Adrian Hamilton: A democratic disgrace crafted by cowards

As a committed European – indeed, I would even own up to having urged our joining the euro at its inception – I can only call what European leaders are now up to as a complete democratic disgrace.

There is no mandate in any of the countries for the kind of wide-ranging changes in sovereignty being proposed. There is no indication that it is what their populations want. It does nothing for growth or any of the concerns of the populations of the member countries. And, what is worse, there isn't even any firm indication that it will work.

This has nothing to do with the argument over whether Britain is now going to be isolated or whether Cameron exercised his right of veto out of concern for our national interest or fear of his own backbenchers. It's not even about whether France outmanoeuvred Britain or the other way round. Summits always arouse that kind of discussion and analysis. But in this case they are simply the gyrations of politicians who don't know what to do about the markets and aren't brave enough to exercise statesmanship.

It's all very well criticising David Cameron for being too terrified of his backbenchers to work to the common interest. He has been. But what else has Nicolas Sarkozy been up to, with his wild declarations of a future federalist Europe? And how do you explain Angela Merkel's dogged refusal to allow the ECB to act as lender of last resort or full-blooded expansion of the bailout funds other than as the caution of a provincial councillor facing re-election? Little wonder the Italians and the Greeks prefer government by technocrat to elected representatives.

Contrary to the hysterical pronouncements that preceded this summit, the crisis of Europe is not primarily about the eurozone and its debt. It is much wider than that. It is the challenge that the US, Britain, Japan and every other major advanced economy is facing at the moment. The happy days of unrestrained growth, the longest period of sustained increases in national wealth in a century, are over. Stagnation is the order of the day, a dip back into recession a real possibility, and the dark days could last years, if not a decade. In the meantime, you have all the strains of a global economic architecture being restructured in favour of the newer powers of the East. The strains on the eurozone are the consequences, not the causes, of Europe's woes.

What the public wants to know, or at least feel, in this new world is what its leaders are going to do at least to prevent things from getting worse, ensure that the pain is more equally distributed and seek co-ordinated action to try to get growth back into the system. The discussions in Brussels addressed none of these issues. Instead they turned the persistent fears of the markets over sovereign debt into a crisis that demands the hasty erection of a vast new building to overawe them.

But, if it is the markets you are worried about, then it is financial measures you need to respond to them, whether in the form of ECB purchases of debt, the building of a massive bailout fund or the involvement of the IMF. If it is the difficulties of countries funding their debt at reasonable rates which need addressing, then it is perfectly possible to ensure that each tranche of bonds is bought without getting into a panic over total sizes. The regular rollover of debt and new issues are not beyond the resources of Europe to cope with.

The trouble with the new deal agreed yesterday by eurozone leaders, and most of the would-be entrants, is that it involves fundamental constitutional change proposed – not out of a vision for a future Europe but out of the failure to get to grips with the market crisis early enough or with sufficient firepower. A problem of over-indebtedness has turned into a panic over the capital of the banks. A collapse in investor confidence in sovereign debt and the risk of default have been turned into a demand for fiscal integration of the eurozone on the optimistic ground that this way no one can get indebted and the banks will all be repaid.

Yet there is not the faintest evidence that the people of the eurozone want constitutional change of this kind. Just the opposite is the case. Anyone going round Europe today must sense that nationalism is on the increase, even in France. So is disenchantment with political leadership and with Brussels. Forcing the citizenry into ever greater austerity and lower growth at the behest of Germany and policed by the European Commission is not a way to re-establish trust in government or, indeed, the ideals of a closer Europe.

If that is what Merkel and Sarkozy really want, let them put it to the test by holding referendums. Then they will have the right to introduce such a loss of national sovereignty. Bouncing your countries into such change because you say the markets demand it is totally undemocratic.

As for dear old Britain, if it is now marginalised, it is entirely its own fault. Had David Cameron played a constructive part in building up the bailout funds and increasing the involvement of the IMF instead of just demanding eurozone action from the sidelines, he might now be in a better position to prevent this leap into the dark. As it is, he was probably right to veto the general change in the overall treaty. Indeed, he had little choice in the end. But now it's not only that we will be left on the margins. The worst of it is that when things do go wrong, it will be Britain that will get the blame.