John Rentoul: In? Out? Where's the third way when you need it?

David Cameron's European policy is so contradictory he doesn't even agree with himself. But logic and Europe have often failed to converge

Share

It has taken two years, but David Cameron's European policy is now clear. Unfortunately, that does not mean that it is a good policy. Nor does it mean that it no longer contradicts what the Prime Minister privately believes. It does, but it is clearer now what he is up to and why he disagrees with himself.

The puzzle of the Government's policy is that its leading members, Cameron, George Osborne and William Hague, do not believe that the euro can work. They have a belief, founded in economics, forged in Thatcherism and fortified by their humiliation by Britain's ejection from the European exchange rate mechanism in 1992, that "there is no way in which one can buck the market". The ERM failed because its constituent economies had not converged enough, and movement of labour, which makes the giant US currency union work, was not sufficiently free.

For them, the creation of the euro was a doubling on that original error. It removed the immediate threat of speculative attack on a currency, but failed to deal with the structural imbalances, thus ensuring that the eurozone would have to break up at some point. I suspect that they are right, and that the alternative view – that the single currency would itself force economies to converge enough to make it work – is mistaken.

Why, then, did Cameron go to another summit in Brussels last week to support the fiscal union, the banking union and, in principle, the political union of the 17 members of the eurozone, but to trumpet Britain's exclusion from it all? The answer is that Britain's influence in Europe is weak, and the commitment of the 17 to the euro is strong. Really strong. And it is not as if the other nine members of the EU outside the eurozone are sure that the currency is a bad idea. Cameron is outnumbered and has to calculate how to deal with that.

He is also hemmed in at home, just as the last Conservative Prime Minister was. John Major had to balance sceptics and pro-Europeans in his party. Although the Tory party has moved since then, leaving only Kenneth Clarke as a Cabinet pro-European, the Liberal Democrats make up the difference. Hence the policy of "European political union for the others but not for us". This is a transparent device to hold together the two wings. Everyone seems to agree that the euro can work only if there is political union. For the sceptics, this is their argument against it. For the pro-Europeans, this is a goal for which they strive. Or an option, at least, which they want to keep open for Britain.

Actually, the policy does not fully cover the sceptics' position. Even a fully-fledged United States of the Eurozone does not guarantee that the single currency would work, because it does not make the economies converge, and it does not instantly make the movement of labour freer. The sceptics really believe that the main European economies need their own currencies, which could find their own value against each other.

That is not likely to happen soon, however, and in the meantime a political union would allow German taxpayers to support the weaker economies of the eurozone for some years.

The importance of last week's summit was that it edged a little – but only a little – in that direction. It means that German taxpayers will continue to sustain the unsustainable for a bit longer, as Hamish McRae argues on page XX.

This was particularly significant because Angela Merkel had repeated her warning that "not even Germany's strength is unlimited" just before the summit, and yet she agreed to a compromise which seemed to pledge more of that strength to stand behind Spanish and Italian banks. Merkel's warning stands, however: that, if the rest of the eurozone demands too much of Germany, "then everything we are planning, agreeing, implementing would ultimately be worthless".

That seems all too likely, to put it crudely, but Cameron cannot say it. He would gain nothing by telling our European partners that they ought to dismantle the euro and start again. Thus he tries to make a virtue of a contradiction, which is that we are part of something we do not really like but over which we have no influence.  

The trouble with being a "practical Eurosceptic", which is what the Prime Minister declared he was in Brussels last week, is that it means that Britain should be semi-detached for ever. And it means an unstable balancing act at home. At his post-summit news conference in Brussels, Cameron said that he did not agree with an in-out referendum on Britain's membership of the EU because it would offer "only those two options".

He prefers the third way, of being neither in nor out. That was a halfway house that Tony Blair could sustain, because he thought Britain's "destiny" was to be "in". But "neither in nor out" does not look like leadership, or even a policy. It looks like indecision.  

Maybe that accurately reflects what this country wants, or what we have to settle for, but it doesn't provide much of an idea of what we want from Europe in future, and it guarantees the permanent distrust of our European partners.

twitter.com/@JohnRentoul; independent.co.uk/johnrentoul

React Now

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
iJobs Job Widget
iJobs General

Scrum Master (Agile, Java, team recruitment)

£45000 - £60000 Per Annum + benefits: Clearwater People Solutions Ltd: Scrum M...

Junior Asset Manager

£25000 - £35000 Per Annum: The Green Recruitment Company: Job Title: Junior As...

HR Generalist (standalone) - Kent - £30,000

£28000 - £30000 per annum: Ashdown Group: HR Generalist / HR Officer (standalo...

Oracle Developer/IT Analyst

£35000 - £36000 per annum + benefits: Ashdown Group: A market leading financia...

Day In a Page

Read Next
Jennifer Aniston has said it's 'not fair' to place the pressure of motherhood on women  

Like Jennifer Aniston, I am no less of a woman because I am childless

Rachael Lloyd
 

i Editor's Letter: The persistence of a privately educated elite

Oliver Duff Oliver Duff
Israel-Gaza conflict: No victory for Israel despite weeks of death and devastation

Robert Fisk: No victory for Israel despite weeks of devastation

Palestinians have won: they are still in Gaza, and Hamas is still there
Mary Beard writes character reference for Twitter troll who called her a 'slut'

Unlikely friends: Mary Beard and the troll who called her a ‘filthy old slut’

The Cambridge University classicist even wrote the student a character reference
America’s new apartheid: Prosperous white districts are choosing to break away from black cities and go it alone

America’s new apartheid

Prosperous white districts are choosing to break away from black cities and go it alone
Amazon is buying Twitch for £600m - but why do people want to watch others playing Xbox?

What is the appeal of Twitch?

Amazon is buying the video-game-themed online streaming site for £600m - but why do people want to watch others playing Xbox?
Tip-tapping typewriters, ripe pongs and slides in the office: Bosses are inventing surprising ways of making us work harder

How bosses are making us work harder

As it is revealed that one newspaper office pumps out the sound of typewriters to increase productivity, Gillian Orr explores the other devices designed to motivate staff
Manufacturers are struggling to keep up with the resurgence in vinyl records

Hard pressed: Resurgence in vinyl records

As the resurgence in vinyl records continues, manufacturers and their outdated machinery are struggling to keep up with the demand
Tony Jordan: 'I turned down the chance to research Charles Dickens for a TV series nine times ... then I found a kindred spirit'

A tale of two writers

Offered the chance to research Charles Dickens for a TV series, Tony Jordan turned it down. Nine times. The man behind EastEnders and Life on Mars didn’t feel right for the job. Finally, he gave in - and found an unexpected kindred spirit
Could a later start to the school day be the most useful educational reform of all?

Should pupils get a lie in?

Doctors want a later start to the school day so that pupils can sleep later. Not because teenagers are lazy, explains Simon Usborne - it's all down to their circadian rhythms
Prepare for Jewish jokes – as Jewish comedians get their own festival

Prepare for Jewish jokes...

... as Jewish comedians get their own festival
SJ Watson: 'I still can't quite believe that Before I Go to Sleep started in my head'

A dream come true for SJ Watson

Watson was working part time in the NHS when his debut novel, Before I Go to Sleep, became a bestseller. Now it's a Hollywood movie, too. Here he recalls the whirlwind journey from children’s ward to A-list film set
10 best cycling bags for commuters

10 best cycling bags for commuters

Gear up for next week’s National Cycle to Work day with one of these practical backpacks and messenger bags
Paul Scholes: Three at the back isn’t working yet but given time I’m hopeful Louis van Gaal can rebuild Manchester United

Paul Scholes column

Three at the back isn’t working yet but given time I’m hopeful Louis van Gaal can rebuild Manchester United
Kate Bush, Hammersmith Apollo music review: A preamble, then a coup de théâtre - and suddenly the long wait felt worth it

Kate Bush shows a voice untroubled by time

A preamble, then a coup de théâtre - and suddenly the long wait felt worth it
Robot sheepdog technology could be used to save people from burning buildings

The science of herding is cracked

Mathematical model would allow robots to be programmed to control crowds and save people from burning buildings
Tyrant: Is the world ready for a Middle Eastern 'Dallas'?

This tyrant doesn’t rule

It’s billed as a Middle Eastern ‘Dallas’, so why does Fox’s new drama have a white British star?