The Eurozone summit: a fissure in the UK’s relationship with the EU

No-one can have expected the fissure in the UK’s relationship with the EU to come so soon, but the stormy discussions at the European Council in Brussels last night confirm a parting of ways that has probably been inevitable. The exact consequences of what happened – when it comes to the UK’s relationship with the EU, and indeed how the whole EU functions – are going to take some time to fully work out, but the serious nature of the situation is clear.

Angela Merkel and Nicolas Sarkozy came to the summit aiming to achieve a commitment to EU Treaty change for the 27 Member States. Cameron had his price for agreeing to that – a protocol he wanted annexed to the Treaty designed to protect the City of London [his justification for it has been leaked here]. Making such demands, on an issue at best tangential to the immediate need to strengthen the governance of the Eurozone, was understandably met with anger and derision.

The solution instead agreed (and a danger that Cameron must have foreseen) is that the 17 Eurozone countries, plus 6 others (Poland, Latvia, Lithuania, Denmark, Romania, Bulgaria) will reach a new agreement amongst themselves to strengthen Eurozone governance. Two others (Sweden, Czech Republic) could join them, and only the UK and Hungary stand on the outside. Making all of this work is going to be a legal minefield and – importantly – this structure will exclude the EU institutions (Parliament, Commission) from decisions on the future of the Eurozone. It might all work, but it is going to be lacking legitimacy and efficiency.

Cameron – in short – has not achieved what he wished (there is no guarantee of no further legislation in future that will impact the City of London), and has forced an administrative solution that is going to set a multi-speed EU in stone. He has not even managed to achieve any repatriation of powers – so demanded by his party – but has also lost solidarity and negotiating capital with his fellow leaders. That is a spectacularly bad result, whichever way you look at it.

Cameron may have shown he has a bit of backbone to his party, but to everyone else across the EU he looks tactically inept, weak and irresponsible.