Yesterday, as the fallout of the UK’s EU treaty opt-out continued, William Hague quietly flew off to the US for talks with Hillary Clinton. There has been much said about the raucous reaction of the Tory backbenches to Cameron’s treaty revolt, but it would be fascinating to hear what Barack Obama and Clinton think about the UK’s turn towards European isolationism. For it is in our relationship with the US and the world’s growing superpowers like China, India and Brazil where the pain of this fiasco might be felt the most. For all its institutional malaise, the long-term diplomatic momentum is still with the EU, not individual member states and it is folly for the coalition government to think Britain can stand alone in an increasingly multipolar world instead of being a powerful player in the European Union.
The eurozone crisis has not been resolved, although the EU’s other 26 member states have taken steps towards securing the economic union. What has changed is that the UK no longer has a say in the direction of Europe and how it will address this near-existential crisis. And what do we get in return for relinquishing our position as a core decision-maker of what is still politically and economically one of the three most powerful players in the world? First, the City of London is protected from external regulation and the potential imposition of a Financial Transactions Tax. For a sector which generates huge wealth for the UK, four times as much proportionately as Wall Street does for the US, this is arguably an important concession won by David Cameron. Second, as the other 26 EU member states move towards greater fiscal unity, the Treasury will be left free to tweak fiscal as well as monetary policy to try to keep the UK economy out of the red. But both of these summit ‘wins’ are short-term economic plus points which help to mask what was a deeply political decision by the prime minister to assuage his backbenches.
Cameron has bought himself some time on Europe, as the increasingly vocal anti-European rump of his party pat themselves on the back. But the long-term ramifications of this move for the UK are grim. Economically, it’s a no-win situation. If the EU now moves forwards towards tighter consolidation and eventual recovery, the UK will find itself outside a huge economic power on its doorstep. If, on the other hand, the financial crisis rumbles on within Europe the UK will be unable to influence the direction of policymaking while still suffering the economic fallout of any economic implosion – Europe is still by far Britain’s biggest export market.
Diplomatically, the future is equally concerning. Even before this summit it was clear that the US administration simply isn’t that interested in the UK. Why now, with the European External Action Service finally getting its act together as the EU’s foreign office, and the rise of Paris and Berlin as the leaders of Europe, would Obama see any real value in fostering the so-called special relationship. And while some might argue that political history and cultural ties may spark some obligation on the US to continue the UK-US ‘partnership’ there is absolutely no chance of that happening with the world’s other rising super-powers. Make no mistake, in governments around the world, Friday was seen as a day when Britain lost a fistful of its diplomatic bargaining chips and is weaker for it.
To be clear, Britain is not out of the European Union but the practical and political damage that has been done is hugely significant. On a clear day you can see continental Europe from the British coast yet politically we are now in the middle of the Atlantic Ocean.
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The Future of Labour’s Foreign Policy by Sam Hardy and James Denselow is published here
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Great article!