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How to alienate friends

23 January 2014 By Hugo Dixon

A year after David Cameron promised a referendum on EU membership, the British prime minister and his Conservative party are alienating potential allies across the Channel. He needs to pitch reforms that benefit the whole bloc, not just pander to eurosceptics. Otherwise an “Out” vote looks more likely.

Cameron promised to hold a referendum by the end of 2017, assuming he’s still in power. His original hope was to first renegotiate the terms of Britain’s EU membership sufficiently so that he could then sell the advantages of staying in to a sceptical electorate.

In such a scenario, the expectation was that much of Tory press would rally round – or at least mute their criticism. Meanwhile, business would campaign to stay in, alongside the Liberal Democrats, the junior partners in Cameron’s coalition, and the opposition Labour party.

Cameron’s strategy was partly based on the idea that the EU would need a new treaty to keep the euro zone together. This would give Britain leverage to extract concessions, say repatriating powers on social policy, as the other 27 EU members would need its approval to change the organisation’s treaties.

This scheme never looked terribly convincing, not least because many other EU countries are afraid they could never get a new treaty ratified by their people. They are also reluctant to open a negotiation that would give Britain the ability to dictate terms.

Despite this, Cameron still has a way to help reform the EU while advancing Britain’s interests, and then sell that to the electorate. This is to focus on reforms that benefit the whole EU rather than just the UK.

The sort of agenda that might work is to complete the single market; create a transatlantic trade area with the United States (Cameron has already played an important role in kicking off talks to achieve this); cut red tape; and stop the European Commission interfering excessively in national affairs. These changes would appeal to many across Europe, and are needed to increase the EU’s sluggish underlying growth rate.

None of this would require a new treaty. However, it would mean making friends and influencing allies.

Euro-bashing

Cameron seemed intent on pursuing such a plan last year, including making a determined effort to woo Germany’s Angela Merkel. But more recently, he has engaged in euro-bashing under pressure from his eurosceptic wing, some of whom see eye-to-eye with the UK Independence Party (UKIP) which wants to pull out of the EU.

The new line has been most visible in the increasingly harsh Tory attitude to free movement of people within the EU. A plan to stop immigrants receiving child benefit for kids left back home has particularly irritated Poland, a source of a large number of immigrants to the UK as well as one of Britain’s natural allies.

Britain benefits economically from immigration from the rest of the EU. But the Tories haven’t wanted to look at the evidence. Indeed, they have shelved a government report on the pros and cons of EU immigration because it failed to provide ammunition for their point of view, according to the Financial Tmes.

Meanwhile, Chancellor George Osborne last week said the EU needs to reform to stop Britain quitting. This is completely the wrong rhetoric. He should have said the EU needs to reform to succeed.

Yet Cameron and Osborne are moderates compared to many of their backbench MPs. Nearly half these signed a letter saying the British parliament should have the right to veto any EU legislation.

If every national parliament could block laws, the EU would grind to a halt. The demand, which would require a new treaty, has zero chance of being agreed.

Impossible demands

For now, Cameron has beaten back this demand. But the worry is May’s European elections, where the Conservatives look like being beaten into third place by UKIP and Labour, could prompt the PM to engage in a further round of euro-bashing.

Cameron might even be pushed into making a series of near-impossible demands for EU reform in the party’s next general election manifesto. Not only would he then lose goodwill on the Continent and waste political capital, undermining Britain’s chance of securing reforms that really matter, such as completing the single market. After failing to secure his wish list, Cameron would be under pressure from his eurosceptic wing to campaign to quit the EU. If he agreed, it would then be almost impossible for an “In” campaign to succeed.

Last year many thought the best hope of Britain staying in would be for the Conservative Party to win the 2015 general election. The way it has been behaving in recent weeks suggests that this may no longer be the case.

Nor would the Labour Party find it easy to persuade the electorate to vote to stay in the EU if it won power and then held a plebiscite (something it has yet to promise). In such a scenario, the Conservatives would ditch Cameron for a die-hard eurosceptic. The Tory press would then be unleashed to campaign for an “Out” vote.

Things don’t have to play out this way. The campaign among the business community to stay in the EU – which has recently gathered pace with JPMorgan, Citigroup, Unilever and Ford the latest to warn of the economic danger of quitting – may win over public opinion. Labour may win the election and not hold a referendum. Alternatively, Cameron may yet find the strength to resist his eurosceptic wing. But the current trajectory within the Tory party makes a British exit – which would hurt both the UK and its partners – more likely.

 

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