It is a commonplace for Britain’s politicos to sadly shake their heads and complain that the Euro crisis demonstrates a woeful lack of political leadership. Regardless of the fairness of this charge in respect of Angela Merkel, say, it clearly has resonance for Britain’s own leaders. There seem to be two camps: ravingly impractical Eurosceptics, and sheer paralysis from everybody else. The mood amongst Europhiles (as I witnessed at fringe meeting at the Lib Dem conference) is akin to deep depression. It is time for this to change.
To be fair some key players have been showing something less than paralysis – George Osborne and Nick Clegg have both been conspicuous in raising the seriousness of the situation with their international colleagues – but their pronouncements are hardly more helpful than anybody else’s. They aren’t bringing anything to the party and they aren’t trying bring our own public alongside.
The first point is that the Euro crisis has serious implications for Britain, much though most people seem to think it is happening to somebody else. This is for two main reasons. First is that this country would be caught up in any financial disaster. Our oversized banks are deep in the mess; Euro zone countries are vital trading partners for a country very dependent on trade – especially given that international financial services are so important to us. Our fragile attempts at recovery risk being completely blown off course. Forget Plan B if this lot breaks.
The second reason it matters to Britain is that resolution of the crisis could take the European Union in a direction that is against our interests. Britain leads the single market wing of the union: the chief Euro zone countries are more protectionist in their instincts. We risk being shut out of the design of critical architecture – much as the Common Agriculture Policy was put together in our absence.
How to proceed? We need to tackle the dark spectre head on: the best resolution of the crisis involves changes to the European treaties. To change the treaties will require a referendum here (let’s not weasel out of it this time). If we face up to that challenge now, it will show real courage, and help get things moving.
But, of course, we would need to see something in return. Changes to the treaties that would further our interests. These need to be to promote the single market, to protect London (and Edinburgh) as centres for financial infrastructure, and to reduce unsightly bureaucracy and/or operating costs of the Union (the siting of the European Parliamnet at Strasbourg needs to go on the table, at least). Given our understanding of finance, we might well have useful things to say on the Eurozone architecture too – even though we clearly can’t be part of it.
To do this our leaders (the Prime Minister and the Deputy Prime Minister in the lead) need to build two sets of alliances. The first is within the British body politic, so that the referendum can be won. This needs to cover Tory pragmatists (David Cameron, George Osborne and William Hague), the Labour leadership and, preferably, the SNP. The Lib Dems have an important role in making this hold together since, by and large, they understand the Union the best. Mr Clegg’s experience of deal-making in the European parliament counts for a lot. The next set of alliances is within the Union itself, to create a Single Market bloc. The obvious candidates are the Nordic countries, Ireland and the Netherlands, together with many of the newer members in central and eastern Europe.
This will be very difficult. That’s the point, almost. The reward is a stabler EU, constructed more to our taste, even if we must concede some powers to an inner core of Euro area countries. Everybody wins. And by taking on the wilder Eurosceptic fringe, including their newspaper backers, it will cheer all right-thinking people up. It’s time we stopped being paralysed by fear and came out fighting.
Is there really time for treaty change? It may be necessary further down the line, to tidy things up, but a Greek haircut, and more support for both countries and banks can – and will – all happen without it.
Perhaps you agree that it’s something that could happen over the next few years but isn’t the immediate solution I thought your article suggested. If it’s later – say, a set of changes to further integrate the eurozone – then I think you have a good point and it may be a great opportunity to make some of our own improvements (and indeed that may be the only way to win a referendum).
But in the near future, if treaty reform were the best solution to turning around the economies of the West, I wouldn’t bet on it going well; with eurozone countries still trying to solve their problems but now with non-eurozone members extorting unrelated but controversial changes (e.g. re. Strasbourg) and with British and other eurosceptics prepared to risk a decade-long depression…
First deal with the euro crisis (finding ways to do this without treaty change), then later (but still with a pressing need for long-term solutions) we can talk treaty reform. I fear trying to combine the two will only make the situation more intractable and likely to lead to disaster.
Trying to split the issue between urgent (deal with now) and longer-term (let’s handle at leisure) is in my view part of the problem. A lot of the issue is about confidence – and confidence will only arise if people see a way out in the long term. There’s almost a sense that leaders are using the urgency of the crisis as an excuse for avoiding the difficult longer-term solutions. A treaty will take years, but now is the time to start planning it. My hope is that if Britain comes out positively for a treaty change, accepting the challenge to domestic politics, this will create some momentum – and with momentum on the longer term stuff, the shorter term solutions are more likely to work. May be it would be unwise to put the Strasbourg issue directly on the table at this early stage – but we need to make it clear that carrying forward the single market agenda is part of the solution.