First, is the agreement the 26 have reached a good one? I tend to agree with Foreign Policy on this one:
Merkel’s short-sighted, audaciously Germany-first reaction to staunch the eurocrisis is the Germanization of European monetary and fiscal policy, foremost the codification of its obsession with tight money, fiscal purity, and budgetary orthodoxy. In spite of all evidence to the contrary, she insists that what’s good for Germany is good for everybody else, too. It’s clearly not. And with the world’s leaders begging her to do “whatever it takes” to stave off global calamity, she’s doing it with Sarkozy at her side and over the heads of the now completely irrelevant European “voters” (“subjects” is the more fitting word). This is a catastrophic mistake, which, politically, vastly expands the EU’s centralized authority while robbing it of even the fig leaf of democratic legitimacy it had sported. Moreover, the economics of Berlin’s Germanocentric prescriptions for the eurozone compound the very problems that landed Europe’s weaker economies in the mess they’re in right now.
In other words, it is politically dangerous – because it has no democratic legitimacy – and it probably won’t work in the long run (and maybe even the short run).
Second, what really caused Cameron to use his veto? The Economist has a lot more evidence here than we had on Friday morning.
By a certain point on Thursday night, I am told, a majority of countries were growing interested in a quick and dirty legal fix, suggested by the president of the European Council, Herman Van Rompuy. The fix was dreamed up by lawyers working for Mr Van Rompuy. They said that a legal device, known as “Protocol 12″, would allow the 27 leaders of the EU to agree most of the new rules and mechanisms for fiscal union in the euro zone by a simple, unanimous decision among themselves.
Suddenly, Germany looked isolated. Mr Van Rompuy, a former Belgian prime minister elected by EU leaders to chair their summits, decided to see if he could sweeten the deal for the wavering EU leaders, and asked Mr Cameron if he would consider dropping some of his requests. This made sense to some leaders in the room. Mr Cameron’s demands were already more than many of his colleagues would tolerate, and Britain had already said publicly it would tailor its demands to the scale of the treaty change on the table. Mr Cameron said he would not lower his ambitions, and that his demands would be the same in the event of Protocol 12 being used, or a full-blown EU treaty.
A hostile view of this is that Mr Cameron overplayed his hand. In this version of events, the British prime minister thought the mood of the room was running towards Protocol 12, and because Protocol 12 is decided by unanimity, he thought he had the whip hand.
Instead, my source tells me, the room turned on Mr Cameron. This, I am told, “was the point at which the Protocol 12 route, which requires unanimity, was effectively closed down and one country after another accepted a new treaty at 17+.”
Did Mr Cameron miscalculate? Did he want to end up with a treaty being crafted at almost 26, with Britain on the outside? My source is certain that was not Mr Cameron’s goal, and my source is not alone in this thinking.
It is now almost inevitable that separate structures be set up, with Britain on the outside, it seems. Talk in London of preventing the “Eurozone-plus” from using the Court of Justice is also a mistake, I am told. Article 273 of the treaty allows just this.
You can choose to believe this account or not. It comes from a single source, who is well-placed but clearly viewing this from a particular perspective.
Time will tell. But what a mess.
What Britain wanted was a return to inanimity for votes on certain issues in financial regulation; that was Cameron’s price for agreeing to Protocol 12. Clearly he overplayed his hand. The more you read about it, though, the more extraordinary it seems that a compromise could not be reached. Perhaps Cameron didn’t want an agreement in order to appease his backbenchers. (I typed ‘bankbenchers’ the first time I wrote that sentence, a telling error.) Perhaps the French waited for Cameron to go too far then shot down his balloon. In any case, the outcome – both in terms of what has been agreed and where it leaves Britain – is depressing and unsatisfactory.
One key point – a point I didn’t get on Friday – is that Cameron wasn’t trying to stop Sarkozy from doing something: he was trying to get agreement to change the voting system for financial regulation. He didn’t succeed. In other words, he annoyed the 17 (or more) and got precisely no gain for Britain. This, I suspect, is why Clegg changed his tune over the weekend. In any event, Cameron looks more incompetant now that the facts are clearer.
(Further, insightful comment on how well the pact will work can be found here, while this post has an interesting discussion of Cameron’s behaviour and its consequences.)