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Tuesday, September 24, 2013

Cameron needs to begin putting specific reform ideas to Berlin

Our Director Mats Persson has an op-ed in today’s Telegraph. See below for the full text.

The old joke about the European Union was that it had two capitals: Brussels and Berlin. In the wake of the eurozone crisis, we can replace Brussels with Frankfurt – which is why Germany’s elections were watched with such keen interest in Downing Street.

David Cameron knows that his plan to negotiate a new deal between Britain and Europe depends almost entirely on Germany’s approval. So Angela Merkel’s crushing victory will have been a cause for both celebration and trepidation. The incumbent squashed all opposition, with her CDU/CSU party winning 41.5 per cent of the vote. This can only be seen as a massive endorsement of her approach to the eurozone crisis, trading German cash for others’ austerity.

Whatever the differences between the CDU and the Tories, Cameron retains a hugely powerful centre-Right counterpart with whom he can definitely do business. Merkel won’t pay any price to keep the UK in the EU, but she has dropped hints in public and private that she’s willing to grant concessions – including a reduction in the EU’s powers – so long as it doesn’t mean completely unpicking the founding treaties. The CSU, the CDU’s Bavarian sister party, is also an ally of Cameron’s, not least on issues such as rewriting EU rules about foreigners’ access to benefits.

In any coalition, the CDU and CSU will control the chancellery and finance ministry. This is where most of the de facto power over EU decisions now lies. Put simply: Merkelism will continue to dominate. Which is why, as one journalist told me yesterday, “Cameron should pop open the champagne.”

But it isn’t quite as simple as that. Merkel’s old partners, the free-market FDP, failed to make it into parliament. Ironically, it may have been the anti-euro Alternative fur Deutschland party which blocked them, by stealing the FDP’s votes. To form a new government, the chancellor will need a new partner, and it will have to be one of the Left-wing parties: either the Social Democrats (the SPD) or the Greens.

For Cameron, a centre-Right coalition would clearly have been a better deal. If the CDU and the Tories are distant cousins, the SPD belong to a completely different species – and the Greens even more so. The German Left is oriented towards Paris rather than London, and strongly in favour of tougher EU regulation, including the dreaded financial transaction tax. (With anti-banker sentiment still running high in Germany, this will remain a huge area of contention for years to come.)

The most likely outcome in Berlin is a grand coalition which hands the foreign ministry to the SPD. This is not a deal-breaker for Cameron’s plans. But it will certainly add a layer of complication, and may well take some issues off the negotiating table. For example, it’s hard to see how a German coalition and a socialist government in France will allow the UK to repatriate powers over employment law, even though this has been a Tory demand dating back to the early Nineties.

Still, with no German or French elections on the horizon – and the euro no longer fighting for survival – Cameron has what he has long needed: a window of opportunity. The tide is with him. Holland’s ruling party made clear only last week that it wants “less Brussels in several domains” including the return of “whole policy areas”, and has called for there to be a way to overturn, or at least challenge, the sillier rulings of the European Court of Justice. Even the Italian prime minister recently said that the return of EU powers “can be possible and it could be useful for us too”. “Everyone is now talking EU reform,” as one Brussels diplomat put it to me.

Most importantly, the European public are also in favour. As a recent Open Europe Berlin poll showed, German voters – by a margin of two to one – want their chancellor to back efforts by other EU leaders to decentralise powers. German voters’ trust in the European Parliament has plummeted from 52 per cent in 2007 to 33 per cent today, with a full 60 per cent wanting national parliaments to be able to block unwanted EU laws.

So how should Cameron play this? He certainly appreciates the importance of winning Merkel over to his cause: some estimates say that the number of visits by British ministers to Berlin has quadrupled over the past two years. Yet while the chancellor is instinctively sympathetic – particularly over the need to make the EU more competitive – the parliamentary backlash over Syria, as well as several other incidents, have left her wondering whether Cameron is really in control at home.

To assuage such concerns, Cameron needs not just to show that he is in charge of the agenda, but to begin putting specific reform ideas to Berlin to first slow and then reverse the drive to ever closer union. First, the core of the EU needs to be defined as the single market – not the euro. Giving the rest of Europe a veto over any eurozone proposals that touch on the single market could well win support in Berlin – and might prove more effective than a UK-specific veto over financial services.

Second, national parliaments must be the ultimate democratic check on Brussels’s decisions, while EU judges must be reined in. And third, there are several individual policy areas where Cameron should woo the Germans, from cutting the cost of Brussels to further liberalising the EU’s services market. With the German elections finally behind us, and Angela Merkel firmly in control, Britain will never have a better chance to get a better deal.


Stefan Wehmeier said...

""Wohlstand für alle" und "Wohlstand durch Wettbewerb" gehören untrennbar zusammen; das erste Postulat kennzeichnet das Ziel, das zweite den Weg, der zu diesem Ziel führt."

"Der Markt ist besser als der Staat."

Ludwig Erhard

Auch wenn der angebliche "Vater der Sozialen Marktwirtschaft" (der echte war der Freiwirtschaftler Otto Lautenbach, der leider zu früh verstarb) nicht wusste, wie die echte Soziale Marktwirtschaft (nicht eine kapitalistische Marktwirtschaft mit angehängtem "Sozialstaat", sondern eine freie Marktwirtschaft ohne Kapitalismus, die den Sozialstaat zur Finanzierung kapitalismusbedingter Massenarbeitslosigkeit gar nicht nötig hat, weil sie prinzipbedingt und unabhängig vom jeweiligen Stand der Technologie für natürliche Vollbeschäftigung sorgt) zu verwirklichen ist, kannte er immerhin das Ziel und den Weg:

Persönliche Freiheit und Sozialordnung

Dass ein auf dem Holzweg wandelndes, dummes Huhn wie unsere "Frau Bundeskanzlerin" das verlorene Ziel aus eigener Kraft findet, kann ausgeschlossen werden. Dennoch beweist die folgende Patientenakte, dass auch in besonders schweren Fällen von religiöser Verblendung (totale geistige Umnachtung) eine Heilung (Auferstehung) schon vor dem Jüngsten Tag (gesetzlich verbindliche Ankündigung der freiwirtschaftlichen Geld- und Bodenreform in der Bundesrepublik Deutschland) möglich ist. Wenn sich das dumme Huhn rechtzeitig in Behandlung begibt und sich helfen lässt, besteht also noch Hoffnung:

Behandlung eines Privatpatienten

Anonymous said...

I thought that the EU was composed of 27 countries and not just Germany.

If this is how the oppressive EU now works then it is broken and completely unfit for purpose.

Any 'deal' that Cameron does will just increase the disenfranchisement between people and parliament.

Roll on the European elections next year when the three main political parties are going to get a pasting.

I want my country back. UKIP for me.


Rik said...

On German EU policies.

Hard to see like OE writes that much will change.
Basically Merkel has just kicked the can in the hope that things would more or less solve themselves over time with the help of some limited adjustments in the rules of the Euro-game.
Well hard to see that this strategy will work longer time.
There is austerity fatigue in the South and bail out fatigue in the North.

Furthermore markets are unlikely to keep quiet for such a long time. There might not be a direct dump of everything South, but longer term a lot of present investors will likely will move somewhere else. Simply as far as the market goes this looks like a stay of execution. And execcution rather by 1000 curs than by more efficient means.

On top of that these things are related Merket action could trigger new bail outs and subsequently increase both fatigues. And a problem in getting either reforms or packages accepted will influece markets in a negative way.

The main problem I foresee in Germany with its present policies for the next 4 years are therefor more that a crisis will arise that is impossible to solve within the current framework than that the basic policies will change.

Merkel herself will want to stick to them anyway. It is in her DNA and she simply lacks oversight to make bold choices. Her party will not want major events in her last term while there is no proper succession in sight and the long term trend for Christian Democrats is South (and possibly steeply).

SPD (or Greens) mainly electoral/opposition rhetoric as I see it and we see time and time again all over the EU.
Their big words if translated in policies would mean high costs for the German tax payer. While at home there is insufficient funding for problems like aged poverty.
Simply impossible to sell Oma Muller having to suffer for money that has to be sent to Greece and Co.
On Eurobonds these simply seem unconstitutional. Would require a referendum which they are very likely to lose. Simply impossible. Democracy is nice when you are in opposition. Fund night give some room however.

Anyway as far as Germany goes it is hard to see that no calls would be required that would involve big bucks. Now everything is budgetneutral (aka cooking the books/ OBS financing).
Here as said I see more problems than in a policy change. If big cuts at home would be required while the EZ works in some ways at least as a drag there will be problems. How these will play out nobody knows. But there will be a substantial chance that the rescue will be tanked because of it. Difficult to see it otherwise.

Rik said...

Cameron simply seems to lack a grand strategy (beyond reneg and referendum in 2017).
Imho he should first get one now everything looks totally ad hoc and in the process you will likely shoot uyourself somewhere in the foot.
Likely not make it public (not let the other side look into your cards), but he clearly doesnot have one even for internal use.

No treaty change is imho an illusion. Also on restructuring the EZ btw.
You will bump into topics that can not otherwise be solved but by changing the treaty.
Germany and Co clearly doesnot like that.
Cameron however should make up a plan how and when to bring this up in the discussion.
Anyway it is totally unlikely that the folks at home will accept only the changes that go without treaty change. Plus the thing needs a major overhaul it is as simple as that.
Looks like bringing it up without bringing treaty change in the open at least for the first period might be a good idea.
Anyway Merkel and Co have to realise that if an emergency would arise in Euroland very likely there would be an UK backbench problem (aka quid pro quo stuff also known as the ancient art of blackmail). So she likely wants to have some understandings in place for that kind of situation herself.

On the form.
hard to see that a lot of UK related stuff should in future be arranged otherwise than outside the treaty structure.
See it as a very long term option.
In Finance: say a Techco value now say 100. Call option for 2000.
1 Year option: value nearly nil.
30 year option will have some real value.
Similar here in EU politics. If things are done via the treaty they are more or less written in stone. Outside you are much more flexible to make later changes.
Essential as the UK population will remain EU-sceptic whatever will happen in the referendum. And the last thing you want is a 'Quebec'. With exit/independence coming up every 5-10 years.
Anyway hard to see how making your own decisions would fit in with a treaty structure at least one that is rather similar to the present one. And seen the fact that treaty changes are a hard sell anyway (which makes a revision also on this point unlikely and certainly more difficult.
These things should imho be get clear first (as part of a grand strategy).

Rollo said...

He should start by making Euronorms optional; and eliminating the law demanding CE marking on everything. The CE thing will eliminate small business and start-ups.
He should then take back our fisheries in their entirety, with 200mile boundaries.
But he won't. Like other failures before him, he wants a future in the EU

Anonymous said...

O Sir Camerom não têm muitas estratégias Porque a Alemanha têm o lado positivo quando ao seu poder económica e politico dentro da Alemanha e da Europa O Sir Cameron quere é mais poder dentro da UE Porque o que esta em jogo é o futuro económico do Reino Unido dentro do espaço europeu

Unknown said...

A peek into the future: It's 2017, Britain is seen as the uneuropean neighbour who has got what it wants, changed the rules, been awkward, and then votes to leave and says au revoir to the rest.

clinihyp said...

Why are political commentators, politicians and assorted hangers on still trying to delude us into believing that (A) Cameron actually has the ability, power or will to renegotiate our membership? and (B) even if he did manage to secure a cosmetic change or two he would actually offer us a straightforward irrevocable in/out referendum.

If Mr Cameron was serious about his ephemeral 'commitment, why, since January, has he not taken the first step of changing the negotiation team, of four, all of whom are dedicated and ardent Europhiles? Three of those four also serve on the Future of Europe Forum, a body set up for the sole purpose of keeping us in the EU at any price. What a democratic man Mr. Cameron is!

To fullY understand why Britain has been dragged deeper into the EU,
regardless what promises politicians make, take a look at who we have had negotiating on our behalf.

For the past quarter century, Britain has been represented round the table in Brussels by people personally determined that we should be part of the Euro system. It’s not just in the big, set-piece treaty type negotiations where this matters. Every week in Brussels, UK
diplomats sit down with other Eurocrats and strike deals that
determine public policy in Britain. No wonder that on everything from fisheries to finance, we always
gets such dreadful deals in Brussels.For more detailed information visit;