Britain stands alone in Euro’s darkest hour

Cameron proves that his seat at the EU table is predicated on Britain’s own best interests.

David Cameron 311 R (photo credit: REUTERS)
David Cameron 311 R
(photo credit: REUTERS)

British Prime Minister David Cameron two weeks ago exercised his country’s European Union veto for the first time in history, in order to derail an ambitious treaty that hoped to stop the Euro’s continuing disintegration.

French President Nicolas Sarkozy and German Chancellor Angela Merkel clashed bitterly with Cameron over his stand at the all-night negotiations in Brussels. A member of the French delegation remarked that Cameron behaved “like a man at a wife-swapping party who refuses to bring his own wife,” although this perhaps tells us more about the after-work activities of the French diplomatic corps than we probably need to know.

Inciting the political wrath of the leaders of the other 26 EU member states, as well as the stinging criticism from the Europhilic quarters of the British media establishment, Cameron surprised many of his doubters. With the veto, he demonstrated the courage to take a stand on what he believed to be in Britain’s best interests. Cameron seems to be channeling former British prime minister Margaret Thatcher, who was always willing to wield her proverbial handbag when overreaching European power-grabs required.

At the heart of Cameron’s veto are concerns over whether the new EU treaty would undermine London’s competitiveness as a leading global financial center. Despite lingering concerns over the role in which investment banks, exotic derivative securities and eye-wateringly high bonuses played in the global meltdown, the financial services industry remains central to Britain’s prosperity in the 21st century.  Unfortunately, the regulation of financial services and investment products has recently become part of the EU’s jurisdiction. As a result, UK regulators have been increasingly relegated to merely implementing the diktats issued from Brussels.

The continued strength of England’s capitol as a globally-recognized financial capitol, and the numerous benefits that this provides in terms of tax receipts, consumer spending and international prestige, has made many in the EU quite envious.  Approximately 12 percent of British tax revenue, for example, comes from the financial sector. It is an open secret that the leaders of France and Germany would much prefer if significant slices of that activity were repatriated back to Paris and Frankfurt.

Clearly, it is in Britain’s own best interest to have the Euro stabilized as soon as possible. Serious problems continue to face over-indebted European governments and under-capitalized European banks.  At the heart of the proposed EU treaty was fiscal integration, with national budgets becoming subject to multilateral approval at the EU level. A monetary union without a fiscal union was always going to lead to instability at some point.

But when Britain sought safeguards that would protect the status quo and ensure that any fiscal oversight could not expand into further financial integration, which would undermine London’s position, adequate comfort was not given by Sarkozy and Merkel. Cameron, standing his ground, vetoed a full 27 country treaty.

Of course, the 17 individual countries of the Euro-zone can still make whatever agreements they wish among themselves. Just as the Euro experiment was launched involving only some, but not all, of the EU, so can any proposed solution to the current debacle. Perhaps a “two-tier Europe” is now inevitable.

Every leader has the obligation, both legally and morally, to put the national interest of his or her country first. Short-term factors such as popular approval at home or diplomatic displeasure abroad cannot be the priority. Instead, leaders must have the fortitude to stand up for their citizens when required.

As a result of the veto, Britain is now in a minority of one and could face a sizeable backlash from disgruntled EU leaders in the coming months. Britain’s “empty chair” also means that Cameron will have greatly diminished influence on whatever subsequent measures are ultimately adopted.

In addition, the derailing of the treaty has revealed the cracks in Cameron’s own governing coalition, which pairs his generally Euro-skeptic Conservative Party with the pro-European Liberal Democrats. Although many in his own party have voiced their support for Cameron’s willingness to stand-up for his country, high-profile EU supporters in his cabinet have loudly voiced their disappoint at such unilateral actions.

If the EU is an economic endeavor, then its treaties, directives and regulations should be judged objectively on their economic impact. But to most of the European ruling classes, and many British elites who prefer Brussels’ backroom negotiating style to the bright light of Westminster democracy, the EU is about something much more political.

Although Belgium lies only 30 miles away, and the soil of that land was liberally washed in the blood of the King’s soldiers during the First World War, Britain has a larger role to play in the world than simply being a handmaiden to the never-ending process of European integration. The path that Europe is now following is dictated primarily by the needs and fears of Germany, the largest economy on the continent and a country still deeply scarred by its experience with hyperinflation in the interwar years.

Britain has a different history and a different future. As former French President Charles de Gaulle once remarked, when forced to choose between Europe and the open ocean, Britain always chooses the seas. Cameron’s courageous use of the EU veto demonstrates clearly, once again, that Britain sits at the European table by choice, and not out of necessity.

The writer is a commentator who divides his time between the United Kingdom and Southern California. He has appeared on CNN, CNBC, BBC and Sky News, and has been featured in the New York Times, the Wall Street Journal, the Washington Post, the Financial Times and the Economist.