Cameron must not let this crisis go to waste

2 July 2015

1:00 PM

2 July 2015

1:00 PM

Few European leaders have been luckier than David Cameron. First he was sent Ed Miliband. Now events in Greece may be about to present him with a solution to the thorniest problem of his second term: how to negotiate a new form of EU membership for Britain that the Tory party can rally behind come the referendum.

The Prime Minister’s critics delight in claiming that his European problem is of his own making. Two years ago, he promised a referendum on EU membership before the end of 2017. But he couldn’t have survived without making such a pledge. It was his way of stopping his party arguing about Europe; without it, he could not have gone into the election claiming that he led a united party. It was also a way of wooing back those Tory voters who had gone to Ukip — without Cameron in No. 10, they could be told, there would be no referendum. Tory MPs in marginal seats say that the promise was a great help in their efforts to squeeze Ukip support in the final days of the campaign. Still, that won’t make the coming referendum campaign any easier.

Last week, Cameron was confronting the challenges he will face in the coming months. First, he had to concede that there was not enough time for him to achieve actual treaty change before 2017. Instead, he would have to go to voters with details of the reform that has been promised but not yet approved. All of this makes the case for a further confirmatory referendum. The Prime Minister has also sketched out his list of demands, which has underwhelmed many Tory MPs. There is much grumbling that he isn’t sticking with all the reforms he set out two years ago.

Finally, there is the No campaign. A few weeks back, the No side looked like being the Prime Minister’s ideal opponents. Nigel Farage and Ukip were threatening to scare off moderates from other parties. The campaign was preparing for a pitched battle on ground of Cameron’s choosing, a straight in/out fight come the referendum. But the arrival of Dominic Cummings, the man who led the successful push to keep Britain out of the single currency, has changed all that. Cummings plans to fight a guerrilla war. He is busy going around London explaining to people that a No vote wouldn’t mean that Britain would be straight out of the EU. Rather, it would just be a rejection of the deal that Cameron had negotiated.

This makes backing No much more appealing to those who would like to hurry Cameron out of office — those close to him say that the Prime Minister would like to leave No. 10 in late 2018 or soon after — but aren’t so sure about leaving the EU. It is perhaps telling that Boris Johnson is said to be flirting with the idea of voting No, safe in the knowledge that another vote would follow before Britain actually quit.

But the consequences of events in Greece could offer Cameron a way out. Eurozone leaders have been clear that if Greece votes No to the bailout in Sunday’s referendum it is voting, in effect, to leave the euro. At the time of writing, it is impossible to predict with any confidence what the result of the ballot will be — or even whether it will take place. Any vote is likely to turn on who the Greeks blame for the banks being shut and strict capital controls being imposed: their government or its creditors? Equally important will be whether they believe Syriza’s argument that No wouldn’t mean Greece leaving the single currency, but would instead strengthen its negotiating hand.

One factor that shouldn’t be underestimated is the emotional pull of the word ‘No’ — όχι. The Greeks have an annual ΌχιDay, which marks the rejection by Prime Minister Metaxes in 1940 of the Axis powers’ demand to be let into his country. Syriza is calculating that saying no to the demands being made by the German government in Berlin and the European Central Bank in Frankfurt will have a patriotic pull. Those who have repeatedly told us that European integration is the way to deliver peace and stability across the continent should reflect on how the straitjacket of the single currency is stirring up old animosities.

A Greek departure from the single currency would force the eurozone to change dramatically. It would have to move fast to integrate further if Portugal, Spain, Italy and even France are not to be pushed towards the euro exit the next time a fiscal crisis hits. (There is a reason why Paris is trying so hard to broker a last-minute deal for Greece.) This may well require a new treaty to complete economic and monetary union.

Such a development would in turn give Cameron, armed with the British veto, greatly increased negotiating leverage. The crisis would force the EU to accept that the dream of Europe-wide integration is now dead. What is more, the huge number of Greeks who would leave the country to seek work elsewhere in the EU would further test other countries’ commitment to the principle of freedom of movement, making it more likely that Cameron could win concessions on immigration — the aspect of EU membership that most concerns the public.

Cameron’s defenders would argue that, when people call him lucky, what they actually mean is that he seizes his opportunities. But so far he has shown a marked reluctance to take advantage of Europe’s troubles to secure a better deal for Britain.

Politicians are fond of quoting the words of Barack Obama’s former chief of staff Rahm Emanuel: ‘You never let a serious crisis go to waste.’ Emanuel’s next line, however, is even more apposite: ‘And what I mean by that, it’s an opportunity to do things you think you could not do before.’

Should Greece be forced out of the euro, Cameron would have a glorious opportunity to craft a looser form of EU membership. He could prevent a split in the Tory party over Europe and settle the question of Britain’s position in the EU. He must seize his chance.

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