Adrian Hamilton: The public must have a say in any euro deal

International Studies

If the world wants real political leadership from Europe – and they all do, from the markets to the US President and Chinese leaders – then they ought to understand the politics of the place. It's no good acclaiming the virtues of democracy in Libya and then turning round and demanding Germany and the governments of Finland, Slovakia and everyone else steams ahead with plans inimical to their own voters.

It may be the art of statesmanship to lead your populace rather than follow lamely their prejudices, but it is totally self-defeating to ask elected leaders simply to ride rougshod over the clear will of their own electorates. Yet that is what the markets, and President Obama and his Secretary of State and Treasury Secretary and, for that matter, David Cameron, are demanding of the EU. What they want, what the financial markets always want, is some clear action on debt which allows the funds and the institutions to play their bets within set rules. For all their espousal of the virtues of free markets, there is nothing that the players of finance hate more than total uncertainty.

Fair enough. It's what anyone who has a pension, fears for their job or needs to borrow wants at the moment. The problem is that the solution they demand – for governments to step in with a guarantee against default – is at the expense of taxpayers none too keen on spending their hard-won savings to bail out the profligate, especially when the commitment seems open-ended.

The more Europe's leaders try to force a huge increase in the size of the bailout, the more they attempt to get around the technical and legal problems by bringing in the European Central Bank and the IMF, the more perverse the whole operation has seemed to the public. It's no good talking, as the Commission President, José Manuel Barroso, did in his state of the union address yesterday, of the solution being an ever more integrated Europe with common economic governance.

Of course the Commission would like more power and Barroso would like more authority after his nose was put out by the appointment of an EU President. But it's not what the voters want, even less today than before. The euro crisis has turned the north of Europe against the south and the periphery against the centre. Northern Europe feels that the EU is blowing its money away in a hopeless attempt to shore up the eurozone; southern Europe feels that the EU has become the instrument of a mad form of monetarism that is determined to starve them into a condition of servitude. There is no faith in the EU as an institution and certainly not in the idea of greater integration.

It need not be the end of the story so far as the eurozone or the Union is concerned. Most people instinctively feel that, the bigger the crisis, the greater the need for a wider response. But any solution is going to have to start with public opinion, not ignore it. That should mean an early default by Greece. It has spent too much and can't meet its obligations. Those with money (mainly the Germans) would now rather bail out their own banks than Greeks who won't pay their taxes. Nor can the Greeks themselves ever hope to lift their heads up again under this yoke of tightening austerity.

Whether Greece can be kept within the euro or helped to exit is a secondary problem. Angela Merkel and Nicolas Sarkozy are wrong to say it's a great matter of principle and consequence. The current situation, in which talks still go on about a second tranche of aid while everyone knows that it is just biding time until a default can be managed, only serves to make things worse.

In the same way, raising the prospect of a tripling or quadrupling of the European Financial Stability Facility to two or three trillion euros, when the first tranche hasn't even been approved by all parliaments, is just asking for trouble from member countries.

It may be necessary to increase the Fund and for the European Central Bank to extend its bond purchases to keep the show on the road. But what the EU, outside as well as inside the eurozone, needs to do if it is to sell a rescue package to the public is to come up with an agreed strategy, and the funds for growth, that the voters would buy. But then it is something they've barely started to consider.

All the world's a stage for Cameron

Like all prime ministers, David Cameron has taken to the international stage with relish. He can afford to, as the Libyan venture seems to be finally coming right and the eurozone's problems don't – as he keeps repeating – directly involve us. Still to go on, as he did over the last week in speeches about humanitarian intervention and the need for urgent action over the euro, does smack of smugness if not complacency.

What's he up to? World leadership? Not when he has no intention of sending British troops to Syria or of offering British funds for a eurozone bail-out. But then that's the point. We are in the realms here of performance for performance's sake and also something traditionally Tory.

Cameron isn't a high Tory or a right-winger despite the accusations to the contrary. He's a conservative who thinks he and his party have a right to rule and considers the job as just getting things to tick along, whatever direction they take. It's a relief after Thatcher, of course. But international affairs demand both judgement and commitment. Standing on the sidelines telling others what to do isn't either.

a.hamilton@independent.co.uk