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Will David Cameron Sell UK Down the EU River of Worthless Promises to Join the Euro?

Politics / UK Politics Nov 20, 2011 - 03:17 PM GMT

By: Mike_Shedlock

Politics

Best Financial Markets Analysis ArticleThe UK had been expected to have a voter referendum on proposed EU treaty changes. The EU of course does not want voter referendums or anything that look remotely democratic as we have seen by actions in Greece and Italy.

Deal or No Deal?


The problem for the EU is all 27 nations have to agree to treaty changes or it's no deal. A political work-around is in progress (as always).  And Merkel will allegedly give up on the Financial Transaction Tax idea if only Cameron will sign on the bottom line.

Piss Poor Deal

It's a piss poor deal and Cameron should know it. Once the EU gets what they want, Sarkozy and Merkel and others will be back at it, demanding once again the financial transaction tax and God only knows what else.

Secret Plans to Derail Referendum

The Telegraph notes Germany's secret plans to derail a British referendum on the EU

Germany has drawn up secret plans to prevent a British referendum on the overhaul of the European Union amid concerns it could derail the eurozone rescue package, leaked documents obtained by The Daily Telegraph disclose.

Angela Merkel, the German chancellor, is today expected to tell David Cameron that Britain does not need a referendum on EU treaty changes, despite demands from senior Conservatives for more powers to be repatriated to Britain.

The leaked memo, written by the German foreign office, discloses radical plans for an intrusive new European body that will be able to take over the economies of beleaguered eurozone countries.

It discloses that the EU’s largest economy is also preparing for other European countries, which are too large to be bailed out, to default on their debts — effectively going bankrupt. It will prompt fears that German plans to deal with the eurozone crisis involve an erosion of national sovereignty that could pave the way for a European “super state” with its own tax and spending plans set in Brussels.

Britain would be relegated to a new outer group of EU members who are not in the single currency. Mr Cameron will today travel to Brussels and Berlin for tense negotiations with Mrs Merkel amid growing disagreement between the leaders over how to deal with the eurozone.

The six-page German foreign ministry paper sets out plans for the creation of a European Monetary Fund with a transfer of sovereignty away from member states.

The fund will have the power to take ailing countries into receivership and run their economies. Even more controversially, the document, entitled The future of the EU: required integration policy improvements for the creation of a Stability Union, declares that the treaty changes are a first stage “in which the EU will develop into a political union”. “The debate on the way towards a political union must begin as soon as the course toward stability union is charted,” it concludes.

The negotiating document also explicitly examines ways to limit treaty changes to speed up the reforms. It indicates that Mrs Merkel will tell Mr Cameron to rule out a popular EU vote in Britain.

“Limiting the effect of the treaty changes to the eurozone states would make ratification easier, which would nevertheless be required by all EU member states (thereby less referenda could be necessary, which could also affect the UK),” read the paper.

Open Europe, a think tank, last night called for Mr Cameron to demand something in return from Mrs Merkel for her “far-reaching plan”, which requires the unanimous consent of all 27 EU countries, giving Britain a veto.

“It would be the first step towards a vision of 'political union’ that would have major consequences for the future of the entire EU, and therefore the UK’s place within it,” said Stephen Booth, the think tank's research director.

"Merkel is daring Cameron to call her bluff, but if the UK is serious about taking a leadership role in shaping the EU, Cameron will have to take a stand sooner rather than later."

Bill Cash, chairman of the Commons European scrutiny committee, accused the Coalition of standing by in "no–man's land" while Germany shaped the EU to suit its own interests.

"We are going to get nothing significant in return for agreeing to this," he said.

Mr Cameron is today also expected to pressurise Mrs Merkel into lifting German opposition to the use of the European Central Bank to rescue the euro.

Two-Speed Europe and the Clutches of France

The Guardian reports Cameron warned his eurozone stance risks forcing two-speed Europe

David Cameron will be warned that he risks creating an unstoppable momentum behind a "two-speed Europe", which would be dominated by France and Germany, if Britain demands too many concessions during the eurozone crisis.

In a series of meetings in Berlin and Brussels, the prime minister will be advised that Britain should table modest proposals next year when EU leaders embark on a small treaty revision to underpin the euro.

A six-page German foreign ministry paper, published by Der Spiegel this week, calls for "a ('small') convention that is precisely limited in terms of content" to present proposals "rapidly". These would then be agreed by all 27 members of the EU.

Merkel warned the prime minister at an emergency European council meeting in Brussels on 23 October that she would reluctantly have to side with France if Britain overplayed its hand in the negotiations. Nicolas Sarkozy, the French president, wants a treaty to be agreed among the 17 members of the eurozone, excluding Britain and the other nine EU members outside the single currency.

This would be seen as a major step towards the formalisation of a "two-speed Europe" in which France, Germany and the four other triple A-rated eurozone members would form an inner core. Britain and Denmark, the only two members of the EU with a legal opt-out from the euro, would form the backbone of an outer core.

One Brussels diplomat said: "There is a choice the UK has to make. Does it push Germany into the clutches of France or does it try to find an accommodation with the Germans by not going too far in its demands on repatriating powers? The Germans want to find an accommodation with the British but they must not go too far."
Got that? Cameron is supposed to accept a bad deal from Merkel, or Germany will make an even worse deal with France.

German Finance Minister Says UK will Join the Euro


Talk like this should scare the hell out of the UK citizens: Britain will have to join the euro, says Tory grandee Lord Heseltine
Britain will soon have no choice but to join the euro, Tory grandee Lord Heseltine has claimed, as tensions grow over the eurozone's slow-moving efforts to get a grip on the spreading debt crisis.

The former deputy prime minister, a long-time supporter of the single currency, said the public had "no idea" about the potential impact its collapse would have on the UK.

But he believes Franco-German determination will secure the euro's future and pave the way for Britain to sign up.

Both the Coalition and the Labour Party have ruled out adopting the euro in the foreseeable future.

Last month Prime Minister David Cameron suffered the biggest ever Conservative revolt over Europe as more than 80 Conservative MPs defied his orders and backed a referendum on Britain’s membership of the European Union.

German Finance Minister Says UK will Join Euro

Please consider Britain 'will join euro before long’, says German finance minister

Wolfgang Schäuble said that, despite the current crisis in the eurozone, the euro will ultimately emerge as the common currency of the entire European Union. He said he “respects” Britain’s decision to keep the pound, but insisted that the survival and eventual stabilisation of the euro will convince non-members to join the currency club. “This may happen more quickly than some people in the British Isles currently believe,” he added.

Mr Schäuble also said Germany will stand firm on its call for a financial transaction tax that Britain believes would badly harm the City of London.

Sir John Major, the former prime minister, warned last night that the growing integration of the eurozone nations threatens democracy in those countries. He told Al Jazeera television that richer euro members led by Germany and France will “insist on moving towards what we call fiscal union. By that I mean common control over budgets and fiscal deficits”.

Sir John, who advises David Cameron on foreign policy issues, also described the banking transaction tax as “a heat-seeking missile proposed in continental Europe, aimed at the City of London”.

Promises on Transaction Tax will not be Kept

The arrogant talk by Schäuble in and of itself should be enough to convince Cameron that the financial transaction tax talk will never go away and that no deal with Merkel can be trusted.

Thus, Cameron should not agree to any treaty changes except those for the explicit purpose of creating exit procedure for countries to leave the Euro.

The Eurozone is about to break up yet Merkel, Schäuble, Sarkozy and others still cling to failed ideas. Pressure on the UK is nothing but last minute sheer desperation by those attempting to bully the UK into accepting the creation of a nanny-zone super state.

The irony is both Cameron and Merkel want something that is blatantly stupid. Cameron wants the ECB to buy bonds on a massive scale, while Merkel wants the financial transaction tax and a nanny-zone super state. All three ideas are horrendous.

Should Cameron get sucked into a lousy deal (which means virtually any deal Merkel will offer), all Cameron would accomplish would be to prolong the agony.

Enough is enough, Cameron should tell Merkel "No Deal", which of course is the polite way of saying "Go to Hell".

 

By Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post List

Mike Shedlock / Mish is a registered investment advisor representative for SitkaPacific Capital Management . Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction.

Visit Sitka Pacific's Account Management Page to learn more about wealth management and capital preservation strategies of Sitka Pacific.

I do weekly podcasts every Thursday on HoweStreet and a brief 7 minute segment on Saturday on CKNW AM 980 in Vancouver.

When not writing about stocks or the economy I spends a great deal of time on photography and in the garden. I have over 80 magazine and book cover credits. Some of my Wisconsin and gardening images can be seen at MichaelShedlock.com .

© 2011 Mike Shedlock, All Rights Reserved.


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