British Exceptionalism and the ‘National Interest’

Twenty years ago today, British Prime Minister John Major obtained an opt-out clause on the proposed single European currency. This allowed the United Kingdom to be part of the European Union for political and economic union but outside what would become the eurozone. The policy pursued then was consistent with the approach Britain had taken ever since joining the European Economic Community in 1973: to be “in” Europe, but with caveats. 

The current British Prime Minister, David Cameron, appears to have broken with that conventional wisdom by choosing to veto a new EU-wide treaty designed to address both the symptoms and root causes of the deep economic malaise affecting the eurozone.

The decision is ironic on many fronts, most notably because Cameron’s overriding concern as prime minister has been to avoid tying himself in knots over Europe — as so many Conservative leaders have done before him. Indeed, the issue of Europe has torpedoed many a Conservative’s career in the U.K.

When Cameron became prime minister in 2010 at the head of a Conservative-Liberal Democratic coalition that included both dyed-in-the-wool Eurosceptic Tories and pro-European Liberals, he confidently believed he had found the formula to transcend the problems of old. It appears that overconfidence has been misplaced. After 18 months of insisting that there is not, and never will be, a two-speed Europe, where Britain is on the margins, Cameron has created precisely that scenario.

The broad facts are these. A European-wide treaty, including all 27 members of the EU, will not come to pass. Instead, 26 countries (though three of these still need to consult their parliaments) will negotiate a new intergovernmental agreement to stabilize the eurozone. The deal will include measures to consolidate the fiscal union among those states, accelerate the recently created European stabilization mechanism, and add substantial sums (estimated at 270 billion euros) to the International Monetary Fund. The details, of course, are still to be hammered out over the course of the next few months. Whether or not the agreement will succeed is still an open question. After all, it’s still uncertain whether the European Central Bank will operate as a lender of last resort.

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What is clear, however, is that Britain will not be part of the negotiations. The explanations for how this situation transpired are already filtering in, but we’d do well to let some of the dust settle. Today, it appears that Sarkozy has won this round of the chess match. And he must have taken a certain amount of devilish delight in being able to publicly chastise a country that earlier this month had dared to compare France’s economy to that of Greece (a comment the U.K. Chancellor, George Osborne, may over time regret). Will we reach the same conclusion when we know more about what really happened, and what it all led to. 

The biggest question that needs answering is how Britain became so isolated. Think back to March 2011, when it was Britain and France — shoulder to shoulder — leading the world in devising a forceful response to the threat of mass atrocities in Libya. Or think back to the years of Blair/Brown when, even when Britain had real and legitimate differences with Europe, British leadership in Europe was never in doubt. One prominent sign that Britain was misplaying its hand was when Poland — the U.K.’s long-standing historical partner and advocate in Europe — criticized Cameron’s approach going into the negotiations. Why had the prime minister failed to forge the necessary alliances, based on reasoned arguments, to ensure that the U.K. wasn’t alone at the critical moment?

The most parsimonious explanation is that Cameron’s gaze was turned inward, as he believed he needed to appease the Eurosceptics in his party. Those 70-80 members of Parliament have become more and more vocal as the prime minister has continued to resist calls for a referendum on Europe. And so Cameron spent most of his time before these crucial meetings talking to his caucus rather than to important partners in Europe. The Eurosceptics urged their PM to go into the negotiations with Churchill’s “bulldog” spirit, rather than Chamberlain’s penchant for appeasement.

Of course, this analogy was tragically wrong on two fronts. First, while Churchill and Chamberlain faced an intractable enemy, Cameron faced long-standing European friends, to whom the U.K. is tied in a myriad of political, economic, and social ways. But more to the point: it was Churchill after 1945 who recognized (with his characteristic good foresight) the need for a kind of “United States of Europe.” Despite the tendency of Eurosceptic Conservatives in the U.K. — and I daresay in Canada too — to evoke Churchill to bolster their arguments that we should be wary about “the French,” a nostalgic dream about keeping Britain in some kind of splendid and detached isolation is not a position that most sensible Tories (including Churchill) would adopt.

The pact Cameron has now made with these Tory Eurosceptics is a dangerous one, for they are likely to want to seize on this moment to try to renegotiate everything about Britain’s relationship with Europe — and to hold a referendum to legitimize that policy. This is a path down which Cameron cannot go if he wants his current coalition to hold together. The pro-European Liberal Democrats will not sign up to such a strategy. Perhaps the Eurosceptics — a minority in Parliament — believe that now is the time to ditch those coalition partners and win a majority in a new election. That would be the riskiest move of all.

A more charitable explanation of Cameron’s decision is that he truly believed he was protecting Britain’s national interest — and particularly the interests of the City of London as Europe’s financial hub. Of course, by vetoing, he is no more able to protect the city than he was before. Essentially, he got nothing. But there is a lingering hope — and we saw this displayed in the headlines of the business sections of newspapers yesterday — that the city can rebuild itself after the debacle of the past two years, and retain its status as an important financial centre. By asking for safeguards for the single market and the city, Cameron believed he was retaining the key tools to fuel that recovery.

If we think only about the current structure of the U.K. economy, we might be relieved about the prime minister’s tough stand. The financial sector makes up approximately 10 per cent of Britain’s GDP. But is this a sustainable economic platform going forward? Does Britain’s future prosperity not also require new efforts to bolster manufacturing, and to maintain access to European markets? And what about the many unemployed Britons who have suffered from the economic crisis largely caused by that financial sector? Are their economic prospects best served by the city, or by growth elsewhere?

What these questions suggest to me is that Britain’s national interest — contrary to what realists seem to believe — is not fixed, obvious, and immutable. It is possible to have an honest debate in Britain today about what the national interest really is, who should articulate it, and how. The boys from Eton have gotten their way today. In so doing, they have changed Britain’s relationship with Europe (and key allies such as France and Germany) in dramatic ways. Is that really in Britain’s long-term interest?

Photo courtesy Reuters.