David Cameron will arrive in Brussels tomorrow a conflicted man. Cameron now finds himself in a place between a Eurosceptic cabinet (and an even more Eurosceptic party) and pressures from his French and German counterparts to head towards a new European Union (EU) referendum, which could possibly rescue the Eurozone.
If it wasn’t for Cameron popping up frequently within the past few weeks to decry the handling of the European debt crisis, I think most of us would forget that the United Kingdom is a member of the EU. A couple of weeks ago, we witnessed Eurosceptic MPs from the three major parties move to put forward a vote on whether Britain should hold a referendum on its membership of the EU.
As argued by The Economist the outcome of the vote (the motion was heavily defeated) was not significant; it was the fact that this even occurred in the House of Commons. It exposed the extent to which Eurosceptism exists within British politics across the three major parties, and not surprisingly it was the Conservatives who were in the majority with 81 Tory MPs defying Cameron and the party whip by supporting the motion.
There is a definite element of the “I told you sos” in statements coming out of Britain. Former European Commissioner Jacques Delors has admitted that the “Anglo-Saxons” were onto something when the British initially pointed out that it was virtually impossible to have a single currency without a single government.
Britain has often been labeled an “awkward member” or “reluctant European” and history would suggest that Britain has always been a cautious observer from the sidelines. Since becoming an official member of the EU in 1973, successive British Governments (both Labour and Conservative) took intergovernmentalist stances towards the EU. That is, British policy makers made decisions that preserved the central role and authority of Westminister and tried to control the speed of European integration.
Recently, we have seen Cameron and his Chancellor of the Exchequer, George Osborne, blame Brussels for Britain’s economic woes by suggesting that if it were not for the current crisis, thing would not be so dire. Even without a collapse of the Eurozone, Britain is facing one of its bleakest decades ahead with an Observer poll revealing two-thirds of Britons surveyed believe children will have a lower standard of living than their parents. The British government is now looking at borrowing £111billion more than initially expected and the economy is set to grow by 0.8% in 2012. It is estimated that there currently there are 2.1 million unemployed Britons.
And while the Eurozone may buy 40 per cent of Britain’s exports; the current crisis has had a drag on effect rather than being a catalyst for Britain’s economic woes. The reality is that Britain’s economic slowdown began in 2007-8 with the banking crisis that saw the British government forced to bailout struggling banks such as Northern Rock. Despite this, it is clear that if the Eurozone were to collapse, it would trigger an even graver economic crisis in Britain.
In the past few weeks, Cameron appeared to have taken a firmer stance on relations with the EU. During the lead up to the House of Commons vote on the referendum on EU membership, Cameron warned Eurosceptics to “sober up”, suggesting an understanding that Britain is not ready to leave the EU and a comprehension of how complex the current European debt crisis is. Cameron’s current dilemma is this; with Eurosceptism rearing its ugly head in the House of Commons, Cameron cannot afford to be seen as signing over the transfer of any UK sovereignty to the EU without it being put to a referendum.
At the same time, senior officials in Brussels are not impressed with the prospect of Cameron trying to exempt Britain from EU financial market regulation. It would quite possible, derail the aims of the revised Lisbon Treaty (or a new EU treaty). This puts Cameron in an uncomfortable, yet not entirely unique position; many EU leaders before him have found themselves torn between their commitments to the EU and domestic Eurosceptism. At its foundations, the EU is an economic union, and the economic ties between Britain and the EU are now deeply entrenched.
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The safest outcome for Cameron is a revision of the Lisbon Treaty. This would be agreed to by all 27 members and guarantee that EU institutions such as the European Commission could enforce fiscal sanctions on Eurozone members. This option would also provide Britain with a clear veto; something to appease the Eurosceptics. A new EU treaty between the 17 Eurozone members would essentially isolate Britain; while Cameron could still push for the involvement of EU institutions, he would have less bargaining power in negotiations and there would be no guarantee of safeguards.
The Eurosceptics may be circling but it remains in Britain’s interest to remain within the EU and for the Eurozone to remain in tact; the economic impact of its disintegration would be catastrophic, even for an “outsider” like Britain. While Britain may have got it right about the Euro, the decision to remain a reluctant European places limitations on bargaining power during treaty negotiations.
Cameron’s current position is unenviable, however, his response to the challenge of the UK referendum suggests there is an understanding that Britain cannot afford to further isolate themselves from the EU. To paraphrase Cameron himself; they are all in this together.