Angela Merkel and Nicholas Sarkozy – Boxing David Cameron Into a Corner
Details are beginning to emerge of the new European deal which will be imposed by Germany and France on the rest of the EU (or at least the Eurozone) on Friday.
The measures are:
- Automatic sanctions (fines) for countries that run a deficit of more than 3% of GDP.
- A “golden rule” forcing a balanced budget to be built into member states budgets.
- Private investors never again to be asked to take losses – i.e. no more partial or full defaults on debt allowed by any member state.
- European Stability Mechanism (a permanent bailout fund) brought forward to 2012.
- Eurozone leaders to meet every month until the crisis is over.
The golden rule will be policed by the European Court of Justice – a quite astonishing provision that shows clearly how undemocratic forces have hijacked the mechanisms of the EU. There will come a time, in the future, when judges in that court order a member state to spend less.
Germany and France have also completely rejected the idea of “Eurobonds” (i.e. debt issued directly by the European Central Bank). Therefore any future bailouts will have to be paid by member states themselves, including France and Germany.
It is clear that France and Germany are proceding full speed ahead with ever closer union, as is being widely reported. It is not clear that even the French and German people are happy about this. The deal could well become mired in legal proceedings in Germany, for example – or the markets might just decide that the whole Eurozone is too risky and bail out en masse, leaving the Euro facing collapse.
What about Britain?
Germany and France have made it clear that they will go ahead with these changes within the Eurozone, regardless of whether the non-Eurozone countries sign up.
If Mr Cameron wants to go along with these changes, it is absolutely clear in his own European Union Act that he will, legally, require a referendum to do so. Even granting a referendum would be a U-turn for Mr Cameron, and massively weaken his position domestically, because he has so stubbornly and publically set his face against one.
So presumably Mr Cameron will not sign up to the new treaty, which means the rest of the EU will go ahead without him. And not just the Eurozone countries – most or possibly all of the non-Eurozone countries will probably go along with these changes, as they have been cleverly framed to ensure they could be acceptable to the others. Britain will potentially be left as the only EU country that is not in the new pact.
That is fine providing the Eurozone countries don’t act as a “caucus”, meeting separately and agreeing the position they will take in full EU meetings. Woops. Remember that final provision of the Franco-German proposal? “Eurozone leaders to meet every month until the crisis is over.”
Mr Cameron is damned if he goes along with this, and damned if he doesn’t.
Mr Cameron is now completely boxed into a corner. What’s more, it is his own stubborn refusal to take any kind of leadership position on this issue that has left him boxed in. That “in Europe but not run by Europe” fudge that has been so beloved of Conservative politicians for so many years will not work any more.
The “in or out” choice is becoming more and more inevitable. The game is up. Mr Cameron cannot duck and dive around this any longer.
That EU meeting on friday is High Noon at the OK Corral. Unfortunately Mr Cameron’s pistol is empty. Maybe he ought to think about walking away?