Analysis

Grexit or Brexit - is Britain going to leave the EU?

14.08.12 @ 20:12

  1. By Benjamin Fox
  2. Benjamin email

BRUSSELS - Last week, Eurogroup leader Jean Claude-Juncker said that a Greek exit from the eurozone could be managed. Why Juncker felt compelled to say this is unclear, especially since there are no indications Greece wants to leave the euro.

  • Is Cameron in danger of being seen as neither fully committed to leaving nor fully committed to the EU? (Photo: University Hospitals Birmingham)

In any case, focusing on the political plight of Greece is to ignore the elephant in the room: is Britain going to head for the EU exit door?

Last week, Japanese bank Nomura published a paper by Alastair Newton, a former diplomat and aide to one-time British leader Tony Blair, to the effect that the chances of a referendum were high enough to warrant contingency planning.

Meanwhile, Blair himself expressed concerns that Britain was in danger of swapping influence for isolation in an interview in Die Zeit. There have been a slew of articles to the effect that a referendum on the EU is inevitable.

But then, haven't we been here before? Talk about Britain's awkward relationship with Europe is cheap. Countless books have been written on the subject. Yet Britain has not rejected a single EU treaty nor held a referendum since 1975.

It is increasingly likely that Britain will hold a referendum on the EU within the next five years.

It also appears that the eurosceptic camp could win - opinion polls over the past couple of years have shown a large majority in favour of renegotiating Britain's terms of membership or, failing that, leaving altogether. A YouGov poll released today (14 August) found that 46 percent of Britons would vote to leave the EU.

Meanwhile, the governing Conservative party is more eurosceptic than ever before. Emboldened by the crisis engulfing the eurozone, some Tories sense an opportunity to pull Britain out of the club.

They are also terrified about the rise of the UK Independence Party. Under the charismatic leadership of Nigel Farage, Ukip have been consistently polling between 5-8 percent, almost neck-and-neck with the Liberal Democrats.

Most opinion polls have Ukip, which has 11 MEPs but has never come close to winning a UK parliamentary seat, at more than enough to deny the Tories a House of Commons majority.

But the real demand for a referendum comes from the Conservative grass roots, from increasingly fractious Tory campaigners. A recent poll by the popular activists’ website ConservativeHome found that six in 10 supporters favoured a deal with Ukip rather than the current coalition deal with the pro-European Liberal Democrats.

The caucus of Tory MPs elected in 2010 known as the "Fresh Start" group have drafted their own shopping-list of policy areas to be repatriated.

Their first item is an opt-out for the City of London from EU financial regulation, which British leader David Cameron demanded at the last minute at the December summit which agreed the fiscal compact.

Considering that the only positive thing the Conservatives think has come from the EU is the single market, it seems bizarre to then insist on an opt-out from a key plank of it. In any case, there is no chance of France, Germany and others ever accepting this. It is politically a non-starter.

The other main demand is to restore Britain's opt-out from EU social policy, including the directives on working time and temporary agency workers. This is more feasible - John Major, the last Tory prime minister before Cameron, negotiated this opt-out, which Tony Blair scrapped when ratifying the Amsterdam treaty.

Even so, it is predicated on the assumption that other EU countries would be prepared to open up negotiations on Britain's terms of membership, something which could lead to a Pandora's Box effect, with a string of countries trying to re-write their own accession treaties.

In any case, it is not as though EU officials will fall over themselves to help Cameron.

The spat between European Commission chief Jose Manuel Barroso and Martin Callanan, the Tory leader of the anti-federalist ECR group in the European Parliament, during the July session of parliament, where he accused Callanan and his delegation of "taking delight" in the woes of the eurozone, was childish in the extreme, but it did illustrate the frustration and hostility between EU officials and British eurosceptics.

Meanwhile, nobody should expect Labour to join forces with the Liberal Democrats to stymy a referendum. Labour is split on the issue and, although most of its members would campaign for a Yes vote, the party is also alive to the huge damage that a plebiscite could do to the Tory party.

A number of Labour's pro-Europeans, including Jon Cruddas, the cerebral Labour MP tasked with leading the party's policy review, actually favour an EU in/out vote.

The problem for Cameron is that he has, as the Nomura paper says, "fanned the flames of euroscepticism" but does not want a referendum.

He withdrew the Conservative MEPs from the European People's Party before then promising a referendum on the Lisbon Treaty, only to back down after it had been ratified.

After the December EU summit he earned plaudits for supposedly vetoing the fiscal compact treaty only for the praise to die down when it became clear that the rest of Europe was proceeding with it anyway.

Despite the recently adopted "referendum lock" legislation which guarantees a referendum on any future transfer of powers to Brussels, and an audit on the costs of EU policies that will report in 2014, Cameron has talked tough on Europe but achieved little of any substance.

A case in point was his performance at the December summit.

Contacts in the Council said that Cameron presented his demands for exemptions for the City from EU financial regulation just a day before the December summit. With no time for the legal service and officials to digest and discuss it in any depth, the wish-list did not make it on the agenda.

It may be that domestic difficulties - the coalition is in real danger of falling apart after Tory back-benchers refused to back Liberal-Democrat-demanded reforms to the House of Lords, while dismal economic figures have put chancellor George Osborne in the firing line - contrive to keep Cameron from re-opening the EU sore.

But the momentum for a referendum is getting stronger and stronger.

Comparisons between Britain's relationship with the EU and a forced marriage - or a bickering couple at least - are overused but do carry a grain of truth.

It is true that, despite the regular arguments, whether they were from Thatcher vs. Delors or Blair vs. Chirac, the two parties eventually kiss and make up. But the bickering couple stay together because they cannot live without each other and, deep down, still love each other. Can the same really be said of the Conservative party and Europe?

Whether or not Britons would actually vote to leave the EU remains unclear.

The 1975 referendum on whether to remain in the then EEC was expected to be close. In the event, the pro-European ‘camp romped home by a two to one margin.

Although the biggest selling newspapers, particularly the Murdoch-owned Sun, the Daily Mail and the Daily Telegraph, are deeply hostile to the EU, it is likely that most of the business community would back staying in.

There is an English nursery rhyme about the grand old Duke of York, who marched his 10,000 men to the top of the hill only to march them down again.

Desperately seeking opt-outs in a bid to appease eurosceptics is a dangerous and ultimately futile game.

If the rest of the EU calls Cameron's bluff and refuses any new concessions the demand for an in/out referendum would become almost irresistible.

Even if he were to secure fresh opt-outs it would still not be enough for much of his party. In the end, the nursery rhyme goes, "when they were only half way up they were neither up nor down." David Cameron is in danger of making the same mistake.

The writer is a freelance journalist and a frequent contributor to EUobserver

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