British prime minister David Cameron has promised a big speech later this month, where he will set out his government's view on Britain's relationship with Europe. According to Mr. Cameron, the EU is about to change in significant ways, becoming more integrated in order to mend the structural problems created by the euro zone crisis. Just as the euro zone member states needed changes, he suggests that Britain, too, has a right to ask for changes in its relationship to Europe.
Unfortunately, this is hogwash, and Mr. Cameron must know that he is holding a losing ticket. He can ask for, and may even get, a few small concessions from the club, but with regard to a root-and-branch renegotation of Britain's membership, the EU has already called his bluff. Jacques Delors, the former EU commission president, suggested in a recent interview with the German newspaper Handelsblatt that Britain should retreat to a looser trade association with the EU, similar to Norway or Switzerland. The EU grandee said that Britain's only interest in Europe was economic and it was therefore appropriate that it quit full EU membership. Mr. Delors' intervention was beautifully timed, as it will now force Mr. Cameron off the fence and into the proper debate. He must say whether he believes Britain's best interests lie within or without full EU membership.
The Delors proposal sparked much ignorant speculation that the Norwegian option might be attractive – free trade with Europe without paying for the Common Agricultural Policy and without compliance with EU social and employment regulations. No one bothered to ask the obvious question: why would the core euro-zone states allow British businesses to compete freely in European markets if they were not bound by the same social obligations? No French or German competitor would tolerate such an unfair playing field.
Britain will get no cosy access to Europe's markets – keeping the door open will mean compliance with every stricture of the EU's internal market while playing no part in writing the rules. A free-trade pact could be a disaster for Britain's financial markets, as the U.K. would simply watch while euro zone financial institutions erected new financial structures and regulations to the benefit of businesses based in Frankfurt and Paris, rather than London.
Lurking behind the fantasy of a semi-detached Britain in the EU lies the continuing assumption that the euro zone will eventually collapse, removing the need for further EU integration. The assumption that a collapse is inevitable rests on the misunderstanding that the euro zone is an economic project; in fact, the euro's purpose is plainly political. Too many powerful leaders and institutions depend on the euro's survival in too many countries for it to be abandoned. What has been striking over the past year of patchwork sovereign rescues has been not the level of social unrest in the troubled euro-zone states, but the relative calm. Only Greece has experienced riots and street disorder on any scale. In Spain, where unemployment is 25 per cent, there has been no significant unrest, much less serious political challenge to the established order despite the mounting pain of austerity measures.
Britain's choice is not as good as Mr. Cameron would like to paint it. He finds himself excluded from the high-stakes card game now being played in Brussels. Ignored by the inner circle of gamblers who are focused on the next bet, he will just have to wait until the game is over, when the winner might begin to pay him some attention.
Carl Mortished