It remains a tragedy that we are led by governments who insist that British interests are served by distance and disengagement in Europe
At times yesterday it was hard to credit that the David Cameron who reported to MPs on last week's Brussels EU summit was the same David Cameron who had emerged from that summit claiming a victory for his efforts to put a seven-year cap on the EU's �129bn budget that was not even on the agenda in Brussels. Whatever the merits of that budget campaign, his emphasis on it was chiefly a public relations smokescreen, aimed at Britain's anti-European media and his own backbenches. The much more pressing issue facing Europe today is the eurozone crisis, on which Mr Cameron was right to stress to MPs that Britain's interests are engaged in support of stability. It is a pity that he does not make this his primary message more often.
Mr Cameron would be uncharacteristically naive if he thought his budgetary real-terms freeze campaign is either in the bag or that it may not bite back at him in the future. It is not in the bag because there are no signatures on the deal yet, just promises. Europe's net budget receivers still have time to mobilise against net contributors like the UK. And it may bite back because Mr Cameron's anti-European backbenchers are not the kind of people to accept any sort of increase in the EU budget, including a freeze in real terms. They want the EU budget to be cut, not frozen, and they want it cut big. They will not buy assurances from a man who has compromised on the EU to seal the coalition deal with pro-European Lib Dems.
The real business last week was the effort, led by Germany, to nail down a permanent bail-out system for debt-laden eurozone members. The agreement creates German-influenced "strict conditionality" rules for rescues from 2013 to replace the ad hoc ones adopted after the Greek crisis. Non-eurozone states, like the UK, can participate (or, more likely, not) on a case-by-case basis. Tight conditions (details to come) will be put on private bondholders. In the meantime, there is an effective pledge not to let Spain, which got a fragile report from the OECD yesterday, go to the wall. Suggestions that the eurozone would issue its own bonds ? which would have put fresh pressures on states such as Germany, with sounder finances ? have been dropped.
It is a very delicate package, one which risks a deflationary effect across Europe, though one which Mr Cameron, already set on such policies at home, can certainly sign up for. But it is a huge gamble. The truth, as Mr Cameron knows but does not say often enough, is that UK economic interests are fully bound up in the short and long-term success of the bailout package. It remains, as ever, a tragedy that we are led by governments who insist that British interests are served by distance and disengagement in Europe ? when in reality the reverse is true.
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