Political Promise

Good day for Cameron, but was he the winner?

In Liam Quinn on December 9, 2011 at 7:40 pm

Was it the Merkozy power couple who were the real winners after the emergency summit on the Eurozone crisis today? Liam Quinn examines the details of the new deal.

From a British perspective this morning’s EU Crisis Summit meeting was a resounding victory for David Cameron.

However, overall it was a victory for the power couple of President Sarkozy & Chancellor Merkel. (Hereby referred to as Merkozy)

23 of the EU members signed up to the new deal in an attempt to salvage the Euro. But in reality, no deal to save the Euro occurred. What actually happened is that the members signed up to a set of regulations that are as equally stringent as they are ridiculous. These rules are:

i.            “A commitment to “balanced budgets” for eurozone countries- defined as a structural deficit no greater than 0.5% of GDP”

ii.            “Automatic sanctions for any eurozone country whose deficit exceeds 3% of GDP”

iii.            “A requirement to submit their national budgets to the European Commission, which will have the power to request that they be revised”

It is easy to take these apart one by one. Whilst the first rule is sensible in theory, it will prove impossible. The original Maastrict Treaty imposed similar deficit restrictions (3%). When this was ignored, the EU introduced the Growth & Stability Act. This was then flouted and ignored by none other than the French and Germans. This will simply happen again and again.

The second point is simply ludicrous. If a government is struggling to control its spending and debt, why would you impose financial sanctions, increasing the pressure on the government? It is completely illogical.

Finally, the European Commission will have the final say on the fiscal policies of the 17 Eurozone members. They have in essence signed away all of their spending powers. Ultimately they no longer control their own fiscal or monetary policy.

The reasons above would perfectly explain why David Cameron refused to sign the original Treaty. But he was pushed to concede even more. Merkozy are seemingly suddenly in favour of a Tobin Tax. A Tobin Tax is a tax on every financial transaction by bankers and the City (in a nutshell). Whilst the tax itself remains minute, the revenue raised relies disproportionately on the City of London. The UK is already the 2nd biggest net contributor to the entire EU system. Cameron was being asked to give away sovereign power over fiscal management and in return Merkozy would take EVEN MORE money from the UK.

On a side note, the City of London does need more regulation. The UK relies far too heavily on this one sector, however, regulation is not a synonym for tax, it never has been.

The biggest surprise of the whole summit was that David Cameron actually stood up for British interests. Before the summit, he had threatened to use his veto, but many commentators simply ignored it as fighting rhetoric. It is no wonder that Sarkozy blanked Cameron earlier today. Merkozy and their predecessors have been used to British leaders rolling over and playing ball at all stages. This was a shock to the system.

Compounding David Cameron’s victory today is how his actions have left the Labour Party floundering. They aren’t sure what to make of it; they can see that popular support is on the side of Cameron. Douglas Alexander has been doing the rounds on Sky/BBC criticising David Cameron for isolating Britain and not negotiating a good deal for the UK. This is nonsense; he has protected our interests and ensured we do not give any more sovereign powers away, something the Labour Party cannot argue proudly about.

As I mentioned earlier, the UK is the 2nd biggest net contributor to the EU, it still has political clout, we haven’t lost any of our trade agreements, the Left hyperbole has gone into overdrive over “isolationism”. One great piece of news for the Coalition today is that the trade gap has narrowed at the quickest pace since records began, mainly through exports to India, Russia and China increasing dramatically, showing that the EU is not our only trading partner after all.

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  1. Impossible, Ludicrous? They are just words used to start attention. The fact of the matter is that the conservative government is pulling away from the euro, isolating future immigration and portraying the UK as ‘bitch’ of the US financial conglomerate. Shame on Cameron as he is a puppet of the financial industry.

  2. I agree wholeheartedly with what is being said here. The objections being made by Milliband and New Labour in general seem to be being made purely for the sake of disagreeing with Cameron, and not on rational grounds.

  3. If this is what winning looks like, god help us when we have losses. The truth is that for all the bluster, Cameron sacrificed our negotiating position for absolutely no gain.

    He claimed he couldn’t sign up because of the lack of safeguards for the city, both from extra regulation and from the proposed Financial Transactions Tax, but he was being completely disingenuous.

    In terms of regulation, I find it hard to believe that anyone seriously thinks the city is already over-regulated, only months ago even the most hardcore right-wingers were bemoaning Gordon Brown for deregulating the financial sector. It was one of the few criticisms I would gladly have joined with (Although it having come from the right was rich given the Conservatives demands for faster deregulation at the time.)

    But it’s the point on the Financial Transactions Tax that I find most outrageous. Let’s first assume it isn’t a good idea, despite it being supported by the majority of the country and most of Europe’s leaders, indeed even Cameron himself recently. I can only assume his city donors had a quiet word.

    But even if it were a bad idea, Cameron gained nothing from this latest set of negotiations. We ALREADY had a veto on a Financial Transactions Tax should we choose to exercise it, such a tax’s creation is already covered by the Lisbon Treaty.

    So in return for a veto we already had, Cameron has sacrificed his place at Europe’s top table, isolating himself from the decision making process which so effects our country. Sure, technically we’re still in the EU, but if you think personal grudges against Cameron for snubbing their deal won’t play a part, I think naivety must be bliss.

    Like I said, if this was winning, I’d rather Cameron stopped playing the game.

  4. It is baffling how people think being left out a negotiating table that is served with a mountain of bad debt, economic dysfuntion and a totally unstable monetary union (that Mr Jacques Delors predicted would end in crisis) is somehow a bad thing for the UK. The Europeans made rules in Maastricht that not everyone followed. The Europeans warned during the beginning of the financial crisis that bailouts were not forthcoming, but then 4 were dished out (twice to Greece). And now the Europeans want more rules… can anyone not see the farce in all this? Making new rules when there is a history of rule bending and breaking.

  5. What is baffling is thinking being left out of negotiations of one of our biggest trading partners could ever be a good thing.

  6. You know what is bizzare and stands against reason? The fact that this great country is trading overwhelmingly with Europeans that have bad debts and products that we already have. The napkins at Starbucks here in this country are made from recycled materials in the Netherlands… why? Since when have the British become too stupid to make napkins? Our trade with Europe is bogus and it is high time we start diversifying our trade with the real economies out there in the wider world such as oh I don’t know India maybe? How bout Nigeria and South Africa? Not to mention our kith and kin Commonwealth realms like Canada and Australia. Why are we fighting over this little table called the Eurozone and EU that is becoming unstable and economically opressive? I really wish this ‘UK’s destiny being solely fixed to Europe’ propaganda be put to an end. Trade can be done with any country and yes, there is a world outside Germany and France.

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