The UK and Europe: how much damage did Cameron's veto do?

Reactions are still rolling in, just over a week after Cameron's veto. Was it the tantrum of an 'obstinate kid'? Whatever reasons he had, he has relegated the UK to the sidelines of Europe.
Kirsty Hughes
20 December 2011

Days after David Cameron used his veto to block an EU treaty aimed at solving the euro crisis, only to find himself isolated as the other 26 decided to go ahead with an intergovernmental treaty, the reactions and related metaphors are still rolling in.

Germany's Chancellor Angela Merkel moved on from her rather testy, if restrained, end-of-summit remark that: "I really don't believe David Cameron was ever with us at the table" to five days later regretting "that the UK has not been able to join us on this journey" and insisting politely that the UK is still "an important partner in the European Union". Ten days post-summit, German foreign minister Guido Westerwelle, in London for talks with William Hague, proclaimed Germany "willing to build bridges over troubled waters."

But those waters certainly are still troubled even if LibDem coalition minister Vince Cable, ten days after the summit, was employing the 'dust not yet settled' metaphor to avoid answering questions on the harm done to the UK's influence –  in an apparent effort to at least  limit the damage done to Tory-LibDem relations even if not to relations with the UK's 26 EU partners. 

Unsuprisingly, French President Nicolas Sarkozy has not been as restrained as Merkel – rather cheerfully asserting immediately post-summit that there are now "two Europes." Some reports even suggested he had called Cameron 'an obstinate kid'. Whether true or not, within a week of the sumit, France-UK relations rapidly descended to playground level as both sides claimed 'my economy's better than yours', a fairly unwise game for supposedly adult politicians from two countries both of which are heading for a double-dip recession.

Holed below the water or just a little surface damage?

But has the Cameron veto done real damage to the UK's standing and influence in the EU, or will it go down as just one more summit spat, a sideshow soon to be forgotten amidst the turbulence of the euro crisis?

Soon forgotten? Deploying a veto on an EU treaty is a rare and rather major action – vetoes on particular laws or particular paragraphs in summit conclusions may be two-a-penny, but vetoing a whole treaty rather than negotiating to a compromise is a big deal at any time, even more so when the EU is in its biggest crisis in 50 years. So it is unlikely to be forgotten, and bad feelings will linger. Getting agreement on a country's particular hobby horses in the EU –things it wants to happen and doesn't want to happen – depends most of the time in the EU on having good and functional relationships with other member states. For now, the UK's relationships in the EU vary from frosty to damaged to highly dysfunctional. This will clearly damage the UK – how much and for how long, depends on whether more high-level, serious diplomacy is brought to play in the coming months than the Cameron government has displayed so far in their 18 months in power.

Soon mended? Given, firstly, that the amended protocol that Merkel and Sarkozy wanted to append to the existing Lisbon Treaty only applied to eurozone members, and, secondly, that it only related to commitments to fiscal and budgetary discipline for those members, Cameron's veto continues to look rather bizarre. While for now a very short intergovernmental treaty is being drawn up that doesn't need UK agreement (for the euro 17 and as many of the 9 'euro-outs' as decide they want to join), it would always be easy to add this short new treaty back into the Lisbon Treaty at any point if the UK government would agree. That would constitute a bridge over troubled waters.

But Cameron is now rather hoist on his own petard. And Hague's response to Germany's 'bridge over troubled waters' offer was to insist again that all (not some of) the UK's demands for special treatment for financial services should be met. This is despite the fact that some of the UK demands, such as for the City of London to have tougher capital requirements on banks than EU minimum rules, are – and always were – going to be allowed in the financial directive put forward on this by European Commissioner Michel Barnier, and certainly don't need treaty amendments. There is plenty of wiggle room if Cameron and Hague want to use it but for now it looks unlikely.

David Cameron insisting that the UK won't contribute to the €200 billion IMF fund to aid the eurozone, that the other EU countries (not just euro countries) are contibuting to, or at least not unless other G20 countries are, makes clear Cameron wants to cement the UK's role as part of the G20 not as part of the EU.

Three speed Europe: Inevitably, attention has mostly turned back to the main drama of the euro crisis. With austerity being piled upon austerity across the EU – including in the UK – recession and unemployment and the fate of the euro will remain the dominant issues. But it is clear that, while the euro, and the EU, survive, there will be a three-speed Europe – the eurozone 17 as the central core, surrounded by 9 other countries who either intend to join the euro if it survives or, in the case of Denmark and Sweden, who want to stay as close to the euro 17 as possible (to maintain influence in the EU) while not joining the euro. Only the UK sits in the third outer circle close to the exit door, not so far from non-EU countries Norway and Switzerland.

The UK is talking up the possibilities that either the 26 will not agree their intergovernmental treaty or that not all 26 will sign up. But if Sweden or Hungary don't sign the new treaty, that does not put them in the UK's veto-wielding, EU-sceptic lane, so it will stay lonely there.

Rather than playing a major influential role to stop a euro-meltdown, or being in a position to lead through the crisis if the euro did implode, Cameron has relegated the UK to the sidelines whichever way the euro crisis plays out. It is a deeply unimpressive result for a country and a government that likes to assert it is still a global player. And it is no way to defend the UK's interests.

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