Paul Anderson, Tribune column, 13 July 2012

 If the crisis in the eurozone weren’t so serious, the way that David Cameron and George Osborne have tied themselves in knots over Europe would be funny.

They are both instinctive Eurosceptics who would like to disengage from Europe: as the 2010 Tory manifesto had it, “We will work to bring back key powers over legal rights, criminal justice and social and employment legislation to the UK.” They certainly don’t want Britain ever to join the euro; and they want no British part in the deeper fiscal and political union that is increasingly on the European Union agenda as the solution to the euro’s design flaws.

But they know that the eurozone is a crucial market for British goods and services and that its collapse, or indeed anything that impeded access to the European market, would be a disaster for Britain’s already stuttering economy. So they have been arguing for closer integration for the eurozone – from which Britain should be excluded, although it should remain in the EU. An increasingly federal Europe, it seems, is good for everyone else but not for us.

This position horrifies much of the right of their own party, who view the crisis in the eurozone with Schadenfreude, are sworn enemies of a federal Europe even without Britain and would simply like to get out of the EU. It is also unacceptable to most of Britain’s EU partners, who see it as Britain demanding free access to eurozone markets while escaping eurozone fiscal rules and retaining the right to devalue at will.

To make matters even more complex, the Tory leadership remains committed to its manifesto pledge of a referendum on any treaty “that transferred areas of power or competences” to the EU – but it doesn’t want one on measures designed to rescue the euro, which might well require a treaty that transferred vast powers to the EU. Moreover, the idea of an “in or out” referendum on Europe sooner rather than later, as advocated by a large part of the Tory right, is anathema to Cameron and Osborne, but they can’t be too critical because they are fearful of defections of Tory voters (and, who knows, Tory MPs) to the ultra-Eurosceptic UK Independence Party. They also have to keep on board their pro-European Liberal Democrat coalition partners (whose last manifesto included a promise of an “in or out” referendum because they thought “in” would win, though how keen they are on it now is a moot point).

Europe looks as if it could well not only cause the Tories to implode, as it did in the 1990s, but also tear the coalition apart.

With events moving quickly – and with a myriad plausible scenarios of how the eurozone crisis comes to be resolved (or not) – the temptation for Labour is to play a game of wait-and-see, saying little but reaping the benefits of the confusion and feuding in British government ranks. And that, by and large, is what it has done under Ed Miliband.

It won’t be long, however, before it has to declare its own Europe policy: the next nationwide elections, those to the European Parliament, are now less than two years away. Obviously, much of its detailed position will be determined by what happens next, which cannot be predicted, let alone influenced by Labour.

But the big question Labour has to answer is clear even now. It is how far Labour – for the past 25 years a pro-European party, if one that in power infuriated much of the EU with its stubborn resistance to further integration and with its advocacy of free-market deregulationist policies – should adopt a more critical stance on Europe, and how it should do it.

That it should take a more critical stance is hardly controversial. It is now clear that the euro as implemented without a fiscal union is fundamentally flawed – and it has always been clear that the EU’s political structures need reform to make them much more democratically accountable. But that is simply to state the problem. Should Labour rule out future membership of a reformed eurozone forever? Should it demand British opt-outs from EU policies, either present or future, that remove powers from the UK? Most importantly in terms of domestic politics, should it promise a referendum or referendums on Europe, and if so when and on what should they happen?

On all this, the superficial attractions of anti-Europe populism are evident: public opinion is viscerally anti-European. But Labour should be careful not to offer hostages to fortune. A “never” on eurozone membership might look very foolish by 2020, and hasty offers of referendums often prove disastrous in the long run. Labour’s best bet is to ignore the allure of populist promises and offer a European policy of constructive engagement and radical democratic reform of the EU’s institutions.

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