Mr Sarkozy’s grand declarations of European strength in
adversity, the 12-digit financial pledges to the EFSF and the IMF, and the commitment
to fiscal integration that seemed set to make the December euro-summit the
stuff of history, soon became a distant memory in Brussels as the gluvine was opened,
the fairy lights went up, and the eurocrats returned to their member states for
the Christmas break. As 2012 arrived, Europe seemed to have lost its
assertiveness once again as news broke that Italy and Spain’s service sectors
were rapidly shrinking; that inflation was up from 2.8 to 3 per cent; and that
the unprecedented €489 billion in loans made available by the ECB to banks
across Europe in December was re-deposited in record amounts at the same
institution come January.
Despite bearing an inter-governmental treaty which will
bind signatory countries in a ‘fiscal compact’, as with euro-crisis summits
before it, the December meet of EU leaders will not provide a golden ticket to European
recovery any time soon. In fact, the European Union is expected to slip back
into recession in the first half of 2012.
If the December summit is not to be remembered as
definitively bringing the euro-zone crisis under control, it will be recalled as a pivotal moment in
the shaping of the UK’s relationship with the EU.
Three weeks ago, I wrote an article on Mr Cameron’s
decision to veto the treaty. My initial response was one of horror: I felt that
he had sidelined Britain within the EU, and that his decisions were made solely
on the behalf of two parties: the City and Tory backbenchers.
I stick by my initial response: Mr Cameron certainly has
isolated Britain in the sense that we are not part of what would otherwise be a
comprehensive EU treaty, and his motivations for doing so were not on behalf of
the UK population, but rather to gain political brownie points among his
eurosceptic party members and with London’s financiers.
However, spending time in the UK over the Christmas break
caused me to reflect again on Britain’s use of its right to veto. Although I almost
exclusively disagree with Mr Cameron’s reasoning and motivations, and in spite
of my pro-European leanings, I am not wholly convinced that, had I been in Mr
Cameron’s position, I would have signed the treaty either. Here’s why:
The measures emerging
from the December talks included a new fiscal compact, further economic policy coordination, and the development
of EU stabilisation tools to face short-term challenges. While in principal, the
inter-governmental treaty’s requirement that government
budgets be balanced or in surplus seems sensible and, in fact, is a long-term
policy extension of the UK’s own current austerity objectives, the move to
‘stronger policy coordination and governance’ on fiscal matters proves more
problematic for me.
The statement issued
by euro-area heads of state and government stipulates that ‘all major economic
policy reforms planned by euro-area Member States will be [...] coordinated at
the level of the euro area’. Although it is widely recognised that this move towards
fiscal integration should have occurred at the advent of the single currency,
the implications of this development on member states’ sovereignty must not be
underestimated: this is significant step towards European federalism. Had this
appeared in the Lisbon treaty, the already controversial accord would have
proven even more difficult to sell to the European people.
While euro-zone countries must
further integrate out of necessity: recent events show that a shared currency
must be matched with a shared monetary and fiscal union, the UK, along with the
nine other non-euro-zone countries should think long and hard about whether they
want to sacrifice sovereignty in this historically sacrosanct area. The
statement issued following the December summit is worryingly opaque, not just
about the status of the non-euro-zone members which wish to participate within
the treaty, but significantly, the actual fiscal implications for all signatory
countries. Call me traditional, but I was always taught not to sign my name to
anything I didn’t properly understand. Especially not in such a rush.
Mr Cameron’s decision to veto must not, and cannot be
seen as a victory for the Brits. On a soft political level, it is true that EU member
states will get used to working without the UK. Nevertheless, handing over
fiscal competence to Brussels without serious consideration of the implications
– both good and bad, would have been foolish of the Brits. In my mind, Cameron
would have done well to take the matter back to the UK parliament. This may
have given him the opportunity to better consider his strategy and to mitigate
against what was ultimately considered an isolationist move. This, as show in the case of Sweden, may have
enabled him to participate in the treaty and thus retain influence in the EU,
while protecting British interests by negotiating different terms than those of
euro-zone member states.
By Sonia Jordan
