Friday 21 May 2010

Eurozone governance: Cameron nixes treaty change

According to the BBC, UK prime minister David Cameron has politely told chancellor Angela Merkel in Berlin that he wants to play a positive role in Europe and that a strong eurozone is in the UK’s own interest.

However, Cameron excludes any treaty change giving the European Union more powers to shore up the eurozone, and he referred to the unanimity rule and the British veto. Cameron also excluded British participation in “bolstering” the euro. (By this I understand financial stabilisation measures.)

These are essentially the same things Cameron said the previous day, when he met president Nicolas Sarkozy in Paris.

UK government programme

While adding non-participation in financial stabilisation, what Cameron said is contained in the agreement between the Conservatives and the Liberal Democrats: The Coalition: our programme for government.

Here are three relevant excerpts:

We will ensure that there is no further transfer of sovereignty or powers over the course of the next Parliament.

We will amend the 1972 European Communities Act so that any proposed future treaty that transferred areas of power, or competences, would be subject to a referendum on that treaty – a ‘referendum lock’. We will amend the 1972 European Communities Act so that the use of any passerelle would require primary legislation.

We will ensure that Britain does not join or prepare to join the Euro in this Parliament.

The inadequacy of the Lisbon Treaty rules on economic governance is in plain view. If monetary union without fiscal and political union is a structural weakness, there are two coherent responses for EU leaders:

1) Make necessary changes to the EU treaties, or
2) openly act to dismantle the eurozone.

Best wishes for the eurozone, while vetoing necessary treaty change, comes awfully close to the Leninist saying to give the Mensheviks support in the same way as the rope supports a hanged man.

Ralf Grahn


  1. I think this just means the EU needs to market any treaty changes in a way that makes it obvious that UK won't be affected.

    If there are calls for tighter market regulation, that goes pretty much against everything Conservatives stand for, so it makes sense they would not agree to such a treaty. They already had one such moment with Thatcher and SEA.

    EU has done a poor job at convincing they know a way to solve the crisis. It seems like EU's just trying every trick they know and risks creating further panic in the markets - UK is the critical voice in whether this is the best practise.

    But, Cameron's a pragmatist, he won't let the eurozone fail.

  2. Mia,

    Cameron seemed to reject any treaty changes out of hand, even if reform specific to the eurozone would not affect the UK because of the opt-out.

    First the task force on economic governance will probably look at short term solutions, possible without treaty reform, anyway, so it is difficult to know how much they feel the need to propose more profound changes in the end.

    If there is political will and the UK continues to prevent treaty change, the euro area countries might look at enhanced cooperation as an opportunity to advance.

    Regulation of financial markets and supervision is another, although related, matter.

    If some continental politicians seem to find financial players to be ideal enemies, the lack of critical distance between UK governments and the City look somewhat disconcerting.

    In my view much, even if not all of the consequences of the financial crisis, the economic downturn and the eurozone crisis (sovereign debt)follow from structural weaknesses at EU level, both economic governance and market regulation.

  3. I don't necessarily agree that it is a structural weakness at EU level that's the cause of this. Perhaps this reveals the slight intergovernmentalist streak in me.

    If anything it's a problem of the Mediterranean welfare model. And I for once was not surprised by the Greek crisis purely from personal experience; it appears to be Greek national sport to avoid paying taxes and many Greeks boast about that.

    Admittedly I'm not an economist or a lawyer so the finesse of the crisis escapes me. So I could be wrong.

    From a political point of view, you can hardly expect that a party from the opposition (and now in government) to support a what seems to be a failed economic union at a time when the domestic situation is so dire.

    Also, I really think that the EU needs criticism in order to make the best decisions.

    If the EU were to completely neglect the anti-euro sentiment across Europe at the moment, that in itself would undermine the democracy of the institution more than anything else before.

    I value democracy over utilitarianism. EU has too often fallen into the "we-know-best" trap, UK is right to criticise it.

    That said, I hope that Cameron won't fall into the populist trap and fail to justify his position. Opposing to European treaties for the sake of opposition seems futile and pointless.

  4. Mia,

    Your comment touches upon a number of fundamental questions about European integration, the European Union, economic and monetary union and Britain's role (and English sentiments) in all of this.

    Over the course of my earlier forum discussions and blogs, including this one in English, I have looked in some detail at these questions, and they have shaped my views along the way.

    I see a contradiction between the increasing need for European level decisions and a lack of democratic government at the same level.

    Intergovernmentalism can be the answer neither to effective decision making at the right level nor to the requirement for democratic legitimacy.

    The UK has consistently been a brake on European integration, since the establishment of the Council of Europe six decades ago. English criticism of the EU often leads in the wrong direction, so it is more a part of the problem than of the solution.

    The decade of the Lisbon strategy for growth and jobs was a failure because some of the countries most in need of structural, growth-enhancing reforms were unwilling or unable to take the painful decisions.

    These missed opportunities have compounded the problems caused by financial crisis, the economic downturn and now the eurozone crisis.

    For Greece (and to at least some extent Spain, Portugal and Italy) these neglected opportunities have came back with a vengeance.

    I think that the anti-euro sentiment in many European countries right now is (with the possible exception of Germany) less hostility towards the common currency and more a reaction to having to foot the bill for crisis measures, a golden opportunity for politicking by opposition parties.

    Pragmatic or not, according to UK standards, the fact is that Cameron has already rejected treaty changes and threatened with the UK veto as well as a referendum on every treaty change which strengthens EU level decision making.

    It remains to be seen if other EU member states see the need for more profound reform, which they would have to achieve without Britain.

    This discussion can be little more than speculation among us citizens at the moment, but I am heading towards it in my following blog posts.


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