Kieran Lawrence looks at autonomous weapons and the effect they could have on modern warfare
Continuing a series on world leaders, Miles Deverson takes a look at Angela Merkel
Ben Bland examines the fallout from the Iowa caucuses and looks forward to the New Hampshire primaries.
In the first of a series on world leaders, Miles Deverson takes a look at Nicholas Sarkozy
Cameron’s veto certainly wasn’t ideal, but apocalyptic cries of disbelief go too far.
Early on Friday morning, Cameron revealed he was ‘vetoing’ a new European treaty. You can read more about what went on in Brussels in The Yorker’s article ‘What on earth is going on in Europe?'
Politicians from both side have been trying to shape the debate: Nick Clegg has said that the result is bad for Britain", leaving it "isolated and marginalised". Cameron for his part has said that it is “better not to have a treaty within a treaty” and that Britain is “better off” out. Both sides of the debate have been quick to describe this summit as either a monumental failure or a decade-defining success. In truth it is neither.
David Cameron was right to go to Europe and ask for concessions for the British financial services industry. According to a study by PWC, over 10% of all British tax receipts come from the Financial Services industry, approximately £53 billion in 2010 - that is more than the total amount the government spends on defence and over double the transport budget.
In an age of austerity, Britain simply cannot afford to put that income at risk through over-regulation, particularly as the big British banks and insurers are being wooed by cities in the US. Whilst it may not have been a priority in Europe, whose traditional regulatory framework has been a lot stricter than the Anglo-Saxon model, for the continent to get Britain on board with a deal which is crucial to their economy, it is right that Britain expects protection for industries which are crucial to its economy.
Talks of a ‘two-speed Europe’ also seem exaggerated, the agreement focuses on deeper tax and spending integration based on the German model of low government debt and low inflation driving growth. Yet this fails to deal with the current issues surrounding the Euro and whilst support for the IMF and the ECB “stability mechanism” (enshrined in the agreement) will give European countries some time before the market descends on them, it cannot stave off the problem.
It is not just government debt which got the ‘PIIGS’ (Portugal, Ireland, Italy, Greece and Spain) into problems, it was private debt too. In other words, it wasn’t just governments who were living beyond their means; it was companies and households too. All of the ‘PIIGS’ had debts to foreigners that equalled their total yearly income. That’s not sustainable and the foreigners will still want their money back at some point. With the Eurozone placing itself in a spending straightjacket, the reality might be that in a two-speed Europe, Britain can be in the fast lane.
But that does not mean that using the veto was either inevitable or helpful. As Bagehot points out in the Economist “a true veto stops others from doing something you dislike”, but Cameron could not stop the other 26 countries making a deal behind his back. That agreement will no doubt cause Britain to lose some short term influence in Europe, particularly as Cameron seems to have lost trust with the two key players in Europe: Merkel and Sarkozy. What’s more is that Britain has been frozen out of the monthly meetings between those who did sign the treaty, which will carry on until the Euro crisis abates. We may well come to regret that, as decisions made in those meeting will have a profound effect on the British economy.
Furthermore, Cameron has not got protection for the City of London. With the EU adopting what’s known as Qualified Majority Voting for almost all votes in 2014, there is a real risk that European-wide financial regulation could be introduced regardless of the British opinion despite the fact that the UK will be most affected by that decision. Indeed by not signing this treaty, Cameron has isolated himself from those who may have been willing to join with the UK to block such a move.
In the long term however, I believe this agreement can work for Britain. With the Eurozone placed in a low growth straightjacket, Britain has a chance to develop a strong, mixed economy which can stand out in Europe. Furthermore, even without UK backing, this treaty is likely to bring Euro exchange rate stability, which will delight British exporters. The main risk for Britain remains the threat of excessive European regulation being passed through the back door, destroying the UK financial model which is so different from the continent. If Cameron’s actions go down in history as a failure, it won’t be for the use of the veto, it will be for failing to protect the City of London in the long term.
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