London ~ Saturday 10 December 2011, page 1
David Cameron blocks EU treaty with veto, casting Britain adrift in Europe
EU leaders poised to line up 26-1 in support of Franco-German blueprint, but PM had apparent blessing of Nick Clegg
Ian Traynor, Nicholas Watt, David Gow in Brussels and Patrick Wintour
David Cameron at the EU summit in Brussels where he used his veto to block the revised Lisbon treaty. (Francois Lenoir/Reuters)
David Cameron plunged Britain's position in Europe into the greatest uncertainty in a generation as he used his veto to block a new EU-wide treaty and left at least 23 other countries to forge a pact to salvage the single currency.
With the apparent blessing of the pro-European deputy prime minister, Nick Clegg – and the subsequent delight of Tory backbenchers – Cameron deployed the ultimate weapon in European summitry at about 2.30am yesterday.
EU leaders promptly agreed to bypass Britain and establish a new accord on the euro among themselves by March. The EU appeared poised to line up 26-1 against Cameron in support of the Franco-German blueprint, leaving Britain utterly isolated.
Cameron's bombshell came at what was billed as the most important EU summit in years, with the fate of the single currency hanging in the balance. The veto was unexpected and was being seen as a watershed in Britain's fractious relationship with the rest of Europe. Cameron insisted on securing concessions on, and exemptions from, EU financial markets regulation as the price of his assent to the German-led euro salvation blueprint.
The others balked, France most vocally, accusing Cameron of putting Britain's perceived interests ahead of resolving the EU's worst crisis.
While Cameron has failed to secure the concessions for Britain's strong financial services sector, Britain has also forfeited its place at the table where Europe's future and the new euro regime will be determined. For the first time since Britain joined the European Community in 1973, a treaty that goes to the heart of how the EU works will be struck without a British signature.
"I said that if I couldn't get adequate safeguards for Britain in a new European treaty then I wouldn't agree to it. What is on offer isn't in Britain's interests so I didn't agree to it," Cameron said. He could not allow a "treaty within a treaty" that would undermine the UK's position in Europe's single market.
Last night the prime minister went further, suggesting that Britain's membership of the EU was no longer a given. "Membership is in our interests. I've always said, if that's the case, I'll support our membership," he said, appearing to query whether being in the EU would remain in Britain's interests.
Cameron appeared initially to have lukewarm backing from Sweden, the Czech Republic and Hungary. But by all three had signalled they would take the Franco-German proposals for a new "fiscal compact" to their parliaments.
With at least 23 countries signing up for a deal conferring intrusive rights on European institutions to enforce budgetary policy in countries breaking the euro's debt and deficit rules, as well as quasi-automatic penalties for delinquents, the German chancellor, Angela Merkel, the central driver of the new regime, appeared sanguine and unbothered by the British veto.
"The breakthrough to a stability union, a fiscal union has been achieved," she said. "Only one country, Great Britain, distanced itself." She added: "I really don't believe David Cameron was ever with us at the table. We're very pleased with the result. [The deal] was no weak compromise for the euro."
But Cameron was scornful of what the summit accomplished. "I don't actually think the world is waiting with bated breath about what was the exact nature of the institutional relationship. I don't believe they're sitting in the trading rooms wondering whether there's going to be a new reverse QMV [qualified majority voting] article on integrated budget setting of blah, blah, blah."
Boris Johnson, the London mayor, said Cameron had "played a blinder", a mood shared by the rest of the Tory right.
Downing Street said Cameron had contacted Clegg . "This was a coalition position. This was an agreed position," Cameron emphasised.
Clegg fell into line, describing Britain's demands as "modest and reasonable". But later, after talks with his party, Clegg said "any Eurosceptics who might be rubbing their hands in glee about the outcome of the summit should be careful what they wish for because clearly there's potentially an increased risk of a two-speed Europe in which Britain's position becomes more marginalised and, in the long run, that would be bad for growth and jobs in this country."
Lord Ashdown, an ally of Clegg, told the Guardian: "The deep and sustained anti-European prejudice of some in the Tory party backed by anti-European papers has now created anti-British prejudice in Europe, especially in Paris.
"There will be a huge price to pay and, as a consequence, the foreign policy priorities of this country for the past 40 years has gone down the plughole in a single night. That foreign policy has now been hijacked by the Eurosceptics in the Conservative party aided by a prime minister who was not prepared to stand up for the national interest. As a consequence we have lost control of the European agenda and the prime minister has lost control of the demands for a referendum.
"This has been Gallic payback time for the way in which Cameron went around Europe lecturing Sarkozy on what to do."
Figures such as Ashdown believe Clegg managed to reduce Cameron's negotiating demands by the end, but the French were no longer willing to listen.
But Sharon Bowles, the Lib Dem MEP who chairs the European parliament's influential monetary affairs committee, accused Cameron of betraying British interests to curry favour with Tory Eurosceptics.
"The way in which the UK is isolated now is very damaging. We played, we lost, and now we are worse off," she told the BBC. "The point of the summit in Brussels was to fix the eurozone. However, under pressure from Eurosceptics in his party, Cameron has decided effectively to relegate the UK to the sidelines of Europe … Without a place at the negotiating table, we may not get to influence those very policies that will impact on the City and our financial sector as a whole."
Arguing he had to protect the City of London, Cameron demanded that any transfer of power from national regulators to an EU regulator on financial services be subject to a veto; the UK be free to place higher capital requirements on banks; that the European Banking Authority remain in London; and the European Central Bank be rebuffed in its attempts to rule that euro-denominated transactions take place within the eurozone.He also argued that non-EU institutions operating in the City but not in the eurozone, such as American banks, should be exempt from EU regulation.
Market reaction was muted, ahead of ratings agency Standard & Poor's decision, which could be made next week, on whether to downgrade its credit rating for 15 eurozone countries.
Despite German failure to get all 27 to reopen the Lisbon treaty, the Cameron veto may even accelerate the creation of the new pact since it will be struck between participating governments, probably avoid delaying tactics in the European parliament, and may require less comprehensive ratification procedures.
The leaders also agreed that central banks in the eurozone as well as others would provide an extra €200bn in bilateral loans to the International Monetary Fund to boost the firepower of the bailout funds in the effort to contain sovereign debt contagion.
London ~ Saturday 10 December 2011
Leading article: Isolation that damages both Britain and Europe
What took place in Brussels in the early hours of yesterday morning was nothing short of a disaster for Britain, and perhaps for the European Union and its single currency, too.
Britain is now more marginalised from the rest of the European Union, and more bereft of political allies on its own continent than it has been for more than a decade – some might say since it joined the European Union in 1973.
The Prime Minister allowed Britain's national interest to be dictated to him by 90 Eurosceptic MPs. Small matter that they constitute a mere 15 per cent of the current Parliament. They have shown how a small group, sharing a clear objective and loudly trumpeting an absolutist cause, can countermand the majority. From the moment the gravity of the euro crisis became apparent, Britain's sceptics had identified an opportunity to realise their goal: the UK's withdrawal from the European Union. The events of the past 48 hours regrettably bring that eventuality closer, de facto, if not – yet – de jure.
As dawn broke yesterday, Britain appeared to have three allies in its refusal to accept amendments to existing EU treaties as a means of salvaging the euro: the Czech Republic, Hungary and Sweden. That was three out of a possible 26. By mid-morning, the cold, hard light of day had persuaded all three to qualify their position and open the door, at least a crack, to signing a new financial accord. Britain's isolation was complete.
In the domestic political short term, Mr Cameron may have achieved his "handbag" moment. "Standing up to Brussels" rarely lost any British leader votes. The Mayor of London, Boris Johnson, who has bombastically championed the City's cause, credited the Prime Minister with "playing a blinder". For a while, then, all may be quiet for the Conservatives on the home front.
But there should be no doubt about the overall price that must be paid for this short-term gain. At the most elementary, diplomatic level, Britain is to all intents and purposes friendless in Europe. Continental European preconceptions about Britain's semi-detachment from the EU project have once again been confirmed. Mr Cameron has left the impression that Britain only ever wanted to be part of Europe on its own, narrow, self-interested terms. There is no reason why any EU country should now be amenable to cutting Britain any slack.
This is doubly unfortunate, because for the best part of a year Mr Cameron and his ministers had given almost the opposite impression. While they might at times have sounded a Eurosceptical note at home, they had nonetheless stuck to the message that the survival of the euro – and a strong euro at that – was in Britain's national interest. Given that the bulk of Britain's trade is with the eurozone and the bulk of inward investment, too, that was the wise and pragmatic course. The message conveyed by the veto Mr Cameron has now wielded is quite different.
Britain also risks being isolated economically. Mr Cameron's chief reason for declining either to amend existing treaties or to join a new, discrete, financial accord was to protect the position of the City of London as a European and global financial centre. The fear was that existing or new regulation would be extended across the Channel, to the detriment of London's "competitive advantage".
But it has to be asked how long London's primacy as a world financial centre, let alone any competitive advantage, can endure if Britain now floats off, metaphorically, into the Atlantic. Much of the City's attraction to foreign business at present derives from its position in Europe. Mr Cameron's refusal, in essence, to countenance tighter regulation of the City may appeal to some, as giving free rein to the natural dynamism of the market. But it will also repel others, who already blame the UK's loose regulatory regime and cavalier banking practices for helping to trigger the global financial crisis in the first place. It is not at all clear that in his professed determination to protect the City, Mr Cameron has not, in the longer term, signed its death warrant.
Beyond the confined vision of Conservative politics, the Prime Minister's veto risks bringing into being the worst of all possible worlds. If success in diplomacy is about achieving national objectives, while not alienating other people, Mr Cameron has single-handedly created the conditions for the two-speed Europe he decried, while displeasing almost everyone else around. Britain will be in the slow lane, if it is in any lane at all, and without even the limited say on eurozone matters it was able to claim before. What is more, Britain's absence from any new accord could weaken both the effect of the agreement and the European Union as an institution. Mr Cameron used to argue that the health of the British economy required a healthy euro; why is this suddenly no longer so?
Another mystery about Mr Cameron's veto concerns the silence of the Liberal Democrats. In the long run-up to this week's EU summit, the increasingly shrill voices of Britain's Eurosceptics went almost unchallenged. Yet, with seats in government, the post of Deputy Prime Minister and, in Nick Clegg, one of the most pro-Europe leaders in their history, the Liberal Democrats had the most prominent platform they have ever had to make the case for Britain's engagement in Europe. Instead, there was silence, followed yesterday – the morning after the night before – by a strange reticence. Yes, the Deputy Prime Minister agreed that Britain's national interest, as represented by the City of London, had to be defended, but he regretted the breakdown of the talks and had done his utmost behind the scenes to prevent it. No, the veto was not something that would break the Coalition.
That conclusion is a sad reflection on the importance of Europe, even to Britain's most Europhile party. The fact is that Mr Cameron's veto could, and should, have been a Coalition-breaker. Long-term international calculations have been forced to yield, for the umpteenth time, to the quest for short-term domestic gain. If, in the end, the euro fails, British myopia must share the blame.
London ~ Friday 9 December 2011
David Cameron has let Britain down
The prime minister has not wielded a veto in Europe. He has simply failed to protect British business and British jobs
By Ed Miliband
'Even before the summit began, [David Cameron] decided to pull stumps and retreat to the Eurosceptic pavilion.' (Stefan Rousseau/PA)
For the last generation, despite the twists and turns of Conservative and Labour prime ministers, Britain has been determined to stay at the top table in Europe. Today, David Cameron, after months of posturing and disengagement, took the catastrophic decision to walk away.
We should be under no illusions about the import, the impact or the reasons behind the decision. The significance is that we have chosen to let 26 countries make crucial decisions without us. The prime minister's apparent warning at the meeting that they "couldn't use this building for their meetings" would be laughable if it was not tragic.
The impact cannot be precisely known but the scale of Britain's isolation makes it hard to believe it will not be serious. The reality of the EU is that influence does not always come from rules but from strategic alliances. This government has been left in an alliance of one. And for what? Cameron went into this summit saying his first priority was to protect Britain's financial services industry. Forty-eight hours later it is clear he achieved not one such protection.
Instead, he has delivered the reality that 26 EU countries will now meet to discuss financial services without our country being represented in the room. That is not in the interests of Britain.
And while Cameron tells us he made his decision to protect British business, it is British business that will lose when Britain is not involved in decisions about their largest export market.
The real reasons for this debacle are about internal Tory politics. Even before he entered Downing Street, Cameron pulled Conservative MEPs out of the centre-right grouping in the European parliament. It sent a clear signal he did not want to engage with anyone except mavericks from the extreme margins of European politics. In office, it has got still worse. As recently as March he was telling Angela Merkel he did not even want to be in the room when issues to do with the euro were being discussed. Europe got the message. Last week, when the leaders of centre-right parties in Spain, Germany and France met in Marseilles, Cameron was not invited.
Going into Friday's crucial summit for jobs and growth, at a time of great peril for our country, the British government was bereft of influence and allies.
The truth is that Cameron never wanted a deal at this summit because he knew he was too weak to sell it to his Eurosceptic MPs back home.
When Geoffrey Howe resigned from Margaret Thatcher's government, he complained that in European negotiations he felt like an opening batsman who found his bat had "been broken before the game by the team captain". Today, Cameron didn't even want to be on the pitch. Even before this summit began, he decided to pull stumps and retreat to the Eurosceptic pavilion.
Cameron could have been batting for British interests. Instead, he had put the Tory party's self-interest ahead of Britain's national interest. He could have built alliances over the preceding months, he could have insisted that a different deal was done rather than giving up on Thursday night. What was the alternative? He could have sought practical protections for our financial services industry rather than posturing. He could have insisted that crucial euro-area meetings affecting Britain should not take place without a British voice in the room. Instead, he has been too scared of his own backbenchers and too desperate to avoid a vote in parliament to stand up for Britain's national interests.
So preoccupied with stabilising the Tory party, Cameron has done nothing to help deliver the stability and growth in the eurozone that is so crucial to Britain's recovery. That should have meant support for the European Central Bank acting as a lender of last resort, and a recognition that ever greater collective austerity will never deliver the growth we need.
But neither of these steps were taken.
I fear that we will come to rue the fact that the summit was a political disaster and an economic failure for Britain and Europe. What does this mean for British politics? We know where the Tory party now stands. But it does not command a parliamentary majority.
Nick Clegg, the deputy prime minister and leader of the unashamedly pro-European Liberal Democrats, said before the summit that the key aim was to do "everything we can to avoid a great big split in the European Union" because that would be "bad for jobs and growth in this country".
Can Clegg really look his party – or the country – in the eye and say this has not now happened? It is time for him and Liberal Democrats to ask whether this is really what they came into politics for.
Cameron has not wielded a veto as he claims. He has simply lost.
This is a terrible outcome for British business, British jobs and for Britain.
London ~ Saturday 10 December 2011, page 48
Cameron and Europe: the English outpatient
Instead of putting Britain first, the prime minister prioritised the Conservative party
To stand alone against the world can sometimes be an act of heroic defiance. At other times, however, it can merely be proof of tragic foolishness. David Cameron spent much of yesterday basking in the approval of the previously hostile rightwing press and his party's Eurosceptics after he vetoed an EU-wide treaty to rescue the single currency. But the prime minister's action in Brussels marks a moment of profound and long-gestating British failure. Mr Cameron has left an empty chair that could define Britain's place in the world for years to come.
None of this is to pretend that Mr Cameron missed the chance to get aboard a voyage to the stars this week. For Europe as a whole, the latest Brussels summit marked a moment when the partners finally recognised one of the things they failed to see at Maastricht 20 years ago, that monetary union requires constraints of fiscal co-ordination that some nations might not welcome. That recognition is still too little and too late, and has been reached in the most adverse of circumstances. It comes at a moment of extreme inequality between the eurozone members of the north and the south, while the actions now foisted on the eurozone 17 by Germany and France are insufficient and too cautious to stop the bond markets – as initial market reaction yesterday seemed to indicate. There is no guarantee that the plans which Mr Cameron vetoed for the Europe of 27 will work for the Europe of 17 either.
What exactly has Mr Cameron's veto prevented? Not much. The City of London may not be most people's idea of an ecology in need of special protection – quite the opposite. Yet even if it were, the City is not actually better protected by Mr Cameron's empty chair than it would be if he sat up at the table as he should. Nor are British interests in the European single market more strongly safeguarded by his absence than his presence. If the latest Brussels summit fails to stem the disintegration of the eurozone, Britain will not be better able to help manage the crisis through an isolation that is shortsighted, not splendid. Not even Margaret Thatcher made that mistake. She may have been destructively wrong about Europe, but she always believed in sitting at the top table.
Mr Cameron's veto was an act of domestic politics, not an act of international statesmanship. It was a pseudo-Churchillian, pseudo-Thatcherite gesture to appease his anti-European backbenchers. It prevented a shock to the Conservative party, not a shock to the British economy. It followed irresistibly from his decision to take the Tory party out of the mainstream of European centre-right politics back at the start of his leadership rather than to concentrate on building up alliances. But instead of putting Britain first, Mr Cameron prioritised the Tory party and bounced the once so admirably pro-European Liberal Democrats into allowing him to do it. Rear-view mirror driver hits wall shock.
Yet this is ultimately not the failure of one politician but of a culture and a system. Britain's true national interest has become the prisoner of three inexorable forces. The first is the failure of the misconceived euro project, which put the politics of European Union ahead of the economics, and which might perhaps have been better constructed if Britain had had the instinct to engage. The second is the dominance of the financial sector within the British polity, and the destruction of so much manufacturing, which have resulted in the obscenity of a prime minister being compelled to represent the finance interest as the national interest. And the third is the destructive Europhobia of the past 35 years, which – fed by the rightwing press, the financial sector and political parties that were terrified of offending either of them – has fanned a mood of contempt towards everything about a European project with which Britain should be fully engaged rather than sneering uselessly on the sidelines.
London ~ Saturday 10 December 2011
Coalition rift widens as Tories rejoice
Lib Dems, meanwhile, lament a 'black day' consigning Britain to the EU's 'waiting room'
By Oliver Wright
Conservative MPs yesterday reacted with delight to David Cameron's decision to veto plans for an EU-wide treaty change – believing it will eventually force Britain to split further from eurozone countries.
Prominent eurosceptics believe the move by the eurozone countries to go outside the legal framework of the EU and to set up a core fiscal union will eventually undermine the existing union.
The Eurosceptic Tory MP Bill Cash said: "We are now embarked on a very serious path towards renegotiating in a fundamental way our treaty relationship with the European Union.
"The Germans and the French precipitated this with their demands. Now, David Cameron quite rightly has said 'No'. There is a real question, however, about the way in which we go forward from here."
Bernard Jenkin added Britain would need to look again at the status of the EU. "This is a very big change to the European Union," he said. "This is the moment when we have to start completely renegotiating our relationship. We are going to be a satellite on the edge of what is going to be an economic superpower. We cannot remain in the treaties as currently constructed."
David Davis did not rule out exiting the EU altogether. "We are seeing a new balance of power in Europe arising out of the eurozone crisis," he said.
"What [Mr Cameron] should be doing is looking for a new relationship with Europe which recognises those power balances but also protects our interests both inside Europe and in terms of trading with our friends abroad." Asked if that meant pulling out of the EU altogether, he said: "It might happen."
But Mr Cameron's decision effectively to exclude Britain from negotiations on a new treaty caused consternation amongst pro-Europeans. The Liberal Democrat peer Lord Oakeshott of Seagrove Bay accused Mr Cameron of undermining Britain's influence in Europe and putting the interests of the City above the wider economy. "It is a black day for Britain and Europe. We are now in the waiting room while critical decisions are being taken," he said.
"With western economies and our banking system on the edge of a cliff, we should not be putting special pleading for interests in the City of London above our vital national interest of working closely together with Germany and France to keep our economy and jobs all over Britain safe."
The Liberal Democrat MEP Chris Davies accused Mr Cameron of "betraying Britain". "Far from keeping Britain strong, Cameron has ensured that we will lose our influence at the top table," said Mr Davies.
Denis MacShane, the Labour MP for Rotherham, said: "There is now little point in Britain staying in the EU. Bill Cash has won and I congratulate him and other Eurosceptics on their victory.
"Europe's future will be settled without us. The 17 plus 6 will decide new rules which will govern trade and Britain will have to comply, like Norway or Switzerland, or give up market access."
True Blue: Tory Eurosceptics
One of the arch Tory Eurosceptics, he suggested Mr Cameron was now embarking on a "very serious, responsible path towards renegotiating our relationship with the European Union". That may be more wishful thinking than dispassionate analysis.
Both a Eurosceptic and Camo-sceptic, Mr Davis urged Mr Cameron to be "equally robust" as Margaret Thatcher in seeking to recast European relations. He may suspect that, in the end, the PM won't be.
A more moderate Eurosceptic, Mr Eustice has been vehement that Britain must protect its financial-services sector in the face of closer eurozone co-operation. He will be genuinely pleased with Mr Cameron's position.
Iain Duncan Smith
The Work and Pensions Secretary, one of the biggest Eurosceptics in the Cabinet, will be pleased by the British approach. At one stage he was said to have even considered resigning over the Government's apparent unwillingness to stand up to further European integration.
Northern Ireland Secretary said that if a new eurozone bloc was created, "there will have to be" a referendum on British membership. The decision in Brussels effectively creates one – but it is hard to see Mr Cameron agreeing with him.