Europe’s crisis is Cameron’s opportunity

For the election campaign, and for the negotiations that might follow it, Syriza’s victory opens some promising vistas

31 January 2015

9:00 AM

31 January 2015

9:00 AM

Napoleon notoriously preferred his generals to be lucky — and on that score at least, he would have approved of David Cameron. The triumph of the Syriza party in Greece presents him with a glorious opportunity to solve the European question that has bedevilled the Tories for so long. Europe’s difficulty is Cameron’s opportunity.

The European elite has been shaken by the scale of Syriza’s victory. Just a few weeks ago, Cameron was arguing in private that Greek voters, who remain overwhelmingly pro-EU, would ultimately not back a party that was intent on a confrontation with the eurozone authorities. European diplomats stressed that even if Syriza won it wouldn’t get close to a majority and would end up having to form a coalition with To Potami, which would moderate its demands, so no need to panic. But Europe now finds itself confronted with a hard-line coalition of Syriza and the Independent Greeks, a three-year-old party of right-wing populists every bit as determined as Syriza to renegotiate the terms of the bailout. Syriza, a party of the radical left, and the Independent Greeks agree on little more than the imperative of securing relief of Greece’s debts.

The decision of Alexis Tsipras, the new Prime Minister of Greece, to go with a party of the nationalist right is a signal to Brussels, Berlin and Frankfurt that he is quite serious about what he said on the campaign trail. He is not going to back down. On his first day in office, he held talks with Russia’s ambassador and has appointed a Marxist academic as his finance minister. The scene is now set for a reckoning in the eurozone: the fundamental contradictions between its economics and its politics are going to have to be confronted.

Politically, it is unclear what answer there can be to the Greek question. Syriza’s whole purpose is to end EU-imposed austerity in Greece. Tsipras has to be able to say that he has stopped what he has called the ‘fiscal waterboarding’. But northern European leaders, led by Angela Merkel, are bitterly opposed to any concessions to Athens. They fear that if Syriza succeeds, voters across the eurozone periphery will turn to anti–austerity parties in the hope of securing better bailout terms.

In Spain, that would mean Podemos — a party formed a year ago, but which now regularly tops the polls — winning the elections there this year. Europe’s leaders also worry that going easy on Greece will boost parties of the radical right in their own backyard. Leaders are acutely aware of how quickly new threats to their position can emerge in Europe’s volatile political scene. Parties can be formed and lead the polls within months.

One argument being advanced for why there can be no immediate concessions to Athens is Finland’s election on 19 April. Its prime minister, Alexander Stubb, is trailing in the polls — an obvious concern to his ally Angela Merkel, Germany’s Chancellor and the unofficial keeper of the European order. If she cuts Greece any slack that would risk angering Finnish voters and making matters even worse for Stubb — who is facing a threat from the nationalist Finns Party — so that it might be impossible for him to recover. There are no votes in Finland (or anywhere in triple A-rated Europe) in letting Greece off the hook.

Diplomatic sources report that Merkel is in no mood to compromise. She is deeply unhappy about the scale of the money-printing programme launched by the European Central Bank. She fears that this will make it easier for recalcitrant southern Europeans to avoid making the structural reforms she believes are vital for the survival of the single currency. She also has a very German worry about the damaging effects of quantitative easing and knows that her electorate share that concern. The anti-euro Alternative for Deutschland party is aiming to capitalise on unease about Europe’s monetary policy in the state elections in Hamburg next month and in Bremen in May.

The more anxious Merkel feels about the direction of the EU, the more reluctant she is to lose Britain as a member. The UK has been one of the most vocal supporters of deficit reduction and market liberalisation and without us the EU’s centre of gravity would shift even further towards the dirigiste south. Merkel needs Britain more than she did last Christmas, so the price that she is prepared to pay to keep us in the EU is now higher.

In contrast, she is less concerned about the EU hanging on to Greece. In conversations with other EU states, the Germans express an almost reckless confidence that — unlike in 2011 or 2012 — the eurozone could survive Greece being forced out of the currency union. The consensus in Brussels is that this is not a risk, since Syriza will eventually have to accept that its hand is not as strong as it thinks. But there is a serious danger of an accidental ‘Grexit’. Syriza has no experience of government or international negotiations. Its members include Maoists and communists who regard the Greek Communist party as too moderate. There is, therefore, as one senior British figure warns, ‘the capacity for misjudgments’ in this game of chicken with Brussels.

The country that really keeps European policy makers up at night isn’t Greece or Spain, but France. Its economy is sinking, with no signs of a sustained or sustainable recovery. Its unemployment stands at a record high of 3.5 million, it has had to abolish the much-hyped 75 per cent tax rate on the rich after it turned out to be an abysmal failure, and its tax revenues are so weak that it’s now looking at a deficit of 4.1 per cent of GDP — far outside the 3 per cent limit supposedly demanded of EU member states. If the European Commission applied its own rules properly, France would be fined for this continuing inability to get its books in order.

The great debate is whether France is, in economic terms, part of northern Europe or stagnating southern Europe. Tellingly, the day after the Greek result, François Hollande invited Tsipras to the Elysée while Nicolas Sarkozy went to Berlin to see his old ally Angela Merkel, reflecting the division between the current president and the past president over what role France should try to play in Europe.

But while both men will probably be their parties’ candidates in the presidential election in 2017, it is the prospect of someone else winning that spooks Europe. Until now, even if the Front National made the final round of the French presidential election, you could be sure that it wouldn’t take the Elysée. But that is not so certain anymore. There was even a recent poll which had Marine Le Pen, who has moved her party away from the explicit racism of its past, winning the run-off this time around.

Fear of Front National largely explains Sarkozy’s shift on Europe. In an essay published last year, he argued that the EU should hand back half its powers to member states. Over the past few months, he has hardened his rhetoric on this point, warning that Europe will ‘explode’ without reform and threatening to end French co-operation with Brussels unless he gets his way on border controls.

Now, given that the final round of the French presidential election is not until May 2017 and Cameron is committed to holding his referendum on EU membership before the end of that year, it is not clear how much the Sarkozy agenda could help him. British government figures also caution that Sarkozy might want the ‘wrong powers’ back; he might want to weaken the ability of the Commission to prevent governments from blocking foreign takeovers.

But Sarkozy’s bold talk is an illustration of how France — and the fear of a Le Pen victory — could end up changing the whole EU debate. Cameron could suddenly find that there is far more on offer at the negotiating table than he currently expects. This would give him an opportunity to craft a deal that would go far enough to satisfy the eurosceptic instincts of his party. At the moment, his plans for the renegotiation, as far as they exist, look like they will fall short of what several of his cabinet ministers and many of his MPs want.

The British renegotiation could turn into a moment for a wider rebalancing of the relationship between the EU and its member states. Sarkozy’s visit to Berlin on Monday showed that the German Chancellor is still close to the former French president. Given that she broke diplomatic protocol to offer him her support ahead of the last French presidential election, it seems fair to assume that she will be guided by him on what is needed to prevent the catastrophe of a Front National presidency befalling Europe.

Cameron, though, has to be prepared to take advantage of the opportunity to press for radical reform, if it presents itself. During a previous acute phase of the eurozone crisis in 2011–12, Cameron and Osborne refused to try to use it to renegotiate Britain’s terms of membership. In private, their aides argued that if your neighbour’s house is on fire, you don’t start trying to negotiate a reduction on your water rates. But the more Europe is in crisis, the more important it becomes for the EU to keep this country in it. George Osborne has long argued that Britain would eventually be able to get an acceptable deal from the rest of the EU because it is, ultimately, in everyone’s interests. He likes to say that northern Europe wants Britain in as a liberal and free trading influence, that the Baltics and the East European states value our hawkish stance on Russia and that the rest of the EU understands the awful message that would be sent to investors around the world if Britain decided that it couldn’t stay in the EU.

Some in the government caution that if the eurozone’s problems worsen, there’ll be less ‘bandwidth’ available for dealing with the British renegotiation. They fret that in these circumstances few people will want to pay attention to the details of London’s demands. But, I suspect, this will be trumped by the fear of losing this country at a time when the whole European project is in danger of failing.

All this would be irrelevant unless Cameron wins the general election. But the situation in Greece might help him here, too. A return of the eurozone crisis would make the perfect backdrop for the Tory message: that the choice on 7 May is between stability or economic chaos. Cameron has already started referencing events in Athens whenever he can. The stormy winds from the Continent may yet return him to power — and to a successful renegotiation of the terms of Britain’s EU membership.

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  • Roy

    This should be a warning to David Cameron that all will not be solved when he commits the country to the EU monolith. It should also be a warning to the country at large, the ever expanding European body, like its global counterpoint, has no room for ones expecting a lift up and a decreasing amount of subs to the body politic. Unless on the other hand, British politics have had a complete shift in its philosophic position on free enterprise, to expound and promote the small business principal, reduce government tax take and ignore the ever present socialistic spending agenda, even when a member of a larger whole the same grass roots business acumen applies to all and everyone, including the grown and seemingly too big to fail.

  • Blindsideflanker

    As Cameron has managed to squander every opportunity that has fallen into his lap, don’t be too sure he won’t squander an opportunity here as well.

    • Thomtids

      Which opportunity is that, precisely? He is a total Europhile. He is utterly committed to our remaining in the EU as one of its principal funders. Nothing he can say should lead anyone to think otherwise. He will not undertake, nor could he, any honest or serious approach to revise the Founding Treaty of Rome nor indeed any variation of existing Treaties. The work is done, the process begun when we signed the treaty of Accession is, effectively over when Brown signed the Lisbon Treaty, at night having entered the building by its back-door.
      Nothing this man can say is authentic, credible or likely.
      Vote UKIP.

      • funny, a thoughtful article on the impact of insurgent parties, suggesting they’re not entirely a good thing, and the comments are dominated by our own favourite insurgents, the kippers! Hey, if all you’ve got is a hammer, everything looks like a nail, right!

        • Thomtids

          As the late, great, Frederick Sewards Trueman once or twice kept saying about part of his anatomy, “Aye up lad, tha needs a fuckin” big ‘ammer to bang in a fuckin’ big nail”.
          He was, of course, a words-smith and had the vocabulary of a miner, from whence ha had come.

  • Richard Eldritch

    I think the Cameron, the Press and the EU are missing the obvious. People no longer care about the debt or defaults, they’re already diiging through bins in Athens. It’s now about National pride and sovereignty, which of course is why the Greek radical left and conservative right have joined together as Greeks to restore it. Semantic economic arguments are useless now, that’s what has really scared the Trioka and Germans.

    • Bonkim

      Yes but emotional appeal will be lost on the Germans and destroy Greece.

      • Richard Eldritch

        Greece has already been destroyed, worse the ruins are now under German control. The Greeks know this, the Germans ( as usual) dismiss any values other than their own.

        • Andrew Smith

          The efficacy of saving until the pips squeak is debatable. If we remember, the Germans first stimulated their economy before imposing savings targets.

          But…. he who pays the piper calls the tune. As Germany is most likely to foot the bill, they can call for whatever they like. After all, they are not under any obligation to lend anything to anyone.

          • Ed  

            “After all, they [the Germans] are not under any obligation to lend anything to anyone.”

            Not true.

            Permanently backstopping the entire European economy, through the Euro, was the price Mitterand extracted for approving reunification. Kohl should have found a different way to reunify. He committed Germany to an awful lot when he accepted that deal.

            Maybe AfD can eventually extract Germany from that deal with the devil. Maybe not.

            In the meantime, Otto von Taxpayer can’t do much other than pay, and quietly steam.

          • Andrew Smith

            In essence you are right regarding Kohl’s rather short-sighted deal, but the great majority of the German taxpayers (including this one) either never understood this or are no longer prepared to accept it.

          • Ed  

            Oh, I never said Otto von Taxpayer was ASKED about that deal…..

          • Bonkim

            Don’t blame Kohl – yes Greece should not have been accepted within the Euro-zone but then how do you expect all countries within the union to claim equality when they patently are not equal. Unless all agree to political/fiscal union – this was predictable in 1999.

            I think the German taxpayers including you should let Greece bite the dust. Within or without the Eurozone, Greece is a lame duck, corrupt and not worthy of any further financial aid. Not a big loss to the EU and a clear signal to Italy, Spain, Portugal and others to behave themselves.

          • trotters1957

            Its all Germanys fault.
            They wanted all these uncompetitive economies in the Eurozone so that the Euro would be weaker than the Deutschmark and the world would buy their Mercedes. They then lent these economies the money to carry on buying Mercs.
            The Germans achieved their beloved Liebensraum without a shot being fired.

          • Andrew Smith

            The French stitched it up in 1989.

          • disqus_9I6C4azbIA

            They also keep Englishmen in employment making Rolls-Royces. Bentlies and Mini motor cars.

          • rtj1211

            I’m not sure it was ‘space to love’ they were looking for.

            Perhaps you could ask all the Greek girls whether strapping muscle-bulging Fritzes come on furlough to Athens to sample the delights of local feminine wiles?!

          • Andrew Smith

            Yes. The only reason the EU didn’t boot out Greece five years ago (remember Merkel and Sarkosy’s bullying of Papandraos to stop him from holding a referendum in 2011?) was because they wanted to protect Italy from contagion. The safeguards are in place now and I’m sure they would let Greece bow out. Which of course, would be better for them.

          • rtj1211

            I think ‘contagion’ is already present. Anti-EU sentiment in Italy is extremely high and the chances that an ‘EU out’ party in Italy winning the next election is not beyond the bounds of possibility.

          • ScaryBiscuits

            Yes, but you are essentially saying that in wanting two contradictory things, having the Euro and not having to pay for it, they are just the same as the Greeks and just as much to blame.

          • Andrew Smith

            Hit the nail on the head.

            The German electorate never wanted the Euro. The German politicians in the 1980s/90s were split on the matter and finally agreed to it as the French price for reunifcation. Had there been any form of democratic consultationon the matter, I’m not sure it would have been carried through.

            For me this explains the rather odd positions adopted now. In a sane world, the Euro would never have happened or would be ammended now. The German political classes don’t want Greek or Italian hands on the tiller (real political union), yet reject a transfer union because they know they will be roasted at the ballot box. Scaling down the Euro (my preferred option) would be akin to admitting that they had made a mistake, which they aren’t going to do either.

            The real problem is that the EU can no longer be controlled by a Franco-German understanding; the small club of unelected Eurocrats are trying to dictate but can’t control.

        • Bonkim

          It is not under German control. Greece should not have been accepted within the Euro-zone but had corrupt auditors cook their books. Greece is in the same league as India in terms of corruption. The new socialist order is contagious and the Euro-zone would be better off cutting Greece off to prevent the contagion spreading to Italy, Spain Portugal, even France all appear to somehow think that Ma-Merkel will continue to feed them caviar-butties and Champagne for ever when they wake from their siesta for ever..

          • Airey Belvoir

            The Euro project began with a set of strict and sensible economic conditions for membership. Ironically the first Country they had to be bent for was Germany! – after that it was all downhill and Greece should never have been allowed in, even with a lot of jiggery-pokery by Goldman Sachs.

        • Thomtids

          What are they gonna do? Send in the Panzers, station their U-Boats off the Corinth Canal and blockade the main Ports? Or worse……Angela will threaten to go down and give them a stiff talking-to?
          No, it’s what the EU is all about….taking our money and giving it to others in a 21st Century version of “The Company’s Shops”. Want a car….German or French?

        • global city

          What values are those? Give out the message to all governments of the EU that you could have a party for ten years and the Huns will bail you out?

    • EppingBlogger

      And a write off would only be a cosmetic change as no one believes the Greeks could possibly repay 175 per cent of a year’s production plus interest.

      Their economy is on the floor, their young people are either emigrating or losing all hope on the dole and their infrastructure is crumbling. It is now so tatty and so many shops are closed that tourism is suffering.

      • rtj1211

        85 – 90% of GDP on 40 year maturities?? That possible????

        • EppingBlogger

          Just think of the problem of taking that much cash from Greek voters and workers for three generations, together with interest. I do not think any political system could cope unless it was a closed economy with autocratic rule as the Soviet Union managed.

  • misomiso

    Interesting article James, and Cameron’s poll ratings have always gone up whenever he has taken Europe on. Maybe in the debate with Miliband he could raise the stakes by saying unless there is treaty negotiation he will walk?

    But he CANNOT finesse this the way he wants to without dealing with the two fundamtal questions: freedom of movement and soveriegnty. There will always be a split on the right so Long as the British Parliament doesn’t control immigration, and as long as the ECJ is senior to British courts.

    My guess is there is no one in the No. 10 political machine who really understands UKIP, and what they are all about, or if they do they don’t care. Its Parliament being subject to ECJ law and the very basics of the EU constitutional settlement that upsets them so much.

    If he offers to change that, then he could win back some votes in May.

    • George_Arseborne

      That is Cameron’s poll rating not the Tories. This election is not Presidential but Parliamentary. That is what you fail to grasp.
      So your opening statement was just catastrophic.
      When are you going to Learn?

    • Blindsideflanker

      I would put it wider than the ECJ. It is the loss of sovereignty, where we no longer have a Parliament to represent our interests, but represents Brussels interests to us.

      No10 and in general the professional political classes are unable to understand is that nation is important to people, and in the Conservatives we have a party who make the claim that nation is important to the, but its a claim that just doesn’t wash while they kowtow to Brussels. The EU has put a fracture straight through the heart of the Conservative party message.

      • misomiso

        Yes. There are more issues – no EU funding for UK think tanks, no threat to British identity, no obligation for translators to be provided in NHS Hospitals or UK schools, but we can do all that ONLY if we are out of the jurisdiction of the ECJ and European Parliament.

        What Brussels hates is any assertion of National identity and Sovereignty, and that is EXACTLY what needs to change.

        Treaty change or bust please Mr Cameron.

    • ScaryBiscuits

      I’m afraid it’s too late for Cameron to win votes. His party has been on an essentially flat line for the last four years. The narrowing of the polls is entirely due to Labour’s decline not Cameron’s ascent and a hung parliament with Labour as the largest party is more-or-less baked-in.
      At first when Cameron took on the EU his poll ratings went up but it was never sustained because as soon as the pressure was off he reverted to his previous Europhile position. People have now realised that, which is why changing his stance now would be too little too late.

  • richard j williams

    It is interesting that analyses seems to demonstrate that Merkel can deliver what the UK needs to stay in the EU but Cameron cannot.
    Either way it is a condemnation of the EU system in that either the Germans hold too much sway, or the UK too little.Patently immigration into our country from the EU. at 265.000 is unsustainable at its current level as is the illegal flow from the sub continent estimated by the Border Agency at 200,000.
    When Cameron again, as on Radio 4 this week. talks of reducing it to tens of thousands he is whistling Dixie and he knows it whilst we reman in the EU.
    This is not the sole advice from Merkel but has been spelled out to him by Von Rompouy, Barrosos, Junckers and his own Civil Service,
    As legislation involving QMV stakes effect in March 2017 it is imperative that a referendum for membership takes place prior to that date as subsequent departure will cost UK taxpayers a great deal more

    • Carter Lee

      It stands to reason the Germans hold sway because they have the largest, most sophisticated and most powerful economy in the EU. If France did they would hold sway. It is simply a matter of numbers.

      • Thomtids

        It’s a matter of smoke, mirrors and lies. Seeing that despite the lurid language, Britain keeps paying all the monies demanded under a variety of reasons not the least being that we have agreed to making them, I refuse to believe that, in the dark, smoky rooms that deals are struck by a variety of Ministers, quangoids, Civil Servants and the rest, that the man who is paying these particular pipers isn’t calling a lot more tunes than we are being told. If I pay a taxi driver, I tell him where I’m going. If I’m paying the fuel for the luxury coach that I’ve got into with a load of free-loaders, I get to choose some of the places it visits. It may not suit me to tell my sponsors that I’ve got the choice……
        It’s still a crap deal.

    • EppingBlogger

      I think you meant to say “per annum”?

      • richard j williams

        Sorry yes .I took that as read as there are now 13 Million Immigrants in the UK

    • TrulyDisqusted

      I though QMV already happened on 1 Nov 2014.

      Germany is about to discover what it feels like to be British and be out voted at every turn. Let’s see how long Germany lasts now she can no longer use her veto on deal breakers?

      • richard j williams

        Post March 3017 QMV is cast in stone. No one can opt out of a majority decision thereafter on around 50 clauses.

    • global city

      Hopefully a hard left government not being able to implement the policies upon which it was voted will wake up all the stupid collectivists here as to the devastating consequences for democracy from being members of the EU entails?

  • Max

    This all sounds like wishful thinking.

  • BigCheddar

    A quality piece. It’s a very pleasant change to read a balanced argument on the possibilities for renegotiating our relationship with Europe. But as misomiso says below the Government, (in reality the Whole Westminster elite), do not understand the appeal for UKIP. Perhaps looking around Europe and watching the seeds of European rebellion grow they might stop sneering and start listening, Only when they understand the fears and concerns of their electorate will they be able to follow the excellent advice of this article.

  • tomgreaves

    Forsyth would do better writing fantasies for Walt Disney than parading this fairy story as serious journalism. And what it the Spectator doing printing such a daydream? We are in the beginning of a massive shift of power and politics, and to spin a story such as this expresses the degree of anxiety, nay sheer terror, that the establishment feels as the immense passion of millions is unleashed across Europe. Forget predictions and wild speculations and learn to understand that the limits of reason leave us all, and forgive the pun, spectators of events and processes completely beyond our understanding or control.

  • mikewaller

    My reaction to this piece was initially negative. “Europe’s crisis is Cameron’s opportunity” sounds a bit to much like “England’s peril, Ireland’s hope”, a tag-line which went down very well with Irish republicans as applied in the 1916 “Easter Rising” (in the UK, aka “The stab in the back”) but soured Anglo-Irish relations for generations. However, Forsyth clearly has in mind something non-violent and much more sensitively handled. For example, no shooting people in their beds this time!

    What really does annoy me is the complete failure of the German’s to take up something I suggested to them and our useless parliamentary German friendship association when the problems in Greece first kicked off. Seeing how hated the Germans were becoming and recalling the huge pro-USA sentiment that was brought about in the UK and elsewhere by the “family to family” gift parcels sent from the States during our period of post-war austerity, I asked why Germany could not set up similar arrangements with needy Greek families now. From the Germans I got the usually mealy mouthed negativities from some over-paid Jack in Office; from our useless parliamentarians, nothing. A curse on both their houses!

  • realarthurdent

    “The British renegotiation could turn into a moment for a wider rebalancing of the relationship between the EU and its member states”

    Do you mean the British renegotiation which Cameron announced two years ago and he still hasn’t started yet ?
    The renegotiation for which Cameron hasn’t laid out even the barest bones of a negotiating position, to the extent that two of his MPs realised that ut was a lie and and deserted the party ?
    The renegotiation which everyone who holds any power in the EU, and anyone who knows anything about how the EU works, says is impossible due to the need to achieve unanimity amongst all member states ?
    The renegotiation which is nothing more than a political device to paper over the cracks inside the Conservative Party until after the election, and deceive the electorate over the EU once again, just as Edward Heath did 40+ years ago ?

    Is that the renegotiation you mean?

  • MrVeryAngry

    And people want us to stay a member of this comic opera organisation?

    • rtj1211

      It’s a very nice gravy train for some……

  • ScaryBiscuits

    Cameron was arguing in private that Greek voters, who remain overwhelmingly pro-EU, would ultimately not back a party that was intent on a confrontation with the eurozone authorities

    If anybody needed another reason not to vote for Cameron, Osborne or anybody associated with them, this is it. Just how many more catastrophic errors of judgement and out-of-touch group-think on everything from gay marriage to HS2 and siding with ISIS against Assad, should he be allowed to get away with? The argument that he’s better than Ed is about as persuasive that PASOK is better than New Democracy.

    • Blindsideflanker

      It is frightening how wrong he is on everything. You missed the massive howler of his to agree to Labour’s tax and spend proposal , with ‘sharing the proceeded of growth’ just as we were entering a slump. Make Aid his big pitch just as people had enough of the policy. Hug a Husky as people were struggling to pay their heating bills, scrap our armed forces as the Soviets were becoming belligerent. Throw the towel in on SNP demands. Give the Libdems an AV referendum and not get anything in return. And it has yet to play out him calling us sour faced little Englanders, with English people getting more and more hacked off with the unfair devolution.

      • jaspershawcross

        The bloke is a Loser.
        Amusing at PMQ’s but that’s about it.

  • Thomtids

    Bearing in mind that the EU is not only a Customs Union but also a means of transferring wealth from one part to another, it is arguably not a legitimate expectation that places such as Greece must submit to “Austerity unto Eternity” and actually repay the wealth transfers made to it (or them) nor that the Wonky Wonga that is now being imagined up by buying the worthless Bonds issued by the Greeks and others is anything but money transfers without any real intention than a “One Way” process. It would keep the spectators of this process, e.g. Us, sympathetic to the Greeks for thumbing their nose at The Troika, whilst achieving the base purpose of the Union – to take our money from us and give it to everybody else that has less.
    If we view the pantomime that is being played out as being essentially a very, very clever way of fooling different Countries with different “nuances” of the real truth ie Greece don’t intend to leave their bottomless pocket for the old life of poverty, the German people would go crackers but understand Bond-Holders’ haircuts. We will applaud the wily Greeks giving half a rigid digit to Brussels.
    My money is on Greece having a massive debt re-structure where, 50% is forgiven, a payment holiday of 5 – 10 years for the balance, and a rate of interest barely above zero. Result. Greece still in Euro, un restructured, lessons adopted by other would-be defaulters that anything can be done, but like the Hotel California, once you’re in it no one can ever leave. After all, why leave a Bank that gives you a perpetual overdraft and periodically resets your balance at zero and forgives the debt?

    • Blindsideflanker

      No as you point out , others like Spain and Portugal, will be taking a close interest , and as such Germany will insist the line is held. The cost of Greece being kicked out of the Euro is less than the liability of making a financial accommodation to keep them.

  • EppingBlogger

    Whether Syriza opens opportunities for Cameron depends on what you think his end game is intended to be. If you think he wants a faux negotiation (à la Wilson) then the Greek situation is a hinderance. Under this scenario Cameron would find himself in difficulty because the public’s expectations of real changes would be raised “if Greece can get concessions why can’t Dave”.

    If you believe he wants to stay in the EU at all costs (as many do believe and he has not denied it) then Syriza ia also a problem because public expectations will have been raised but the EU is unable to agree any changes which require a treaty amendment, as all meaningful concessions would.

    Syriza is a benefit to him only if you believe that the PM actually wants significant changes and that they can be somehow fiddled through the existing maze of treaties without a treaty change. In this case only he could pressure Merkel and the rest to make concessions in order to get a potentially explosive issue off the table. Personally I don’t see this as the real objective nor do I see it achievable.

  • Chris Hobson

    Europe is doomed.

    • morbidfascination

      The EU is doomed, I agree. How much damage in total it does to Europe on the way down is yet to be seen.

    • rtj1211

      Goldman Sachs Europe doesn’t seem doomed to me……

  • WalterSEllis

    “[Cameron] must walk away if he doesn’t get what he asks for.”

    Mr Cameron should
    negotiate hard and aim to get as much out of his EU negotiations as
    possible. But the idea that he could ever get everything he asks for is
    ridiculous. On that basis, the IRA should have kept on bombing and
    shooting until it got a United Ireland and the SNP should have screamed “Independence or Death” – and note that the extremists in both these instances who advocated the all-or-nothing approach are the ones for whom the rest of us have least respect. The EU owes us a better deal; it doesn’t owe us a free lunch.

  • Machiavelli

    You forget that Cameron is a fully signed up member of ‘The Project’. His referendum offer is only based on enlightened self interest of advancing himself whichever way the wind blows. A Snake oil salesman of the first order.

  • jeffreymtodd10

    He will blow it; let’s face it – even if the instructions were printed on the bottom of the bucket, he would still not be able to empty the water out of it.

    • Blindsideflanker

      The signs point that way, when Crosby is attempting to get all the policy barnacles off the Conservative election boat, Cameron is sticking them on with the likes of plain packaging for cigarettes.

  • derekemery

    Even the EU, big as it is, offers no defence against the forces of globalization. Capital and jobs are moved anywhere in the world to suit. Jobs have been and still are being lost to the developing world simply because its cheaper. This will continue because the EU will always be one of the most expensive places to do business.

    The EU and much of the west have moved to become increasingly financialized (bubble) economies since 1980. In turn this leads to low economic growth, hollows out the middle class and increases inequality. The declining fortunes of the middle class feeds political instability which is now found throughout much of the EU.

    Another factor is the poor ageing demographics inside the EU which leads to low economic growth and rising unfunded liabilities.
    Even if the EU became fully integrated none of these problems would be solved so the EU will always be an area of of economic growth and will lose share of world income.

    • Blindsideflanker

      The EU is a force for globalism, you might say little globalism of Europe, but the consequences of someone losing their job to cheap immigration from Eastern Europe workers is no different to them losing their job to cheaper labour in the rest of the world.

  • rodger the dodger

    It certainly is an opportunity – to get out before it collapses in a bloody heap around us.

    I give it five more years. The bond market vigilantes are limbering up…tick-tock…

  • norman’s nonsense

    I detest the linkage between Europe and the eu. One is a Continent of cultures and freedom, the other is a socialist dynasty of China-lite, destructive and designed for worker servitude to big business and politico masters. Secondly, Germany, who exports over 50 percent of its output, requires the eu member COUNTRIES to keep buying their stuff, and more importantly, paying back the loans they have taken to buy the stuff.. the German economy depends on it! Next, CamEUron’s wish list is weak, not adventurous and will not amount to any change in ‘ever closer union’.
    Dress it, talk it, write it anyway you want, the little known idea that the right and left extremes of politics are two peas from the same pod have been shown to be true by the political alliance formed in Greece (forget Stalin offering to train Adolf’s Germans in mass extermination techniques, or the inconvenient truth that both launched a simultaneous attack on Poland). So, far from it being an immigration, and by default (nowadays anyway), a racist issue to want to leave the eu; it is the fact that the majority of the centre ground people of Continental Europe and the UK want to leave the eu as we see no point in a politicised, federal entity, when trade seems a pretty good reason to keep us together. But never let the truth, a scare story and the constant reference to war or keeping peace in Europe get in the way of a eu superstate project.

  • lojolondon

    I love this – the EU is history. As has been said, the great European fear is not that Greeks leave the Euro and fail, it is the knowledge that when the Greeks default, embrace the Drachma their economy will take off. As Greece starts to re-build their country you will see the fear and loathing flash around Europe as the great dream of the Fourth Reich dies.

  • c777

    My greatest fear is that when the EU goes the bloated layers of bureaucracy and control systems it has created within our government stay intact.
    The Environmental agency and the DECC being examples.
    For if they are not radically cut and changed, it will make no difference

    • FrankS2

      The EU will die but refuse to admit it is dead, its corpse dragging Europe down.

  • Full Name

    Cameron will do more of what he does ie repeat himself:-

    * Cast-Iron Guarantee of Referendum (lisbon)
    * Judge me by my actions: Immigration net pa “I have returned from Germany with Treaty Change FOR OUR TIME!!”

    In 2020 after French and other National Elections the EU will attempt a Federal/Fiscal Treaty sans UK vote on it.

  • John Andrews

    I wish the Spectator’s columnists were in line with the anti-EU sentiments of the below comments,

  • Bonkim

    All Cameron needs to do is wait – the EU is disintegrating and Cameron may not need the referendum.

  • Frank

    It does strike me that Greece ought to just announce a default on all external debts. What could the rest of the EU do? The Greek government just about washes its face in terms of current income and expenditure, so what is the drawback?
    Manifestly this would encourage Portugal and Spain to follow, and then you have the end of the over-ambitious EU experiment.

  • global city

    Why this pretence that the Tories are anything but fully subscribed to the fullest aims of the project?

  • “There are no votes in Finland (or anywhere in triple A-rated Europe) in letting Greece off the hook.”

    Is this true? I don’t know that it isn’t, but it’s important for the thrust of this article that this is indeed the case. What evidence is there that voters in A-rated countries would not support a Greek renegotiation? Or do we just have to find out by seeing what happens..

  • grumpy_old_ben

    perhaps we might all usefully stop trying to express the current events in terms of the historic Left/Right, four legs good, two legs bad paradigm.
    Europe is sliding inexorably into de-facto fascism as the Soviet Left (for want of a better term), the successors to the Soviet penetration of the 1940s and 1950s and the New Left of the 1960s, seek to impose a wholly ideological project and the electorates turn to nationalism and nativism, salted with a considerable dose of what might be called Old Socialism in return.
    Look at Sweden, where the government is seeking to completely abrogate the democratic process by binding the hands of its successors, as a defence against the rapid rise of a “populist” (that word again) anti-immigration party in response to the race riots there – a thing previously unknown there.

  • andrewp111

    The only permanent solution for the EU is full fiscal union. If they can’t do that, dissolution is the only possible ultimate outcome.