Tuesday, November 29, 2011

Cameron may have more leverage than he thinks

Over on the Spectator's Coffee House blog, we look ahead to next week's EU summit and suggest that David Cameron may have a stronger hand than he thinks. Here's the piece:

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.

22 comments:

Rollo said...

Cameron makes a prat of himself every time he opens his mouth. His profound ignorance on matters economic is matched by his profound stupidity in lecturing others.
Cameron could redeem himself only by giving us the referendum he gave his cast iron pledge for.
Once we get out, there will indeed be a two speed Europe: Norway, Switzerland and the UK forging ahead, the others floundering in the euro-puddle.

Anonymous said...

Rollo is quite correct in his comment, Cameron is the biggest waste of space that is apart from Clegg,Blair & Brown.

jimbo said...

I am fed up with Cameron.What we need is a leader who will stand by his promises.He ought to get us out of the EU completely we will tighten our belts in order to do this. Why is he paying homage to Sarky a Merkel they will give him no head room at all.
Come on PM get our of Cleggs bed and do something positive.

Anonymous said...

If Cameron is so fond of Europe perhaps he should stay in Berlin. What we need in Britain is a British spring... it worked for the Arab countries, What says you ???? Bob Owens

Anonymous said...

The EU is a cost Britain cannot sustain, a one way street that does
not and will not work.
Despite this, all three main parties are hooked on this undemocratic, unaccountable, communist organisation who's sole aim is control of Europe. As a member, Britain has no voting rights - one twentyseventh! It means, Blair, Brown, Cameron,Haig,
Osborne or Milliband, have no conception of democracy. The EU have none either.
Why

Anonymous said...

If Cameron can agree to a treaty change without a referendum (as no doubt he hopes), it is the end of British democracy.

We need to be out of the eu. This is the equvalent of taking appeasement all the way to the invasion of Britain. We need strong leadership not wet connivers in the loss of our remaining freedoms.


Brtain out of the eu.

Frances Fpx said...

Edward Heath cheated the people of this country when he signed control over to the EEC of Britain's natural resources ie: Coal, Farming, Agricuture and Fishing. I am dreading David Cameron making out he is going to do his best for Britain but to do so he has signed off control of Britain's Financial Services to do so.

Gordon 98AB said...

In 1975 when i voted yes for the EEC( As it was then called)I understood that I was voting for an association of soveriegn states in a customs union. EVER since then we have been cruelly misled. The Eurpoean Union is a corrupt third world organisation, manned by secondhand politicians who exercise excutive power without being accountable to the electorate.IT IS NOT ONLY UNDEMONOCRATIC IT IS ANTI-DEMOCRACTIC. If we are to be part of the Untied States of EUROPE then the European Commission should be disbanded and consigned to history( Think of the money to be saved if we got rid of all those EUROCRATS) and have a properly elected parliament that is TRULY accountable to electorate. In the meantime, since this is unlikely to happen, we should have our referendumn , let the British Nation speak and withdraw from the whole shambolic mess and return to being Soverign Nation in our own right. Rule Britannia and God Save the QUEEN

David Barrie Neale said...

I must concur with Gordon 98AB.

This Government is as mendacious as Brown and Blair's administrations. Promises of a referendum regarding Europe are anathema to most in this government, and their weasel words regarding promises of a referendum should there be serious treaty changes are just that - weasel words. Almost certainly, even though the EU dictatorship embark on the most gross changes, Cameron and his Mad Hatters Tea Party will simply state that the changes are so insignificant that no referendum is required.

These are scandalous times - some extremely devious people have determined that they will indulge themselves in social engineering exercises, completely unmoved by any demands by ordinary people who demand democracy. Furthermore, there is almost nothing that we can do about it.

It pains me to state the above; I am a lifelong Conservative voter. NEVER again, until the Party I trusted begin to tell the truth, and keep their promises. I won't hold my breath.

Anonymous said...

David Cameron is, without lawful authority, negotiating British freedoms with a foreign power - contrary to our English Constitution; therefore he is committing acts of treason! FACT!

Robin L said...

Cameron is Eurofanatic as is Clegg,and Ed Milliband.

Only UKIP will rebuild UK by Manufacturing,Fishing Zones 200 miles patrolled by coastguards,Coalition have shut 8 coastal stations.

Mass immigration has lowered wages,salaries,living standards.
Common Fisheries wrecked UK fish stocks, Common Agricultural policy has helped bankrupt farmers' by paying them for not growing. UK population 65m and rising we are prisoners Not self sufficient in Foodstuffs. Manufacturing 82% of UK GDP IN !1973, 13% 2011

Anonymous said...

There is only ONE solution for Cameron but unfortunately he is too much of a wimp to do it.
That is, repeal the 1975 act for joining the Common Market which was a lie from the start.
No need for a referendum, as, with repeal, we would be out of this sorry mess.
The 40billion yearly payments to the EU will then be used to rebuild roads, railways etc thus providing work. And purchasing industries taken over by foreign countries at firesale prices.
Back to Britain and back to what it used to be.

17041937 said...

I wrote to Cameron in August expressing my concern that since taking office he hasn't done a single thing right . In ever crisis one step behind the action . No fly zone in Libya , same as Blair in Iraq , an utter fool incompetent to govern , Hague and the rest of the cabinet , utterly hopeless . Britain should leave the EU forthwith , we would save 18billion , any initial hardship would be worth it . I believe the Euro is on the point of collapse , the sooner the better and the EU !!!
David Barneby

17041937 said...

Britain has got to leave this horrendous EU no matter what , even if the people have to storm the houses of parliament and drive out the government . No good Cameron seeking a return of one or two powers , time for a referendum . Britain is not the only country suffering under this dastardly EU administration . We need a " European Spring "

Anonymous said...

VOTE....

Repeal the 1975 act..leave the Common Market.

Lee

Paul Daniel said...

Cameron is showing himself to be another Tony Blair: political survival first and foremost and say what is necessary to keep the peace and deal with the immediate short term problem without showing any real vision for the future; no real leadership. Keeping promises is just an aspiration that falls as the first showing of 'realpolitik'.
He is just another version of John Major, reacting to events as best he can. Any idiot can steer a car down the street bouncing off every parked car and swerving violently to avoid the next unexpected danger but that's not proper driving.
The Euro does not and will not work without full integration of the economies of the countries concerned and that cannot be achieved if the democratically expressed will of the respective peoples is respected. So, it's either a break up or dictatorship from Brussels/Germany, like it or not. As a matter of expediency Cameron is going for dictatorship and that short term fix will cause far worse long term problems than financial pain now.
No more lies and fudging. Let's have our country back. Referendum now!

Anonymous said...

Mr. Cameron is too weak and France & Germany know it, the very fact that we pay 18+billion to the eu and only get approx 8 billion back in trade is a fact that a nursery school child would know is not good for the country, that combined with the continued unfettered immigration for benefits is killing our economy.

Mr. Cameron's time would be better spent making trade agreements with countries outside of the eu, if you think about it Europe has nothing that we can't make, grow or raise ourselves, the scare tactics of 'you'll be isolated' or 'it will cause a war' carry no weight with anyone with jot of intelligence but for some reason, and it can only be personal gain i.e.: b-Liar, we keep giving more and more and get very little in return.
Time to pull out and make our own way in this world to get back to the once proud and prosperous country we once were before the one world government driven eu got its corrupt claws into us.

Anonymous said...

Time for people to realise that none of the main political parties are ever going to give the people their say in europe. We should all do what the people of Kidderminster did a few years back,find the person we want to represent us in parliament and vote them in as our MP without regard to party politics. The system we have today is no longer representing the people of this country over the concerns the people have.

Anonymous said...

I have written to my MP saying that I will only support and vote for a party that will bring us out of the EU. If all like minded people did the same we may see some progress. Every politician works to be re-elected first, anything else is secondary. We need the return of "conviction Politicians" not career stooges with massive perks. We need this now more than ever.

Anonymous said...

Is it really in the interests of Britain to go along with the Eurofiles Merkal and Zarcosi and what has been sporned the Dictatorship now called the European Union. Their latest idea is for the United States of Europe with tax raising powers in the hands of the unelected. What is planned overides democratically elected national governments as can already be seen in Greece and Italy.They have given away their sovereignty cheaply. The Euro will fail in any case even with central control. All the decisions on the Euro are being made for political reasons and not for economic reasons, as is happening now. You mays as well call the Euro the Rubel. With the track record of deceipt over the Maastricht treaty and the Lisbon treaty and the German Mark before the second world war, the market do not trust them and why should they or anyone else. If the planned changes go through their will be increasing unrest in the European states and eventually Civil wars with sucession of nation states from the Union and the ultimate failure of the Euro in any case. Will this lead to a civil war as with the susession of the Southern States from the Union in the USA civil war? IN whose interest is the proposal in any case? Is it not Germany and France because of the political damage to their dream of Franco German dominated Soviet State of Europe. Why do not they just form a union between themselves and leave the rest to live in harmony and peace for their national governments to act democratically and to have currencies that reflect their worth in the money markets.This will happen any way why not do it now in an orderly fasion!

Anonymous said...

I am a lecturer in the business department of a major university and I can tell you that the next generation of young business people are very angry about the manner in which the UK is governed. They believe that the UK has become a rather undemocratic place to live and it is not lost on the young that we are sending our troops abroad to fight for democracy......that we do not have here on our island.
I cannot remember or identify a time in history when the UK was governed by so many incompetents who do not understand simple economic principles.

Angela Merkel and her team are running rings around everyone - DC is not up to this sort of dealing and he still believe the UKs best interests are in Europe. He is so very afraid of having a Referendum.

Bill Mountford said...

Cameron may pretend to try to repatriate powers from the EU or he may admit that he's not even going to try. Either way if the Franco-German Axis changes that damn treaty, we demand our referendum.