The unexpected decision of the Greek government to call a referendum on the Euro-area austerity package has once again thrown the future of Greece and the euro into doubt. But at the same time doubts are also starting to surface about the credibility of the Tory Euro-sceptic back bench revolt launched in the House of Commons two weeks ago and widely hailed as the start of a nation wide campaign to take the United Kingdom out of the European Union. 

Paradoxical as it might seem, the doubts have been triggered by the steps taken by the 17 nation Euro-area group to create an economic and eventually a political union in the heart of the EU. Questions are now being asked about precisely what alternative relationship with the EU the Euro-sceptic right wing now envisages and how it is to be achieved.

Some Tory sceptics are already making it clear that they do not actually want to see the UK completely abandon membership of the EU. This group would prefer to seek further ‘opt outs’ from some existing legal obligations to respect minimum EU standards notably linked to the rights of employees and especially of women. The Cameron leadership of the Tory party agrees with this approach but is doubtful it can be achieved unless and until the 27 EU states are asked to approve major changes in the EU Treaties to facilitate a Euro-area ‘economic government.’ 

The hard liners retort that some Treaty changes will be sought in the near future as a result of the measures to strengthen the Euro-area’s defences in Brussels last week. These, they insist, should be used by London to trigger a UK referendum with the belief that a resulting ‘No’ vote result would force a major re-shaping of the terms of British membership of the EU or better still right out of the Union. 

They point to new legislation already passed into law by Parliament committing the government to call a referendum on any new Treaty changes which would lead to a transfer of further powers from the UK to the EU. The trouble with this is that the treaty changes likely to be put for approval in the next few months will not require any ‘transfer of sovereignty’ to the EU since Britain will not be affected by the planned strengthening of the Euro-area. 

The most which the British government might be able to secure as a result of the immediate treaty changes would be some further assurances that the UK and the nine other countries which are currently outside the Euro will continue to be involved in decisions affecting matters such as the single European market. However the ‘Outs’ will not be able to prevent the 17 Euro-area ‘Ins’ from holding all the key meetings affecting the running of the single currency by themselves alone. 

This, to be sure, will not be the end of the story. Germany, France and the other Euro-area states want to follow the limited measures to reinforce the collective governance of the single currency with a far more ambitious new Treaty over the next few years. The first step will be the presentation of an important paper setting out the need for further economic and political integration by the President of the European Council, Herman von Rompuy, at the next EU summit in December. 

We already have some idea of what might be involved following the  debate which took place with Chancellor Merkel in the German Bundestag a week ago. Berlin is anxious that a step by step creation of a Euro-area economic government must be balanced by new measures to strengthen democracy at the European level.  These could include the direct election by EU voters of future Presidents both of the European Commission and the European Council itself. This will make it difficult for those sceptics who trade almost exclusively on claims that people are being denied a vote on EU issues.

It is at this point that David Cameron sees a chance to bargain cherry picking rights on the existing obligations of the UK within the EU in return for not blocking the new treaty. But this will not be easy to achieve since most Liberal Democrats know it would be political suicide for them to back Tory moves to abolish the social reforms brought by EU membership in recent years. 

There is a view elsewhere in the EU that far too many concessions have already been made to the ‘half in – half out’ terms of existing British membership. The constant slide in the value of sterling is seen as undermining the spirit if not the letter of the single market. A weakening pound has produced little benefit for UK exporters but has encouraged higher levels of inflation in Britain than elsewhere. 

There is already some talk in Brussels and other capitals that it might be better to make provision in the second set of Treaty changes for some kind of “associate membership” of the EU which might be offered to the UK. This would certainly cheer the hard line euro-sceptics who already cite Norway’s relationship outside the EU but within the European Economic Area as a desirable model. 

They should think again. Norway is bound by all the laws and regulations adopted by the EU for the running of the single market – but it has no part in taking those decisions. Moreover Norway has to pay heavily for this relationship by making substantial payments through the European Union budget to assist the less developed EU countries. In any case talk about the UK forging a new alliance of Poland and other ‘Outs’ is undermined by the determination of most ‘Outs’ to become Euro-area ‘Ins’ as soon as possible.

But is this really a problem between the UK and the Euro-area/EU? As Gerry Hassan has pointed out in openDemocracy, the UK ‘Union’ may be more at risk of imploding than the European Union. The debate about the big EU Treaty could well coincide with the referendum on Scottish independence. There is little enthusiasm in Scotland, Wales or Northern Ireland for any change in Britain’s place in the EU which placed at risk EU finance for development. 

Little wonder that the Euro-sceptics have no coherent vision for the future. They no longer even dream of becoming some kind of 51st State of the US or of forging some mythical union of English speaking Commonwealth states. Ultimately a split between those Euro-sceptics who dream of keeping one foot in and one out of the EU and those who simply want to leave lock stock and barrel might even destroy the Tory party itself.