Jan. 31 (Bloomberg) -- David Cameron, who found himself isolated in the European Union after refusing to back a treaty to enshrine fiscal discipline last month, drew criticism from his own lawmakers for retreating from his position.
The prime minister told reporters following an EU summit in Brussels yesterday that Britain will allow European institutions including the European Court of Justice to be used to enforce new fiscal rules in the euro region.
Cameron will have to explain that in Parliament in London today to rank-and-file members of his Conservative Party, who cheered him in December when he forced other EU nations to forge ahead with their own agreement and vowed to resist the use of EU institutions to underpin it. Cameron said yesterday he will be “watching like a hawk” to see the new arrangements don’t threaten British interests.
“There isn’t an EU treaty, because I’ve vetoed it,” Cameron said. “We’re not in this treaty, we’re not part of it, we don’t ratify it. The EU institutions are already used in other settings we’re not involved in. Our national interest is that these countries get on and sort out the mess that is the euro.”
The leader of the Conservatives in the European Parliament, Martin Callanan, accused Cameron of giving way to his Liberal Democrat deputy, Nick Clegg. “I blame a combination of appeasing Nick Clegg, who is desperate to sign anything the EU puts in front of him, and the practical reality that this pact is actually quite hard to prevent,” Callanan said in an e- mailed statement.
Tory lawmaker Bernard Jenkin said the euro region was embarking on fiscal union “in the full expectation that the EU institutions will do their bidding,” nullifying the U.K. veto.
“This is a fundamental change in the nature of the EU, where a veto counts for nothing and highlights how the terms of U.K. membership of the EU are becoming ever more unacceptable,” he said in an e-mail.
EU leaders yesterday completed the fiscal-discipline treaty, which speeds sanctions on high-deficit states and requires European governments to anchor balanced-budget rules in national law. Eight countries outside the euro backed the pact, leaving Britain and the Czech Republic to boycott it.
Cameron broke ranks with French President Nicolas Sarkozy and German Chancellor Angela Merkel last month after he failed to secure guarantees of a British veto right over future financial regulations. Cameron called them a threat to London’s standing as Europe’s leading financial center.
Cameron said at the time that any changes made under the alternative fiscal pact could not use EU institutions because they could only carry out policies applying to all 27 members.
Europe has been a lethal issue for Conservative prime ministers since at least 1990, when it led to Margaret Thatcher’s downfall over her refusal to agree to a timetable for joining the single currency. Her successor, John Major, found his leadership undermined by euro-skeptics on his own side.
Cameron attempted to laugh off speculation of a rift with Sarkozy after the French president told reporters Jan. 29 that Britain “doesn’t have any industry,” a comment he refreshed yesterday when he said France’s decision to develop industry as well as finance “aligns us more with our German friends than our British friends.” The two men exchanged a brief handshake upon arrival in Brussels.
“Every now and again he says something I don’t agree with,” Cameron said. “We actually have a larger industrial sector than France, but I’m going to gloss over that.”
He attacked Sarkozy’s plan for a financial-transactions tax. “In the spirit of this healthy competition with France, if France goes for a financial-transactions tax then the door will be open and we’ll be able to welcome many more French banks and businesses to the U.K. and we’ll expand our economy in that way,” he said.
--With assistance from Gregory Viscusi in Brussels. Editors: Andrew Atkinson, James Hertling
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