David Cameron: the toast of Brussels

Overbearing. Arrogant. Difficult. Britons in Brussels are used to having their compatriots trashed by Eurocrats fulminating over the latest betrayal from perfidious Albion. Yet this time it’s not the Brits who are being bad-mouthed, but the Germans—whose new mood of bossiness is putting backs up all over town. Meanwhile, a very senior official in the European commission recently described Chancellor George Osborne to me as “highly intelligent and extremely constructive.” Ask around about David Cameron’s government and the adjectives used to describe it are invariably “helpful,” “constructive” or “professional.”

What’s going on? It seems that, less than a year into his government, Cameron has managed to dispel the fears of those expecting a sulky, Eurosceptic Tory administration, determined to sabotage the EU.

The British prime minister started without much money in the bank, having upset Angela Merkel of Germany and Nicolas Sarkozy of France in 2009 by pulling his Euro-MPs out of their centre-right bloc in the European parliament. But since he got into Downing Street he has cosied up to both of them with some success. He agreed to Merkel’s demand for a change in the EU’s treaty, and did a deal with Sarkozy over defence co-operation. William Hague, the foreign secretary, may still be against the Lisbon treaty, but he is working with the structures it created. Cameron’s Europe minister David Lidington is pragmatic and, more important for pro-Europeans, he is not Mark Francois, the Eurosceptic who did that job in opposition.

At the same time, the financial crisis has shown how interconnected European economies are—hence London’s willingness to help bail out the Irish, and the lack of gloating, even from Eurosceptic Tories, over the euro’s travails. Given the tensions on Europe within the coalition, a low-key approach has helped keep the EU out of the British news. Yet while the tactics are working, the question remains: is there a strategy?

The answer seems to be no. Under Cameron, Britain’s room for manouevre in Europe has been deliberately limited. The European Union bill currently going through the House of Commons prevents any further significant transfer of sovereignty without a national vote (the bill would take effect sometime this parliament, though it is not clear when).

The potential conflicts of interest arising from this bill came into focus recently because of the little-noticed issue of the EU patent. Years of squabbling have prevented Europeans from agreeing on a single system so that companies can register one patent for all 27 nations, thereby putting them at a huge disadvantage to American innovators. A group of EU countries has agreed to go ahead on their own, under a provision called “enhanced co-operation,” and—as this is a good single market innovation—Britain wants in. Would such a thing have been possible if the referendum bill had already made it onto the statute books?

The official answer is yes, but there has been an internal discussion within the government about whether even such a technical matter might fall foul of the new law. And if there is legal doubt, such exercises will be impossible after the bill is in force because any move to transfer sovereignty, however prosaic, could be challenged in the courts if a referendum has not been called.

So if Cameron wants—as he says he does—to deepen the single market by adopting new measures along with like-minded nations, he may have a problem.

Despite Britain’s absence from the euro, its free-market economic vision has been dominant during the past decade, becoming the hallmark of the past two European commissions. Both used their regulatory powers to press for more competition in the internal market rather than pushing a continental-style industrial policy—to the frequent annoyance of the French.

But now the ascendancy of Anglo-Saxon, non-interventionist thinking is under threat. The euro debt crisis has underlined the need for more integration within the 17-nation single currency bloc. After months of stalling, Merkel has now agreed to French calls for summits of eurozone leaders to steer the currency zone towards greater integration—on the condition that other nations should be asked to sign up to Germanic fiscal discipline.

If the policy programme is agreed in March, non-eurozone countries will be given the option of joining in. But if Cameron says no, Britain may see its influence on economic policy wane, as the new bloc of “eurozone-plus” nations becomes where priorities are set and decisions are taken.

In any event, Britain will remain one of Europe’s two defence powers and a major foreign-policy player. But economic policy influence may now be shifting, via eurozone leaders’ summits, to Berlin and Paris—and that could be bad news for London. Ultimately, being helpful, constructive and professional may not prove to be enough.