Cameron's almighty gamble

After the party comes the hangover. Only it’s not been a party. More to the point, it was a car crash with the fatality of Britain’s role in Europe and the post mortem is in full swing in the British press. Of course, I am talking about David Cameron’s decision to veto the Merkel-Sarkozy plan for fiscal union, something that would have led to a new European Treaty. 

There has been plenty of navel gazing in the media, mainly about whether or not Cameron’s move will damage Britain. What received less attention is the question why on earth he did it in the first place. Yet the question about his motifs is an important one. Cameron himself points out that he had to protect the City of London and its financial services from a financial tax that would have come with the treaty. Louise Cooper agrees with Cameron in the Guardian today (you can read her piece HERE). 

Yet two questions remain. First, does Cameron’s veto mean that the city is now safer than it would have been with a new treaty? And, second, was this the only reason Cameron reached for the nuclear button? 

The first claim is questionable. The rest of Europe will now come together to design new rules and regulations for financial transactions which will affect London one way or another. Remember that any future rules will apply to all banks that are based in one of the treaty member states, hence to all but Britain. Politically, protecting British banks from sensible regulations which are being applied across Europe sounds tricky to me, to say the least. Is Cameron really going to block a financial transaction tax repeatedly over the next years that has broad popular support in Britain? This does not sound like a plausible strategy for which the voters will richly reward him in 2015. 

The second question however goes to the heart of the relationship between domestic and foreign policy for Cameron’s government. If his veto will not safeguard the City from future regulations, the question arises why he used it in the first place? Critics may point to a previous decision on European affairs that was less than surefooted: his withdrawal from the Conservative party bloc in the European parliament. Some may say Cameron simply does not care much about Europe. A more likely explanation however may be that his policy is mainly determined by preventing Europe to tear his party apart. 

After all, his veto stopped a new treaty for which he would have needed to campaign in a referendum; the new treaty ‘referendum lock’ would have been triggered by any new treaty. Seen from this perspective, Cameron’s veto looks more like a desperate attempt to prevent a referendum on Europe which may have jeopardised the unity of his party. By exercising his veto he may have saved Britain an early exit from the EU, at the cost of marginalising it. 

Time will tell if this almighty gamble will come off. Some of his Eurosceptic backbenchers are already calling for re-negotiating Britain’s relationship with Europe. Some political scientists call it the law of unintended consequences in politics: you aim to do one thing yet get another. Cameron may find it just as difficult to extricate himself from this iron law in politics as any of his predecessors in Number 10.