People are criticising Cameron for using the veto, saying “this fails to protect our interests.” They fail to understand that if there had been no threat to the single market and our financial services industry (from either existing EU legislation introduced by the Lisbon Treaty or a new EU fiscal treaty) then the 26 could have easily given the safeguards he asked for and Merkel would have got the ‘stability pact’ she wanted (rather than the weaker one Sarkozy engineered: note, either way it falls a long way short of the full fiscal union needed to save the euro).
The fact that the 26 could not – and would not give those safeguards is a clear indication that the safeguards were (and still are) really needed but were not going to come unless we demanded them. It is also worth noting that what DC asked for was not that radical and could have been accommodated if Sarkozy had allowed. However, Sarkozy quite clearly wanted a) not to have full EU jurisdiction over French budgets (so needed to spike Merkel’s plan – that’s why he was smiling and she was not), b) wanted the UK out of the way and the City at his mercy.
If Cameron had not asked for safeguards he would have been accused of being weak (by left and right) – and by agreeing to a new EU treaty, he might have been forced into a ratification referendum (which the EU would have hated even more). Having asked for such safeguards, he could not back down for the same reason. Miliband says he should have built alliances (a debatable point since the coalition seems to have been very active in Europe since taking office) – but it might have been more helpful if Labour hadn’t signed up to some of the new financial regulation (with the Lisbon Treaty) in the first place.
Nor could DC have waited for a more opportune moment. This was probably the last time we would have had any real leverage on the issue of financial regulation, because the formation of the euro17 block effectively scuppers our ability to block most legislation even if it harms our national interests. Those who say DC should not have asked, implicitly accept the financial consequences of such inaction – and need to explain how they would deal with the subsequent loss of tax revenues from a shrinking City.
If Cameron had backed the 26 in a new fiscal treaty the threat of new legislation and taxes would have stood – and Sarkozy would have made good on it. The EU would also have used the new treaty for more mission creep – that is inevitable (as we have seen over the last 50 years – and as enshrined in the ratcheting clauses of the Lisbon Treaty) – and in time we would have been subject to the same German austerity (with, note, a greatly reduced stream of tax revenues from a by then depleted City), which would make Osborne look like Santa.
Finally, it is worth noting (particularly for those fans of the euro and those who think we should have backed this enhanced stability pact) that these new fiscal rules impose the same balanced budget constraints on the euro17 as the Republican Tea-Party want to impose on the US – now I wonder how the ‘progressives’ feel about that?
By the way:
The Merkozy proposal on 7 Dec http://www.telegraph.co.uk/finance/financialcrisis/8941290/Fostering-fiscal-discipline-Angela-Merkel-and-Nicolas-Sarkozys-letter-to-Herman-Van-Rompuy-in-full.html was simply a rehash of this agreement from April http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/ec/120296.pdf – but with the addition of reopening Lisbon (to enforce behaviour since the euro17 had comprehensively failed to make any progress since that April statement) – and the addition of the FTT (by the backdoor).
The statement in the opening line of the announcement following the 9 Dec summit is therefore simply ridiculous puffery or delusional hogwash – take your pick: http://consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/ec/126658.pdf
That said, even if DC did not know what was coming on 7/9 Dec, he should have prepared the ground more thoroughly with our natural allies.
He should have followed up on that April statement from the Council- to ask how it could best be achieved and to say where the UK could and would help – if only by putting our own house in order (although I recall Sarkozy telling him where to go, when he put forward some suggestions).
He should certainly have held another meeting with the Baltic States (as he did last November) but this time including Poland – to discuss the issues. He should also have reached out more to the Southern periphery – doing a Bill Clinton “we feel your pain – what do you need from the euro core to survive.”
He also seems to have made an appalling mistake in leaving the EPP (whatever it’s short comings it is a centre of power – as explained here http://www.bbc.co.uk/news/uk-politics-16070611) – now that is an empty chair policy that gained nothing (hatched I believe by one Dr Fox, which explains much).
Above all DC should have made it clear (before the meeting and during) that his primary aims were protecting the single market for all (rather than allowing Sarkozy, Barroso and Barnier to portray him as trying to opt the UK out of financial regulations – which he wasnt’ see here http://www.scribd.com/doc/75193128/UK-protocol-demand-to-EU ) – avoiding a referendum – and saving the euro.
He should then have pointed out all the inherent weaknesses in this, Plan F or G (I have lost count), and given the others the opening they needed to voice their concerns (only now coming to light http://openeuropeblog.blogspot.com/2011/12/why-26-vs-1-narrative-is-simplistic.html ).
Always good to get support http://www.ft.com/cms/s/0/b7b944a0-24fc-11e1-8bf9-00144feabdc0.html#comment-1580096
That positive was in response to this http://www.ft.com/cms/s/0/b7b944a0-24fc-11e1-8bf9-00144feabdc0.html#comment-1577096