European Affairs

Long before the Algerian army's unexpected attack on hostage-taking desert jihadists caused the British prime minister to postpone its planned delivery in Amsterdam, the whole project had got out of control. The ugly, once-unthinkable word “Brexit” has now entered the Brussels vocabulary. Speculation about Athens leaving the euro – the Grexit - may have subsided.  But what about the Brits?

Nothing symbolizes the current disconnect between London, Paris and Berlin more than the original timing of the speech.  It had been penciled in for Tuesday, January 22, perhaps in a German city, until horrified British diplomats and EU officials pointed out what they thought every good European knows. This would be the day when French and German politicians and officials would be gathering in their thousands in Berlin to mark the 50th anniversary of the Elysee Treaty of Franco-German reconciliation after three major wars since 1870.

Self-absorbed and prone to self-regard they may be, but to the EU elite Cameron's proposal sounded a bit like a Mexican president proposing to a big speech on reforming Nafta, to be delivered at the Alamo battle site in San Antonio on the Fourth of July. Downing Street shifted the date to Friday January 18, the place to Amsterdam – until the French intervention in Mali backfired bloodily into Algeria.  But the damage was done. As one irate Merkel adviser puts it: “we don't even bother to ignore the Brits any more.”

That's an exaggeration, but Britain's absence from the heart of the eurozone debate has become a marginalization about more than its retention of sterling as opposed to the euro.  As Europe's preeminent financial services centre, London constantly needs to protect itself from excess EU regulation and commercial envy as the French and Germans protect their vital interests. Instead the UK retreats, politically and officially. When Cameron took Britain out of the EU's conservative political caucus, the European Peoples party (EPP) – it was the pledge that won him the Tory leadership in 2005 – he took himself out of the networking loop. Another damaging case of appeasing unappeasable activists with the disaffected temperament of Tea Party Americans, said critics.

Cameron's “European Curse” had been evident for a while. He once said his party must stop “banging on” obsessively about this divisive issue. Yet the prospect of a defining Cameron speech – his equivalent of Margaret Thatcher's Bruges speech in 1988 – encouraged Euro-skeptic Conservative MPs in the prime minister's own party to bang their drums, upping the stakes in anticipation.  After two serious parliamentary rebellions on the issue - shades of John Major's Europe-riven regime of the 1990s in which young Cameron cut his political teeth – the premier had been promising but postponing the speech for months.

Its aim would be to set out for British voters and for the country's EU partners how the Conservative-led coalition hopes to renegotiate the UK's turbulent 40-year relationship with mainland Europe in ways that would make everyone happy and keep the Brits inside the tent – as senior US officials have been making publicly plain the Obama administration wants to see too.

A tall order by any standards.  In some opinion polls taken in the fifth year of a deep recession, with UK GDP still 4% off its 2007 peak, a majority of British voters, especially Conservative-voting types, now say they want out of Europe, as a vociferous minority have never ceased saying since Edward Heath took them into the then Common Market in January 1973. Yet Cameron's Liberal Democrat coalition partners, led by the multi-lingual deputy PM, Nick Clegg (his mother is Dutch, his wife Spanish), remain, as they have long been, British most pro-EU party.

It's a hard circle to square, and Clegg makes no secret of his dismay at the tone which Cameron and some of his ministers (at least six cabinet members would vote to leave if a renegotiation of UK membership did not deliver acceptable terms) deploy to address the question. At his most emollient Cameron argues that many of the EU's member states are troubled by the centralizing ambitions of Brussels, though they are increasingly a glove puppet for German demands for supra-national control over banking and budgets.  If Berlin and the European Central Bank are to underwrite the debts of Athens, Lisbon, Madrid or Dublin they must correct the defects in the euro's original design, feeble rules about keeping budget deficits below 3% which, incidentally, Berlin and Paris broke first.

Faced with the awful prospect that it might collapse into economic depression, Cameron accepts the logic of greater eurozone integration, but wants the EU to withdraw from other areas where it claims competence. The Dutch or Swedes may agree, but prefer quiet diplomacy and alliance building to tub-thumping,  which they suspect is designed to impress UK voters tempted by the simplistic populism of the UK Independence party (UKIP) which wants out. UKIP has no elected MPs, but has overtaken the Lib Dems in some national polls. It threatens to split the Tories as the Tea Party does the US Republicans or the French National Front (NF) does both main parties. In a deep recession populism's appeal grows.

Ironically the EU's austerity-driven recovery package, criticized by British and US Keynesians for making a bad situation worse, is the one critique Cameron cannot make: his own government is doing much the same. But less technical issues like immigration levels (half a million Poles moved to the UK after its EU accession), business regulation, tax rules, extradition treaties, court rulings and much else enrage the London tabloids and their recession-hit readers.  More than ever the EU is the scapegoat for the ills of a nation whose core problem remains poor skills and not enough competitive goods to face the Asian (and German) challenge.  Exit from the EU won't change these facts any more than exit from Britain – Alex Salmond's Scottish Nationalist Party (SNP) has won the right to its own independence referendum in 2014 – will solve Scotland's.  Core problems would remain after the celebration hangover recedes.

It goes without saying in the age of voracious 24/7 rolling news that hours before Cameron cancelled his flight to Amsterdam to deal with the Algerian crisis officials briefed reporters on what the PM was going to say – correction: would have said - and may now never say since some advisers had always warned against making The Big Speech at all. If Europe does not change, if the EU does not cease to be “something that is done to people rather than acting on their behalf” it will fail, economically against more dynamic, emerging BRIC nations, and politically at home, he would have said in Amsterdam - “and the British people will drift towards the exit. I do not want that to happen.”

European ministers and officials, many British ones, past and present, do too. Tony Blair as well as Ed Miliband, the current Labour leader, warns that Cameron's scenario, a renegotiation of terms followed by a referendum after the 2015 UK election he hopes – hopes – to win, may be “sleepwalking” towards the Brexit option. So do Tory veterans like Kenneth Clarke – a minister in every Conservative government since 1970 – and Lord Michael Heseltine. So does most of British big business, including banks, which see UK access to EU markets as crucial to stability and investment.

Yet the same people (including Clegg) have a problem which most refuse to address: they advocated sterling's entry into the poorly-designed eurozone in 2001, and predicted dire consequences if did not happen. Gordon Brown, then Blair's finance minister, gets little credit for ensuring it did not. The pro-Europeans were wrong and voters monitoring the protracted eurozone crisis are daily reminded so. No one has yet said “sorry.”

It is not that the anti-Europeans' alternative scenarios were convincing either-- join Natfa, revive the Commonwealth as a trading block, emulate Switzerland or Norway-- allowed EU access at a price with little influence, go it alone as a siege economy or a European Hong Kong. Clever people make powerful arguments both ways, none has a convincing argument in an uncertain world in which Europe looks increasingly old and tired for the first time in 500 years.

But Cameron's 2016 referendum scenario adds a further element of uncertainty. Back in 1975, EU leaders connived in Labour PM  Harold Wilson's largely cosmetic “renegotiation” of Heath's 1973 terms. It allowed him to lead the Yes campaign and win the In/Out vote by a seemingly decisive ratio of 2-1. Will Europe leaders, still locked in the eurozone crisis, have the will or capacity to oblige again? Or will they say they have cut the Brits a deal once too often, Wilson's renegotiation, Thatcher's budget rebate, John Major's opt-outs at Maastricht in 1991, exercised by Blair and Brown, which Cameron wants to unpick again?

Even if Europe – increasingly than means Berlin - sees continued British membership as important enough to accommodate Cameron, itself a gamble, will disgruntled voters buy the offer in 2016?  Plenty of EU referendums, the last on the aborted constitution to which the French and Dutch said no, have gone wrong as voters punish the sitting regime. By 2017 we could be looking at an independent Scotland leaving England but trying to stay in Europe while England goes the other way. It's not likely, but it is possible.

Michael White writes about politics for The Guardian in London.