There is devilish detail in the new euro pact

Forget use of EU buildings, the threat is members of the new fiscal union cooking up deals that affe

The issue of David Cameron's "phantom" European veto has fallen out of the headlines pretty quickly, ousted from the agenda by the news of Fred Goodwin losing his Knighthood. (The announcement landed yesterday, by remarkable coincidence, within moments of the Prime Minister getting a bit duffed up in a Commons statement on Monday's European summit and after a weekend of bad headlines around banker bonuses.)

Conservative Eurosceptics, however, will not forget how the gesture of anti-Brussels defiance they so celebrated in December has turned, as they see it, into a supplicant bow to the forces of continental integration. It doesn't help that the Lib Dems are conspicuously pleased by Cameron's restoration of normal diplomatic service with regard to the EU.

As I wrote last week, upholding the spirit of the "veto" to the satisfaction of Tory back benchers and doing what it takes to secure British influence in European Union diplomacy were mutually exclusive demands. In fact, it seems, Cameron has done neither.

The sceptics have concentrated on the Prime Minister's failure to prevent signatories to the new Fiscal Union (FU) treaty using EU institutions to enforce their agreement. That was always a bizarre and unrealistic fixation. If Britain's position is to support other countries pursuing their plan, why would we sabotage the obvious mechanism for making it work. (There is an argument that says Britain should be opposing FU on the principle that any countries surrendering control of their budgets to a central European authority and insisting on choreographed austerity in the middle of a downturn is bonkers - but that is a different matter and definitely not government policy.)

The real issue for concern, as far as British influence is concerned, is not the use of institutions by the FU members, but the prospect that they will crowd the UK out in discussions of the single market. This is the problem that euro-wonks refer to as "caucusing" - the danger that plans will be hatched, positions agree, alliances cemented within the FU members that can then be presented at European Council meetings as faits accomplis.

This is not a threat for today or even tomorrow, but it is clearly a problem and potentially a very big one. If Britain struggles to build alliances in the Council it can get outvoted on things that matter deeply to our economy - on tax and regulation policy, for example. In the past, this hasn't happened too often, but the new FU structures, including regular summits (combined with some ill will generated by the whole "veto" episode) make caucusing much more likely.

Thus, as I have written before, the eurosceptic prophecy is self-fulfilling. Marginalisation diminishes influence leading to bad deals, suspicion of a conspiracy and more marginalisation. Onward towards the exit. Cameron told a press conference in Brussels that the government would "take action" if there was any sign of the FU members "encroaching on the single market". And that he would watch out for such encroachment "like a hawk". He didn't say what action would or could be taken.

The main safeguard in the draft fiscal union treaty appears to be in the preamble:

NOTING, in particular, the wish of the Contracting Parties to make more active use of enhanced cooperation, as provided for in Article 20 of the Treaty on European Union and in Articles 326 to 334 of the Treaty on the Functioning of the European Union, without undermining the internal market, as well as to make full recourse to measures specific to the Member States whose currency is the euro pursuant to Article 136 of the Treaty on the Functioning of the European Union, and to a procedure for the ex ante discussion and coordination among the Contracting Parties whose currency is the euro of all major economic policy reforms planned by them, with a view to benchmarking best practices.

Yes, I know that isn't even a sentence - such is the language of European treaties. Anyway, in something approximating English, this seems to be saying that the FU treaty is recognised as a special deal between some but not all existing EU member states - "enhanced cooperation" - for which a legal framework already exists in the much revised founding treaties of the EU.

The key passage on "enhanced cooperation" in the Treaty on the Functioning of the European Union says:

Such cooperation shall not undermine the internal market or economic, social and territorial cohesion. It shall not constitute a barrier to or discrimination in trade between Member States, nor shall it distort competition between them.

In other words, cooperation between FU members mustn't formally skew the single market against the non-FU members (Britain and the Czech Republic). In practice, however, some or all FU members could end up deciding on things that would subsequently be put to a full EU Council and comfortably outvote Britain.

To what extent this will happen and what Cameron could do about it are the real questions that should be asked about the changing nature of Britain's status within the EU after Monday.

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

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Labour is condemned to watch helplessly as Theresa May consolidates power

The Zombie Party is too weak to win and too strong to die. 

Labour’s defeat to the Tories in the Copeland by-election in Cumbria, which the party had held for more than 80 years, is a humiliation for Jeremy Corbyn and his moribund party. This is the first time a governing party had gained a seat in a by-election since Margaret Thatcher’s Conservatives won Mitchum and Morden in 1982. 
 
The victorious candidate Trudy Harrison, who increased the Tories’ share of the vote in this former Labour “stronghold" by more than 8 percentage points, hailed the victory as “truly historic”, while Labour MP John Woodcock called it a “disaster”, and even the shadow chancellor and Corbyn ally, John McDonnell, conceded it was a “profound disappointment”. 
 
At a time in the electoral cycle when a credible opposition should be winning by-elections and riding high in the polls, Labour is in disarray: rejected, humiliated, ridiculed. It has all but collapsed in Scotland, where the Tory leader Ruth Davidson has emerged as the popular, unapologetic leader of Unionism. And in England the danger now is not that it will lose seats to Ukip — whose leader Paul Nuttall was rejected yesterday in the Stoke-on-Trent Central by-election, which Labour held on a low turn-out after a dispiriting campaign — but to Theresa May’s Conservatives. 
 
The Copeland result was a vindication for Theresa May. When recently I interviewed her in Downing Street she had a simple message for Labour: we are coming after your voters – and she is. 
 
Because of its embrace of the radical left and internal divisions, May accused Labour of abandoning many of its traditional supporters. The party was not responding to their concerns on issues such as “the impact of immigration on lower income levels”.
 
True enough: Corbyn favours mass immigration and open borders yet is an economic protectionist – a classic Marxist position but electoral suicide in our new emerging post-liberal era in which populist movements are rising across Europe and an America First nationalist is in the White House.
 
“I hope there are Labour voters,” Theresa May told me, “out there who will now look at us afresh and say, ‘Labour hasn’t responded to our concerns, it hasn’t recognised what matters to us, but the Conservatives have seen that and are responding to it. I want our greater prosperity not to be confined to particular groups of people or a single part of the country.”
 
The polls suggest that more than simply disaffected Labour voters are looking at the Tories afresh, as we embark on the epic challenge of negotiating the Brexit settlement.
  
May believes that Brexit was not only a vote to leave the European Union but a demand for change from those people – many of them in places such as Copeland - who felt ignored and excluded from prosperity and greater opportunity.
 
Her vision is for a “Great Meritocracy” (whereas Corbyn’s is for a socialist republic) combining greater social justice with enhanced social mobility. It’s an intellectually fascinating and ambitious project and, if successful (and many doubt her, not least her own right wing), it has the potential to condemn Labour to electoral oblivion.
    
The collapse of the Labour party as a stable and credible political force is dismaying. Many of the party’s problems precede Corbyn, who is sincere and determined but is not a national leader. But then neither was Ed Miliband, who misunderstood the financial crisis, which he believed had created a “social democratic moment”, and misread the country he sought to govern. Miliband treated politics like an elevated Oxbridge PPE seminar and introduced the new rules by which the party elected its leader, disempowering MPs.
 
The distinguished Cambridge historian Robert Tombs has called the European Union a system of “managed discontents”. Something similar could be said of Corbyn’s Labour, except that its discontents are scarcely managed at all.

Most Labour MPs despise or are embarrassed by their leader. The MPs are divided and demoralised, with some pondering whether to follow Tristram Hunt and Jamie Reed (whose resignations created respectively the Stoke Central and Copeland by-elections) out of politics. The Corbynites are breaking up into factions (one hears talk of “hard” and “soft” Corbynites), and Corbyn himself is incapable of appealing to those who do not share his ideological convictions.
 
For now, the Labour leader retains the support of activists and members and, crucially, of Unite, Britain’s biggest union and the party’s paymaster. But even his friends must accept that he is leading the party in only one direction – into the abyss.
 
On the eve of the two by-elections, Corbyn posted a message on Facebook: “Whatever the results, the Labour Party – and our mass membership – must go further to break the failed political consensus, and win power to rebuild and transform Britain.”
 
The statement was received with derision on social media. The idea that Labour can win power any time soon (notwithstanding some black swan event) is magical thinking. Corbyn’s personal ratings among traditional working class semi-skilled and unskilled Labour voters are catastrophically poor. He appeals to students, affluent metropolitans with degrees, and minority groups. As for the majority of the electorate, forget it.
 
MPs are reluctant to challenge Jeremy Corbyn because they know any leadership contest would revitalize his leadership, as happened last summer when the Welsh MP Owen Smith mounted an ill-considered and doomed “coup”. Nor is there a pre-eminent candidate waiting in the shadows to strike, as Michael Heseltine was in the last years of the Thatcher administration.
 
So Labour will continue to be the Zombie Party: too weak to win but too strong to die. Its founding mission was to defend the labour interest and to create a fairer, more ethical society. But Labour has lost its role, its confidence and sense of purpose. Obsessed by identity liberalism, bewildered by Brexit and led by a radical socialist, Labour can only look on helplessly as the Tories start to win seats in its former heartlands and hunker down for another decade or more in power.

This column was originally published in the London Evening Standard.

Jason Cowley is editor of the New Statesman. He has been the editor of Granta, a senior editor at the Observer and a staff writer at the Times.