Duncan Hamilton: Small nations bide their time as David Cameron storms out

THIS weekend, mainland Europe seems just that bit further away. It is now clear that the European Union is about to change radically and irrevocably.

It is also clear that the UK has stepped into the margins of the European debate. If the first of those was inevitable, the second was surely avoidable.

Plainly, there were divergent interests. For the Eurozone, the dash towards a model of shared sovereignty and fiscal and monetary uniformity was driven by markets mercilessly exposing and exploiting every weakness in the Eurozone. The currency itself was, and remains, on the brink. There was no room for delay, prevarication or caution. The euro was on its way out the back door of the last chance saloon. Hence the leap into the unknown.

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Democratic accountability, national sovereignty, regional diversity, economic flexibility – overnight those became the concepts of the Old Europe. Instead, the New Europe is defined by an agreement which emphasises strict control, punitive sanctions for those who fail to remain within agreed debt levels and an overwhelming sense that a new forced unity has been forged. No-one knows whether it will work. But if you take as your starting point – as Germany and France do – that the single currency and the concept of “European Union” are now necessarily indivisible, it was a necessary and inevitable next step.

By contrast, for David Cameron the issue was political survival. This was his defining moment as Prime Minister. He was being asked to back the Eurozone leap of faith by acting in a manner which he considered against the interests of the City of London. Perhaps even more immediately, he was being asked to do so with the absolute certainty that he would be savaged by the Eurosceptic ranks of the Tory back benches. Saying “no” was certainly much easier than saying “yes”.

But what about the long term? I wonder whether once the adrenalin of muscular diplomacy subsides, David Cameron will regret his inflexibility. This crisis will, eventually, pass. When it does, what is left will define the next century of political influence and economic growth. There was no option for the Eurozone nations to do anything but what they have now done – even Eurosceptics such as John Redwood had been advocating it for months. That forces the question – does the short term protection of tax revenues from the City (an undoubted advantage) justify the undoubtedly diminished influence of the UK in moulding the new Europe? Was that a price worth paying?

Even as the UK stepped back, others did not. The UK grabbed the headlines by vetoing treaty changes. But contrast the position of other nations within the EU but outside the euro. Bulgaria, Denmark, Latvia, Lithuania, Poland and Romania all indicated their intention to join in the new process of fiscal reform. The Czech Republic and Sweden decided to consult their parliaments. Hungary also is considering its position. Of the ten nations in the EU but outside the euro, six intend to be part of the proposed changes and three are reflecting. Only we – instinctively and without further reflection – decided to walk away. I don’t know what your definition of “isolation” is, but that must be pretty close.

Which means that in adopting his uncompromising stance, Cameron is taking almost as big a risk as signing up to reform. Not in the short term – there will be bunting and jellied eels in the backbench 1922 Committee – but certainly as we look to the long term. Not only does this make UK membership of the euro exceptionally difficult – maybe no bad thing many will argue – but it makes UK involvement at the core of the EU unlikely. We are told that the UK will insist on being just as central as ever under the treaties and in the institutions of the EU. Nice try, but that isn’t how it works. Try leaving your wife and then turning up every night for dinner. You might still have a key to the front door, but the reception will be more than a little frosty. Be in no doubt, there will be a high price to be paid for the exercise of the UK veto.

All of which simply confirms that for the UK, as for the Eurozone, the political and economic choices all carry risk. That’s the world we live in. So too for Scotland, as a choice on independence approaches. I read with amusement the demands for clarity from the UK Government on the future position of the Scottish Government on currency and the euro post-independence. The truth is that the options are the same for Scotland whether as part of the UK or not. Sterling remains the default position and will continue post-independence. The euro remains a long-term option, precisely as it does for the UK. In its current form that carries no greater attraction for Scotland than it does for the UK. Scotland would be in the same boat – and the same stormy waters – as every other nation.

As events unfold in the coming years, choices will have to be made based on the way the cards fall. The only difference is whether that decision will be made in Scotland – on solely Scottish priorities – or as part of the UK.

Does the current crisis make the argument against small nations in Europe? Hardly – almost unnoticed at the summit, Croatia signed a treaty to become the 28th member of the EU from mid-2013. As the UK wanders off centre stage, it seems others are waiting in the wings.