Cameron Must Not Fudge Hard Line On EU Negotiation

David Cameron last week laid out demands/objectives/aspirations – delete as appropriate – for reforming the European Union. The word choice depends on whether you view the Prime Minister’s conditions for backing the UK’s on-going EU membership as ambitious, woefully weak, or somewhere in between.

By making it clear for several years that he wants Britain to stay in whatever the outcome of his “renegotiation”, Cameron has blundered badly. His outlined reforms are, on top of that, far too timid – coming across more as an extended apology for being awkward, rather than the opening gambit of what needs to be a prolonged, hard-nosed negotiation.

The upcoming referendum – which must happen by the end of 2017 but could be next year – is, as Cameron says, “perhaps the most important decision the British people will take at the ballot box in our lifetime”. But his feeble proposals reveal all too clearly that, just as the referendum pledge itself was forced out of him, so the upcoming negotiation is, in his mind, a damage limitation exercise – the main aim being to avoid upsetting other member states. This is a serious mistake.

The EU, let us be clear, is an institution mired in crisis. The stakes could barely be higher. Monetary union, the centre-piece of the European project, is an incoherent nonsense that has spread economic stagnation and misery. Having already condemned millions to unemployment, the jerry-rigged euro could yet spark a Lehman-style global meltdown.

The single market, allowing free trade in most goods within the EU, remains decidedly patchy – not least when it comes to professional services and technology, sectors where the UK is strong.

The “free movement of people”, meanwhile, laudable but ultimately naïve, is now widely flouted – with Sweden last week becoming the latest country to slam shut its borders. The exodus of hundreds of thousands from North Africa, the Middle East and beyond is stretching consent for passport-free internal EU travel to the limit. Such mass immigration, unlikely to abate, could actually escalate.

“Both the Schengen border-free zone and the eurozone are central projects of EU unity now driving disunity,” wrote William Hague ominously, in this newspaper last week. “We need a new approach,” continued the Former Tory Leader. “The EU needs to show it can change in order to survive”.

As the EU continues to impose measures opposed by tens of millions of European voters, chipping away at democracy, political extremism is rising. Some rather nasty parties are now attracting growing support, exploiting the xenophobia that spreads when frightened electorates feel they’re losing control.

Yes, the Mediterranean crossings have brought the migrant crisis to a head since the summer, but this outrage is built on discontent that’s been growing for the last decade, connected to rising migration from new EU member states. The UK, relatively buoyant and speaking the world’s language, isn’t immune. Net annual immigration of 330,000 on the latest figures, reflecting strong inflows from Eastern Europe, is quite simply unsustainable.

Three-quarters of the 430,000 UK jobs created during the year to September were taken by non-British EU nationals, we learnt last week. That’s enough to cause anger even in this country – which has traditionally extended a decent welcome, as I know from my own family’s experience, for those who work hard and pay their way. The current pace of immigration, though, and the lack of requisite house-building and infrastructure provision, is gravely threatening such tolerance and the economic dynamism that goes with it.

It is against this fraught backdrop that the UK has an historic opportunity to press for significant and meaningful EU reforms – the “fundamental change” Cameron said he wanted when making his referendum pledge three years ago. Only the UK has the economic muscle, diplomatic weight and political culture to lay out an ambitious set of changes and – amidst a credible threat of Brexit – build support for them, not just in the UK but across Europe.

Among electorates in France, Italy and Spain, there are growing calls for the EU significantly to reform, with parties committed to leaving the 28-nation union now challenging for government. Poland has just witnessed an electoral earthquake, the eurosceptic Law & Justice party now holding a Parliamentary majority in a country which, since it threw off the Soviet yoke in the late-1980s, has been ardently pro-Brussels.

Our Prime Minister has a lot more power to shape a new EU than he allows himself to realize – if only he had the courage to take it. This pan-European construct, if it is to survive, needs to become looser and less invasive, focusing on trade liberalization rather than bureaucratic centralization and control, ensuring the unfettered movements of goods and services, not the unfettered movement of people.

Cameron’s check-list of reforms, though, says nothing of cutting through the regulatory thickets, or promoting free trade, stretching only to vague talk of protection for non-euro members within the EU, a symbolic British opt-out from “ever closer union” and a bizarre request to “write competitiveness into the DNA” of member states. Then there was his call not for intra-EU immigration quotas, but a four-year ban on UK benefit payments to EU migrants to Britain – a demand the Prime Minister appeared to withdraw just seconds after he made it.

Cameron didn’t mention, either, requiring EU jobseekers to secure work before entering Britain or limiting the European Court of Justice’s jurisdiction over our criminal law – both of which he has previously discussed. This was the first time, after years of debate, the UK presented its specific demands to the rest of the EU. The list could well get even weaker as negotiation now ensues.

The Prime Minister was heckled by two young men last week, at a Confederation of British Industry conference. “CBI – Voice of Brussels,” the fuzz-lipped protesters chanted softly, as they held up a makeshift banner. Their protest was no less effective for that.

It is vital the British business community now does everything possible to push our political leaders into staging a proper renegotiation with the EU. The CBI has indeed long been slavishly pro-Brussels, I’m afraid, captured by big firms who can handle the endless slew of regulation, knowing that absurd compliance costs keep their smaller competitors at bay.

No less than 70pc of the UK’s small medium-sized companies remain “unfazed” by the prospect of the UK leaving the EU, according to a Telegraph survey released at our Festival of Business last week, our SMEs sensing we could thrive either within or outside the EU. The CBI should reflect such views – rather than campaigning to stay in, even if the EU barely changes.

The CBI will be split on EU membership “by definition”, former Director General Lord Digby Jones told me last week, given that it represents such a wide spectrum of British business. The “way out of the hole”, he says, is to wait until Cameron’s negotiations are over, then “openly and transparently” ballot the CBI’s 190,000 member companies, before “declaring and campaigning on that result”. I think that’s right – and the British Chambers of Commerce should do the same.

The UK could easily vote to leave the EU. While business opinion is split, with some senior executives wanting either to leave or remain in under any circumstances, the vast majority of business leaders – particularly at SMEs – are pragmatic and will decide contingent on the strength of the changes Cameron secures. Most ordinary voters are also in that position as, indeed, am I. On that basis, the UK last week took a big step closer to Brexit.

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