Robert Buckland states the reformist case for Britain’s being at the heart of Europe

Nik Darlington 4.20pm

TRG vice-president Robert Buckland had an article on ConservativeHome yesterday, in which he argued forcefully for Britain’s role at the head of the European table.

Robert rattled off a list of British achievements in Europe that really ought to be better known and understood: reform of the CFP, for instance, despite coming up against seemingly implacable entrenched interests.

Moreover, Robert claims, it is largely because Britain is so much more influential in Europe than we oft imagine, that David Cameron’s historic Bloomberg speech was received with such seriousness around the EU.

"Chancellor Merkel…has some sympathy with our reformist aims; without her support, the budget cut would not have been achieved. She realises that the EU must be more efficient and competitive. Mark Rutte, Prime Minister of the Netherlands, shares our desire to see some powers repatriated to the Member States… Alexander Stubb, Foreign Minister of Finland, recognises that there has already been a lot of differentiation within the EU. He understands that an identikit EU is not the be-all and end-all to the European project."

Underpinning Mr Cameron’s bold statement last month is, I believe, a profound ambition to recast the European Union in its entirety and for the benefit of all its members - including Britain. European leaders have taken notice.

Finally, Robert sets out a case for remaining at the heart of Europe, and a case we shall hear a lot more of as the date of an in-out referendum approaches.

"History has surely taught us that we must stay at the heart of Europe precisely so that we can reform it. Whether we like it or not, our fortunes are intricately linked with those of the continent. Instead of shouting from the sidelines, Britain is taking its place again at the head of the table, helping the EU to face up to its many problems."

Follow Nik on Twitter @NikDarlington

Set Europe aside, Mr Cameron, and reinvigorate a genuinely One Nation outlook at home

Giles Marshall 10.49am

I’m not sure "Fresh Start" is quite the right name for a group of Tory MPs busy re-hashing what is by now a pretty hackneyed message. The group is publishing a report calling for the repatriation of significant powers from the EU to Britain.

So the same call that has been made by Tory MPs since Margaret Thatcher’s Bruges speech – a fresh start indeed.

Yet, of course, the group’s report is newsworthy because David Cameron is himself entering the European maelstrom, with a speech due on Friday that advance spin suggests will be redefining the British relationship with Europe and calling for a referendum on the terms of our membership. Mr Cameron is going to complete the work that Sir John Major began with Maastricht it seems, though Sir John himself had rather assumed that the Maastricht agreement was an end in itself.

The problem for Mr Cameron is that of the few policy positions he does hold, a vague Euro-scepticism is among them. This is a Prime Minister viewed with deep suspicion by the majority right-wing of his parliamentary party, and he undoubtedly sees a new Euro-scepticism as just the sort of thing to appease them with.

He should beware. There is no beast so determinedly single-minded as the Euro-sceptic Tory MP, and they will not be appeased by some vague ideas about renegotiation. Nor shall they be too happy about what must seem a far distant prospect of a referendum on Europe under a majority Tory administration, especially given its current unlikelihood.

Hatred of the EU has become part of the DNA of many Tory MPs, to the extent that any rational debate about it is virtually impossible.

Take the Obama administration. After successful reciprocal visits between President Obama and Mr Cameron, you could be forgiven for thinking that this was a transatlantic relationship built on the strongest of foundations. Back to the glory days of Reagan and Thatcher.

Well, in the sense that Reagan consistently belied his own rhetoric by following a US interest that typically denied Britain her own, I suppose it is. For all the bonhomie of Cameron and Obama, the administration has not been slow in making it very clearly known that it regards these European manouevres as unwise and potentially disastrous. A Britain isolated from Europe will not be able to rely on any special relationship with the United States. Her realpolitik views a single European unit as the most useful form of European ally. Any country standing outside of that – including Britain – will be marginalised.

American attitudes are nothing compared to those of powerful European countries such as Germany. Gunther Krichbaum, a key CDU ally of Chancellor Merkel, warned of economic disaster for Britain if she stood outside the single market. Just as British Tory euro-sceptics are vigorous in their call for ‘renegotiation’, so most European players are equally determined that Britain cannot keep treating the EU as a la carte.

Mr Cameron is more Euro-sceptic than Sir John Major. Yet he also appears to be a less effective diplomat. Andrew Rawnsley, in a thoughtful piece for the Observer on Sunday, recalled Major’s tenacious and canny diplomacy (“a gentleman”, according to one of his European adversaries, Ruud Lubbers), which yielded the opt-outs of the Maastricht Treaty.  But, as Rawnsley reminds us, such opt-outs benefited Major not a bit, as he watched his 1992 election triumph dissolve into the ashes of a disastrous party war.

David Cameron is not, as I’ve noted before, a leader with deep roots in the Conservative party. It is something that isolates him, and it would be foolhardy of him to think that he can ride the Euro-sceptic bandwagon. Europe wins few votes amongst the British electorate, but a perception that Britain is an isolated, marginal figure in world affairs does resonate, and in appeasing certain MPs, Mr Cameron is heading in that direction.

He should leave Europe alone, and appropriately enough on the day of the launch of a new book about Tory modernisation, look to reinvigorating a domestic One Nation policy. Therein lies our real chance of reversing decades of Tory electoral decline.

Follow Giles on Twitter @gilesmarshall

Procrastination, prevarication & paralysis: an idiot’s guide to the Eurozone crisis

Henry Hopwood-Phillips 9.46am

I always thought that the EU had secured the winning hand.

In success, it could boast that its social democratic model, inching towards fiscal and ultimately political union, had created a permanent and enlightened route to general prosperity. In failure, the globalised proportions of its wreckage would ensure that only its supranational intervention could offer succour.

Yet the EU’s problem is that its chief creditor, Germany, has been thinking like a nation, rather than a supranational overseer. It is not that Germany is not willing to play paymaster to a transparently political project. Rather, Germany resents the fact that beneath the surface, economically the EU project resembles a cheese grater.

ClubMed, eager to ignore the holes, yearns for closer political unity because of the accompanying German credit card.

The Germans, not wanting to subsidise the European periphery forever, has suggested mandatory terms and conditions and requested appropriate collateral in return for pooling proportions of debt, privatisation, teutonic budgetary discipline, and flexible employment laws. ClubMed baulks at the small print.

The tension between German realism and Mediterranean myopia is painfully apparent. Angela Merkel has said that under no circumstances would she consider Eurobonds. Italy’s ex-prime minister, Silvio Berlusconi, retorts that if Germany continues to prevent the ECB from printing money she should quit the euro. Italy’s current leader, Mario Monti, tells the German chancellor that “six decades of integration are at stake”.

In the past, at least, political obfuscation of economic realities was intelligible while the the direction of the EU’s hopes was centripetal. However, with the EU’s economically strongest member now in direct confrontation with the rest, the outcome of the crisis is far from predictable.

The impending Spanish bank bailout ought to be as conventional as a banking crisis can be, following a relatively simple process. Nonetheless, foreign investors are shunning the prospect - not just because they believe the books are cooked but because how they might be cooked is no longer discernible. An efficient and free market should not be run on fiddled facts but it routinely is. Cynicism does not ruin markets on its own. Rather confusion over the target and form of that cynicism, as with the current EU chaos, appears to. It certainly paralyses credit flows, meaning that Spain is now required to spend $600,000 to insure merely $10 million of debt.

The president of the ECB, Mario Draghi, has identified the systemic weaknesses and trends and said it cannot continue, recently describing the Eurozone as “unsustainable”.

Exasperation is noticeable even in the EU’s own reports. Its top brass has informed the new French president, Francois Hollande, that the economic assumptions behind his budget plans are “optimistic”, measures to hit budget targets “not sufficiently specified”, and France’s record on meeting past targets has been “mixed”.

In this febrile climate, the technical solutions suggested in answer to the European crisis - from a ‘Grexit’ to Eurozone deposit schemes - seem to me to be superfluous. At this pretty pass the repair of the EU body seems more dependent on the cogency and cohesiveness of its soul than any mere physical tinkering.

The eurozone crisis: what Cameron & Osborne must do next

David Cowan 4.29pm

Eurozone leaders have announced a new 109 billion bailout package for Greece, which includes restructuring Greece’s national debt and inflicts further cuts to public spending. Money markets have rallied but the fear is that this cannot last. Meanwhile, Westminster remains mesmerised by the hacking scandal.

Ireland and Portugal have already been bailed out. Greece has now been bailed out twice. Italy is teetering on the edge of collapse and Spain looks risky - bond markets remain turbulent. A new European rescue fund is reported to have $464 billion ready to defend these two countries should markets scramble. If any of these eurozone countries fall to an uncontrolled default then financial contagion could spread right across the continent, cause the eurozone’s collapse and unleash a new global recession.

I think that a default in one of these countries is now inevitable. Bailouts can only prolong the wait. This leaves only one viable option for the PIGS: a controlled default outside the eurozone. New currencies (or re-introduction of old ones) would allow exchange rates to fall to more realistic levels and permit an economic recovery based on increased exports. Once recovery was secured and necessary reforms were implemented in order to comply with the Stability and Growth Pact’s original 3 per cent cap on deficits, such nations could return. However, as President Sarkozy has said that the word ‘default’ (or defaut) is not in his vocabulary, this option appears to be off the table.

The Government seems to have a new EU policy, outlined by David Rennie in this week’s Economist:

Thanks to a great scoop by George Parker of the FT, it is clear the government now believes the following: (a) a big leap towards fiscal union is the only way of saving the single currency, (b) Britain has a strong interest in the survival of the single currency, (c) Britain must play no part in bailing out the single currency and will stand aloof from fiscal integration, thus (d) our national interest now lies in allowing Europe to divide into markedly different zones of integration, with us on the outside.

Whereas eurosceptics such as Bill Cash and Daniel Hannan are clamouring for a radical renegotiation of the UK’s membership of the EU, such changes are unlikely as long as the Conservatives govern in coalition with the Liberal Democrats. However, David Cameron does risk a Conservative backbench rebellion if he does not take some advantage of the situation, particularly when one considers that the 2010 intake of Tory MPs is the most rebellious since the Second World War.

The European Commission’s budget proposals - an unrealistic 100 billion euros increase - could offer the best opportunity for Mr Cameron. At a time of budget cuts across Europe, the Government must demand a 10 per cent cut to the EU budget over the next budgetary cycle (2014-20). In return, there should be negotiations about revenue raising powers for the EU. A VAT increase or new Tobin Tax should be ruled out in favour of options such as replacing the EU Emissions Trading Scheme and carbon price floor with an EU-wide Carbon Tax (see my previous post).

William Hague should also push for a Single Market Act. This could be the greatest supply side reform in EU history by significantly reducing regulations, regulatory bodies, quangos and unnecessary bureaucratic obstacles (see also Nik’s article in March about Tory Reform Group MPs demanding EU deregulation). We must help to liberalise the European economy to enable it to become more productive, dynamic and innovative.

David Cameron envisages an EU that allows the free movement of goods, capital, services and labour, and where there is multilateral co-operation over global trade, the promotion of human rights, international aid and tackling climate change. As the 2010 Conservative manifesto makes clear, this does not include oversight of social policy or the rule of law.

The eurozone crisis is both a huge threat to the UK economy and the greatest opportunity for genuine, lasting reform in Europe. Let’s hope that the Prime Minister and his Chancellor face down this threat and grasp the opportunity in front of them.

Follow David on Twitter @David_Cowan

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