Daily Archives: November 14, 2011

I don’t know whether to weep or laugh. Eurozone leaders have turned a €50bn Greek solvency problem into a €1,000bn existential crisis for the European Union. Barack Obama cannot remember “whether it was Merkel, Sarkozy or Barroso” – no first names or titles – who told him, as grand hopes for the Cannes summit turned to dust, “welcome to European politics”. And David Cameron calls on the European Commission – the embodiment of “Brussels” bureaucracy and elitism that his government loves to hate – to prevent the 17 countries of the eurozone running the EU show in their own interests.

The only people satisfied are eurosceptics and federalists. Both say ‘I told you so’. Both make valid points about weaknesses of Europe’s hybrid structure – part intergovernmental and part supranational. Both feed off each other to tell their own supporters that now is the moment to break with the compromises of the past.

Every political system is a balance of efficiency and legitimacy. The sceptics sacrifice efficiency for legitimacy. Their arguments about sovereignty ignore the reality of an interdependent world – in which regional co-ordination and collaboration is going to become increasingly important. The federalists substitute efficiency for legitimacy. They ignore the reality that national particularities, far from disappearing, are on the rise.

The Lisbon treaty tried to square the circle. The post of president of the European Council, a former head of government to chair the meetings of heads of government, was created expressly to “drive forward its work on a continuous and consistent basis” and “make the EU’s actions more visible and consistent”. In other words, bang heads together and reach out to the people.

But the truth is that European politics and politicians have been unable to cope with the triple blow of slow (and slowing) economic growth, rising sovereign debts and unstable financial institutions. Chancellor Angela Merkel and her senior colleagues have prime responsibility, but ‘President’ van Rompuy has been invisible.

The danger of the current situation is that both sceptics and federalists get their way as the EU splits between core and periphery. The eurozone does need a stronger centre. That will enlarge the gap between ins and outs, ‘vanguard’ and ‘rearguard’. And the eurozone countries will seek to get their way in the wider EU, or go it alone.

For Britain, it is a fateful development. Governments have sought to prevent a two-speed Europe for 40 years. Edward Heath celebrated our entry into “the framework of a single community”. Margaret Thatcher embraced the deepest of single markets. John Major played with ‘variable geometry’. Tony Blair put it into practice by supporting stronger European foreign, energy and environmental policy from outside the euro.

In every case the UK feared a two-speed Europe would leave us in the second division. And we have made the argument that the rest of the EU would be much worse off without us. British politicians need to make the case that Europe is better off with Britain on the inside as passionately as we argue that Britain needs a strong Europe.

The government’s decision to make the repatriation of powers from Brussels its top priority for European negotiations is deluded and dangerous. Deluded because the last thing other countries, including the other ‘outs’ from the eurozone, want is to ally themselves with a quixotic British campaign. Dangerous because the failure to negotiate these repatriations will only intensify the fury of the sceptics.

Second, every country needs an alliance with Germany. That is especially the case for a UK determined to avoid a slide to the European exit door. German fears of a transfer union provide the opening. We should be supporting the Berlin-inspired treaty change that enforces shared responsibility for the eurozone’s economic future across its members. The quid pro quo would be buffers against a two-speed Europe – safeguarding the rights of non-euro members and preserving enhanced co-operation in areas beyond macroeconomic policy.

Third, Britain needs to play to its comparative advantages in defence and foreign policy, and its interests in energy, to help move the EU forward. This is not about being “good Europeans”. It is about national interest in an outward-looking Europe.

Fourth, although Europe is now a danger to the rest of the world’s economic prospects, the rest of the world is not standing still. In the next two years, the EU negotiates a new budget for the seven years until 2020. The shock of the eurozone crisis needs to be a spur to budgetary reform (and not just budget limits). In universities, infrastructure and innovation Europe (beyond Germany) needs to chart a new growth path.

Fifth, we should be making the Lisbon treaty work. In spite of opposition to its passage, the government said they would make its innovations work. President van Rompuy is up for re-election in June. He needs to up his game in a big way – above all its vision and projection.

Finally, Britain must build coalitions across the euro in/out divide. It is no good confining ourselves to dinner with the outs. We need a positive vision for an open, prosperous Europe to sell across the 27 countries.

These are issues for politicians of all parties. But they are a matter for business too. It is no good complaining about the short term posturing of politicians if business and trade unions don’t speak up. Reform will be arduous. But the alternative, opting out by design or mistake, would be disastrous.

The writer is the MP for South Shields, and former British foreign secretary.

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