Consequences of Britain's summit veto

It’s too early to gauge the real impact of David Cameron’s veto at the European Council in the early hours of December 9 and the decision of 26 countries to devise a new treaty, but there have been straws in the wind over recent days which indicate how positions are evolving and which will set the agenda for 2012.

One consequence of Cameron’s self-imposed isolation in Brussels has been a surge in articles and interviews arguing for Britain’s full engagement with Europe. We’ve seen nothing like it for years. The nicely-named “Atlantis” strategy, whereby Britain takes the eurosceptic route, “repatriating” major elements of EU legislation, quitting key parts of Europe’s decision-making process and becoming (as some British eurosceptic MPs have advocated) like Norway or Switzerland, has been widely exposed as a recipe for decline. See for instance Timothy Garton Ash’s Guardian article.

One long-term consequence of the UK position could be to encourage the break-up of the United Kingdom. Scotland’s first minister Alex Salmond has already questioned whether Scottish interests will be adequately protected, given the UK’s isolation, reflecting the fact that the Scottish National Party has always seen the future of an independent Scotland as a committed member of the EU. The SNP plans a referendum on independence in 2014 or 2015 where the protection of Scotland’s interests will no doubt figure.

British public opinion has been broadly in favour of the Cameron stance and even puts the Conservative Party ahead of Labour, which is no mean feat in these times of austerity, but those questioned in the YouGov poll showed some popular concern over the economic impact.

As for Britain’s EU partners, Chancellor Merkel’s conciliatory speech in the Bundestag after the summit was a helpful start. She stressed Britain’s role in Europe and so provided some comfort to the British prime minister. This contrasted with President Sarkozy’s attack on Britain’s obsession with the single market which was followed by a stream of criticism about the British economy from various French notables, including the head of the French central bank – further evidence that Anglo-Saxon financial services are seen as the ultimate villain behind the present crisis, and also a sign of the tensions within the Franco-German alliance.

That said, there is no doubting the distress that has been caused among several member states by the UK opt-out. Ireland was quick to promise intensive bilateral talks with London to avoid British isolation and agree common agendas.

There has been some back-tracking and some reassurance. Prime Minister Cameron and Chancellor George Osborne said immediately after the Council that the British veto would prevent the European Court and the Commission being used for implementation of the “fiscal compact”, but after a weekend’s reflection Mr Cameron had “an open mind” on the subject. The lawyers had ruled that the EU institutions could be used, under Articles 121, 126, 136 and 273 of the existing Treaty.

Britain’s draft protocol, presented in the early hours of December 9 to give treaty protection for UK financial services, would have demanded the right for the UK to adopt banking laws which were stricter than provided under EU financial services legislation. It seems there was no need to worry though: Commissioner Michel Barnier has since said that the Vickers report, requiring enhanced levels of bank capital, can be applied to meet the UK’s special situation.

In a previous blog I suggested that David Cameron’s prime motivation for exercising the veto in the small hours of December 9 was to satisfy the eurosceptics in his own party and avert a referendum. I have since been told that he said to Barroso and Van Rompuy during bilateral meetings that his job was indeed on the line. One can only draw the conclusion that the British prime minister found himself trapped by political calculation at home and diplomatic isolation abroad, leaving him little choice but to act as he did.