Cam’s Euro U-turn – this is what happens when you fail to negotiate

Much wailing and gnashing of teeth today on the right as evidence emerges that David Cameron is backsliding on his ‘veto’ preventing the European Union from enforcing fiscal integration among the Eurozone countries. Here’s how The Guardian reports it:

Ahead of Monday’s summit of EU leaders, which is due to finalise “political agreement” on the fiscal compact treaty, the government signalled that it would not challenge a role for the European commission and, more sensitively, would also allow resort to the European court of justice (ECJ) in Luxembourg to enforce new debt ceilings and fines for fiscal miscreants in the eurozone. ..

Cameron is understood to have made it clear to José Manuel Barroso, the president of the European commission, in a telephone call on Wednesday that Britain would no longer object to using the ECJ to enforce the new treaty. … Cameron’s concession marks a significant watering down of his previous position and represents a victory for Nick Clegg, who has been urging the prime minister to recover ground after wielding the veto. The deputy prime minister lobbied hard inside Whitehall for Cameron to drop his objections to the use of EU institutions to enforce the compact.

There’s good reason for Nick Clegg’s stance. The only way the UK would be able forcibly to prevent Eurozone countries from making use of the European court of justice would to challenge it in the courts. Legally there’s no guarantee such a challenge would work. And politically it would pit the UK against the vast majority of its neighbours who have signed-up to use the ECJ — not a smart move.

Mr Cameron has landed the UK in neither a winning nor an attractive position. But that is what happens when — as the Prime Minister did in December — you issue an ultimatum without laying the necessary groundwork, and then walk out of the negotiations before you can gain any concessions.

Of course, none of this may now matter to Mr Cameron. His ‘veto’, however unintentional, earned him rave reviews from his backbenchers and the right-wing media, and is credited with providing the Tories with the polling boost that has seen them overtake Labour, piling more pressure on the beleaguered Ed Miliband. That just a few weeks later the Prime Minister now backs down over technicalities such as the ECJ, which few will understand or care about, will probably matter little to the political mood music.

But the stark truth of the matter is that Mr Cameron’s cack-handed negotiating has delivered nothing of lasting significance for the UK.

* Stephen was Editor (and Co-Editor) of Liberal Democrat Voice from 2007 to 2015, and writes at The Collected Stephen Tall.

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9 Comments

  • C H Ingoldby 29th Jan '12 - 12:21am

    Cameroon did not ‘fail to negotiate’. He ‘failed’ to accept an imposed order from Sarkozy.

    Since when has accepted anything imposed by Sarkozy without question been considered Liberal or even remotely sensible?

  • Joe Litobarski 29th Jan '12 - 9:18am

    @C H Ingoldby You’re still assuming Cameron actually managed to veto anything. He did no such thing; he strengthened Sarkozy’s hand by dropping out of the negotiations. What the PM “achieved” was a couple of positive headlines at home and a diplomatic spat with the rest of Europe that he’s been furiously rowing back from this last month.

    @Stephen W This is not an EU treaty, it’s an intergovernmental treaty. I’m sure you already know this, so you are perhaps arguing that locking the UK out of negotiations was against the “spirit of European solidarity”, and the rest of Europe wasn’t playing cricket when it outmanoeuvred David Cameron. Perhaps. But it takes two to tango.

    As for bail-outs being illegal – there is provision made for exceptional circumstances.

  • Joe. Here is the “provision for exceptional circumstance” which is in Article 122 of the Lisbon Treaty:

    Where a Member State is in difficulties or is seriously threatened with severe difficulties caused by natural disasters or exceptional occurrences beyond its control, the Council, on a proposal from the Commission, may grant, under certain conditions, Union financial assistance to the Member State concerned. The President of the Council shall inform the European Parliament of the decision taken.

    How do you reconcile “natural disasters or exceptional circumstances beyond its control” with a self-induced debt death spiral caused by years of binging on cheap credit?

    The bailouts (including the ECB’s purchase of Italian and Spanish debt on the secondary markets) are manifestly illegal. But everyone is prepared to turn a blind eye because the alternative is the destruction of asset value in over-extended French and German banks.

    Three facts:

    1. The fiscal compact requires member states to incorporate a requirement into their national legal systems for budgets to be balanced or in surplus. Failure to comply will be punishable by fines.

    2. The Germans are demanding that Greece should lose control of its fiscal policy, which will instead be administered by officials in Brussels.

    3. The officials who run the ESM will have unprecedented powers to demand money from national governments. Governments will not be able to refuse the demands of the ESM nor to require it to explain them in a court of law.

    Are we now supposed to shout “hurrah” in support of the destruction of national sovereignty and the creation of unaccountable supra-national quangos?

  • No, this is what happens when you DO negotiate. You rarely get everything you want. So you probably have to give ground over something.

    Unless, of course, you start off by saying you want to give the other side every single thing they want.

  • Joe Litobarski 29th Jan '12 - 9:57pm

    @Paul In the event, that’s why the EFSF was conjured up and why the IMF is involved. It’s also why Article 136 of of the TFEU will be amended to read:

    “The Member States whose currency is the euro may establish a stability mechanism to safeguard the stability of the euro area as a whole. The granting of financial assistance under the mechanism will be made subject to strict conditionality [and] will be activated by mutual agreement of the euro area member state in case of risk to the stability of the euro area as a whole.”

    Yes, it’s shocking that it got to this point, but the EFSF was agreed by the EU Council (i.e. all 27 European heads of government) and has also been approved by the German Constitutional Court. The excuse for the ECB’s securities purchasing programmes is different again; the Executive Board argues they aren’t breaching their mandate because the crisis has disrupted “transmission mechanisms” for the bank’s monetary policy signals. Nevertheless, the ECB admits the purchasing programme cannot continue indefinitely – hence the fiscal compact (possibly followed by eurobonds or some other mechanism of joint liability).

    @Stephen No, not “plain as day”. The new fiscal compact is using the enhanced co-operation provisions set out in Article 20 of the Treaty on European Union and Articles 326 to 334 of the Treaty on the Functioning of the European Union. Cameron is also, if reports are to be believed, happy for them to do so.

  • Joe Litobarski 31st Jan '12 - 9:45am

    Stephen,

    It’s still possible to be enthusiastic about the EU, but it desperately needs reform. Some of the proposals are sensible, some are shockingly undemocratic. The leaked German proposal for an EU budget Commissioner with the power to override fiscal decisions made by countries receiving bail-outs, for example, is an abomination and should be burnt with fire. The German proposal for writing debt limits into national constitutions before getting access to financial assistance, however, is (it seems to me) a fairly sensible idea.

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