Central Europe: A Forgotten Ally for Britain

When David Cameron was undiplomatically told, in comments that were crafted to be reported, to butt out of negotiations over the Eurozone by Nicholas Sarkozy, both he and the French President would have been pleased by the impression given to their domestic constituencies. As a political manoeuvre it is not quite on the scale of the war of Jenkins’ Ear or the Ems Despatch, but it served to remind concerned followers of the Prime Minister that he was not going to refrain from speaking his mind or advancing British interests in the notoriously closed-minded European Union.

Offending the EU and its members for the sake of domestic consumption has been Mr Cameron’s strategy ever since he took his party out of the European Conservatives grouping and set up a new, eurosceptic grouping in the European Parliament. The affair earned him a tongue-lashing from David Miliband, but if that was the worst of it, no more senior member of the Shadow Cabinet need retort than Baroness Warsi – keen as ever to go to war.

Yet the strategy of carping at the margins has failed, and embarrassingly so. France, an awkward partner, aside, the effect on Mr Cameron’s relationship with Angela Merkel has been disastrous. Last week the German Chancellor, undoubtedly the political centre of gravity in the EU at present, warned Britain to avoid substantial amendments to any new treaty to regulate the Eurozone. Mr Cameron could claim, with well-worn earnestness that ‘they started it’ but Ms Merkel could as easily repeat the claims of the British Labour Party, that is not a time to play politics in the midst of a serious crisis.

That Mr Cameron went alone to the meeting with Angela Merkel, as well as to see Jose Manueline Barroso and Herman van Rompuy, is revealing. Moreover, he did so at a point when the figureheads of Central European countries are substantially parroting his own agenda.

First, there is Slovakia, the most reluctant contributor to the bailout of Greece. As the second poorest member of the Eurozone, it is not hard to see why, especially as the financial crisis has already claimed one government.

Second; Poland, whose Prime Minister, Donald Tusk has just accomplished the unique feat in post-Cold War Polish politics of being reelected. Moreover, Poland has the honour of being the only economy in the EU not to go into recession in the past four years. In an eloquent and wide-ranging speech to Parliament, Mr Tusk set out his plans to tackle a looming pension gap, reform farmers’ national insurance and promote growth through the tax system. In practically the same week, the Polish EU Presidency settled on a 2% rise in the EU budget to keep pace with inflation, contrary to the more profligate demands of the European Parliament, which wanted 5%.

Third; Hungary, whose Prime Minister, Victor Orban recently spoke at the London School of Economics. Mr Orban admitted, in Steve Hilton-esque terms, that his country had a ‘growth problem,’ but that it was well poised for investment nonetheless through its renewed infrastructure and culture.

Finally, Romania, who alone in the EU seem to be speeding towards some form of growth.

The thread linking these countries is a wariness of the Eurozone, of which only Slovakia is a part. Hungary, which is threatened with a downgrade to ‘junk’ status by the ratings agencies (and a politically unreliable government), may be the hardest to believe when they call for stringent benchmarks (Mr Orban specifically questioned the timing of the higher capital quotas for banks, now 9%), but it is nonetheless in the interests of these countries, as of all, that the Euro is maintained by common standards of solvency to avoid devaluation or the attentions of short sellers.

Poor countries largely, they are understandably keen to see investment in infrastructure and their economies continue. Having caught up to some extent with the established EU members, that could be either focused in key areas or come from the private sector, so long as there are credible markets to their east.

In a pithy turn of phrase, Mr Tusk pointed out that in the EU, everyone is invited to dinner. However, if you are not at the table, you are most likely on it. This is the distinctive attitude that Britain has taken to the EU, and it is unlikely to be constructive. It has alienated Germany with its defence of finance and has failed to seek new allies amongst the governments of Europe. Having given up a share of the rebate under Tony Blair, it has failed to push for the removal of protectionist subsidies in favour of ones that open up investment and undertaken the same hectoring tone of President Obama over the Greek debt crisis; sort out your mess so I can jolly well carry on blaming you for my own.

Perhaps the only point on which Mr Cameron could conceivably differ from those Central European countries named above is over Russia, where Mr Cameron has recently been touting Britain as open for business. Overturning uneasy British relations with Russia is not a bad decision but it should be recognised that as an emerging market, Russia will naturally look for partners to do business with, if the political costs are not too high. At the moment, pushing for the expansion and reform of the EU would not hurt Mr Cameron’s relationship with Vladimir Putin, and should be strongly considered, if Messrs Tusk, Orban and Radičová still see fit to associate with Britain amidst its own growth problem.


Postscript: A really good article from MP Denis MacShane on the Conservatives’ EU isolation at Progress makes similar points.

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