David Cameron: did he bite off more than he can chew?

The Prime Minister was lauded by his fellow Tories for his crunch EU summit performance, but could his show of strength cost Britain dear in the long term

VISIBLY exhausted and hyper-stressed, the bulldog got the reward of a big juicy bone when he got back home. David Cameron arrived at Chequers, the Prime Minister’s residence, on Friday night, to a hero’s reception.

Greeting him were 30 Tory back-benchers who had been invited for dinner. Among them was Andrew Rosindell, the MP who – on Wednesday – had urged the Prime Minister to show some “British bulldog spirit” at the EU summit on Thursday night and Friday.

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At 2:30am on Friday morning, according to their definition, he did just that. Going where even Margaret Thatcher never did, Cameron said the word that his party’s eurosceptics have been wanting to hear said to Brussels for nigh on 40 years: “No.” No to a new EU treaty embedding new rules for the crisis-hit eurozone. No to Germany, France and all the rest. Thanks, but we’re off.

Running up to Friday, one Tory eurosceptic, Edward Leigh, had compared Cameron to Joseph Chamberlain, whose infamous claim to have won “peace in our time” after a 1938 meeting with Hitler has forever tainted his name with appeasement. Yesterday, the same wing of the party were throwing praise to their leader more akin to that offered to Chamberlain’s successor, Churchill.

For Cameron, this week’s highlight will surely be when he attends a meeting of the party’s 1922 back-bench committee where he can expect further acclaim for his “no”. Yesterday, conservative newspapers in the UK offered him the kind of praise he has not experienced once since taking over as Prime Minister last May. But what next?

As he returns to his desk tomorrow, Cameron will also get back to working alongside his Lib Dem coalition allies who, yesterday, were showing open rebellion with the way the PM handled the summit. Offered the chance on the BBC yesterday to say he agreed with Cameron’s judgment call, deputy leader Simon Hughes pointedly declined. Other Lib Dems were warning of “revenge attacks” from Europe, with senior EU officials vowing that Britain’s decision is “going to cost them dearly” in influence lost.

While the drama early on Friday morning has stolen the headlines, no-one is claiming that it is in anyway more important than the underlying and immediate crisis facing all of Europe over its debt storm. That storm may yet sweep up the fuss over Cameron’s veto away. The bulldog both barked and bit last week, proving his back-bench critics wrong. But did he bite off more than he can chew?

Frenzied briefing and counter-briefing from all the governments across the continent have blown up a dust cloud bigger than usual, but by yesterday the facts of the overnight conference in Brussels were becoming clear. On the British side, Cameron had dug in his heels on his conditions for supporting a new treaty setting out the terms for the new eurozone.

This included a reform to ensure that any attempt to transfer control over the financial sector from countries to the EU could only happen if all member states agreed to do so. Cameron met German chancellor Angela Merkel and French president Nicolas Sarkozy to discuss this on Thursday evening.

There, Sarkozy dug his heels in too. As far as the British are concerned, this was because the French president, fearful of France’s own loss of sovereignty in the run up to his re-election next year, did not want to offer any concessions to the Anglo-Saxon financiers who act as Paris’s favourite scapegoats for the financial mess it is in. Neither Cameron nor Sarkozy gave ground. And so Cameron walked.

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Sarkozy-watchers suspect a deliberate trap. Far from having to concede that France was having to bend the knee to German-led demands, he emerged on Friday morning to announce regret at the “unacceptable demands” that Cameron had stuck to.

He returns to Paris this weekend as the man who stood up to London’s rapacious bankers. With Cameron, things appear to have been more haphazard, but just as politically astute. The changes he requested for the treaty were not so onerous that they alienated the europhile Lib Dems: indeed, Nick Clegg signed them off. So, when faced with Sarkozy’s “non”, Cameron calculated that he could play his veto without fatally fracturing that coalition.

The impossible task – of doing what both his Lib Dem partners supported, and his eurosceptic back-benchers demanded – had been achieved. Given their mutual success, it is tempting to conclude that the bilateral talks held last Tuesday between Sarkozy and Cameron in Paris were all about ensuring this convenient little Franco-British spat got set up.

So with one bound he is free? Not a bit of it. The non-ideological Cameron has now become the eurosceptics’ hero.

And it was already clear yesterday that they want more. One, MP Douglas Carswell, declared the move “opens the way to a Swiss-type relationship with Europe”. The door having been closed on the EU by Cameron, they are eager to keep it that way, by ensuring there is no back-sliding of “fudging” by civil servants of Cameron’s split. They hope Cameron will now pen his own “Bruges Speech” – his own version of Lady Thatcher’s famous 1988 declaration on Britain’s sovereignty, and still the seminal Eurosceptics creed.

In 2007, after taking over as Prime Minister, Gordon Brown disappointed his own left-wing backbenchers when it turned out he was not going to take the party back to the days of Old Labour. Now Cameron faces a similar risk, of marching his eurosceptics up to the top of the hill, only to march them all down again.

But he may have to do so if the coalition is to stick together. Clegg may have backed Cameron on Friday morning after the veto has been issued. But yesterday, Hughes was less enthusiastic. He “accepted” Cameron’s decision, he said. But did he accept it?

“It’s always a matter of judgment,” Hughes replied evasively. Would the UK be marginalised when the 17+ meet in future? “Yes, of course it is,” he went on – just a few minutes after George Osborne had insisted it wouldn’t be. The Lib Dems may well start asking themselves some uncomfortable questions: Couldn’t he have stayed in the room? Why didn’t he sort it out beforehand? Was it because he wanted it happen? Were we strung along?

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Nonetheless, senior sources claimed yesterday that there had been remarkably little disquiet within the parliamentary group since Friday over the deal. Lib Dem figures argue that the portrait of the party as a bunch of “euro-nutters” is over-played. Lib Dem ministers insist they are not expecting a major revolt this week from their side of the fence. Where there is concern, however, is if the mantra of Britain’s “splendid isolation” after Friday becomes received wisdom, and if the Tory eurosceptic wing takes Cameron’s “no” and decide to run with it.

As we report today, Clegg will tour the TV studios warning the Tories to cool it. One senior Lib Dem figure notes that while they don’t begrudge Cameron his heroes’ welcome at Chequers on Friday night, there has to be a line drawn in any further triumphalism if the coalition is to carry on happily. They, like the Tories, are also hoping that some of the other non-eurozone countries which backed France and Germany last week may think again over the coming weeks, to ensure the UK isn’t entirely on its own.

Past form suggests that Cameron will now do everything in his power to hug the Lib Dems close, in order to preserve his precious coalition pact. And that becomes all the more important when the bigger picture is surveyed. For while Friday night’s intrigue has changed Britain’s relationship with Europe in an irreversible way, it has little to do with the immediate debt crisis confronting the continent.

The summit was supposed to sort that out through its new “fiscal compact”. Under the deal agreed on Friday night, the European Court of Justice will have new powers to assess euro members’ budgets and impose fines on countries which fail to meet the 3 per cent of GDP deficit limit.

But the controls are not as tough as Germany wanted. Chancellor Merkel’s aim was to demonstrate that the debt-crippled nations of southern Europe were now locked into a EU-wide fiscal union. The hope then was that German taxpayers and the European Central Bank would be persuaded to put their financial muscle behind their debts. But financial traders said yesterday that the summit had failed to do so. “We are unlikely to see a step change in ECB bond purchases in the short term,” said one senior financial analyst. It makes it more likely, analysts warn, that ratings agencies will this week mark down some euro area member states. That could be the cue for the markets to test the ECB’s stance by launching a full attack one of those countries’ debts.

At that point, the intrigue from Brussels, and its long-term plans for fiscal union, will be put aside as the eurozone is forced to fight for its life. David Cameron made a historic move in the early hours of Friday morning. But with the debt storm gathering over the continent, it is still too early to say whether it ends up as one of the EU’s biggest events, or simply a peculiar penultimate chapter prior to its complete collapse.