Cameron is a spectator at euro endgame

Any deal will have "Made in Germany" stamped all over it.

It appears that European leaders are finally mobilising the political will required to save the single currency from collapsing. German Chancellor Angela Merkel's speech to the Bundestag today signals clear recognition that institutional reform, binding euro member states into a very different model of fiscal integration, is the only outcome that will persuade markets that the whole project is sustainable.

Last night Nicolas Sarkozy also made a speech suggesting he was moving towards the Merkel position.

The French President said, in effect, that he will work with the German Chancellor to establish a more rigorous system of European governance. He rejected the idea that this meant a new "supranational" model, but he seems to have accepted the principle of automatic sanctions, imposed by a European institution, against single currency members that break the rules of budget discipline originally laid down in the founding Stability and Growth pact.

For months it has been clear that market turmoil would not subside until euro zone leaders agreed clear proposals to express economic solidarity on the level of institutional reform.

Crudely speaking, Germany would have to put its economy up as collateral for debt accrued by weaker member states. In exchange, the indebted countries would have to submit their budgets to scrutiny by European institutions - the European Central Bank (ECB) or some beefed up administrative cadre running the European Financial Stability Facility (EFSF). Ultimately that kind of arrangement leads towards the establishment of a prototype European Finance Ministry.

In any case, the choice is between a new pact that creates the basis for an integrated hardcore eurozone or the catastrophic collapse of the single currency.

Over recent weeks there has been a lot of speculation about Angela Merkel's behaviour through the crisis, and why she appears to have let things get to such an extreme point. Germany has come in for a lot of criticism for withholding permission for the ECB to take action to inject liquidity into the market and, if necessary, buy up debt that the market has rejected. She now seems to be relenting on that front, but her preferred sequence of events is still political agreement on reform preceding full-scale ECB intervention.

A popular interpretation is that she does not have enough domestic political support to encourage measures that look like an abandonment of Germany's cherished attachment to monetary discipline - the tradition of the mighty old Deutschmark. This in turn is said to stem from the deep scars left in the German psyche by the hyperinflation of the inter-War years and all the terrible things that followed from the collapse of the Weimar Republic.

But there is another interpretation, less commonly discussed but no less plausible. It is that Merkel has been withholding support for interim and ad hoc measures to increase the pressure on other European states to find a longer term political solution. In other words, she has waited for other European leaders to be so freaked out by the prospect of euro collapse that they will agree to reform the EU on German terms.

It seems to be working, but it is extraordinarily risky. If the whole thing falls apart, Merkel will get a large portion of the blame. If, however, a political deal is done at one minute to midnight and the result is a new stability pact with "Made in Germany" written all over it, Merkel just might have pulled off a most extraordinary act of diplomatic brinksmanship. It looks like a game of chicken between Germany and the rest of Europe where the penalty, if neither side budges in time, is financial apocalypse.

This is all quite bad news for David Cameron. He has accepted the logic of eurozone fiscal integration for the sensible and pragmatic reason that anything less would risk a systemic banking crisis across Europe. (An indication of the threat: a Treasury official told me earlier this week that contingency plans include anticipation of financial failure on a scale that would require nationalising UK banks.)

But given the extreme urgency of the situation, and the fact that Britain is not a euro member, Cameron's hopes of getting some quid pro quo for supporting a new treaty are receding from view. Changes are now very likely to be agreed among the 17 single currency members, which means the UK would not have a potential veto that might be used to extract concessions. In any case, under the circumstances it would be diplomatic lunacy to start impeding crisis resolution now with frankly irrelevant calls for "repatriation of powers" demanded by Tory backbenchers. Cameron is meeting Sarkozy today, but it is far from clear what he thinks he can get out of the talks.

The bottom line is that Cameron is a spectator. The most he can hope for is vague assurances that the single market will not be skewed or undermined by eurozone consolidation. That is no good to the Tory eurosceptics and they will be, I suspect, very unimpressed by their leader's inability to turn this crisis into an opportunity to redefine Britain's relationship with the EU. It will be redefined of course - just not on British terms.

 

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

A pro-union march in 2014. Photo: Getty
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The legacy of sectarianism is still poisoning the air of Scotland

Ruth Davidson has reinstated two Stirling councillors who posted anti-Catholic and racist messages on social media. That this kind of cretinous guff still goes on in my hometown in 2017 raises my hackles.

Kenny Dalglish was a bluenose: as a boy in the mid-60s, he and his father would make the short journey to Ibrox to cheer on Rangers, then Scotland’s most successful team. With the football allegiance came a cultural one, too. Or, probably, the other way round.

Wee Kenny could play a bit, obviously, and dreamed that his beloved Gers would sign him up. But, as Richard T Kelly writes in Keegan and Dalglish, his enjoyable new double biography of the two footballing greats, "Rangers had a certain preference for big lads, or else lads with an obvious turn of pace; and Dalglish, despite his promise, had neither of those easy attributes."

Rangers’ loss was Celtic’s gain, but it took some effort. The former, writes Kelly, "was the club of the Queen, the Union, Scotland’s Protestant majority… founded by Freemasons and members of the Orange Order, strongly tied to the shipyards of Govan. Glasgow Celtic was the team of Irish Catholic patriots, revolutionary Fenians and Home Rulers, begun as a charitable organisation… a means to bolster the faith and keep the flock out of the clutches of Protestant soup kitchens. It was going to be a serious step across a threshold for Dalglish to accept the overtures of Celtic."

In the end, Jock Stein dispatched his number two, the unhelpfully named Sean Fallon, to meet the young starlet’s family. "Fallon entered a domestic environment he felt to be 'a bit tense' -  a Rangers house, a lion’s den, if you will. Fallon even picked up the sense that Bill [Dalglish’s father] might rather his son pursue [an] apprenticeship in joinery."

The deal was done ("My dream was to become a professional footballer – the location was just a detail," Dalglish would later say) and the most gifted player Scotland has ever produced went on to make his reputation kitted out in green and white stripes rather than royal blue -  a quirk of those difficult times for which those of us classed as Fenian bastards rather than Orange bastards will be forever grateful.

Growing up in west and central Scotland, it was hard to avoid being designated as one type of bastard or the other, even if you supported a team outwith the Old Firm or had no interest in football at all. Thanks to 19th century immigration, the terrible religio-political divide of Ulster was the dominant cultural force even in Stirling, the town around 25 miles from Glasgow where I grew up and where I now live again. If you went to the Catholic school, as I did, you were a Fenian; if you went to the Proddy (officially, non-demominational) school, you were a Hun. You mostly hung around with your own, and youthful animosity and occasional violence was largely directed across the religious barricades. We knew the IRA slogans and the words to the Irish rebel songs; they had the UVF and the Red Hand of Ulster. We went to the Cubs, they went to the Boys’ Brigade. We got used to the Orange Walks delivering an extra-loud thump on the drums as they passed the chapel inside which we were performing our obligatory Sunday observance.

At the time – around the early and mid 80s – such pursuit of identity might not have been much more than a juvenile game, but it was part of something more serious. It was still the case that Catholics were unemployable in significant Scottish industries – "which school did you got to, son?" was the killer interview question if your answer began with "Saint". This included the media: in the late 90s, when I joined the Daily Record – the "Daily Ranger" to Celtic fans (its Sunday sister, the Sunday Mail, was known to Rangers fans as the "Sunday Liam") – vestiges of this prejudice, and the anecdotes that proved it, were still in the air.

The climate is undoubtedly better now. Secularisation has played its part - my own daughters attend non-denominational schools – even if, as the sportswriter Simon Kuper has observed, many are "not about to give up their ancient traditions just because they no longer believe in God". The peace process in Northern Ireland and important gestures such as the late public friendship between Ian Paisley Sr and Martin McGuinness have made a difference. And I suppose the collapse of Rangers as a footballing force, amid financial corruption that saw them dumped into the bottom tier of Scottish football, helped.

But the sensitivity remains. The 2014 Scottish independence referendum broke down in part across tribal lines, with many Celtic supporters, once Labour, now SNP, loudly backing a Yes vote, while Rangers fans were on the No side. The prospect of Brexit creating a significant border between the north and south of Ireland, which could inflame recently and shallowly buried tensions, makes one shudder. And even locally, the old enmities continue to raise their grubby heads. Ruth Davidson, leader of the Scottish Tories, is currently taking flak for allowing the reinstatement of two Stirling councillors who had posted anti-Catholic and racist messages on social media prior to their election. The pair have apologised and agreed to take part in diversity training, but I confess that this kind of cretinous guff still goes on in my hometown in 2017 raises my hackles. The rawness remains.

That this is so was brought to me a few years ago when I filed a column containing the word ‘sectarianism’ to a Scottish newspaper. Though the context had nothing to do with Catholic/Protestant or Celtic/Rangers, the editor asked me to remove it. "It’ll be deliberately misunderstood by one side or the other, and probably both," he said. "It’s not worth the hassle. In Scotland I’m afraid it never is."

Chris Deerin is the New Statesman's contributing editor (Scotland).