Power to the Parliament

Open Europe has just hosted a debate on the Coalition Government's proposed 'referendum lock' with Europe Minister David Lidington. A write-up and recording of the event will be put on our events page shortly. But in the meantime, two thoughts:

A point raised - echoing what was argued in the Economist's Bagehot column last week - is that the referendum lock amounts to an effective "UK Veto Bill" over new EU treaties. This, so the reasoning goes, is de facto locking in a two-speed Europe, with Britain in the 'slow lane', as it would never be able to sign up to new Treaties under the Bill (assuming that any referendum on a new EU Treaty in the UK would result in a No vote).

This logic contains some truth but is also dated. In today's more fluid, interesting but also more perilous, Europe what matters is one thing: the health of your economy.

Europe is already a multi-speed beast, fuelled by the ongoing eurozone crisis. The slow lane is reserved for the countries which don't have enough cash to carry them over until tomorrow - not those which choose to stay out of the European Public Prosecutor (for example). Which lane the UK occupies in the future will depend on its economic fundamentals - not the referendum lock.

Secondly, some commentators really should read the actual Bill before ranting. Philip Stephens, who every week recycles columns in the FT, for instance. Today he argues,

It is likewise curious that a Tory party so wedded to parliamentary sovereignty should be so keen to subordinate its authority to a plebiscite. Margaret Thatcher got it right when she criticised the last popular vote on Europe in 1975. The referendum, the then Tory leader observed, sacrificed parliamentary sovereignty to political expediency.

This is wide of the mark. In fact, the biggest winner from this Bill is not the British people - a referendum is unlikely to be called for a long-time (which Stephens also acknowledges) - but the UK Parliament. Every decision outlined in the referendum lock will ultimately rest with Parliament, including whether a power shift is significant enough to warrant a referendum under the so-called significance criteria in the Bill.

In this sense, the proposal is actually more of a Parliamentary lock, than a referendum lock. What the Bill will do is restore some control to Parliament - which has been handed over to the government (and then onto MEPs, EU judges and eurocrats) through various EU treaties.

Now it's up to Parliament to decide what to do with these powers.

Ps. Stephens also argues that the EU Bill is "a piece of legislation so dense and unintelligible that it makes the Maastricht treaty seem like an easy read." He clearly has limited experience with EU treaties and texts. In fact, the EU Bill is a Stieg Larsson novel compared to much coming out of Brussels, such as the unconsolidated version of the Lisbon Treaty for example (which we were the first to decodify).

Two vetoes for the price of one

In Parliament this afternoon, David Cameron gave his statement on last week's EU summit, followed by questions from MPs. The debate was a bit all over the place if we're to be perfectly honest, with the 2.9% increase to the EU's 2011 budget dominating.

The most talked about intervention came from Ed Miliband who said in response to Cameron's alleged cave-in on the EU budget freeze for 2011: “He wished he could come back and say No, No No, but in his case it's a bit more like No, Maybe, Oh go on then.” (apparently a phrase Miliband didn't quite come up with himself).

On actual substance, Chris Heaton-Harris made the most astute observation. He noted that the PM now has two separate vetoes at his disposal: one over Treaty change and one over the EU budget post-2013. Heaton-Harris asked whether Cameron would use the two vetoes independently to achieve EU reform. As we’ve argued before, a twin-track approach to EU negotiations is by far the smartest way to achieve reform in Europe and the restoration of some democratic control over key EU powers.

If the two vetoes are used in parallel but for seperate issues - one for repatriation of powers and the other for concessions on the CAP for instance - we bet anyone (eurosceptics and federalists alike) that the Coalition government will get at least one game-changing concession in return.

The Coalition could even get other member states along for the ride if it's confident and strategic enough. After all, Merkel has given us a great example for how to do it.

Unfortunately, in response to Heaton-Harris and also earlier in the debate, Cameron hinted he would pass up his veto over the treaty change, effectively giving EU partners a two-vetoes-for-the-price-of-one deal.

Hopefully this isn't the end of the story though, as there's still much to play for before Treaty changes are agreed. But MPs need to get their line of argument in order or the Coalition might well go for the do-nothing option.

For Cameron to use the twin-vetoes separately but in parallel, is surely what backbenchers in favour of EU refom should be pushing for?

Has Cameron underplayed the UK's hand in Europe?

Over at Conservative Home, we examine how David Cameron is getting on in Brussels - the performance so far is a mixed bag, but there's a clear risk that he has underplayed the UK's hand in the negotiations.

Meanwhile, German media praises Angela Merkel's "poker skills". She has now achieved backing from EU leaders, in principle at least, for changing the Treaty in order to introduce a permanent crisis mechanism for the eurozone.

How Cameron should play his cards in Europe

Over at the Spectator's Coffee House blog, we take a look at how David Cameron should approach today and tomorrow's EU summit - and how he should play his cards in negotiations in Europe moving forward.

We argue,

The British media woke up this week, realising that Europe still exists. As David Cameron travels to Brussels, questions loom over what, exactly, he can achieve in Europe – at this summit, and more importantly, moving forward.

Much of the commentary surrounding the summit has focussed on the increase to the EU’s 2011 budget, which Cameron is fighting. And for good reason. It’s insane that Britain – or any other net contributing state – should be forced to accept any increase to the EU budget, at a time of tough austerity at home.

Cameron has spent considerable time talking up the negotiations on the budget increase, so he may have an ace up his sleeve to achieve a cash freeze tomorrow or in the coming weeks. But a 2.9% hike is not unlikely, meaning that an extra £430 million would be added to UK taxpayers EU bill – or even more once the European Parliament has had its greedy hands on it.

However, as outrageous as it is, the annual budget increase is only a side show in a far bigger act.

Even if he were to achieve a freeze to the EU budget, there’s nothing stopping MEPs and other member states from pushing through a substantial increase in 2012 or 2013 to make up for it. The EU budget is negotiated in seven-year periods (though that can vary), with minor adjustments being made on an annual basis. Sadly, negotiations over this budget period have already been lost – courtesy of Tony Blair in 2005.

So the bigger prize – which may or may not be discussed in corridors at the summit – is clearly a reduction in the size of the budget from 2014 onwards. Cameron has rightly stated that this is his priority moving forward.

But here Cameron could be committing a strategic mistake. The temptation is to try to ask for concessions on the post-21014 EU budget, in return for supporting Merkel’s repeated calls for a Treaty change to fix the eurozone.

Thing is, the UK already has a veto over the negotiations on the post-2014 budget. If the UK refuses to agree, an effective cash freeze will be achieved anyway as the previous budget will be carried over. Secondly, member states are desperate to get rid of the UK’s rebate from the EU budget – in itself a powerful bargaining chip.

So if Cameron trades budget concessions for Treaty change, he will effectively be giving his EU partners two for the price of one.

A better way forward for Cameron is to horse trade on the EU budget and possible Treaty change separately.

Despite strong opposition from EU leaders, German Chancellor Angela Merkel continues to push for a Treaty change to fix the eurozone. And she won’t cave in easily.

As we’ve argued before, Cameron should back Merkel’s calls for Treaty change in return for repatriating powers to Britain. It Treaty change actually materialises, the whole package can then be put to a public vote in a genuine referendum on EU reform. Many Tory backbenchers are now picking up on this idea as well.

Cameron and Merkel will meet on Saturday night over dinner to discuss the way forward for the EU. The Prime Minister must think carefully about how to use the unusually fluid European situation to put Britain’s relationship with the EU on a more sustainable path.

The scope for a new Anglo-German grand bargain is greater than in a long-time. But for Cameron to give away his hand this early would be a serious mistake.

Merkel refuses to fold

German Chancellor Angela Merkel is a tough cookie.

Sandwiched between Deauville and tomorrow's EU Summit, Dr. Merkel took to the podium today to defend the controversial pact with President Sarkozy on economic governance in the eurozone that has left both German politicans and EU leaders incensed (but in different ways).

Addressing the Bundestag this afternoon, a firm Merkel said both President Sarkozy and herself will relentlessly insist on a "culture of stability" at tomorrow's European Council summit. She stressed the necessity of taking "precautions today for dealing with future crises" in the eurozone.

Such precautions, she said, will simply have to include a Treaty change. Merkel stated that the measures taken earlier in the year to bail out Greece were "unavoidable" but did not provide long-term solutions. She insisted on a new, robust and legally unassailable "crisis management framework" anchored firmly in a new EU treaty; a move that she admitted is "ambitious". But she confidently asserted that, for the EU

success will only come with a change to the treaty...improvement is always possible, even if the road is rocky.

Presumably responding to Luxembourgish Foreign Minister Asselborn's and others' sneer that Europe does not work with only a "two-stroke engine", the German chancellor said, "the Franco-German union is not everything in the EU, but, without a German and French union, it is not much."

Tomorrow's summit could be really interesting...

A one-year cash freeze to EU budget won't cut it Mr. Cameron

The news in today's Guardian and Mail is that David Cameron is thinking of doing a deal on the proposed new EU treaty. The reports suggest that Cameron will back the new treaty in return for his demands for a cash freeze to the 2011 budget.

We're not convinced that Treaty-change-for-less-cash is a line that the Government will pursue in the end. But if true, Cameron and his Government risk a mutiny not only from the Tory backbenches but the public at large. And it would be completely justified.

The prospect of a new treaty is rightly seen (and not just by us) as a once in a generation opportunity to renegotiate the UK's relationship with the EU and actually repatriate some of the powers the Conservatives promised they would less than a year ago, or pursue a number of other reforms - for example giving real powers over EU policy to national parliaments.

A one-year cash freeze on the EU budget simply doesn't cut it. Sure, the European Parliament's demands for a 6 percent increase are outrageous and have understandably attracted the headlines recently. But what about 2012 and 2013? There is nothing stopping MEPs, the Commission or even other member states demanding similar increases in these years and there would be little the UK could do about it.

And even the next EU budget period, the the one that starts in 2014, is best negotiated seperately. The UK already has its rebate as leverage in those negotiations. Making horse-trades involving Treaty changes is giving EU partners a 'two for the price of one' deal.

But besides this practical reason, the prospect of yet another 'behind closed doors' EU deal could be politically disastrous. After promising to repatriate powers, Cameron cannot shirk the first, and possibly only, realistic opportunity to do so.

It would certainly make his accusations of "betrayal", levelled at Labour and the Lib Dems for their backtracking on a referendum on Lisbon, look pretty hypocritical.

How should the UK government respond to EU Treaty change?

We take another look at this question over on the Spectator's coffee house blog. With the risk of sounding repetitive, we argue,

Rather than instinctively reaching for the veto, David Cameron should back Merkel’s demands, in return for the repatriation of powers to the UK, along the lines of the original Tory election manifesto. This package could then, possibly, be put to a public vote, and be turned into a genuine referendum on EU reform. The net effect of a new EU treaty would then be fewer powers for Brussels and more for Westminster.

On his blog, the ever-insightful Charles Crawford also has some very interesting things to say about German calls for EU treaty change and the nature of EU diplomacy more generally. He argues,

Do Germany's leaders really think that they can force through this time round a "narrow" Treaty change which gives them enough of what they want by way of financial protection and does not open up all sorts of other clamorous demands?

Or do they know that that is more or less impossible, hence they are pushing for Treaty changes as part of a wider agenda aimed at deliberately prompting a manageable (they hope) mini-crisis which will allow them to redefine the way the European Union works, but on (mainly) German terms? If that means wielding a fierce Teutonic axe on many beloved EU schemes and letting other countries squeal, so be it.

What, I wonder, is the government in London making all this?

In principle this situation represents a huge opportunity for cynical but pragmatic British influence aimed at forcing out great quantities of EU rubbish -- and cutting the bill to British taxpayers.

Question is, have the Coalition folks put on their thinking caps?

Do watch this space...

Germany wins French backing for EU Treaty change

As we anticipated in our previous post, it appears as if Germany has won French backing for a change to the EU treaties in return for greater flexibility on sanctions for eurozone countries which run excessive deficits.

France and Germany have agreed that the Lisbon Treaty should be changed by 2013 in order to:

• Set up a "robust crisis resolution mechanism" for the eurozone, which presumably includes a mechanism for an orderly default procedure for countries that go bust;
• Introduce political sanctions for rule-breakers, including the temporary withdrawal of voting rights within the Council.

The taboo of another round of Treaty change negotiations has now officially been broken. This is potentially huge - and throws up a number of interesting questions for eurozone and non-eurozone countries alike, not least the UK.