Renegotiation reality

Governing is about choices. That goes for Europe too. The government says it can get everything it wants – that’s politics – but the reality is different. It actually faces a number of trade-offs, the biggest being a choice between staying in an EU that reforms but not as quickly or as dramatically as parts of the Tory party wants; or to pull out entirely from the EU. 

In his speech at the Lord Mayor’s Banquet, the Prime Minister argued that he could both change Britain’s relationship with the EU but remain inside the 27-member bloc. But I can find no serious EU expert or mandarin who believes this is actually possible. The most the PM can probably get is an opt-out from judicial cooperation.

The main reason is that the UK has no leverage over the other EU nations. Forget the money that the UK pays into the EU. That won’t stop the other EU states moving ahead outside the treaties if they absolutely have to, even though they would prefer not to. The non-Euro nations don’t look to the UK for leadership – Poland wants to join the Euro and the Swedes, Dutch and Danes don’t want to be seen to be as obstructionist as the UK.

It is worth remembering that when John Major secured the opt-out from the Social Chapter the other EU states needed UK backing for EMU and wanted to help the nice Mr Major. They don’t really want anything from us now and don’t really want to help David Cameron. The idea of a “network not a bloc” is on nobody’s official agenda.

So this can probably only end in sorrow for the PM and he will, eventually, either have to concede that he won’t be able to get what the eurosceptics want – large-scale repatriation – or he will have to consider UK withdrawal from the EU.

For now, the government seems unwilling to concede that they face this choice. In which case what to do? First, the PM needs to dial down his rhetoric both to achieve more at home and abroad. He can achieve some repatriation, but as I’ve said I’m not sure he can achieve as much as he intimates. Being strident also risks ruining relationships across the continent. Calling for Angela Merkel, a cautious consensus-builder by nature, to act quickly and pro-actively is only going to cause annoyance.

Second, No 10 needs to get other EU states to sign up to an ‘Open Europe Protocol’ where everyone agrees that the Eurogroup cannot infringe on ECOFIN’s rights – in other words, the 17 cannot decide for the 27. This protocol should also emphasise the need to complete the single market – for example liberalising services. In reality, the Eurogroup will ‘caucus’ anyway – whatever they promise – but a formal protocol will make it harder.

Third, for tactical reasons the Chancellor could make a bigger deal of the Tobin tax – and how it is the greatest threat to Britain’s economy. As any move to this madcap scheme will require unanimity among the 27 member states – as so-called ‘enhanced cooperation’ among a smaller group of states on this won’t really work – the UK has a veto. So the bigger the threat, the greater the relief when George Osborne sees it off.