Friday, July 24, 2015

Britain's renegotiation: Advice to Mr Cameron

To succeed in his renegotiation, David Cameron needs to build an alliance for reforms that benefit the EU as a whole.

Shortly after midnight on June 26th, a new chapter in the chequered history of Britain in Europe opened in Brussels. The European Council conclusions note, in two lines on page eight, that David Cameron, re-elected as prime minister, "set out his plans for an (In/Out) referendum in the UK" and that "the European Council agreed to revert to the matter in December". What will happen then will depend on how Cameron handles his intended negotiation about reform of the EU and Britain's relationship with it: he has yet to tell the European Council what he wants. But his plans will certainly work in London: the promise of a referendum was set out in the Conservative Party's election manifesto, and, despite misgivings in the House of Lords, a century-old convention that the unelected upper chamber does not obstruct a government's manifesto measures means that the necessary enabling legislation will not be blocked. So in 2017, or, more likely 2016, the British will vote on Brexit.

Cameron has not always wanted this. His 2010 position, enshrined in law in the last parliament, was that a referendum would only be needed if further transfers of sovereignty to the EU from its member-states were approved by government and parliament. He dismissed the idea of a free-standing In/Out plebiscite as unwise because of the uncertainty it would create, affecting markets, confidence and hence the economy. But as pressures from the anti-EU wing of the Conservative party built up, and the threat from the UK Independence Party (UKIP) grew, he changed his stance. In early 2013 he announced the strategy of ‘renegotiation and referendum’ which he must now implement.

Some saw it less as strategy and more as short-term political choreography designed to take the wind from UKIP's sails. Others saw the promised negotiation as a particularly dangerous gamble: the response of Herman Van Rompuy, the then president of the European Council, was to ask, in a speech at London's Guildhall, “How do you convince a room full of people, when you keep your hand on the door handle? How to encourage a friend to change, if your eyes are searching for your coat?” David Cameron is about to find out.

Much will depend on what he asks for. His descriptions of his negotiating aims have so far been unspecific. Clues in his speeches point to efforts to improve European competitiveness and deepen the single market, combined somewhat paradoxically with calls for constraints on the immigration flows which hold down Britain’s labour costs. Immigrants‘ access to welfare is also to be re-examined. Safeguards for the City of London as the eurozone expands and deepens seem certain to feature. And there may be some tilting at windmills.

Since a negotiating success or failure could affect the referendum result, the exercise matters. Given that Cameron‘s track record in EU diplomacy is somewhat mixed, how should one advise him to maximise his chances of success? Seven points come to mind.

1. Solidarity matters
Dealing with the expected British demands is not top of most Europeans’ agenda, so what the British say and do about others’ worries may affect their willingness to address British concerns. Take Ukraine: the general perception that Britain has been largely absent from the effort to deter and contain Putin’s aggression weakens the UK negotiating hand, particularly among those living on Russia‘s border. Then take refugees: London’s opposition to new arrangements for Mediterranean rescues lest they create an undesirable ‘pull factor’, and its insistence that the care of those who make it across the sea is not a UK concern, have won few friends. And then take Greece: self-congratulation at escaping any bail-out obligations, and brusque calls for an early resolution that must be cost-free for the UK, have been counter-productive in the wider EU context. The British government needs to show it cares and will try to help. The British need to cool their criticisms of those struggling with real, not self-generated, crises. A friend in need is a friend indeed, and rather more obvious sympathy and solidarity could be a good investment.

2. Try alliances
Fifteen years ago, the then Conservative prime minister, John Major, understood that the German aspiration for political union, and the French aspiration for monetary union, both intended to bind a peaceful united Germany into a greater Europe. Wisely choosing not to be obstructive, he won for London the association with monetary union that has made the City the major market for financial transactions in the euro, while securing a UK opt-out from adopting the single currency. Major was good at alliances: Helmut Kohl and François Mitterrand, along with the Netherlands’ Ruud Lubbers, were his allies at Maastricht. It feels different now: British influence in Brussels has waned, and allies may well be hard to find. Rather than presenting a purely UK shopping list of reforms, it might be better also to speak out in favour of good ideas born elsewhere, such as the Juncker-Timmermans effort in the European Commission to rein back EU legislative over-kill. Denigrating the European Parliament is not particularly constructive – perhaps London should press hard for progress with the proposals from the Dutch and others, including the House of Lords, for an enhanced complementary role for national parliaments. Though isolation may seem splendid, it is alliances that win results. But this renegotiation is not Waterloo, and Cameron should not expect Mrs Merkel to play Marshal von Blücher, delivering victory. The Germans will help, but not at any price; and everyone has to agree.

3. Remember "the vision thing"
Most European governments do not see intra-EU relations as a purely transactional and zero-sum game. For countries whose soil twice ran with blood in the last 100 years, the EU is greater than the sum of its parts. That is equally true for those that suffered under a dictatorship or watched from behind the Iron Curtain as Western Europe’s democratic nations came together, uniting in common respect for human rights, the four freedoms and the rule of law. Margaret Thatcher‘s famous reminder at Bruges in 1988 that the great cities of eastern Europe were also part of the European story, and must be brought back into it, is still remembered there. Gratitude for past UK championship of EU enlargement underlies present puzzlement at Britain’s apparent retreat into insularity. To call for the suppression of the Rome treaty’s aspiration to “ever closer union among the peoples of Europe” seems not only insensitive but quixotic, since in its present position in the treaty it has no normative effect.

4. Don't over-bid
All the EU’s governments see the need to permit the deepening of the 19-member eurozone while preserving the unity of the 28-strong single market. The problem is genuinely challenging, but the willingness to find viable solutions is real. What the UK should most definitely not do is what it tried and failed to do in December 2011: dictating terms did not work, particularly as they were over-ambitious and under-explained (Cameron refused to sign the ‘fiscal compact’ treaty because Germany and other partners rejected his request to change voting rules on some issues affecting the City of London). The British cannot reinvent national vetoes, particularly in financial services – the very area where Mrs Thatcher fought hardest to introduce majority voting to over-ride national protectionism, a task which the Commission’s current Capital Markets Union initiative is seeking to advance further. Defending the City is best done not by Maginot-style red lines and by bringing cases before the European Court of Justice (ECJ), but by underlining the pan-European interest. As Europe‘s champion among the big three global financial centres, London is a major EU asset. The message for Cameron, therefore, is where possible go with the grain and propose solutions which help all parties, and do not over-bid.

5. Don't attempt the impossible
Freedom of movement, equality and non-discrimination are fundamental EU principles. Rules on access to welfare for citizens arriving from other member-states can be changed by majority vote, and some changes are indeed conceivable. But discrimination among those already in work, paying UK taxes and social security charges, is different; proposals which would introduce discrimination, and so fall foul of the ECJ, would get nowhere.

6. Don't make a fetish of treaty change
Back in 1974, Prime Minister Harold Wilson worked to improve the terms on which the UK had joined without amending the accession treaty. This made it easier for other European leaders to help him. No new treaty ratification procedures were needed anywhere, and the only referendum was the one in the UK that he won in 1975. As then, so now. Whatever changes the British seek will be far harder to secure if they have to be enshrined in new treaty provisions. Treaty amendment procedures are onerous and take time. More importantly, referendums would be required in several member-states. Since no government can bind its successor, let alone its electorate, promises of specific changes at some future date offer no magic solution. It is wiser to do as the eurozone countries currently do and work within the treaty. Fortunately, the Conservatives' manifesto was silent on treaty change. The UK negotiators should follow that example.

7. Credibility counts: convince them you care
Governments that agree to make concessions to the British could run into trouble at home. Before agreeing, they will therefore assess the possible cost to themselves and set that against reducing the risk of a disruptive UK secession from the EU. The worst outcome would be to make concessions which did not in the end avert Britain’s secession, earning them both immediate criticism and eventual disruption. This makes Herman Van Rompuy‘s question highly pertinent: if a ‘renegotiation’ deal were to be struck, would David Cameron and his government fight for it, and oppose Brexit in the ensuing referendum campaign? The other members of the European Council will be watching him closely. Press reports already tell them that certain members of his cabinet would shed no tears if the negotiations failed, and whatever their outcome intend to campaign in favour of Brexit.

Where does Cameron stand himself? His election speeches, when they touched on Europe, tended to be critical; he regularly described the EU as “too big, too bossy, too bureaucratic”. His fellow European leaders may charitably attribute this stance to his problems in the party, but they may also ask how long it will continue, and whether it does not help those arguing for Brexit. If, once they see his specific proposals, they then think a deal possible, they will be far more likely to strike one if he has convinced them that he would fight for it as wholeheartedly, skilfully and successfully as he fought the recent election.

David Cameron says that the British people are not happy with the status quo. If so, that may be because they have been told they should not be, and because a defining characteristic of the British is an infinite capacity to grumble. But they are also averse to change. Lord Salisbury, a late 19th century prime minister, famously asked “Change? Why should we change? Things are bad enough as they are”. When Edward Heath took the UK into the EEC, polls showed that the nation disapproved; yet only a couple of years later Harold Wilson’s ‘renegotiation’ won the day in an In/Out referendum and Britain stayed in. In both cases, the change option was unpopular. That is probably the reason why, despite carping from politicians and press, a number of recent opinion polls show a clear majority against Brexit. That could change if Cameron‘s negotiations go badly wrong. It is very important that everyone – not only in the UK but also in the wider EU – who wants to avoid a British secession should say so, swallow their doubts about the Cameron strategy and try to ensure that a deal is struck. We are where we are – enough posturing, it is time to be serious.

Lord Kerr is a former ambassador to the EU, permanent under-secretary of the Foreign and Commonwealth Office and secretary-general of the Convention on the Future of Europe. He is also chairman of the CER. An earlier version of this article was published by Friends of Europe.


Brendan Donnelly said...

This is certanly excellent advice to Mr. Cameron in his negotiations with other governments of the European Union. Unfortunately, Mr. Cameron must at the same time negotiate with his Party, which has a completely different set of priorities and attitudes. The only chance that Mr. Cameron has of persuading any significant proportion of his Party to support the results of his "renegotiation" is to convince them that he has wrenched bcak from the teeth of reluctant and recalcitrant foreigners those dmagaing concessions that never should have been made in the first place by fifth columnists like Edward Heath and Tony Blair. Calm, rational and consensual discussion with other heads of government is precisely not what Mr. Cameron needs to satisfy those elements of his Party that he hopes to win over for his strategy of "renegotiation." They will want to be persuaded that he has stood up to foreign bullies, faced them down and made them realize that they need Britain more than Britain needs them. I rather doubt personally whether this circle can be squared, but it is always worth recalling that the Prime Minister will be trying to play in the coming months to two very disparate audiences, one abroad and one in his own Party.

Brendan Donnelly

john bruton said...

Very good advice!