Monday, 24 October 2011

UK sidelined as Cameron faces attack from Sarko and his own MPs

David Cameron's quest for influence at this week's Eurozone crisis meetings is meeting headwinds, to say the least. First French president Nicolas Sarkozy tells him to 'shut up' at yesterday's summit, and now he is facing a rebellion his back-bench Eurosceptic MPs.

Tonight the rebels will try to force a vote in the parliament to set a public referendum in the UK on its EU membership. Cameron opposes such a referendum and has instructed his party to vote against it, as have the leaders of his coalition partners the Liberal Democrats and the opposition Labour. But 70 Conservative MPs are expected to defy him and vote for a referendum.

Of course, the measure has no hope of passing. But commentators and the markets,will be focused on the message that the rebellion will send at this precarious and sensitive time. British foreign secretary William Hague, who is himself quite eurosceptic, told the BBC that the vote being forced by the back-benchers is "the wrong question at the wrong time" and has likened it to "a piece of graffiti". The vote will "create additional economic uncertainty in this country at a difficult economic time," he said.

Cameron has imposed a 'three-line whip' on his party to vote against the measure, which is the most serious whip a party can issue. Any MPs who disobey will be expected to resign from government jobs. Cameron has said the preceding Labour Party should have held a public referendum on the ratification of the Lisbon Treaty, and he has pledged to hold a referendum on any future treaty changes. But he says an 'in-out' referendum would be counter-productive. This is likely because he knows such a referendum could easily yield an 'out' result, plunging the UK into a diplomatic and economic crisis.

The timing of the vote couldn't be worse for Cameron, who is desperately trying to fund a way for Britain to have a voice in this week's crucially important Eurozone talks. At yesterday's first round of talks between EU leaders (the final round comes Wednesday) Cameron tried in vain to have an influence. After the summit he told reporters that "there is a risk that those countries outside the euro...might see the eurozone members starting to take decisions that affect the single market." He said he had fought for the leaders in the Eurozone (those countries which use the euro) to guarantee the rights of non-euro countries in the summit's final statement.

Even some countries within the Eurozone are expressing concern that the non-Euro EU members - which include Sweden, Denmark and the UK plus all the Eastern European states member states except Slovenia and Estonia - are being excluded from decision making. Finland and the Netherlands signed a joint letter ahead of the summit demanding that "all member states need to be included in decisions." But with closer economic integration of the Eurozone now looking like the only option to solve the crisis, a "two-speed Europe" is looking more and more likely. In such a scenario, the non-euro countries will be sidelined from decision-making.

"You say you hate the euro and now you want to interfere in our meetings"

At this crucial moment it is important that the UK be seen to be engaged and influential, but tonight's vote will send a completely opposite message to the world. And at the same time that Cameron is being pulled away from Europe by his own MPs, he is facing an increasingly hostile and defensive Franco-German alliance that wants the UK to mind its own business. French President Nicolas Sarkozy reportedly said as much to Cameron in a shocking outburst during yesterday's summit.

According to reports, toward the end of the summit when Cameron insisted that non-euro countries be included in the decision making, Sarkozy exploded. "You have lost a good opportunity to shut up," he reportedly told him, adding, "We are sick of you criticising us and telling us what to do. You say you hate the euro and now you want to interfere in our meetings."

Wednesday's 'D-Day' meeting of Eurozone leaders, being billed as the last chance to save Europe, will technically not include Cameron. He is going to come to Brussels for the meeting anyway, but it's unlikely the Eurozone leaders will let him in to the most crucial talks. In any event, he won't get a say over the final decision they take, as that is only being taken by Eurozone leaders.

It's an incredibly sensitive time for Europe as leaders grapple with an almost impossible question: How do you create fiscal union for only part of a common market? In the end, the answer may be: You can't. If this is the case, member states would either have to join the euro or leave the EU. Given that Cameron has ruled out the UK ever joining the Euro, it could mean that one day soon the UK may have to leave the union. This is not something Cameron wants to see happen. But if the message sent by tonight's vote is that this 'two-speed Europe' is untenable and will soon split the union apart, it will have a damaging impact on confidence in whatever solution is announced on Wednesday.

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