A new chapter in EU integration, whether Britain likes it or not

The new EU treaty is bound to contain something that British sceptics think requires a referendum.

There will be a new treaty. It will commit euro members to fiscal discipline. It will be largely designed by the 17 current members of the European single currency. Others can join in if they want to. Those are the essential components of the deal announced today by German Chancellor Angela Merkel and French President Nicholas Sarkozy after crisis talks in Paris.

In a sense this is exactly what had been expected. Discussions had been pointing in this direction since the end of last week. But the fact that the two leaders managed to say it at the same time in a live press conference lends the project a certain solidity and irrevocability. Something along the lines of what has been pledged might actually happen. Markets certainly seem reassured. The two leaders have promised monthly summits stretching ahead into the future (the preferred deadline is March 2012) to hammer out the details until a treaty is agreed and a new institutional and legal basis for the euro is fixed. The crucial fact as far as Britain is concerned here is that those summits will be convened among euro member heads of government. That is reasonable enough given it is their currency in crisis.

But Merkel did not describe these new summits as euro-fixing technical negotiations. She made it clear they would have a wide-reaching economic agenda to look at ways to stimulate growth through market reforms. That assertion spells disaster for David Cameron. His main demand in this process was to be included in the conversation about the future of the single market, to make sure Britain's vital interest in that aspect of European Union economic management was not overlooked in the hurry to redesign the single currency. If there are to be monthly euro-members-only summits looking at the whole growth and reform agenda it seems certain single market rules are going to get caught up in the negotiations. There are all sorts of ramifications if Britain isn't at the table, starting with the likely acceleration of moves on banking and finance reform to shift the balance of commercial power from the City of London to Frankfurt and Paris.

At a briefing shortly after the Merkel-Sarkozy press conference, the Prime Minister's spokesman made it clear the UK government's position is to examine more closely the content of what Germany and France are suggesting before forming a view on whether it would be better dealt with as a 17-member (euro only) treaty or a 27 member (full EU treaty). That position won't hold for long. It doesn't look as if Britain has much of a say anyway, and either outcome gives Cameron a headache. If he can persuade the European Council later this week that all 27 EU members should be working on a new treaty, he invites his backbenchers to present him with a shopping list of powers to repatriate during the talks. If he accepts that it should just be a 17-strong euro member treaty negotiation, he risks surrendering Britain's seat in a discussion that is plainly vital to our national economic interest. That process might still produce a document that has to be ratified by parliament. One way or another, the clamour for a referendum will grow.

Merkel and Sarkozy appear to have agreed a fast-track eurozone consolidation on a take it or leave it basis as far as the rest of the EU is concerned. From the French and German perspective it now looks as if the future of the European Union and the future of the single currency are the same thing. They are embarking on a new phase of integration. The implicit message to Britain: come along if you must, but stay in the back seat because we're driving.

Rafael Behr is political columnist at the Guardian and former political editor of the New Statesman

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Something is missing from the Brexit debate

Inside Westminster, few seem to have noticed or care about the biggest question mark in the Brexit talks. 

What do we know about the government’s Brexit strategy that we didn’t before? Not much, to be honest.

Theresa May has now said explicitly what her red lines on European law and free movement of labour said implicitly: that Britain is leaving the single market. She hasn’t ruled out continuing payments from Britain to Brussels, but she has said that they won’t be “vast”. (Much of the detail of Britain’s final arrangement is going to depend on what exactly “vast” means.)  We know that security co-operation will, as expected, continue after Brexit.

What is new? It’s Theresa May’s threat to the EU27 that Britain will walk away from a bad deal and exit without one that dominates the British newspapers.

“It's May Way or the Highway” quips City AM“No deal is better than a bad deal” is the Telegraph’s splash, “Give us a deal… or we walk” is the Mirror’s. The Guardian opts for “May’s Brexit threat to Europe”,  and “May to EU: give us fair deal or you’ll be crushed” is the Times’ splash.

The Mail decides to turn the jingoism up to 11 with “Steel of the new Iron Lady” and a cartoon of Theresa May on the white cliffs of Dover stamping on an EU flag. No, really.  The FT goes for the more sedate approach: “May eases Brexit fears but warns UK will walk away from 'bad deal’” is their splash.

There’s a lot to unpack here. The government is coming under fire for David Davis’ remark that even if Parliament rejects the Brexit deal, we will leave anyway. But as far as the Article 50 process is concerned, that is how it works. You either take the deal that emerges from the Article 50 process or have a disorderly exit. There is no process within exiting the European Union for a do-over.  

The government’s threat to Brussels makes sense from a negotiating perspective. It helps the United Kingdom get a better deal if the EU is convinced that the government is willing to suffer damage if the deal isn’t to its liking. But the risk is that the damage is seen as so asymmetric – and while the direct risk for the EU27 is bad, the knock-on effects for the UK are worse – that the threat looks like a bad bluff. Although European leaders have welcomed the greater clarity, Michel Barnier, the lead negotiator, has reiterated that their order of priority is to settle the terms of divorce first, agree a transition and move to a wider deal after that, rather than the trade deal with a phased transition that May favours.

That the frontpage of the Irish edition of the Daily Mail says “May is wrong, any deal is better than no deal” should give you an idea of how far the “do what I want or I shoot myself” approach is going to take the UK with the EU27. Even a centre-right newspaper in Britain's closest ally isn't buying that Britain will really walk away from a bad deal. 

Speaking of the Irish papers, there’s a big element to yesterday’s speech that has eluded the British ones: May’s de facto abandonment of the customs union and what that means for the border between the North and the South. “May’s speech indicates Border customs controls likely to return” is the Irish Times’ splash, “Brexit open border plan “an illusion”” is the Irish Independent’s, while “Fears for jobs as ‘hard Brexit’ looms” is the Irish Examiner’s.

There is widespread agreement in Westminster, on both sides of the Irish border and in the European Union that no-one wants a return to the borders of the past. The appetite to find a solution is high on all sides. But as one diplomat reflected to me recently, just because everyone wants to find a solution, doesn’t mean there is one to be found. 

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to British politics.