Britain and Europe

Mr Cameron’s gamble

Mr Cameron has promised an in-or-out referendum on the UK membership of the European Union, should the Conservatives win the next general election. It represents a huge gamble for the prime minister: he seems to think that he could negotiate with other European states to repatriate powers, which would be sufficient to convince his own party and the country at large to win a referendum to stay in the EU. He seems to bank on the fact that the economy in the eurozone would have recovered, so that remaining in the EU would be an attractive proposition. The problem for Mr Cameron is that none of the above may happen. Perhaps he is trying to make life difficult for the next Labour(-led) government, calculating that he won’t be back in No 10 Downing Street after the next general election, but this would keep his restless backbenchers happy this side of the election.

By promising a referendum with a timetable, he now has set himself a deadline for negotiations, which other European countries may not brook. Perhaps Mr Cameron calculates that keeping the UK – with or without Scotland – will be sufficiently important for the EU, and that other member states will be willing to make concessions. It is a blackmail of sorts. Or brinkmanship. He has given himself a small window for negotiations, as any serious talks will only take place if he were to be returned to power in the 2015 general election. This is a big assumption, and the next German government formed after the Bundestag election later this year may be a lot more hostile to the idea of making concessions to Britain. The next presidential election in France will be in 2017, which may make negotiations more difficult. There will also be a new president in the US.

There is little to indicate that the eurozone members will be happy to entertain negotiations with Britain when the single-currency area is going through economic troubles, especially after Mr Cameron effectively vetoed a treaty change, back in December 2011. That should have been a warning: the fact that Mr Cameron had to resort to that tactics demonstrated the degree of British isolation in the EU. If the UK had managed to convince other countries within and without the eurozone to share its position, Mr Cameron would have obtained the concessions he was seeking, without exercising or threatening to exercise his veto. The question is how the other EU members value Britain’s membership: will they want to keep Britain in, and if so, at what costs? On both accounts, Mr Cameron may be overestimating the UK’s importance in Europe, or underestimating the resentment that many other countries feel towards the UK on this issue.

Let’s assume that Mr Cameron is returned to office at the next general election, and that Scotland has not voted for independence, for the purpose of this piece. But even if – and this being a very big if – Mr Cameron were to manage to repatriate some powers, after intensive series of negotiations, will that be sufficient? In other words, can he sell the package to his own party and the people of Britain? Euro-scepticism is a wide spectrum, but among the Conservatives and their supporters, there are those who wish to leave the EU come what may, and no amount of repatriation of powers will be deemed as sufficient. Therefore, whatever powers that Mr Cameron may have succeeded in bringing back, the Tories are likely to be split going into the referendum. And what will Mr Cameron do, if he could not achieve any meaningful repatriation of powers? Having more or less stated that he wishes the UK to remain in the EU, what will he be campaigning for, in such instance?

The referendum may be moot, if for example the eurozone collapses, or other countries leave the EU, but Mr Cameron has seemingly gambled that the eurozone economy will have recovered by the time of the referendum, so that he can make a strong case for benefits of remaining in a vibrant union. However, given the depth of the problems in so many eurozone states, that may not be the case. It is already a good few years since the beginning of the crises, and there are no immediate reasons to think that the economy will turn around that quickly, and things might still be sluggish in 2017. Naturally, a lot depends on the relative performance of the British economy, compared to the EU as a whole, and Britain’s economic outlook is not exactly rosy: indications suggest that the UK is heading towards a triple-dip recession at the moment. The eurozone may not be doing too well, but Britain might be in a worse shape.

And what if the British people vote to leave the EU in the referendum, despite Mr Cameron’s ‘success’ in repatriating powers and his recommendation to vote yes? Can the UK thrive in splendid isolation? Perhaps, but it no longer has an empire, and Imperial Preference was not exactly a huge success back in the early twentieth century. The UK might be able to concentrate on bilateral relationships, but what is in it for the other party? Which would be more attractive as a market to, say, China or Brazil: the UK or the EU? Mr Cameron, and most other politicians, will be loath to leave the EU, as such would have serious consequences for trade, inward investment, and even to Britain’s standing in the world.

Referendums are not bad things. Indeed, it probably makes sense to hold them for very important decisions, that will affect the lives and welfare of citizens, and in the case of the EU also because of the perceived lack of democracy, mandate and legitimacy of the EU, though that can partly be explained by the fact that people don’t take the European elections seriously compared to the national elections. This however was a piece of political manoeuvre, which may have given a temporary boost to his standing in the party and the country, but it has left him without much wriggle room in the future. Mr Cameron may end up in the history books as the prime minister who broke the unions, during whose premiership Scotland left the UK, and the rest of Britain left the EU. Granted, it is not likely, but the existence of such a possibility would have been astonishing only a few year ago.