David Cameron had always promised to safeguard British interests when it came to EU treaty change. Most notably, that meant vetoing any deal that would require the UK to cede further sovereignty to the EU or a tax on financial transactions (a Tobin or ‘Robin Hood’ tax). Despite the significance of the proposed treaty change for the strength and viability of the Eurozone, something undoubtedly in Britain’s interest, the Prime Minister was adamant from the outset that both would be deal breakers where he was not willing to concede.
Consequently, and to the delight of Europsceptics, Cameron vetoed EU treaty change. Instead, the remaining EU states (minus the UK) are now likely to sign up to an ‘inter-governmental accord’ – essentially an agreement without the robustness offered by a treaty.
Cameron maintained that safeguarding British interests would be his priority in any negotiations. And in his capacity as Prime Minister, it’s difficult to argue against that approach. But it’s debatable if British interests were wholly behind his decision to veto EU treaty change. Given Britain’s relative insularity and aversion to supranationalism, surrendering further sovereignty to the EU would always be a thorny issue to say the least. Furthermore, given this aversion, any treaty change would have been met with significant opposition from Conservative backbenchers in Parliament.
While he surely realized the significance for the Eurozone, had Cameron not used his veto he was faced with the wrath of his own party. This isn’t exactly a British interest but had he decided otherwise, Cameron would have returned to a hostile reception from his own backbenchers. Instead, Cameron has returned a hero to many in the Conservative party as he surely knew he would. The Eurosceptics have celebrated Cameron using his veto with many hoping this may even prefigure a shift in Britain’s relationship with the EU and a possible referendum. Cameron may not be a popular figure amongst EU member states but he has avoided a political backlash that could have done much damage to his leadership and political career.
While many would disagree, Cameron may have perceived his decision to use his veto as a reflection of his fellow MPs’ views – a valid perception given they are elected representatives – and as a result one of British interests. But the extent to which his opposition to a Tobin tax can be considered as safeguarding British interests is also questionable.
Cameron, George Osborne et al have argued that the financial sector plays such a significant role in the UK economy that a Tobin tax would be to the detriment of the UK. They argue it would compel the financial sector to relocate abroad and risk the not-inconsiderable tax revenue and jobs created by the sector. Cameron therefore unashamedly declared his intention to protect the City of London during negotiations on EU treaty change.
As I wrote in a previous article on the proposed UK banking reform, measures that might not please the City of London would not lead to a mass exodus of the financial sector from the UK. Were a Tobin tax to be introduced within the Eurozone, indeed some might make the move elsewhere. Yet given this would be applicable to the entire Eurozone, this would surely mitigate that risk. The government’s previous argument of alienating the City of London with a UK-only Tobin tax is therefore less applicable than it previously was.
If too big to fail isn’t fitting, too big to antagonize certainly seems appropriate when considering the government’s stance towards the financial sector. Cameron’s consideration of the financial sector when discussing the safeguarding of British interests is telling as in this instance he sees the two as inseparable. According to the Financial Times, hedge fund managers are now the biggest donors to the Conservative party. Coincidence that their interests are perceived by Cameron as one of national interest? I think not.
Were a Tobin tax to be introduced, it’s likely they’d be some annoyance in the city. But this would hardly be to the extent that averting the tax could be considered to safeguard British interests.
While many outside his party may disagree with his decision, Cameron arguably used his veto to safeguard what he perceived to be British interests. However, he certainly safeguarded his leadership and the interests of the City of London along the way. And while he might defend it as otherwise, Cameron’s decision to use his veto wasn’t exclusively based on safeguarding British interests per se.
Following Cameron’s veto, Britain is now faced with isolation and a loss of influence within the EU. The inter-governmental accord isn’t as rigorous as treaty change but it is nonetheless a forum that the UK will not be party to. Furthermore, this could be a move Cameron comes to regret, especially if it ends up threatening the same British interests he claimed to be protecting by using his veto.