, from which there is no return.
Europe has reached a crucial crossroads, from which there is no return. Soon, either the eurozone countries will become even more tightly bound together or they will begin to fall apart as the most ambitious elements of the European project are abandoned. The eurozone cannot continue as it is constituted for much longer. And if David Cameron is to be credible as a Conservative leader, he must take advantage of Europe’s weakness to secure Britain’s strength.
The eurozone’s difficulty may quickly become Britain’s opportunity. Last week, Jean-Claude Trichet, the normally cautious governor of the European Central Bank, said the eurozone needed a single finance ministry, and so a common budget, to work. This requires a treaty change, over which Britain would have a veto. Cameron could, if he chose, use this moment to renegotiate our whole relationship with the European Union.
But frustratingly, Britain’s political elite hasn’t grasped the scale of the opportunity. Whitehall is not preparing itself for any coming EU negotiation. There are no teams of lawyers and diplomats locked away in the basement of the Foreign Office preparing Britain’s negotiating strategy. There should be urgent seminars at Chequers to discuss what Britain needs most from Europe — but there have been none.
Ask people across government about the issue and the stock response is: ‘There’s no point getting ahead of ourselves.’ This is a bizarre approach. A well-run diplomatic service prepares for even remote possibilities, let alone entirely predictable crises. Having been taken aback by the Arab spring, it would be a scandal if the Foreign Office was now to be caught off guard by the inevitable changes in Europe.
Among those who will discuss the question, there is a breathtakingly complacent consensus: it would be bad form, they say, to take advantage of the misfortune of our European friends to advance the British position. Someone involved in formulating the coalition’s European policy told me: ‘It wouldn’t be right to obstruct changes that don’t affect this country.’ What wouldn’t be right would be to fail to take advantage of this chance to advance Britain’s national interest.
Others in government stress that it is in our interests to make sure that the eurozone works, and argue that it would be counter-productive for us to delay reforms. Do they really imagine the French taking that attitude if they were in our position?
The Foreign Office’s analysis is that a treaty change is unlikely. It believes that European leaders have no desire to embark on a process that would require the agreement of 27 governments and 27 national parliaments, not to mention the German constitutional court, a couple of referendums and some national elections. Their view is that the eurozone countries will try to muddle through.
But even with another bailout, Greece is likely to default within two years. At this point, Europe’s leaders will have to do something. Indeed, the eurozone crisis has already required one treaty change. It would be foolhardy to think there won’t be more before this is all over.
Last October, EU governments agreed to a German-proposed amendment that set up a permanent bailout mechanism for the eurozone. Britain could have blocked it if it wanted to. It chose not to. (The amendment will come to the House of Commons for approval in the autumn.)
Conservative party sources stress that the government used the German initiative as an opportunity to ensure that Britain would not be involved in any bailouts after 2013 and to obtain agreement that the EU budget will, in future, only rise in line with inflation. These are not insignificant points. But they hardly represent a shift in Britain’s relationship with the European Union. If another chance presents itself, Cameron must seize it.
Cameron’s reluctance to seize his chance last autumn was almost certainly because of the Liberal Democrats, the most pro-European party in British politics. Renegotiating our EU membership was hardly in the coalition’s programme for government and Cameron would have worried that it might destabilise, if not split, the coalition.
The government’s founding text, the coalition agreement, places Europe as only the ninth most important subject on the national agenda. Cameron would like it to stay that way, because this is an almost impossible issue for him. What his party wants is the opposite of what his coalition partners will accept.
But the European issue cannot simply be parked (to use the argot so beloved of political professionals). It is a moving vehicle.
Cameroons talk about leaving it until the second term when they have an overall majority. Apart from the arrogance of assuming there will be a second term, they are ignoring the fact that an opening like this might not present itself again for a generation. Cameron will be expected to act if he can.
And his first act must be to work out what Britain wants. One option is to push for a British veto over any regulation that affects financial services, on the grounds that it is a more significant industry for Britain than any other member state. The European Commission and the French would be strongly opposed. But they would know that the new framework for the eurozone could not proceed without London’s approval.
Alternatively, the government could push for a far more radical renegotiation of Britain’s membership. It could attempt to exempt Britain from all EU measures that do not relate directly to the single market. This might seem like an unrealistic goal. But after another eurozone crisis, the European project would be suffering from a lack of direction and confidence. The last thing it would want is for one of the big three to leave. Cameron could point to the EU’s own research on the unpopularity of EU membership in this country and remind them that he has a commitment to put any new treaty to a referendum. This would be good leverage for further concessions.
A European crisis is coming and Cameron mustn’t let it go to waste. But if he is to take full advantage of it, he must start preparing now.
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