sam boyd | politics

Cameron has struck easy gold. But it won’t last.

leave a comment »

14 December 2011

Who knew politics was this easy? Appear to stand up to Europe and the polls surge in your direction. Unruly backbenchers snap back into line.

It worked for David Cameron. After his “veto” of the new EU treaty in Brussels, the Prime Minister was greeted in the Commons by a torrent of Tory admiration, as the party pulled ahead of Labour in the polls for the first time since the election.

No matter that Cameron’s veto didn’t actually stop much. No matter either that business leaders remain unconvinced that the prime minister did anything in Brussels that substantially protected the City’s interests – his sole objective and supposed victory.

The upswing in political fortunes for the Tories probably reflects more about the uninspiring nature of our two main parties than it does any substantive political ‘win’ for Cameron. Clearly, large sections of the public are ready to be swayed by any display of “leadership”, however facile – especially when it involves sticking one to the Europeans. The Mail on Sunday found 62 per cent of people supported Cameron’s move, against only 19 per cent who opposed it. After trying desperately to avoid his party “banging on about Europe”, might Cameron now quite fancy an election fought over the EU?

I doubt it, because the Europe question is by no means done and dusted for Cameron. As Rachel Sylvester also points out in the Times, “this is the one issue he didn’t want to be defined by”. In any case, when events are moving quicker than anyone can anticipate, this new polling tells us little about how people will vote come the next election.

Cameron’s biggest worry will be that the eurozone debt crisis itself remains far from solved, despite countless “make or break” summits. Any eventual resolution will certainly require British input, now complicated by the fact that Britain is largely marginalised in Europe. Tory eurosceptics, meanwhile, buoyed by Cameron’s newfound “bulldog spirit”, will certainly ask for more – and next time they might demand some real substance.

The most immediate challenge for Cameron is whether or not to allow the institutions of the EU, which are supposed to exist for all 27 EU members, to enforce treaty changes agreed upon by only 26 (or less, as the case may be). Without the institutions, there can be no serious sanctions brought against spendthrift countries, nor any substantive fiscal union – exactly what Cameron has spent months arguing for. But if Cameron gives in – if he turns 26 back into 27 and allows the institutions to be used – the virulent grumblings of his backbenchers are certain to return.

Properly enforcing sanctions, meanwhile, remains the sticking point of the Franco-German plan. The Stability and Growth Pact, agreed in 1997, already entailed sanctions against eurozone countries running excessive deficits. And who first broke its rules, sidestepping any punitive action? Germany and France. Little heed, too, is paid to the fact that countries like Ireland and Spain were running budget surpluses in 2008, before the financial crash. Even Portugal had a deficit of 3.1 per cent – hardly catastrophic. The current debt crisis is one caused chiefly by a recession stemming from a banking crisis, not excessive spending on public services as the new proposals imply.

Of course, however eurozone countries got to this point, huge deficits and spiralling debt levels across the eurozone are now a terrible reality. A solution is required, and quick. Germany and France’s idea – their “fiscal compact” – essentially makes any economic policies except for austerity illegal. But this raises several issues.

First, will it work? The real solution to high levels of debt is a return to growth. But it remains terribly unclear whether austerity is indeed the answer to growth in these tumultuous times. There’s no point planning penalties for excessive deficits when deficits are already excessive, and with no real plan to reduce them first.

Second, the proposals are a political and democratic cataclysm. Democratically elected eurozone countries must submit every one of their budgets for approval by Brussels bureaucrats, and agree to fiscal punishments when they fall out of line. As Bagehot has written in the Economist, it is also “politically very dodgy” that the proposals make it “pointless” to vote for any party advocating economic stimulus or tax cuts, because “the fiscal union will stop them from doing what they promise”. “The treaty has buried Keynesianism”, as Owen Jones puts it.

But the most significant issue with the proposals is their practicability. Even supposing the EU institutions are used with Britain’s permission, why should sanctions work now when they failed so miserably in the past? Even to be made law, they must avoid a qualified majority vote of eurozone countries against them. Will eurozone governments agree to such wholesale surrenders of sovereignty? And if, under pressure, they do, for how long will their people stand for it?

As Martin Wolf from the FT has said, the whole thing is a “constitutional monstrosity”. He for one remains “unconvinced that turkeys will vote for Christmas”. We’d then be back to square one. Again. It’s becoming an increasingly familiar place as far as this crisis is concerned.

Advertisements

Written by Sam Boyd

December 14, 2011 at 6:46 pm

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: