Friday, 9 December 2011
9 December 2011: The day Britain left Europe
“UK Threatens Eurozone” headlined ABC News this morning. “UK to Euro nations: We’re out, good luck” heralded CBS News this morning. The reason for Cameron’s veto is bound to make him even more unpopular globally. In order to give his assent to the treaty change, which would not have affected Britain but only the countries using the euro, he demanded that the UK be given an opt-out from proposed increased regulation on banks and financial traders. That financial transaction tax (or 'banker tax') proposed by the EU earlier this year had nothing to do with last night's negotiations.
France and Germany balked, and Cameron walked. As one journalist friend noted last night, "The UK has refused to help solve the crisis because it wants to help the banks who started the crisis." Because the other 26 members walked away and went ahead without Britain, it means the financial transaction tax is still on the table, and the situation on that issue is unchanged from what it was before the summit. Cameron walks away with nothing.
Putting the global economy at risk in order to protect London City traders may not be the most popular stance given the current economic crisis. And Sarkozy emerged from the meeting this morning eager to exploit this. “You cannot have an opt-out and then ask to participate in all the discussion about the euro that you did not want to have, and which you also criticised,” Sarkozy declared to the press after emerging from the meeting at 5:30 this morning. It took Cameron a full half-hour after Sarkozy spoke to comport himself and figure out what he was going to say in his own press conference.
Cameron’s intransigence may please his eurosceptic backbenchers, but it will enrage his global allies and the markets. It will also have serious consequences for the future of the EU and Britain. The eurozone states, plus nine others who do not use the euro but will join the pact anyway, will form a new treaty for a fiscal union. That leaves only the UK outside of this bloc.
As the Economist’s Charlemagne blog noted this morning, this is effectively the beginning of the end for the UK’s place in Europe – it is a divorce. The tigher union formed by all the other EU states will move ahead if the specifics are ironed out today.
The UK will now either have to leave the EU, or watch the EU become an irrelevant skeleton of its former self while the eurozone moves forward as the new federal entity. This is what Sarkozy has wanted for a long time – an EU without the UK constantly saying no and slowing it down. It looks like he is now getting his wish, which explains why he was looking so confident at last night’s press conference. Cameron, not so much.
It's a bit like that episode of The Simpsons when Homer joins the "Stonecutters" (a send-up of the Freemasons). When the rest of the members have had enough of him, they form a new organisation called the "Ancient Society of No Homers", leaving Homer as the lone member of the Stonecutters. The rest of the EU is going to form their own club, and leave the UK behind.
Of course even the 26-country deal could unravel today – the details still need to be worked out. But the lines have been drawn, and the future of a two-speed Europe has been decided. Cameron will go back to Britain this afternoon, while the remaining EU states stay to take the decisions that may or may not prevent the collapse of the global economy. The UK has been left isolated and on the outside, looking in.