January 16, 2013 6:42 pm

Europe: In search of a new deal for Britain

In his speech, David Cameron must appeal to Conservative hardliners and European leaders
British Prime Minister David Cameron©Eyevine

Central Berlin is expecting gridlock next Tuesday when the Franco-German political elite assembles to mark the 50th anniversary of the Elysée treaty, the pact that sealed the postwar reconciliation of the two countries and propelled the great project of European unification.

Six months of intensive planning will culminate on January 22 in a symbolic meeting of more than 1,000 French and German MPs in the Reichstag, followed by a concert for 2,000 guests in Berlin’s Philharmonie. Town halls and schools across both countries will celebrate 50 years of friendship between the old adversaries.

The only trouble is that nobody told David Cameron. The British prime minister has been promising a “big speech” on his quest to loosen the UK’s European relationship since last autumn and last Friday he had finally settled on a preferred date: January 22. His officials thought Germany might be a suitable venue.

As his plan leaked out, anguished calls arrived at Downing Street from the UK embassy in Berlin and the office of Angela Merkel, the German chancellor, expressing incredulity that Mr Cameron might make his speech on this day of all days.

But this was more than a diplomatic blunder: it symbolised Britain’s awkward relationship with Europe, where misunderstandings on both sides are common. British officials later admitted they had no idea of the significance of the Elysée treaty event.

Mr Cameron finally decided to end what he has called the “tantric” wait for his speech on Europe by rushing it forward to this Friday, to be delivered at a venue in the Netherlands – a country regarded by Britain as a free-trading ally.

Mr Cameron wants to clarify Britain’s future relationship with the EU and pacify his eurosceptic Conservative party. That may be wishful thinking: previous Tory prime ministers have tried and failed. Will the Amsterdam speech raise as many questions as it answers? The prime minister is expected in his speech to pledge to negotiate a better EU deal for Britain if he wins the next election in 2015 and offer the British people their first vote on Europe since 1975. “A fresh settlement and then fresh consent for that settlement,” he said this week.

In making his speech in continental Europe, Mr Cameron is following past Tory leaders who hoped to show that their views could command a respectful audience beyond the white cliffs of Dover and to provide a geographical illustration of their commitment to Europe (albeit with trademark British reservations).

Hostility to the EU deepens across the continent

David Cameron is hardly the only European leader struggling to ride a wave of growing anti-EU sentiment in his electorate sparked, in part, by the three-year-old fiscal and economic crisis that has gripped the continent.

Of the 10 largest EU countries, only governments in Germany and Austria have avoided collapse or being voted out of office since the crisis broke amid a gradual rise of anti-EU populists on both the left and right.

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Winston Churchill’s Zurich speech in 1946 urged France and Germany to forge a United States of Europe – although Britain would naturally not be part of it. Margaret Thatcher proclaimed in her 1988 Bruges speech her opposition to a European “superstate”, although her hardline admirers often overlook another passage: “Britain does not dream of some cosy, isolated existence on the fringes of the European Community. Our destiny is in Europe, as part of the community.”

John Major chose Leiden University in the Netherlands to make the case for a multi-speed Europe, but with the caveat: “The British people know that their future rests with being part of the European Union.” That reassurance is being offered by Mr Cameron this week in a round of telephone diplomacy to Europe’s chancelleries.

For all his charm, some leaders do not take Mr Cameron entirely at his word. Werner Faymann, the Austrian chancellor, told Der Standard this month: “Why I have a hard time with David Cameron ... and when it comes to trust, it is because I get the feeling with him that he speaks differently in his own country than he does in the European Council.”

That is perhaps unsurprising given that many European leaders view Mr Cameron’s policy through the filter of the largely eurosceptic British press. “I have to keep telling my colleagues in Brussels not to read the bloody Daily Express,” said one British cabinet minister of the hostile tabloid.

Denis MacShane, a former Labour Europe minister, says there may be a simple explanation of why Downing Street missed the celebrations in Berlin and why other EU leaders are suspicious of Mr Cameron: “They read our papers and we don’t read theirs.”

But there is more to it than that. While Mr Cameron has been reassuring European leaders that he wants Britain to remain a strong player in the EU, he told fellow Tory MPs behind closed doors last month that they would enjoy the tough tone of his speech when it came. “He told us we’d really love it – that it would be really eurosceptic,” says one MP.

Mr Cameron’s precarious attempt to balance his dual role as European statesman and party manager is a familiar one to Tory prime ministers and one which ultimately defeated both Lady Thatcher and Mr Major.

Today the overwhelming view among Tory MPs is that Britain must seize upon the crisis in the eurozone to secure a new British settlement in Europe. While perhaps 30 to 40 of the Tories’ 303 MPs will not be happy until Britain is out of the EU altogether, the majority say they want to stay in, but on new terms. Andrea Leadsom, an MP from the mainstream eurosceptic Fresh Start group, characterises the approach as “more trade, less of the other stuff”.

Even Nick Clegg, Mr Cameron’s pro-European deputy, recognises that Britain’s membership of the euro is “not likely to happen in my political lifetime” and that the UK must defend the single market’s integrity against eurozone members acting as a caucus and decreeing terms to London.

George Osborne, the chancellor, made a promising start before Christmas, winning the support of Germany among others for new voting rules to protect the interests of the euro “outs” in the field of banking supervision, although the Fresh Start Tories want to go further with an “emergency brake” – a veto – to safeguard the City.

But Mr Clegg fears that a desirable drive to clarify the relationship between the eurozone and the long-term “outs” (of which Britain is by far the biggest) is undermined by Mr Cameron’s “fantasy” second objective: seizing back existing powers from Brussels. The Fresh Start Tories have presented Mr Cameron with a shopping list that includes employment and social law, fisheries, regional policy, justice and policing.

Mr Cameron has hinted he might block any EU treaty changes to reinforce the eurozone unless he won back some powers, arguing Britain was “not just entitled but actually enabled – because they need the changes – to ask for changes ourselves”. But that strategy may run into an immediate roadblock if eurozone members decide – as seems increasingly possible – that they can strengthen the currency without a formal treaty revision.

. . .

Mr Cameron’s comments sparked dismay in Berlin, with Gunther Krichbaum, an ally of Ms Merkel from the Christian Democratic Union, accusing him of “blackmailing” other states. Ms Merkel also fears that Mr Cameron’s plan to unpick existing policies could create a free-for-all, with France and other protectionist-minded countries trying to undo the rules governing the single market – the part of the EU that Mr Cameron likes most. But Tory MPs believe that, after considerable grumbling, Ms Merkel will ultimately help Mr Cameron, fearing that a “Brexit” would tilt the EU in favour of a less economically liberal southern European bloc. Senior officials in Berlin, however, warn that there is a limit to German tolerance of a special deal for the UK. “Our red line is clear: no cherry picking,” says one minister.

The possibility of Mr Cameron failing to get a much better deal raises a question that he has been unable to answer: how can he commit to fighting for a Yes vote (to stay in the union) in a referendum if he does not know how negotiations will turn out?

If he does campaign for a Yes vote and the country votes No, would that automatically lead to a British exit? And would a No vote bring down the government? If so, would it not give voters a motive to use the referendum (possibly in 2017 or 2018) to protest against an unpopular midterm administration in a climate of austerity?

A YouGov poll found this month that 42 per cent of Britons wanted to leave the EU and 36 per cent wanted to stay, although the same pollster found a recent swell in the majority in favour of membership when asked how they would vote if Mr Cameron secured a better deal for UK interests.

While that may support Mr Cameron’s belief he can win a referendum, unpopular leaders in pro-European countries including France, Ireland and the Netherlands know to their cost that voters in EU referendums are not exclusively answering the question on the ballot paper. “Europe is not the primary interest of the British public,” says Ken Clarke, the veteran pro-European minister.

Mr Cameron has so far failed to answer perhaps the biggest question posed by business. Asked whether he could guarantee Britain would still be a EU member in five years, the prime minister declined to answer.

“He’s spent six years preparing a speech to create five years of uncertainty for Britain,” says Ed Miliband, leader of the Labour opposition.

. . .

During the long wait for his speech, Mr Cameron’s position has increasingly been framed by others. The US has warned that Britain risked “turning inward” if it held a referendum, stressing that Washington wanted the UK to stay inside the European club, to shape debate.

Mr Clegg, leader of the Liberal Democrats, the Tories’ junior coalition partner, warned of the “chilling” effect the uncertainty might have on inward investment, while Lord Heseltine, Mr Cameron’s growth adviser, said multinationals might shun Britain. European diplomats ask why they should make concessions if they keep reading in the UK press that London is going to leave anyway.

Mr Cameron’s Amsterdam address might have tested Cicero. The prime minister has to convince his sceptical party that he is hanging tough with Europe, while persuading EU leaders he remains a committed player. He has to appeal to the Tory heart which wants to disengage from Brussels and to the party’s head, which recognises the need to stay. He has to signal that he sees Britain’s future in the EU, without throwing away his negotiating hand: a veiled threat to withdraw if he does not get his way.

Even if it all goes to plan, Mr Cameron can still expect a referendum campaign in the next parliament with a highly uncertain outcome which could yet split his party: at least some MPs and ministers are likely to fight for an exit. One Tory MP quipped that it was just as well Mr Cameron “won’t win the next election”. But what if he does? Little wonder Mr Cameron has procrastinated for months before his arrival in Amsterdam.

Additional reporting by Quentin Peel

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