Where have the euro-realists gone?

Pro-europeanism was not defeated on Friday. It was defeated long ago. No, it was euro-realism that lost on Friday – perhaps for the first time but not the last.

Nor was a two-speed Europe created. There has long been a multi-speed Europe. Schengen was signed in 1985. Maastricht created multiple speeds. No, what was started on Friday was institutionalised British isolation. British foreign policy was set on a different course – one unlikely to be in our interests.

On this site a few weeks ago I questioned whether David Cameron was up to it as a leader. Was he the ‘unready’? And this week has confirmed this is the case. Let’s stop and consider what has happened.

Back in October, David Cameron went to a summit to discuss the future of the Eurozone. He went with nothing. He sat in splendid isolation and then came back with nothing. It was, frankly, pathetic.

This time he pursued a different tack. He went with something – a protocol that demanded the City of London be protected in new ways from European regulation. It would involve repatriating single market powers to the UK. This was his price for signing a new treaty.

But what was he prepared to sacrifice? The 26 only needed the UK’s signature in order to smooth the enforcement of new Treaty rules on budget discipline through existing European institutions. We are not a member of the Euro so it doesn’t affect us directly. So what the 26 were being asked was to get their noses out of European financial regulation in return for institutional convenience. And, shock, horror, they said no.

So what is the trade that has now been done? Its quite simple: financial regulation still has to be decided by qualified majority voting and European parliamentary approval – so no change there. The paper that inspired this suicide mission from Open Europe makes it pretty clear that the UK is pretty effective at getting its way on financial regulation. The European Commission is reasonable sympathetic to our cause. There’s a lot of regulation in pipeline; there is in the UK too as, you may know, we have just been through a global financial crash.

But where we had a veto over new cross-border taxation or taxation rules, the 26 can now decide to implement a financial transactions tax which, if drafted well, will impact those European head-quartered or trading institutions trading in Euro-denominated assets in the City as well.

Cameron hasn’t used his veto. He’s traded it in. And he’s got nothing in return. In October, he went with nothing and came back empty-handed. This time he went with almost nothing and came back with less than nothing. Diplomacy? Leadership? At least Chamberlain came back with a piece of paper. We are stood at the water’s edge waving good-bye to the European ship; we just haven’t yet realised that the mooring rope is tied to our ankles.

The problem isn’t that Cameron was willing to sacrifice the real economy and a sensibly realist British foreign policy for the City. That would be strategically dumb in itself but it’s even worse than that. He hasn’t protected the City’s interests either. Read the comments of bodies such as the British Bankers’ Association and the nervousness is palpable. Well, you all over-played your hand and you’ve lost – it’s tempting to say serves you right but this is much too serious for gloating. The lesson is simple: be careful what you wish for.

It wouldn’t surprise me if Cameron gets a boost in polls and he will receive a hero’s welcome later in the House of Commons from his backbenchers. Labour will look nowhere despite its absolutely correct assertion that it wouldn’t have led Britain here. The Lib Dems – trapped in an abusive marriage – will make a lot of unattributed noise in the papers but then soon get back to doing the domestic chores. If not now then when, Mr Clegg?

David Cameron has traded a tactical political victory for himself for the strategic interests of the nation. That’s not leadership; that’s irresponsibility. Economic opportunity, political influence, and global credibility will not surge away from the UK, it will happen incrementally over time and inexorably. We now have less influence over our affairs than more; only a victory if you count own goals on your own tally.

Things will seem the same but everything will have changed. In a new paper published by Soundings journal I argue that the increasing tendency for the Eurozone to be the place where key decisions are taken could – if the Euro survives – prove to be one further pull towards Scottish independence. Which would you prefer: an isolated, capricious, right-wing market of 50 million or a globally influential market of 500 million?

How did the euro-realists not see this defeat coming? After defeat on the Euro the pro-Europeans dismantled the architecture that gave their viewpoint public leverage. But the euro-realists failed to step in to the space. Those who sought to move the public and political debate failed but those who represented the mainstream – pragmatic engagement – never saw their position under-threat. Euro-realism was the position of the Thatcher Government – which signed the Single European Act with its significant extensions of qualified majority voting. It was the position of the Major and Blair governments with multiple opt-outs, red lines, and opt-ins. It is only this Coalition that has gone down a different path – seemingly on the spur of the moment.

Euro-realists have been blind-sided. If Labour were to articulate the sensible position that this treaty should be signed as it doesn’t take any more of our powers but keeps us in the room, it could be torn to political shreds. Emotion is driving reason and the latter has no means of fighting back. The centre has crumbled into dust.

And still, swirling around us we have a eurozone crisis. We have no influence over that either despite the fact that our economy and society is in severe jeopardy. Maybe the euro won’t survive in its current form. But then we’ve heard all this before. Since World War II we’ve constantly and persistently underestimated the political will of our European partners to both maintain and deepen union. Maybe this time the doubters are right but if history is any guide at all I wouldn’t bet on it.

So here we are. A weak prime minister poses as a great man of history. There are seemingly few significant voices with enough weight to point out the folly. The euro-sceptics have won and the UK has lost. Suez seems mild in comparison. What sort of nation is it that rejoices in its own defeat? It’s a question I daren’t try to answer. On we go, to where we have no idea. From whence will real leadership emerge?