Cameron remains locked in a lose-lose situation on the euro

The PM attempts to appease Eurosceptic MPs while retaining British influence in the EU. He cannot ha

It is obvious that the crisis engulfing the eurozone has serious ramifications for Britain. It has also placed David Cameron in a tight spot politically, as he struggles to balance the demands of vociferous Eurosceptic MPs and a Franco-German alliance willing to forge ahead without Britain if it needs to.

As he prepares to join the EU's other 26 heads of government to discuss plans to save the euro, Cameron has attempted to navigate these contesting demands and set out his position in an article in the Times (£).

There are two key points to take from this piece. Firstly, Cameron dismisses calls for a referendum on any treaty changes by reiterating that this law only applies in the case of powers being transferred from Britain to the EU. At the weekend, Iain Duncan Smith added to Cameron's headache when he suggested that it could, in fact, apply to any "major treaty change", such as that required for greater fiscal union. Cameron also states that his demands will remain "practical and focused", despite calls from his MPs to use the talks to renegotiate social and employment law.

But he does not disregard his party's Eurosceptic wing entirely. The second key point is a hardening of rhetoric and a pledge to protect Britain's interests. Cameron warns that his focused approach should not be mistaken "for any lack of steel", and says that safeguards for the City of London will be the price of his support for any changes:

Our colleagues in the EU need to know that we will not agree to a treaty change that fails to protect our interests.

Essentially, Cameron is caught between a rock and a hard place. If he wants to create a treaty for all 27 EU member states, he must strike a conciliatory tone in talks with the rest of the EU. If, however, he prioritises an aggressive defence of Britain's interests, the likelihood is that the 17 eurozone countries will breakaway and form a treaty amongst themselves. In his piece, he addresses this possibility, saying that a treaty of 17 "would need to make sure our interests are protected".But it is unrealistic to think that Britain will not lose influence in such a scenario. Quite simply, he can't have it both ways, as my colleague Rafael Behr argued last week:

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.

Cameron writes that "our biggest national interest is that the eurozone sorts out its problems", but from his posturing, it appears that he is not fully committed to this and remains trapped in a lose-lose situation. On the same day as the Prime Minister ramps up the rhetoric, veteran pro-Europe Tory Ken Clarke has told the FT that Britain should be a constructive player in resolving this crisis, focussing on "how to maintain the financial stability of the western world", not trying to wring concessions from eurozone countries. Quite simply, France and Germany have bigger fish to fry as they try to save the single currency, and they will have no problem with acting without Britain.

Samira Shackle is a freelance journalist, who tweets @samirashackle. She was formerly a staff writer for the New Statesman.

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Theresa May's Article 50 letter fires the Brexit starting gun

But as well as handing over a letter, Theresa May hands over control of the process. 

So the starting gun will be fired, and the Brexit process will begin. The delivery of the letter from Theresa May to Donald Tusk is a highly symbolic moment. It is also, crucially, the moment when the Prime Minister loses control of the process.

Perhaps the most striking thing about the Brexit process to date has been the remarkable degree of control exercised over it by Downing Street. Brexit means Brexit, declared the Prime Minister, and since that day it has been her who has defined what precisely it does mean. After a quarter century of bitter division over Europe, culminating in a referendum where the Parliamentary party was split down the middle, she has managed to unite the overwhelming majority of the Conservative party for a “hard Brexit” that very few claimed to support a year ago.  As an impotent opposition and ineffective Tory opponents watched on, she has made it clear from the first that Britain will leave the single market and, almost certainly, the customs union. Rumours from Whitehall suggest that, whatever the concerns or doubts of line departments, these have been ignored or over-ruled.

Now, however, the Prime Minister has lost control of the process. Inevitably, given the relative strength of the parties’ negotiating positions, both the agenda and outcome of the talks will be determined largely by our European partners. It is of course true that they have an interest in preserving trade with us, as do we with them; nor do they have any interest, either economic or political, in “punishing” us for the sake of it. That being said, our interests and theirs are far from aligned. They have other priorities. Not allowing cherry picking among EU rules is one. Ensuring Britain pays its fair share is another.

And, while it is in neither side’s interest for the talks to collapse, we have considerably more to lose. May’s claim that “no deal is better than a bad deal” may play well with the Daily Express, but is has not gone down well with UK business. As the economics professor Jonathan Portes sets out here, the consequences of “no deal” would go far beyond the mere imposition of tariffs; the economic impacts would be significant for other EU countries, and very  severe indeed for the UK.  There are increasing signs that ministers are, belatedly, appreciating the risks, and are anxious to avoid such an outcome.

So both sides want a deal – and the UK, at least, needs one. But several hurdles stand in the way. In the first place, there is the vexed question of money. Britain, as our partners are concerned, has outstanding liabilities that must be paid. The British government may accept some of these, but is sure to quibble about the sums. Discussions of money are never easy in the EU, and the task of figuring out what a net contributor to the budget might owe at a time when discussions over the new 5 year funding programme are about to start will be no exception.  Nevertheless, if it were simply left to the civil servants, no doubt an acceptable compromise would be reached. The bigger  issue  is whether Mrs May  is prepared to take on some of her own backbenchers – and, more importantly, sections of the UK press – to sell a deal that will inevitably mean that the UK writes a sizeable cheque.

Second, there is the question of how to ensure the "frictionless" trade of which the Prime Minister has spoken. This makes eminent sense on one level – why make trade more difficult with the partner that buys 44 per cent of our exports? On another, though, it is hard to see how she can deliver.

I for one simply lack the imagination to see how we can be sufficiently out of the customs union to allow us to sign our own trade deals, while sufficiently in it to avoid customs checks and tariffs. For another, it is difficult to foresee conditions under which the EU would allow us to enjoy any of the benefits of the single market – whereby states accept each other’s rules and standards – without the oversight provided by the European Court of Justice.

And finally, since all parties now seem to accept that the prospects of concluding an “ambitious and comprensive” trade deal by March 2019 are vanishingly, there is the question of what happens then. The government has talked about an “implementation phase”; but how do you have an “implementation phase” when you do not know exactly what you are trying to implement?

It could just be me. I may simply not have fathomed the subtle devices that might allow these circles to be squared. But it does seem clear to me that doing so would be far from straightforward.

And then, of course, whatever is negotiated needs to be approved. Forget for a moment the continent, where there has probably never been a worse time to try to get a free trade deal approved by 27 European parliaments. The Prime Minister will almost certainly have parliamentary problems here in the UK.

The Labour party has adopted a position whereby they will vote against any deal that does not provide the “exact same benefits” as we currently have as members of the single market and customs union,” to quote Keir Starmer. If the other member states are to be believed, the full benefits of membership are, and will be, only available to members, so this is will simply not be the case.

Labour, then, will probably end up voting against the bill. What Tories opposed to either Brexit or to leaving the single market might then do is anyone’s guess. It may be that, by autumn of 2018, they feel sufficiently empowered  - either because of a shift in public opinion, or because of indications of falling economic confidence, or, conceivably, because of declining faith in the Prime Minster – to make common cause with the opposition.

Under such circumstances, May might face the real possibility of defeat in Parliament. Which in turn poses the question as to why she would she risk putting a deal that might be rejected to a vote?

It seems to me that she would have very little incentive to do so. If she cannot get the kind of deal that seems, on the surface, impossible to get anyway, surely better, from her point of view to simply walk away? Blaming the Europeans for failure would be all to easy. And holding a snap election on a patriotic ticket and opposed by the current Labour party would guarantee a healthy majority.

Two years is a long time in politics. And much that is unexpected will doubtless transpire during the negotiations to come. Do not, however, discount the possibility that it might all go wrong. 

Anand Menon is director of The UK in a Changing Europe and professor of European politics and foreign affairs at King's College London.