British Prime Minister David Cameron’s decision to veto a new EU treaty designed to tackle the eurozone crisis has raised questions about Britain losing influence within the EU and becoming increasingly isolated from its partners.
A marginalised Britain is certainly not in Malta’s interest- Anthony Manduca
Cameron’s veto has also been interpreted as being designed to win favour from his eurosceptic backbenchers – at the expense of European solidarity.
Cameron argued that any change to the Lisbon Treaty could lead to a financial transaction tax being introduced across the EU, which he opposed, and during the EU summit he insisted on a number of safeguards to protect the City of London, namely that the UK’s financial services industry would be exempt from any new European financial regulations.
However, Cameron never really stood a chance of getting his opt-out as many EU leaders – particularly French President Nicolas Sarkozy – emphasised that much of the blame for the financial crisis was due to a lack of regulation in the financial services industry.
In the end Mr Cameron did not end up getting any special protection for the City of London and the other 26 EU member states agreed to an intergovernmental treaty, or accord, outside the normal framework of the union on greater fiscal integration and tough new budget rules – effectively bypassing Britain’s opposition.
Furthermore, there was no mention of a financial services tax in the draft agreement at the summit, which a number of other countries, including Malta, was opposed to.
So it is really quite difficult to pinpoint anything really concrete which Cameron achieved by vetoing a new treaty, except of course, winning the support of the eurosceptic wing of the Conservative Party which rather worryingly seems to have become the dominant faction within the party.
Cameron either intended to wreck the treaty from the beginning, knowing that his demands were unacceptable, or he greatly miscalculated by believing that the EU, especially Germany, would go to any length to get treaty change agreed to by all 27.
In any case it was bad day for British diplomacy and it seems that Cameron’s inner circle of Downing Street advisers took charge at the summit, not Foreign Office diplomats.
It has also become evident that Cameron was not very clear about what he wanted and he sprung his demands on his fellow EU leaders in the early hours of Friday morning when a solution to the eurozone crisis was being sought. One central European diplomat was reported by the Financial Times as having said: “We were talking about big things – saving the euro – and he was asking for peanuts. It was not the time or place”.
At the same time Cameron’s veto has caused a rift with the Liberal Democrats, his pro-European coalition partners, with Deputy Prime Minister Nick Clegg saying the veto was “bad for Britain” and could leave it “isolated and marginalised”. Although I still believe the governing coalition will probably survive the full term of this Parliament, I have no doubt that Cameron’s hardline approach at the summit has caused a serious rift between the Conservatives and Liberal Democrats.
Analysts are also asking what this veto means for Britain’s future in the EU.
Significantly this is the first time since Britain joined the then common market in 1973 that an EU treaty has been agreed to without British consent. This is bound to damage relations between the UK and the rest of the bloc, lessen Britain’s influence within the union, and give France and Germany an even more dominant role in the EU.
It also has to be pointed out that a marginalised Britain is certainly not in Malta’s interest, as the two countries share many common views in the EU, including over financial services, taxation and the role of the nation state within the union.
Furthermore, many eurosceptic Conservative backbenchers believe that Cameron’s veto signifies the start of a new relationship with the EU, and some of them have actually argued – foolishly in my opinion – that Britain should leave the EU and just remain a member of the single market.
That would be a huge mistake, it would be bad for business and it would significantly reduce Britain’s influence not only in Europe but also the world. Britain’s “special relationship” with Washington, for example, would certainly not be the same if the UK left the EU.
Although Cameron has made it clear he believes Britain should remain a member of the EU, the fact that so many of his backbenchers do not share this view is very worrying. Britain’s veto, furthermore, has already led President Sarkozy to declare that there is now a “two speed Europe”, which is really in nobody’s interest. Le Monde’s headline perhaps best summed up the mood after the summit when it declared: “L’Europe à 27: c’est fini”.
The fact that the accord between 26 EU countries is an intergovernmental treaty and not an EU treaty has raised some questions about whether EU institutions, such as the European Commission and the European Court of Justice – which belong to all 27 member states – can enforce the agreement.
Britain thinks not, which will make the situation even more complicated and create further uncertainty – the last thing the markets need. However, this issue has not yet been clarified, and the sooner it is the better.