Not so long ago, in the wake of David Cameron’s decision to leave talks on deepening EU governance, I accused the British Prime Minister of forgoing willing allies in Central Europe in order to advance narrow interests. Europe had a unique opportunity to grasp a desperate situation and reform the institutions of the European Union. After all, Britain’s austerity drive should not render her opposed to an EU keen to control the spending of others, particularly when the instability of the Eurozone has been a key factor in her lack of growth.
Well, incomprehension of Britain’s position did not last as long as might have been expected. The German Chancellor, Angela Merkel, stated that she wanted Britain to play a role in the Union’s economic governance, while even Nicholas Sarkozy has been able to do business on defence integration in the past weeks. Now Britain is engaging again. On the eve of a summit to discuss progress on Greece, twelve heads of government have written to the EU Presidents to lay out their plans for promoting growth.
Letter of 12 EU states on growth is here. db.tt/SBch95IE—
EconomistCharlemagne (@EconCharlemagne) February 20, 2012
A good selection of ideas and personalities are represented; the Poles, Czechs, Balts and Slovaks are represented in a drive for energy integration, in order to prevent the threat of bilateral deals such as that between former German Chancellor Schroeder and Vladimir Putin or the Gas Wars between Ukraine and Russia that effectively shut off supply to Eastern Europe in the winter of 2009. A Swedish-British drive to remove barriers to green technology is attached to that.
Much of the letter concerns liberalisation of one form or another; the deepening of a common market in services, common copyright laws and the removal of regulations. The group also want the EU Commission to “publish an annual statement identifying and explaining the total net cost to business of regulatory proposals issued in the preceding year.” An anti-banking thrust, of sorts, is also present, with calls to increase liquidity and capital standards. Given that Britain, Italy and much of Central & Eastern Europe (the Vienna Group) are the most afflicted by banks in need of bailouts, these proposals are coming from the right quarters.
What the letter is silent on, however, are the very issues that are most pressing; debt and Greece. While Eurozone Nations are struggling to borrow, and this applies also to those tied to the Eurozone as much as those in it, imports are going to be harder to come by and more expensive, whatever the results of the proposed “deepening economic integration with the US, trade and investment relations with Russia and a strategic consideration of China.”
The twelve outliers, basically anyone but Merkozy, are constrained by a lack of money and the inevitable political battles that will delay and follow any decision. Rolling out broadband, one of the few spending proposals, is in danger of entanglement with proposals to introduce the controversial Anti-Counterfeiting Trade Agreement (ACTA), which has already brought thousands onto German and Polish streets, much to the surprise of its writers.
Convincing Germany of the benefits of a deregulating European Union would cement a coup for the twelve signatories to this letter, but that looks far away. As a piece of political theatre, it is neutered in comparison to Radek Sikorski’s famous speech in Berlin last year. All in all, Britain’s return to the fray does not give it the appearance of having any more heft.
Signatories to the Letter to Barroso and van Rompuy
David Cameron, Prime Minister of the United Kingdom
Mark Rutte, Prime Minister of the Netherlands
Mario Monti, Prime Minister of Italy
Andrus Ansip, Prime Minister of Estonia
Valdis Dombrovskis, Prime Minister of Latvia
Jyrki Katainen, Prime Minister of Finland
Enda Kenny, Taoiseach, Republic of Ireland
Petr Nečas, Prime Minister of the Czech Republic
Iveta Radičová, Prime Minister of Slovakia
Mariano Rajoy, Prime Minister of Spain
Fredrik Reinfeldt, Prime Minister of Sweden
Donald Tusk, Prime Minister of Poland
