Saturday, December 10, 2011

David Cameron's Euro-message: a puppet at home; out-foxed abroad

There was a sad inevitiability to what happened at the European summit in the early hours of Friday morning. Thinking back to Britain's relationship with Europe since the Second World War, it seems obvious that Europe had always been planning further integration, while Britain writhed over what position it should take. That position seems clearer today.

The reason for the meeting over the last two days was (as always it seems these days) to save the Euro from collapse. Let's not forget that the reason for the crisis is twofold: firstly, chronic overspending by the likes of Italy and Greece (and Spain, and Portugal, and Ireland...) that put the credibility of the Eurozone at stake; and secondly, chronic financial mismanagement by banks that dug themselves, like Greece and Italy, into a very big hole.
Both Germany and France were the primary architects of the plan on the table to stabilise the financial and governmental system.

Let's remind ourselves that the main reason that the likes of Greece and Italy were allowed to get themselves into this mess was because at the foundation of the Euro there were not strong measures to ensure safety across all Eurozone countries; in other words, there was one currency, but no effective controls at a national level. A more common sense approach would have been to take the same appoach with joining the Euro as with new members joining the EU: if you can't follow the rules, then don't join until you can. Put in this light, Merkel's idea of setting a supra-national financial policy through the Eurozone is pure common sense, righting a wrong made at the birth of the Euro that contributed to the crisis in the first place.
The failure of many European and British banks to follow the most basic rules of economics (not to borrow more than you earn) was the other main factor to the Euro-crisis. Nicholas Sarkozy was the main proponent for the idea of having a stronger regulation of the banking industry across the continent in order to prevent banks from repeating the same mistakes (as they are wont to do). As British banks were the least-regulated in Europe, and, not coincidentally, the worst culprits of irresponsible casino banking, they were the most to blame for this problem (and, therefore, those with the most to fear from regulation).
These two proposals, then, have the benefit of making another financial crisis less likely, at least in theory. Regardless of what views you may have over sovereignty (and in the inter-connected 21st century, that term is increasingly losing its relevance), these proposals would make the EU a safer place to do business.

That's the context of the Euro-crisis. David Cameron, as the Prime Minister of the UK, was at the meeting to discuss these new powers (and the emergence of a new treaty to enforce it), and Britain's role to play. Before going to the meeting, he had promised he would use the veto (as any treaty cannot go ahead with all member states agreeing to it) to block these measures if they damaged the British national interest.
The point here is: what IS in the British national interest in this situation? To allow the continued de-regulation of the British banking industry? It appears that Cameron's thinking was purely on these lines: to protect The City of London at all costs. But does The City produce most of our exports (60% of which go to the EU)? The financial sector, at its height about five years ago, represented ten percent of the overall economy (in itself a lot compared to most other countries); but what about the other ninety percent?
In other words, Cameron, by using the veto, made it absolutely clear to European leaders, as well as his own British voters, that he is focused on the boys in The City, and has forgotten about everyone else that contributes to the British economy, and trades with Europe. By his actions on Friday morning, he has reinforced the stereotype that he is aloof from everyday British interests, even the average business that trades with Europe.
Then there is the issue of his party. It is true that even before leaving for the summit he had put himself in an impossible position back home: if he didn't produce the veto, his own party MPs would have been incensed and many would probably have begun plotting for a leadership challenge, in a repeat of John Major's misfortune back in the '90s. The problem Cameron has is that what Major once called "The Bastards" (a small number of strongly Euro-sceptic MPS) are now a significant number in his party, many of whom were elected only last year, so have no established sense of loyalty to the leadership.
By producing the veto Cameron has simply shown that he has caved in to the short-termist interests of The City (who also provide a great deal of financial support to the Tories), and the knee-jerk interests of his party. Cameron has proven himself to be a puppet; nothing more.

Then there is the way in which Cameron dealt with the negotiations themselves. When Gordon Brown was Prime Minister, he may well have been mocked at home, but was at least well-respected abroad, due to his management of the crisis. Sarkozy once famously told him: "I don't know what it is about you, Gordon, but somehow, I love you". By contrast, it seems that Sarkozy has nothing but disdain for Cameron. It seems also clear that the treaty vote that took place the other day was a real "do-or-die" moment for Europe, in particular the UK.
Sarkozy seems to have taken George W Bush's famous "you're-with-us-or-against-us" approach with Cameron: either sign the treaty, or get lost. Therefore, it was not Cameron who showed strength in using the veto; it was Sarkozy who forced Cameron into that position. Sarkozy is as wily as a fox in European politics, but has a savage bite to match. What's so worrying about Cameron's approach to European politics is a clear lack of knowledge or diplomacy about how to deal with these kinds of complex issues; he failed to even make a serious attempt to find out before the meeting what potential allies he had on his stance against the financial reforms. What some Conservatives might call "Bulldog Spirit" just seems like stubborn stupidity to Europeans.

No other Prime Minister has ever had to resort to using a veto in Europe. Even Margaret Thatcher was able to find a compromise; so was John Major. It is true that Sarkozy was in a stubborn mood over regulation, but still, a more experienced and skilled operator would have been able find some kind of way out that perserved Britain's status, but also could act as a way forward. That's the nature of negotiation: you negotiate. It's also worth remembering that all the EU's policies are decided in this way: there is no "diktat" as such, because all policies are the result of negotiation and supra-national compromise - this is the price of co-operation.
It seems that the experience of those five days in May last year, those long discussions and compromises that Cameron made to get a first taste of power with the LibDems, were all forgotten early on Friday morning. It's sad to think that Sarkozy and Cameron were the two prominent national leaders that worked together the most to bring about military action in Libya only nine months ago; there was none of that spirit of co-operation and careful negotiation on Friday. In that sense, Cameron is useless at European politics.

This now lives Britain in a special Euro-club of one. Cameron's failure to reach a compromise in Europe leaves Britain's position in Europe more danger than ever thought possible. Although still in the EU, thanks to Cameron, Britain is now officially in the second tier, with no-one to keep us company. So by his actions, Cameron has not only removed Britian's voice from the main table, but still powerless to complain about what actions the EU has that affect us; in other words, as long as we are in the EU, it still has influence on us, but we have less influence on it, as we are now a second-class European power.
More worryingly, by pandering to the Eurosceptics in his party, Cameron has simply traded the accusation of Chamberlain-esque "appeasement" to Europe, for appeasement to the lunatics in his own party. By doing so, he has surely opened up a can of worms; not Margaret Thatcher, nor even John Major, did that. Now they have tasted blood - what's next? The calls from his wilder backbenchers may well move on to the next bone of contention: getting out of the EU altogther. And let's not forget that Cameron owes his position as Prime Minister due to the co-operation of his coaltion partners, the LibDems, on paper the most pro-European party in parliament. Large numbers of their party are now livid with their leader, Nick Clegg, for allowing Cameron to take the position he did at the negotiations.

So, for the sake of appeasing the wilder members of his party, and the short-term interests of The City, Cameron has put Britain in a new, second-class position in the EU, and also created a huge (potentially splitting) headache within his own coalition government.
Well done, Dave.

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