• Facebook
  • Facebook
  • Facebook
  • Facebook

Search This Blog

Visit our new website.

Wednesday, February 01, 2012

Calm down dear: Cameron's EU veto isn't dead yet

Over on the Telegraph blog, we argue:

MPs and MEPs – from different parties and for different reasons – have lined up over recent days to explain how David Cameron lost the plot over his EU veto, as it has become clear that the EU institutions are now involved, albeit on the margins, of the fiscal treaty that 25 out of 27 EU countries signed up to earlier in the week.

As we've noted before, the veto that Cameron pulled at the December EU summit was never the best of the possible outcomes. However, the veto hasn't left Cameron empty-handed. In fact, contrary to popular belief, if played cleverly, the veto could remain a source of UK leverage in Europe for years to come. Here’s why.

In the treaty that was signed off, the role of the Commission and the ECJ is very limited. All the ECJ can do is impose a hypothetical fine on countries that fail to transpose spending caps into national law – but not prosecute states that break these spending limits. This makes virtually no practical difference to the UK.

However, as we have pointed out before, it still sets a worrying precedent, which the UK needs to be all over like a cheap suit. But the most effective way to disarm this potential threat is not to seek to blow up the dam by launching an all-in legal challenge.

Instead, Cameron should keep his cards close to his chest. The threat of legal action is Cameron's greatest asset at the moment. Any legal challenge would be a messy, lengthy affair, involving a lot of uncertainty. The Germans in particular – ever conscious of their Constitutional Court – know that the current arrangement involving an ad hoc euro treaty is legally dubious. As long as the Germans feel uncomfortable, Cameron maintains his leverage.

Given that the role of the ECJ is so limited, by holding the option of a legal challenge in reserve, Cameron can tackle the use of the EU institutions head on if it ever genuinely threatened the UK's interests: ie if the ECJ or the Commission started to dabble in single market issues under the auspices of a euro treaty.

In other words, Cameron can credibly tell Merkel: we want you to get on with the business of saving the euro (whether the current policies will actually work is a different matter), but stick to the rules, or it's game over. Just as Merkel is seeking this treaty to assuage domestic political opinion, Cameron can point to his MPs. They will not allow him to stand by should he fail to launch a fully fledged legal challenge if the circumstances require it.

In contrast, playing all his cards now would be far riskier. Since the role of the ECJ is minimal, it’s not certain that a legal challenge would be successful at the moment (see here for our thoughts on this). If he lost a court case over an issue of little practical importance to the UK, he would lose his leverage and set an even more worrying precedent.

And remember, it's still the explicit aim of the fiscal pact members to incorporate the treaty into EU law within five years – over which the UK retains its veto. This sets the UK up for another round of negotiations where it will be free to make demands of its own.

At the end of the day, there’s no escaping that Britain, and most other euro outs, need a different set of arrangements under EU law than euro members – on an increasing number of issues. If the EU, for all practical circumstances, becomes equivalent to the eurozone, then the UK is out, and life won't be easy for the Swedes of the world either. For all the posturing, all EU countries will want to avoid this.

In any case, the fiscal pact is big on talk but small on action – non-euro members are invited to one eurozone summit a year if the fiscal pact is being discussed at that summit. In itself the fiscal pact won’t change the world. Sorry everyone – there’s not that much to see here.

Better then for Cameron to save his ammunition – there are many, many EU negotiations to come.


Rollo said...

A threat from Cameron? Like being savaged by a dead sheep....

Anonymous said...

Can someone please explain this blog to Ed in simple terms.


Cave said...

Control of (Euro)national budgets is covered in The Maastricht Treaty. Submission to review is covered in The Lisbon Treaty.
Exemption from interference in UK national monetary policy is also covered in The Lisbon Treaty.
What we are up against is non-compliance by all the Euro States.
We would do well to keep out of the whole mess that they have allowed themselves to get in to. Let them dig their own hole and sink in to it.