Cameron must be radical on Europe

Allister Heath
ONCE again, the British public is being mis-sold a European treaty. Some of what is being proposed is, as advertised, about “saving” the euro by trying to make it harder for nations to overspend and over-borrow.

But what has imposing a Tobin tax on London, to raise billions that would be transferred to Brussels, got to do with stopping the crisis? Nothing. And what would a unified corporation tax base have to do with fixing Greece’s over-spending and Italy’s lack of competitiveness? Nothing. It’s a sham. It’s what the EU always does: use a crisis to integrate further and pursue its self-interest (and stamp out others’ most competitive sectors or selling points, such as the City). David Cameron is wrong to say that he cannot rock the boat with demands to repatriate powers to the UK because the only thing that matters is saving the euro – much of what Merkozy wants has nothing to do with saving the single currency, so the PM shouldn’t feel constrained in his own negotiations.

There is another reason why Cameron must act. As the Open Europe think-tank explains, the revamped Eurozone, in its new, unified guise (assuming that it actually does agree on some new arrangement) would be able to grab a permanent majority in the Council of Ministers. The euro countries would become a kind of cartel, potentially voting together to impose everything they want (in the many areas where vetoes have been abolished) on the UK. New rules on qualified majority voting come into force in November 2014 (with an option for a state to request a vote follows the old rules until April 2017). In addition to changing the voting weights, the rules slash the qualified majority required to pass an EU law from 71 per cent to 65 per cent, a huge shift which will make it much easier to impose change and reduce the blocking power of dissident groups. Crucially, as Open Europe spells out, if the 17 Eurozone members vote as a caucus, they will own 66 per cent of the votes on their own, giving them a permanent, in-built majority (not accounting for Croatia joining the EU, Greece leaving the euro, or one or more Eastern European countries joining the single currency, bizarrely still a possibility ).

On might imagine that the Dutch and Germans will always be at odds with the Greeks or Portuguese. In practice, however, this may not be so. The dynamics of the Eurozone would change massively under the new arrangement being proposed. Smaller countries will have to make a greater effort to placate the large ones, especially if they are in financial trouble and don’t want to be disciplined for spending too much. There will be lots of horse-trading and a much greater chance of the Eurozone voting as a block. Under such circumstances, the UK’s ability to resist any new law by seeking to build coalitions with some of the more sensible member states would be wiped away. In five years’ time at the latest, it would finally be game over for the City, as the Eurozone would seek to impose anything it likes through qualified majority voting.

It is therefore not good enough for David Cameron to block a new treaty – and for the 17 Eurozone countries to create a new deal among themselves. It is not good enough for him to say the UK needs “safeguards”. Unless swathes of powers are returned to the UK, it will be nigh-on impossible for Britain to rebuild its battered economy. The PM must show some real leadership.
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