Cameron vetoes new Eurozone treaty

[Eframepilot]

Link

Eurozone countries go it alone with new treaty that excludes Britain

David Cameron loses bid to shield City of London from EU regulation and critics warn 'dangerous' move isolates UK

Britain is facing isolation in Europe after David Cameron vetoed a revision of the Lisbon treaty, prompting a majority of EU members to agree to draw up their own deal outside the architecture of the union.

In one of the most significant developments in Britain's 38-year membership of the EU, the British prime minister said early on Friday morning he could not allow a "treaty within a treaty" that would undermine the UK's position in the single market.

The move marked a victory for Nicolas Sarkozy, who had been pressing for an inter-governmental agreement among the 17 members of the eurozone to underpin tough new fiscal rules for the single currency. "We could not accept this," he said of Cameron's demands.

The French president, who has been pressing for the formalisation of a "two-speed Europe", was pleased on Friday when the number of EU member states indicating their support for a separate treaty reached 23. Britain was joined by Sweden, which rejected euro membership in a referendum, the Czech Republic and Hungary.

Angela Merkel, the German chancellor, who had hoped to agree a revision of the Lisbon treaty, said she believed the accord would stabilise the euro. "I have always said, the 17 states of the eurogroup have to regain credibility," she said. "And I believe with today's decisions this can and will be achieved."

Cameron wielded the British veto in the early hours of the morning after France succeeded in blocking a series of safeguards demanded by Britain to protect the City of London. Cameron had demanded that:

• Any transfer of power from a national regulator to an EU regulator on financial services would be subject to a veto.

• Banks should face a higher capital requirement.

• The European Banking Authority should remain in London. There were suggestions that it might be consolidated in the European Security and Markets Authority in Paris.

• The European Central Bank be rebuffed in its attempts to rule that euro-denominated transactions take place within the eurozone.

Sarkozy, who had faced criticisms on Thursday evening that he was isolated after claiming that Britain was pushing for a complete opt-out from financial regulations, rejected the demands out of hand.

Welp, looks like the Euroskeptics won. Can't say I disagree with Cameron, either (though I'm ignorant on the downsides of the veto); the Eurozone is a clusterfuck right now.

[K. A. Pital]

Good on him. No reason to get into the mess right now. If the EMU collapses, at least he could smugly tell "Told ya so". He's a corrupt moron, but even they can feel the instinct of self-preservation.

[Thanas]

Well, considering that Britain wanted to have its financial market excluded from the new measures, how could the EU go along with such demands? "I am sorry, we'll just ignore the largest financial sector in the EU from now on?" That will not work.

It is sad to see the British opting out of this, but I don't think it will change much. If anything, it might push Europe closer to further integration considering the biggest roadblock will now be left out of it, for better or worse.

I don't like not having the brits at the table, but it is their choice. If they see a future with the US and think it to be better than a future with the EU, then they can do so. Though it is doubtful that it will come to that really. More likely Britain will be the EU member in the corner, like the uncle at the table who nobody pays much attention to.


However, it looks like Cameron will just stomp his feet and do everything to blockade the EU from now on, which is just shady beyond belief.

[Thanas]

New post because this cannot be underestimated: Poland has declared that it will take part in such a new union. This is huge - the most important eastern country wanting to join in. It is questionable if this happens.


Another problem for the Brits: Their only important ally Hungary is facing bankruptcy and most likely will collapse within the next year.

[K. A. Pital]

Um... how are they going to "progress without Cameron"? Finland, Britain, Hungary saying "fuck this" doesn't sound too good. And Hungary going bankrupt soon? Whoop de fuck, so? Greece, Spain and Italy are also on the brink of bankrupcy. It is not like Europe could continue to wave their hands.

The sum needed to recapitalize European banks (even without the writedown) has massively increased in the recent month, it is over 150 billion Euros now. What are they going to do?

[Thanas]

Um... how are they going to "progress without Cameron"?

By formulating a new treaty amongst themselves. Why?

Finland, Britain, Hungary saying "fuck this" doesn't sound too good. And Hungary going bankrupt soon? Whoop de fuck, so?

Hungary will need to get its money somewhere. Who is going to pay them except the EU? At that point, do you really think further resistance is possible?

[K. A. Pital]

By formulating a new treaty amongst themselves. Why?

They won't be able to force Britain's financial market to abide by the rules. Which would basically ruin the idea. Britian's financial trading marketplaces are the largest channel of EU papers circulation.

Hungary will need to get its money somewhere. Who is going to pay them except the EU? At that point, do you really think further resistance is possible?

The IMF bailed them out multiple times. They should've been bankrupt a long time ago (just as Latvia, etc.) And yes I think further resistance is not only possible but likely.

[Starglider]

Another digusting, brazen attack on both the UK's financial industry and UK pension funds; desperate eurocrats trying to siphon yet more money away from national economies to spend on euroshit (and specifically, to keep their caviar brunches and endless summits in 5-star hotels going). The vague promise of reducing EU levvies one the tax is implemented is a blatant lie; from this point EU taxes will only go up, they will not give back a single cent. Cameron is not known for showing backbone but in this case he was forced to defend the clear national interest.

Happily the eurozone countries can now just tax and print themselves to death while we watch; major problems for the UK/US are probably pushed out to 2013-14 now as ongoing flight to safety will suppress sovereign yields even with more QE. I'm looking forward to a fun round of S&P eurozone sovereign & bank downgrades and further, increasingly desperate EU political flailing through 2012.

[Thanas]

By formulating a new treaty amongst themselves. Why?

They won't be able to force Britain's financial market to abide by the rules. Which would basically ruin the idea. Britian's financial trading marketplaces are the largest channel of EU papers circulation.

I agree that Britain leaving is not that good, but look at how many other countries have signed up to this. Having Poland go along with this is immense (though domestic resistance might be higher than Tusk thinks). Meanwhile, Britain is facing a 15+% deficit and besides the United States, China and Norway, all their main trade partners are in the EU.

Anyway, an isolated Britain is neither good for the UK nor for the Eu.

And let us not pretend that Cameron's veto was anything but a protection for the UK finance industry, which is among those responsible for this mess in the first place.

The IMF bailed them out multiple times. They should've been bankrupt a long time ago (just as Latvia, etc.) And yes I think further resistance is not only possible but likely.

With the nationalistic fides in power, probably. The problem however is that they will have to do something very soon. Where is the money going to come from?

[Thanas]

desperate eurocrats trying to siphon yet more money away from national economies to spend on euroshit (and specifically, to keep their caviar brunches and endless summits in 5-star hotels going).

Excuse me?

[TC27]

Well done Cameron for sticking up to a craven attempt by the Franco-German axis to knobble the City and end Londons reign as a major global finance center.

The fact is that any deal within the EU did not need to involve regulation or a 'Tobin' tax - it was stuck in there merely as a power play.

[K. A. Pital]

Thanas, Poland is not a place where Euro financial instruments are being traded en masse. Britain is. The impact of Poland joining financial market regulations is nil. The impact of Britain saying "fuck off" to the financial regulations is big. That's the key thing.

And let us not pretend that Cameron's veto was anything but a protection for the UK finance industry, which is among those responsible for this mess in the first place.

It was. But I wouldn't say it was much more responsible than French financial industry (who were at the summit pushing for the deal), so basically if Cameron thinks Sarko should stuff himself, all the better. I hate them all anyway.

[Thanas]

Thanas, Poland is not a place where Euro financial instruments are being traded en masse. Britain is. The impact of Poland joining financial market regulations is nil. The impact of Britain saying "fuck off" to the financial regulations is big. That's the key thing.

I really doubt that one nation will succeed in unilaterally protecting its finance sectors from the other European countries. Switzerland tried and failed.

[K. A. Pital]

I really doubt that one nation will succeed in unilaterally protecting its finance sectors from the other European countries. Switzerland tried and failed.

Who knows. The EMU really does stink right now, and I believe quite a few investors would be interested in still being able to trade European instruments, but outside the EMU proper.

[folti78]

The IMF bailed them out multiple times. They should've been bankrupt a long time ago (just as Latvia, etc.) And yes I think further resistance is not only possible but likely.

With the nationalistic fides in power, probably. The problem however is that they will have to do something very soon. Where is the money going to come from?

As long as Hungary is part of the EU, they can't just ask the IMF for a bailout, without the EU's consent and oversight. That's what happened back in 2008, where some of the harsher measures (like limiting the budget deficit to 3%) came from the EU not from the IMF.
Oh and this came at the worst time for Orbán & co. They just passed a law, that suspended many budgetary restrictions of the new constitution coming into force next year, until 2016. Practically admitting that their so called "economic freedom fighting"* failed badly. Now this EU treaty will bring back many of those restrictions too.

* In the gov't agitprop everything is war, against budget deficit, against "foreign speculators", for national sovereignty, for whatever they try to blame today to hide their own incompetency.

EDIT: oh and the usual Orbánian flip-flopping is rather hilarious. At first he was completely against it(during the night), while in the morning he changed his tune, saying that as the PM, he doesn't have the authority to decide it, only the parliament have that. The same parliament which is practically his rubber stamping committee ...

[Thanas]

Yeah, I've been to Hungary a few months ago. It reminded me a lot of a "glorious leader" type of democracy.

Last I heard Orban tried to cuddle up to the Chinese and Russians to get money. Has that fallen through already or did nothing come up from it?

[K. A. Pital]

EDIT: oh and the usual Orbánian flip-flopping is rather hilarious. At first he was completely against it(during the night), while in the morning he changed his tune, saying that as the PM, he doesn't have the authority to decide it, only the parliament have that. The same parliament which is practically his rubber stamping committee ...

Sounds like Putin. What a limp-dick.

[folti78]

Yeah, I've been to Hungary a few months ago. It reminded me a lot of a "glorious leader" type of democracy.

Last I heard Orban tried to cuddle up to the Chinese and Saudis to get money. Has that fallen through already or did nothing come up from it?

Fixed. Apart from some concessions to Chinese firms, nothing came out of it. Currently Hungary is too risky even for them. That's why after nearly 1.5 year of anti-IMF rhetoric, they went back to IMF (and as usual botched the PR side badly).

[Thanas]

Oh Man. My sympathies.

And let me guess, there are no plans to drop the insane flat tax?

[K. A. Pital]

Eastern Europe incl. Russia masturbates to flat tax. Oligarchic craziness.

[folti78]

Oh Man. My sympathies.

And let me guess, there are no plans to drop the insane flat tax?

That would be admitting total defeatfailure of their insane economic policies. Like kicking out the economics minister who give his name to said "policies"*. Orbán won't admit defeats or mistakes, ever.** Also it'll piss off their only real supporters, the rich oligarchs further.

Oh and currently the flat tax is in name only. People over a certain level of income has to pay an additional "not-an-income-tax-HONEST!" taxcontribution too. It's part of the non-austerity*** measures announced this September.

* they didn't have any plans for economic policies outside of the same vague liberal ideas, rightfully ridiculed on this board, like the flat tax rate with trickle-down economics. Everything else were desperate trepidation looking for any source of money they could think of at that moment. Except backtracking their pet ideas.
** He's both delusional and rebuilt his political persona around the dogma of him and only him knowing what's good and what's right and questioning him is heresy. With this in mind, the upper echelons of his party has been purged from people showing too much original thought, being replaced by yes mens and bootlickers after 2004-2006.
*** In Matolcsyspeak, it's only an austerity measure if you introduce new taxes. If you call it a contribution or jack up existing ones, it's not an austerity measure. Hope you can follow...

[Thanas]

Well, I can guess where the next EU stability measures are going at this rate...

Obviously we have to do something because letting Hungary collapse is not going to be that great for the people of that nation, otoh I can not envision a scenario where the oligarchs won't take that as validation of their policy....


BTW, love the new nationalistic outlook there. Like erecting a fascist sword in the stone monument to Hungary inside a very old Roman danube fortress...

[Thanas]

Important Update:

Guardian

UK isolation grows as three more countries reconsider eurozone treaty
The 23 EU countries ignoring the UK veto may be joined by Hungary, Sweden and the Czech Republic, leaving Britain alone


The sense of unprecedented isolation afflicting Britain in Europe has been reinforced in Brussels after Hungary joined Sweden and the Czech Republic in reconsidering whether to take part in a new pact aimed at rescuing the euro.

Britain parted ways with the rest of Europe earlier on Friday morning when David Cameron dramatically wielded his veto to block Germany's drive to reopen the Lisbon treaty in an attempt to rescue the single currency. Initially 23 of the 27 EU countries said they would ignore the British veto and negotiate a new pact outside the treaty. Later the other three waverers said they would take the agreement to their own parliaments, leaving the UK on its own.

The prime minister's unexpected move was seen as a watershed in Britain's fractious membership of the EU. He insisted on securing concessions on and exemptions from EU financial markets regulation as the price of his assent to the German-led euro salvation blueprint. The others balked, accusing Cameron of putting Britain's perceived interests ahead of resolving the EU's worst crisis.

The prime minister blocked the accord, meaning that Britain is on its own while Cameron has failed to secure the concessions for Britain's strong financial services sector. In one of the most significant developments in Britain's 38-year membership of the EU, the British prime minister said early on Friday morning he could not allow a "treaty within a treaty" that would undermine the UK's position in the single market.

Cameron's blocking tactics frustrated the German chancellor Angela Merkel's plans to secure a new punitive rulebook for the single currency by anchoring it in the Lisbon treaty. Plan B is to create a "fiscal compact" among a coalition of the willing – probably everyone but Britain – with quasi-automatic penalties for countries breaking the single currency rules and stronger powers of intervention for European institutions policing the pact.

Britain, however, is also likely to contest the new architecture, arguing that bodies like the European commission responsible to all 27 member states should not be given a role to police the euro.

The outcome on Friday morning, following nine hours of negotiation through the night, was a setback for Merkel, perhaps a disaster for Britain, and a partial victory for Nicolas Sarkozy of France, who had been pressing for an inter-governmental agreement among the 17 members of the eurozone to underpin tough new fiscal rules for the single currency.

"We could not accept this," he said of Cameron's demands.

But many other countries opposed the Merkel plan to reopen the Lisbon treaty and will not be disappointed that the German scheme has failed. Merkel nonetheless stressed that the accord would stabilise the euro. "I have always said, the 17 states of the eurogroup have to regain credibility," she said. "And I believe with today's decisions this can and will be achieved."

Cameron wielded the British veto in the early hours of the morning after France succeeded in blocking a series of safeguards demanded by Britain to protect the City of London. Cameron had demanded that:

• Any transfer of power from a national regulator to an EU regulator on financial services would be subject to a veto.

• Banks should face a higher capital requirement.

• The European Banking Authority should remain in London. There were suggestions that it might be consolidated in the European Security and Markets Authority in Paris.

• The European Central Bank be rebuffed in its attempts to rule that euro-denominated transactions take place within the eurozone.

Sarkozy rejected the demands out of hand.

Cameron defended his decision to wield the British veto on the grounds that eurozone members could have used the institutions of the EU to undermine Britain's interests in the single market without his safeguards. Speaking at 6.19am local time, he said: "I said before I came to Brussels that if I couldn't get adequate safeguards for Britain in a new European treaty then I wouldn't agree to it. What is on offer isn't in Britain's interests so I didn't agree to it.

"Of course we want the eurozone countries to come together and to solve their problems. But we should only allow that to happen inside the European Union treaties if there are proper protections for the single market and for other key British interests. Without those safeguards it is better not to have a treaty within a treaty but to have those countries make their arrangements separately."

Cameron acknowledged there were risks in striking out alone. But he said Britain would protect its position by insisting that the institutions of the EU could not be used to enforce the new fiscal rules.

"While there were always dangers of agreeing a treaty within a treaty, there are also risks with others going off and forming a separate treaty. So we will insist that the EU institutions – the court, the commission – that they work for all 27 nations of the EU. Indeed those institutions are established by the treaty and that treaty is still protected."

Cameron indicated that Britain may go further and block the use of EU institutions if eurozone countries club together to shape financial regulations and labour laws.

The decision by Cameron will transform Britain's relations within the EU. Other projects, such as the euro and the creation of the passport-free Schengen travel area, have gone ahead without British involvement. But it is the first time since Britain joined in 1973 that a treaty that strikes at the heart of the workings of the EU will be agreed without a British signature. Britain signed the 1991 Maastricht treaty after winning an opt-out on the single currency and the social chapter.

Cameron will be able to tell Eurosceptic backbenchers he refused to sign a treaty that would have undermined British interests. But some Eurosceptics may say the new treaty marks a major change in the EU and that the British people should be consulted in a referendum.

Sources in Brussels say Cameron is playing a "dangerous game" because financial service regulations are decided by the system of qualified majority voting in which Britain does not have a veto. Britain can form a "blocking minority" at the moment to stop harmful legislation. But this will shrink as more countries join the euro.

The summit also agreed that:

• Eurozone countries will provide up to €200bn in extra resources to the International Monetary Fund to help countries in difficulty.

• The eurozone's two bailout funds, the European Stability Mechanism (ESM) and the European Financial Stability Facility (EFSF), will be managed by the European Central Bank.

Well well well. Shot yourself in the foot there, Britain. So much for the "increasing backlash" against this as some brits dream.

[K. A. Pital]

Reconsidering does not mean "agreeing straightaway". It means they can either agree or decline.

[Fingolfin_Noldor]

What function does this "European Banking Authority" perform that Britain is so determined to keep?