The Bewilderness

Budgeting for failure

The real difficulty arriving for Cameron is coalescing on the budget. He cannot say one thing to his fellow leaders in Europe: I hobnob with you but unless my parliamentarians swallow the biscuit, you can forget agreement of a budget. Still, it is a proud moment that the Mother of Parliaments rather than the Bundestag is forcing the pace in Europe for once. 

Cameron is caught between a Europhile coalition partner, restive backbenchers and opportunistic Labour. Miliband has called for a freeze, co-operating with Mark Reckless and the neo-bastard wing of the Conservative Party. The Prime Minister's instinct for compromise has led him to be outflanked by Eurosceptic rivals and the Opposition. Voting paralysis on European developments is a real possibility.

If Cameron is boxed into a veto, this will give an impetus to set up separate institutions for the Eurozone outside of the EU. Integration will then take place outside of the current formal structures. The accepted given of British disengagement and withdrawal will come ever closer to reality. And faced with Janus administrations of pro and anti-Europeans, our influence will be weakened whatever governments do. Romano Prodi is correct: Britain will face grave difficulties if we opt to stay in the EU and attempt to maintain parity with an integrated core; we will be outvoted every time. This is not an option.

When the next election occurs, integration around a core single currency will leave us on the sidelines. The Liberal Democrats and the Labour Party will have severe difficulties explaining why they shoudl give up what little power they have left for the ability to squeak and be overruled. I think we can expect a further revolution in attitudes to Europe on the Left. 

De Generation Game

They will have to write off the debt from each state on the debt generation game as they travel along the conveyor belt from realisation to depression. In a bathetic reversal of what we see, a journey from the ridiculous to the sublime. 

Yet Sweeney Todd in the economic guise of Debt is about to swing his razor and impose a swinging haircut on all Greek debtors. Most frightening of all, for those who chose to march to the funeral tune of the 'Day of the Dead', is that the haircut will decapitate the myth that taxpayers are inoculated from credit writedowns.

Those taxpayers will not be happy... 

Cameron faces up to the clerisy

The challenges that developments within the European Union's political framework pose to the coalition are now arriving more frequently. Despite favourable statements supporting a banking union and greater integration for the Eurozone, the Conservatives find that their unforgiving stance on the European budget acquires greater opprobrium. They face a concerted effort on the part of poorer countries to use development budgets as a tool of redistribution.

This firm stance (with an elaborate and symbolic utterance of veto, echoing Thatcher's handbag rhetoric) seems to combine domestic rhetoric with an aggressive demand for the repatriation of certain powers. The repatriation has focused upon areas of criminal justice and the repeal of the European Arrest Warrant. Yet, such rhetorical tactics are known to harden the resistance of other European politicians and rarely meet the expectations of the radical backbenches. So why do it? Why cause yourself so much pain?

Perhaps European negotiations are zero sum games: to win, one must trade some perks for others. To allow a European budget, perhaps Cameron is signalling that he wishes to obtain concessions in other areas. Yet repatriation is such a betrayal of ever closer union that Angela Merkel of Germany does not seem to be able to entertain the notion, preferring cancellation of the summit.

Could Cameron have overplayed his hand? He may not be dealing with rational players (also known as politicians), willing to horsetrade for their goals. His counterparts could be described to ideologues, determined to foster further integration and unable to countenance any deviation in that ideology. Cameron is no longer viewed as a trader but as a heretic and deviant, head of a schismatic sect. This latter view may help Brexit, since the troublesome critics are expelled.  

The core of Europe's rotten apple begins to harden

During Cameron's interview on the Andrew Marr show, the Prime Minister endorsed teh development of a second and separate budget for the Eurozone. Such a pot of money would ease pressure on Britain to appease the hard core if all decisions were channelled through the current institutions.Short term political expediency and the advantage of diverting integration to a new set of parallel institutions prove attractive to all political parties in Britain.

The division commenced when the fiscal treaty was signed by most Member States last year. Britain vetoed and then stood to one side. Now early critics like the French socialists have passed the treaty: the Eurozone emergency proving more persuasive than principle.

Now, the core and periphery, so successfully modelled in the currency union, will be replicated in the EU's arrangements. Enthusiasts are still attached to the term 'two speed', but the reality is a inner and outer zone. Given current troubles, stop and reverse appear attractive directions when confronted with the Eurozone. Britain, France and Germany all, for different reasons, support this development. 

Yet, is this a permanent development or flotsam discussed and soon to be blown away under the pressure of events. I regard all current proposals as temporary, subject to deformation, and hostage to the fortunes of the single currency