Cameron is the Euro’s Best Hope for Survival

The Prime Minister’s alliance with Angela Merkel may help save Europe’s failing currency, if his policy doesn’t tear apart his party

In the management of his increasingly fractious backbenchers, David Cameron was generally reckoned on February 5 to have made a serious and unforced error. This was the day when a majority of them voted against him on the gay marriage bill. They accused him of being an out-of-touch metropolitan trendy, and of the still more intolerable sin of ignoring them. Already it can be said of Cameron, as D.R. Thorpe wrote of Harold Macmillan: “He had contempt for many of his backbenchers, some of whom felt he was never a Tory at all.”

Yet only a few days later, Cameron was being cheered by those same backbenchers for the deal he had negotiated in Brussels to cut the EU budget. Many observers had imagined he would be unable to achieve this. And a fortnight earlier, on January 23, Cameron gave a performance which was even more unexpected, and even more successful. His speech on Europe, which had again and again been delayed, was bound, most people thought, to antagonise one side or the other. If he placated his Eurosceptic backbenchers, who consider themselves the heirs to Enoch Powell and Margaret Thatcher, he could not avoid antagonising the whole European establishment, including Brussels, Berlin, Paris, Kenneth Clarke, the American administration and big business.

Cameron found a middle road where none appeared to exist. This was an Anglican speech: one which charted a middle way, or via media, between two extremes. Bruce Anderson, in the Spectator, has dismissed the Prime Minister’s religion as “a vaguely pantheistic, sherry-with-the-vicar sort of Anglicanism—less of a religion than an inoculation against religion”. This is quite wrong. People of an ideological frame of mind never get the point of Anglicanism. Cameron’s Anglicanism is more accurately described as a way of being religious without sounding religious. I don’t suppose the Prime Minister ever digs up his faith in order to see how devout he is. But his asperity is an Anglican asperity. He believes in marriage: that is part of his inherited moral code; part of a tradition of behaviour which he accepts without delving into its origins. When Cameron speaks of extending the benefits of marriage to gay people, he is confident he is doing the right thing. In order to preserve a valuable institution and adapt it to modern conditions, he proposes adjustments which may not be exactly what he himself would have chosen. He will not be so self-indulgent as to put his own comfort before the need to be progressive. Nor will he adopt an excessively rigorous attitude to doctrine. What an excellent bishop he would have made. 

His speech was a sermon, designed to disarm criticism, or at least to make his critics look extreme, and to impel, one might almost say compel, any decent, moderate, pragmatic person to agree with him. From the first, as he gave us his idea of Britain, he struck an inclusive note: “Independent, yes—but open, too. I never want us to pull up the drawbridge and retreat from the world. I am not a British isolationist. I don’t just want a better deal for Britain. I want a better deal for Europe too.”

In her Bruges speech, delivered on September 20, 1988, Mrs (as she then was) Thatcher similarly insisted that “Britain does not dream of some cosy, isolated existence on the fringes of the European Community. Our destiny is in Europe, as part of the Community.” But her tone was that of a scandalised patriot who is committed to an ideological agenda: “We have not successfully rolled back the frontiers of the state in Britain, only to see them reimposed at a European level with a European superstate exercising a new dominance from Brussels.” Instead of restoring calm, she declared her willingness to fight. Just over two years later, she went down fighting: “The President of the Commission, Mr Delors, said at a press conference the other day that he wanted the European Parliament to be the democratic body of the Community. He wanted the Commission to be the Executive and he wanted the Council of Ministers to be the Senate. No, no, no.” This outburst during her report to the Commons on the European summit in Rome led to the resignation of Sir Geoffrey Howe, which in turn precipitated her own downfall. 

Just as an Anglican can regard his Church as both Protestant and Catholic, or combining the best from those two traditions, so Cameron reckons he can be both British and European, especially if he can get away with redefining what the latter word means. He realises that his speech will strike some people as unorthodox: “The biggest danger to the EU comes not from those who advocate change, but from those who denounce new thinking as heresy. In its long history Europe has experience of heretics who turned out to have a point.”

Already we can see the thrust of Cameron’s argument, which is that by changing the EU he will help to preserve it. Far from being a heretic, he is actually the European establishment’s best hope. He promises that if he is still Prime Minister, then two years into the next Parliament he will hold a referendum, in which the British people will have the choice either to accept the new membership terms which he has negotiated, or to leave. He has conceded the great demand of his Eurosceptic bankbenchers, and of UKIP, that there should be an In/Out referendum. But in the same breath, he indicates that he will be campaigning for us to stay in. He has turned the Eurosceptics’ weapon on themselves: they can have their referendum, but the chances are that they will lose it. As long as he can negotiate a better deal, “I will campaign for it with all my heart and soul . . . I will not rest until this debate is won.” The words “I will not rest” recall the hymn “Jerusalem”, though what Blake actually wrote was “I will not cease”.

Cameron will not be drawn on what would constitute a better deal. Like Harold Wilson, Prime Minister during the referendum campaign of 1975, he has to be able to declare, and millions of voters who feel nervous about “going it alone” have to be able to believe, that he has won worthwhile concessions. Mention of Wilson is a reminder that to resort to a referendum on Europe is a sign of weakness. In 1970, when Tony Benn first suggested the idea, Jim Callaghan saw it was “a rubber life-raft into which the whole party may one day have to climb”, but Wilson rejected it. Hugo Young describes, in This Blessed Plot: Britain and Europe from Churchill to Blair, the “process of emasculation” during which Wilson was obliged, “under slow torture”, to change his mind in order to have some chance of keeping the Labour party together. Less than six years after the referendum, the party split anyhow with the formation of the SDP. 

The Anglican Church is in many ways weak, and so is Cameron. Yet in this speech, the Prime Minister managed to conceal whatever process of emasculation he has undergone and to sound in control of events. He was helped in this by the Labour party, whose position is to be against a referendum for the time being, but perhaps agree to one in the future.

There is a strong argument for never having a referendum. We live in a parliamentary democracy, in which we expect our elected representatives to debate and decide the great questions of the day on our behalf, after which we can kick them out if we are dissatisfied. The European issue is so changeable and complicated that it is especially unsuited to a referendum. But few politicians will admit this, for most of them prefer to pose as democrats and to issue bogus protestations about letting the people “have their say”. 

Having been prevented, for a variety of reasons, from delivering his speech on the continent, Cameron gave it instead at the London headquarters of Bloomberg News. The subterranean chamber in which that mighty organisation plays host to visiting politicians has all the charm of a Dubai nightclub, and perhaps because of the uncomfortable earliness of the hour, Cameron looked a bit ruffled. Imke Henkel, London correspondent of Focus, a news magazine published in Munich, noticed the Prime Minister glancing repeatedly and nervously at Georg Boomgaarden, the German ambassador, who was sitting just behind her.

German reaction to the speech was certainly of some importance. If Berlin dismissed the renegotiation plan, it would cease to carry the slightest credibility. But the Chancellor, Angela Merkel, gave a magnificently opaque response: “Germany, and I personally, want Britain to be an important part and an active member of the European Union. We are prepared to talk about British wishes and we must find a fair compromise.”

Merkel’s cards remain undisclosed. In September, she faces a general election, and she sees no point in antagonising Germany’s Eurosceptics, many of whom wish they had politicians prepared to be as outspoken as Cameron. Germany finds itself more than ever the preponderant continental power, but economic growth, and the crisis management needed to sustain the euro, have acted as a distraction from, or substitute for, addressing Europe’s constitutional problems. In recent years Germany’s export industries have been doing remarkably well. If that country had kept its national currency, its industries would be exporting less, for the mark would be less competitive than the euro.

Like Britain, Germany has global economic interests. It has a far more flourishing trade than we do with China, a country it is helping to modernise. Its trade with the euro area, though still very big, is becoming less important, and Germany appears to have no idea how to modernise the southern members of the euro, who are instead experiencing a savage contraction and rates of youth unemployment which must surely prove unsustainable. The euro members are not only failing to converge: they are getting wider apart.

The call goes up for Germany to bail these southern members out, and thereby save the euro. That is how currency unions work. But although German taxpayers recognise that they have derived benefits from the euro, they are profoundly unwilling to subsidise the Greeks, Spanish, Portuguese, Italians or indeed the French. The West Germans found it quite bad enough bailing out and modernising the East Germans, whose industry was destroyed after the currency union which accompanied German reunification, carried out by Helmut Kohl at a one-for-one exchange rate which he found politically irresistible, but which was economically disastrous.

Kohl likewise found the euro politically irresistible. It was not, at any rate, resisted by any worthwhile body of German politicians: the opposition Social Democrats believed in it more sincerely than Kohl’s own Christian Democrats. The German public knew it would be disastrous to share a currency with the Italians, let alone the Greeks, but Germany’s rulers were determined to believe all would somehow be well, for who could object to the pious idea of greater European union?

It seems to me that anyone who reckons he or she knows what will happen next is engaging in an act of self-deception. British Eurosceptics should certainly not make the error of presuming that German Eurosceptics are the same as they are. Merkel is a mystery even to her own party: she grew up as the daughter of a Lutheran pastor in East Germany, and the traditions of West German Christian Democracy mean nothing to her. She alone, as an outsider, was sufficiently free, courageous, and uncontaminated by Kohl’s murky methods of maintaining his own power, to overthrow him. As Cameron and George Osborne have realised, it would be unreasonable to expect her to overthrow the euro too. The Germans are condemned to try to make a go of a currency which was launched without adequate political or constitutional foundations, and which, as George Soros recently warned, could end by destroying the European Union. However stable Berlin may be, the currency can still be shaken by a rebellion against German rules and German-imposed deflation in Athens, or Rome, or Madrid, or perhaps in some place so tranquil that the world does not realise an explosion is imminent. 

David Heathcoat-Amory, Tory MP for Wells from 1983-2010, observed during a spell as a Foreign Office minister in the early 1990s: “German politicians would never challenge the basic mission of the EU as they felt that Germany was only tolerable to its neighbours when firmly tied in to a supranational structure. However they were helpful over matters such as trade and the importance of the American connection, and with very few exceptions I found them friendly and co-operative. But they had a weakness for rules, however unrealistic or unenforceable.”

This weakness for rules, and reluctance to challenge the basic mission, can still be found in Germany. The British instinct, when faced by a seemingly impossible situation, is to cut and run: an act befitting a maritime nation. When one’s ship is threatened one cuts the cable holding the anchor and runs before the wind, to take the chance of ending up somewhere better. This not always glorious instinct accounts for the short-term attitude we take to industry. If a venture does not work quickly, we are inclined to try something else. Anglo-Saxon capitalism strikes the Germans as a gigantic and disreputable casino, in which everyone tries to make a quick buck and no one ever invests for the long term.

That is not the German way. Once they have put their minds to some great enterprise, they are not put off by the first adverse gust. When I bought a Volkswagen in order to drive round Germany in the 1990s, the manual assured me it was a good car because of “the conscientious efforts of everyone concerned”. Twenty years ago, when that manufacturer was in trouble and an employee at its great works at Wolfsburg in Lower Saxony was asked how they were going to get out of it, he replied: “We’ll work and we’ll work and we’ll work.” There is a thoroughness to the German approach, an assumption that if everyone pulls with total dedication in the same direction all difficulties can in the end be surmounted. This is the attitude which many Germans, members of the public as well as politicians, bring to the euro. The fact that it is difficult to make the currency work is not a reason to give up, but to redouble one’s efforts. After all, it has to work, or the savings accumulated from 60 years of hard work will be in danger. 

One should not underestimate the power of the idea of European unity to fascinate political elites. During a visit last year to Poland, I met an eminent professor who said of the euro: “We want to join the boat even though it is sinking.” Radek Sikorski, the Polish Foreign Minister, some time ago broke with his British Eurosceptic friends and fellow members of the Bullingdon Club (a nursery of statesmen in which Sikorski, Boris Johnson, Cameron and, some years later, Osborne all played). In his tremendous speech in Berlin on November 28, 2011, Sikorski called on Germany to help lead Europe into a united federation which will do whatever is needed to save the euro, while leaving most other things to the member states. Sikorski’s speech rose to the level of events in a way that few do. Unlike most European leaders, he examined the most relevant precedent, namely the formation of the United States. He wishes a reformed European Commission to acquire draconian powers to supervise national budgets, while itself being subject to a more powerful European Parliament. In my view, this cannot work, for reasons explained authoritatively by Larry Siedentop in Democracy in Europe, where he observes of the gathering in Philadelphia in the summer of 1787: “There was tacit agreement among the delegates that some functions of the British Crown . . . were only temporarily in abeyance—waiting, so to speak, for a central authority to take them over again.” Europe lacks this ghost of a once legitimate authority. Nor can it draw on the established habits and attitudes which were of such value, as Alexis de Tocqueville recognised, to the founders of American democracy.

After Cameron had spoken, Guido Westerwelle, the German Foreign Minister, who like Sikorski is a member of the Future of Europe group of 11 foreign ministers which wants closer integration, took it upon himself to retort, in a prosy manner: “There can be no cherry-picking.” As a number of German commentators pointed out, Berlin is no more averse to cherry-picking than other countries are. When Merkel decided to switch off Germany’s nuclear power stations, she did so without asking what effect this might have on European energy policy, or indeed on French energy policy.

There is no end to the piety of Westerwelle, a former leader of the Free Democrats. As this Teutonic Nick Clegg also said: “Never again can we allow the loose spending habits of individual nations to weaken the foundations of the European house.” By the time he discovers that ordering other people around will destroy rather than preserve the European house, it will be too late.  

But many thoughtful Germans, including Merkel, realise that the EU cannot go on as it is, and find what Cameron is saying more interesting than anything coming out of Paris. It always struck me, while living in Berlin in the 1990s, that there were at the very least considerable affinities between the British and the Germans. Neither country will in the end tolerate having its affairs run by a Napoleonic bureaucracy established in Brussels as an extension of the French state. Germany has a beautiful modern constitution, Britain has a beautiful ancient constitution, and neither is compatible with the imposition of European rule, unless and until that rule can be given the kind of elevated form which the Americans devised for themselves in Philadelphia. That is unlikely to occur in our lifetimes, for as Cameron said in his speech, there is no European demos and democratic legitimacy still flows from national parliaments.

Merkel and Cameron seem to have got on well at the Brussels budget summit which ended on February 8. At least in their present incarnations, the German tradition of consensus and the Anglican tradition of compromise have shown that they can work together. In France, Cameron’s speech produced outbursts of Anglophobia, for example by Jean-Marc Vittori in Les Echos: “Europe without the UK would do better than the UK without Europe. Since no exclusion procedure exists, we can only hope that the British themselves decide their eviction by referendum in 2017. With one brake less, Europe will then have more chances to accelerate.”

No wonder Merkel does not want to be left alone with the more or less hysterical French, as Konrad Adenauer put it in 1953. But one may doubt whether Cameron’s approach to Europe will remain popular with his own party. Just as they have wearied of his coalition with the Liberal Democrats, so they may become suspicious of his alliance with Merkel. His Anglican via media may disintegrate, or he may be removed from No 10 before he can travel very far along it. But since British policy towards Europe has long been highly contradictory, it is also possible that Cameron possesses the gifts needed to lend it a degree of coherence, and even to make it work.

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