Grexit Crisis Puts Cameron In Poll Position With EU

“There won’t be a long discussion”. So said an anonymous French diplomat, prior to the Brussels summit dinner on Thursday night, where David Cameron apparently began to renegotiate UK’s European Union membership. The British Prime Minister will have time only to set out his proposals “in a general way”, observed a German official before the meal, adopting an almost equally withering tone.

There seems little appetite among EU governments for the UK to reconstitute our relationship with the other 27 member states and then hold an in/out referendum. That lack of appeal may even extend to Number 10 itself – given that the Conservatives’ manifesto pledge was made under pre-election duress, to try to win back Tory voters attracted to Ukip.

The Prime Minister’s referendum promise also contained a rhetorical loophole, only applying if he was heading a majority Conservative government. Now that has, rather unexpectedly, come to pass – albeit with a wafer-thin 12-seat margin – the Tory leadership finds itself having to deliver on its word. Failure to do so would surely spark the mother of all backbench rebellions and a slew of ministerial resignations to boot.

Without the Liberal Democrats to blame for stalling, then, an EU referendum by the end of 2017 is a commitment the Government simply cannot avoid. I welcome that, as regular readers will know. While strongly opposing single currency membership for my entire adult life, when it comes to the EU I’m still “negotiate then decide”.

Cameron seems to hold a different view. The Prime Minister’s position appears to be to negotiate, sort of – just enough to make it look convincing – and then, whatever the outcome of that negotiation, campaign for the British public to vote to stay in. Just as the referendum pledge itself was an exercise in political positioning, so is the upcoming negotiation – with Cameron determined to do everything he can to avoid upsetting other EU governments.

Saying now that the Prime Minister wants to vote “yes” is a bad tactic, of course. Any negotiation will go badly, unless you’re prepared to walk away, or can convincingly pretend you are – as anyone with serious business experience knows. The Tory leadership’s approach also reflects a misreading of the political mood across Europe – not in the ministries and the smart multilingual political salons, but among ordinary voters, the great unwashed, the mood on the street. And this is the mood, after all, the view of the broad electorate, to which mainstream continental politicians will ultimately have to bend.

The Prime Minister is actually in a far stronger negotiating position than he appears to understand. He has a unique opportunity, in fact, to shape that continental mood. The European project, an elite project, a project that stretches the bounds of democratic acceptability, is now seriously stretching voters’ patience. The European Commission is bloated, ridiculously expensive and almost comically remote – and widely seen as such. In many member states, concerns about “the free movement of people” and “ever closer union” are spiraling, not least as the Mediterranean migrant crisis intensifies and the single currency spreads misery and woe.

Across the Continent, not only in smaller “protestant” Northern members like Finland, Holland and Sweden, but even in the large “core” economies, scepticism towards “Europe” is on the up. Anti-EU parties made strong gains in Italian local elections a few weeks ago, with the Five Star Movement and Northern League taking a third of the vote between them. The anti-immigrant Danish People’s Party, standing in one of the world’s most liberal countries, just took second-place.

Mainstream German voters, previously desperate to be “good Europeans”, now openly express frustration about bankrolling workers in “Club Med” countries they feel work less than they do – and not only Greece. And the French electorate, of course, increasingly backs parties that question EU membership. Marine Le Pen’s Front National won last year’s European elections and she’s now leading the polls ahead of the 2017 presidential vote. Last week, Le Pen declared herself “Madame Frexit”, praising Britain’s EU referendum and pledging the same for France.

It will take a proper renegotiation, and the repatriation of significant powers, to convince me the UK should remain an EU member. But for all the talk of impossibility, the concerns about German resistance and French intransigence, the reality is that if our Prime Minister has the courage and vision to start a genuine, no-holds-barred debate about what the EU could be, his efforts would attract popular admiration and support in many other countries too.

That would soon force mainstream EU politicians, rather than ignoring voters’ concerns about Brussels-overreach, dismissing them as populism, to tap into the very real and growing discontent that’s out there and rein back this out-of-control European project to what it should be – a free-trade zone, with some common regulations where appropriate, and other forms of cross-border co-operation.

Cameron worries about being seen as too eurosceptic and causing offence in Paris, Berlin and Rome. But if he negotiates hard and brings about genuine change, he could end up actually saving the EU – preserving what’s good about the union and making it sustainable over the long term, solving the “European issue” not only in the UK but across the rest of the Continent too.

The tone of this UK negotiation, of course, will depend heavily on what now happens in Greece. There seemed to be progress last week – with Germany and the other creditors blinking first, agreeing to future renegotiation of Athens’ massive sovereign debts, some 180pc of Greek GDP and counting. That provoked movement from Syriza in terms of pension and VAT changes – which looked relatively sensible. But then the country’s youthful Prime Minister launched the kamikaze tactic of calling a snap euro referendum.

Greece theoretically has until Tuesday to find €1.6bn (£1.1bn) to make its latest payment to the International Monetary Fund. But that isn’t the once-and-for-all deadline. The cliff-edge is July 20 – by which time Athens must pay €3.5bn to the European Central Bank.

While a missed IMF payment is very bad, defaulting on the ECB is seismic. That’s when credit lines could be cut to the debt-soaked Greek banks, a sector now sporting over €90bn of non-performing loans, up from €27bn in 2010 when this crisis began. That’s when the ATMs would dry up, with civic unrest then likely to rear its ugly head.

Whatever the outcome in Greece, it’s not going to be good for “Europe”. Either Athens gets a sweetheart deal to keep it in the euro, for now, causing anger in Portugal, Spain, Ireland and other nations that have suffered and toed the fiscal line. Or, alternatively, the lifeline is cut, and Greece crashes out, causing a wave of market turmoil across the Eurozone and beyond. In both cases, David Cameron will then have to work harder, winning more concessions to convince UK voters that “Europe” is something we want to be part of.

And in both cases, however Greece pans out, continental voters will become even more open to the idea of a looser association, with fewer ties – sentiments that will increasingly influence the incumbent EU politicians with whom the Prime Minister, ultimately, will have to negotiate.

Cameron should state what he wants up front – proper border controls, stiff conditions on EU immigrant welfare payments, a European Commission with properly audited accounts, an end to “ever closer union”.

Rather than a yardstick by which he will be measured, such a list – which could win voter backing in many other countries – would form the conditions which, unless met, would see the UK quit an organisation that, in its current form, lacks legitimacy, vision and purpose.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: