For the Record

by David Cameron

  Lisbon didn’t just rile the usual suspects. It also had an impact on the younger, liberal, what some might call ‘Cameroon’ wing of the party – reinforced by the fact that MPs were keen to reflect their constituents’ views. The bright and loyal new MP Stuart Andrew came up to me and said that he backed my leadership, and knew he wouldn’t be there if it wasn’t for me, but because of the boundary review he would potentially be going for the same seat as anti-EU MP Philip Davies, and he had to rebel. I didn’t like it, but I understood.

  The ringleaders were rapturous. They had brought about the biggest parliamentary rebellion on the issue of the EU for years. And they could argue that I was being stubborn in doggedly defending the status quo. Of course, I didn’t see it that way. My tactics may have been cack-handed on this occasion, but I believed that preventing the government from being undermined by a badly timed and dangerously drafted motion was in the national interest.

  In the event there was little doubt that the ‘PM versus party’ narrative was as bad as, if not worse than, a landslide defeat on an insignificant Thursday motion. As Commons victories go, it was as pyrrhic as they get. And it showed the extent to which the ground was moving beneath us.

  While the focus seemed to be about form – how I dealt with the debate – the argument of substance – how I should deal with the issue – began to matter more and more towards the end of 2011. The Eurozone crisis was growing. The pressure for more treaty change – from European leaders and from our own backbenches – was growing. And, crucially, our economy wasn’t growing, stifled by the lack of progress in the Eurozone. All of this was creating a storm that was very difficult to navigate.

  And then, having envisaged no dramatic changes to European law for five years, I was eighteen months in and facing the prospect of a second treaty change.

  The Germans had come to the conclusion that they would support more bailouts and monetary activism by the ECB, but only if there were tougher rules on Eurozone countries and their ability to run up excessive deficits. Merkel came to the view that treaty change was the only way to achieve this.

  The French didn’t really like it, but if it meant the ECB pumping money into the system, they would go along with it. It was, as I called it at the time, ‘the traditional Franco-German stitch-up’. This Fiscal Treaty was so harsh we privately named it ‘the German torture chamber’. It would cap at 0.5 per cent of GDP the ailing countries’ annual structural deficits, bring in ‘automatic consequences’ for those whose public deficit exceeded 3 per cent of GDP, and enshrine this in their constitutions

  I could see the case for treaty change to help the euro, but we were back to the difficulties it could pose for the UK. While any treaty would principally concern the Eurozone and its members, it represented more powers for part of the EU, and a further change to the nature of the organisation. It also posed a political difficulty: in Britain people would be asking, if the Eurozone could tinker with treaties, why couldn’t we?

  While I thought I could handle both these difficulties, there was a bigger problem at hand. What was on the table was a new treaty that would allow the seventeen Eurozone countries to shut out the ten other EU countries while deciding things that would affect us. Anything they did on financial services or single market regulations, for instance, would have an impact. Financial services was our biggest sector – a huge source of GDP and jobs. The single market was in some ways our creation, and with such high exports in services, it had the potential to benefit us more than many others.

  I knew I’d have a fight on my hands to get the safeguards we needed. But isn’t that what we were in this thing for? Not to roll over and do what Germany wanted every time a decision arose, but to fight for our interests and ensure that, if the Eurozone was going to caucus, Britain’s interests were protected. That, after all, was central to the case for membership.

  The showdown was scheduled for the next European Council and the Eurozone meeting three days afterwards. I insisted on attending the latter – who knew what they’d cook up without us?

  But before that, I arranged a video call with Barack Obama, Sarkozy and Merkel. I agreed with Obama beforehand that I would go in quite hard on the need for a proper deal and genuine bank recapitalisation, reiterating my ‘bazooka’ intervention.

  Obama played it brilliantly: he was the good cop, setting out the scale of the problem, sounding very reasonable. I came in hard. Merkel and Sarkozy were both frosty.

  When, at the end of the call, they said goodbye to Obama but not to me, I realised that the stock of Brownie points I’d built up with France and Germany over the past year and a half had been run down in one go. But it was in a good cause, because prevarication on the Eurozone was stultifying Britain’s economy, and that of many other countries.

  Then came the emergency Eurozone European Council meeting on Sunday, 23 October 2011. Sarkozy was bad-tempered: ‘You’re not in the euro, you hate the euro, you’re always attacking it, and now you want to come to our meetings’ – the accusations flew out of him like rounds from a machine gun. I remained calm. I said we must have some safeguards for those countries that were in the single market but not in the single currency.

  Jean-Claude Juncker, the prime minister of Luxembourg, was particularly dismissive of British concerns. As a finance minister, he’d been there at Maastricht when the journey to monetary union began. He’d been there when we refused to join the euro. He always pushed and pushed for more powers for the EU. Often the smallest nations get the biggest hearing, and here was the proof: the leader of a tiny country, with a population the size of Manchester’s, trying to sideline the interests of the biggest financial services exporter in the world.

  Then José Manuel Barroso, the president of the European Commission, chipped in. He was meant to be the keeper of the EU of twenty-seven. Yet when the Germans proposed a treaty change that would benefit the seventeen and potentially disadvantage the others, he didn’t defend the twenty-seven, he attacked one: Britain. I was furious, and I called him afterwards to tell him exactly that.

  On Wednesday, 26 October I was back for Round Two. Sarkozy was still angry at my presence, though Swedish PM Fredrik Reinfeldt supported my decision to attend. When the leaders met, I made a polite intervention about how we wanted to help; we wanted to endorse the plan for greater Eurozone coordination when it was announced; we were a member of the IMF, indeed a leading shareholder in that vital organ­isation, so there might be ways that we could help. I was met by complete silence. Nobody was interested. I sent a message to my team outside: ‘It’s like karaoke night in a Trappist monastery here.’

  Merkel came up to me afterwards and said that I had lectured the European Council like a schoolteacher. ‘Angela,’ I said, ‘you have come here asking for a treaty change that none of us want and we all have to go “Yes, yes, yes, of course” – so to get that from you is bloody rich.’ To be called a schoolteacher by Europe’s schoolmarm-in-chief was exasperating. Still, we said these things as you’d say them to a friend. And that was good, because I knew she was the key to nailing down Britain’s demands.

  The following month she and I sat in her office in the Chancellery, a modern building in Berlin colloquially known as ‘the washing machine’ because of its square shape and large round window. Ed Llewellyn and John Casson joined us, as did Jon Cunliffe, the cerebral Treasury man I’d brought in as our permanent representative to the EU – someone with a sceptical eye to scan Europe both for changes that could disadvantage Britain and for opportunities to make progress.

  I looked Merkel in the eye and said I had a choice. ‘I can try and galvanise all those countries that don’t want treaty change – and there are quite a lot of them: the Swedes, the Dutch, the Danes – and try and lead all that lot to try and stop what you’re doing. Or we can reach an agreement that you get your treaty change. But in return I do need some safeguards, or something for Britain, to help me take a tre
aty through Parliament.’

  Perfectly reasonable. Merkel was conciliatory: ‘David, I understand. You will ask for more than I can give, I will propose less than you need; but in the end we will find the way.’

  We followed the meeting with two alternative proposals: safeguards around financial services or safeguards around the Social Chapter. That was then expanded into five key asks drafted by the Treasury: one about safeguarding the single market, two about financial services, and two about the Social Chapter. Merkel had agreed that she’d come back with some counter-proposals, and would make sure there was what she called a ‘decent overlap’ to enable me to get any treaty change through Parliament.

  But no counter-proposals were forthcoming. So I would have to prioritise my demands. I weighed it up – what our backbenchers really wanted, versus what would actually help Britain’s long-term economic strength – and concluded that the safeguards for our financial services were far more important than the Social Chapter. They were also more straightforward to implement, and easier to explain to other EU countries as directly related to the new Eurozone arrangements.

  The European Council meeting to decide on the Eurozone plan was to take place on Thursday, 8 December. This was it: my third big European moment of 2011.

  I started that day at the DHL logistics factory in Feltham near Heathrow, where a by-election was to take place the following week. I skipped across London to watch five-year-old Elwen play a mouse in his school nativity play. He had two lines, and I was poised to dart out the moment he’d delivered the second – ‘It’s snowing so badly I can’t see’ – straight into the car and onto the plane at Northolt, bound for Brussels.

  The pre-meeting with Sarkozy and Merkel was so frosty I could barely see a way through. Merkel wanted a treaty. Sarkozy said he wanted a treaty (in fact, I think his real desire was for an intergovernmental arrangement). And I wanted safeguards for Britain’s financial system – otherwise there would be no treaty.

  Still, Sarkozy went off like a rocket. It was ridiculous, he said. We were trying to carve out space for Anglo-Saxon capitalism, trying to opt out of the single market in financial services. He went on and on. But it was Merkel’s reaction that was key. She said, cold as ice, that we could have assurances, but we could not have treaty changes. This, even though she was seeking treaty changes herself. She knew it wasn’t enough. I knew I couldn’t get her treaty through Parliament with nothing more than a few polite assurances.

  Normally everything is sewn up at the pre-meetings before the dinner, but not this time. I took my seat feeling that no one was talking to us and no one was listening to us. In the loos I bumped into the Dutch prime minister, Mark Rutte. He was one of my greatest allies – so often the Netherlands and the UK were on the same page. But he said to me, ‘You are asking for too much on financial services.’

  Van Rompuy said we should discuss the substance of what was required before we moved onto the method – in other words, whether or not it was necessary to have treaty changes at all. That’s why I waited until 2.30 a.m. to say my main piece, because I thought it better to play according to the rules as set out by the president.

  That was a mistake. Van Rompuy’s strategy was to wear everyone down through lengthy arguments, while at the same time marginalising British concerns. It didn’t work, but had I deliberately pushed pause on the proceedings right at the start, I might have increased the chance of British concerns getting a fair hearing.

  In the end, my refusal to agree an EU treaty was swiftly met by a proposal to create an equivalent measure that was formally outside the European Union structure. It was what Jon Cunliffe had predicted: they’d make a treaty without us, and just call it something else.

  I had one final card to play, which was to say that without Britain signed up to this thing – what they were now calling a ‘compact’ rather than a treaty – they couldn’t legally use EU institutions to staff it. When I said that, there was an audible sigh in the room.

  It was now 3 a.m., and they called the head of the European Council’s legal service, Hubert Legal (his actual name), to clarify whether I was right. Could they use the institutions as they had the previous year? Or couldn’t they? All those expectant eyes on this unassuming, greying, bespectacled man, waiting for his judgement.

  I knew that, at a pre-meeting the day before, Mr Legal had been categorical about the constraints on forming a pact outside the EU treaties that used the EU institutions. He had said that it was full of difficulties and potentially illegal. However, he now proclaimed from on high – holding some sacred-looking EU text – that their use probably was in order. Anyone who says that the EU is an organisation based on law and not politics has never seen it act under pressure. We were powerless to stop them and to get what we needed.

  I said to the team afterwards that it reminded me of that scene in Monty Python’s Life of Brian, when the title character has endlessly insisted he is ‘not the messiah’, only to be told by a character reading from an ancient-looking scroll, ‘Only the true messiah denies his divinity.’ ‘Well, what sort of chance does that give me?’ Brian says, exasperated. At that moment I knew exactly how he felt. The sort of miracle that can only happen within the walls of the Justus Lipsius Building.

  At 5 a.m. the meeting broke up, and I held a press conference at which I explained why I had vetoed an EU treaty. I genuinely believed that I had behaved with reason and decency, as well as determination. And I was genuinely angry that this organisation – supposedly governed by the Council of Ministers acting unanimously when it came to issues of treaty change – could behave in this way. I went to bed for an hour at the UK ambassador’s residence before coming back to Justus Lipsius to sign – you couldn’t make it up – another treaty.

  This time, however, I was happy to put pen to paper, because this was the treaty that would admit Croatia to the EU. It felt momentous: a country that just over two decades earlier had been a communist dictatorship, and that was then ravaged by civil war, had come in from the cold, and was ready to trade and cooperate with its European neighbours.

  We had always pushed for an enlarged EU. Not only was it good for peace and prosperity, creating a wider trade area for Britain and a greater bulwark against aggression from the east; it was a counterweight to those who wanted a tighter, federalised Europe – the ‘German horses and French coachman’ that de Gaulle had originally envisaged.

  Derided in Europe, I was now lionised at home by the press and parliamentary party. Never had the 1922 welcomed me with louder table-banging or heartier hugs. I didn’t share their elation. The volcano had erupted, and all I could see ahead of me was the magma of chaos.

  I later heard that Sarkozy and Merkel had met and decided that the risk of a British veto was preferable to my proposed treaty changes, since they could fall back on an intergovernmental treaty outside the European Union structures.

  Looking back, I think this was a very important moment and choice. I had made it perfectly clear that Britain was willing to support a more integrated Eurozone, even to encourage it, but that we needed our status outside the Eurozone but inside the EU to be recognised. They had decided that uniformity was more important than accommodating our differences. I think this was a historic error for the EU, and quite unnecessary.

  Some argue that my demands were unreasonable. But I had dropped the Social Chapter asks. Indeed, William Hague told me I was being brave in asking for so little.

  Perhaps a bigger proof point came from Nick Clegg – lifelong Europhile, College of Europe alumnus, former MEP, speaker of five languages, husband of a Spanish wife, Mr Continental. He urged me throughout to oppose any treaty change, as he was convinced that it was unnecessary, that others opposed it, and that there were other ways of doing what the Germans wanted. He also agreed the negotiating strategy which unambiguously involved insisting that if there were treaty changes for others there would have to be safeguards
for financial services and the single market.

  Another criticism was that my demands were irrelevant to a treaty that was about the Eurozone, pure and simple. By even trying to amend it with safeguards we would be making the job of getting it through the British Parliament harder. I don’t agree. If the Eurozone members were going to have their own treaty and their own meetings, using all the machinery of the EU – including its legal base – we needed to make sure that caucusing by them didn’t result in damage to key British interests.

  The third theory is that I mishandled the negotiation. That I waited too long to set out what Britain wanted, both before the meeting and on the night itself. People were convinced we were asking for something unreasonable before I’d even opened my mouth.

  There is some truth in this, certainly about the timing. But anyone trying to negotiate safeguards from the EU is always in a dilemma. Hold your key goals close until talks are properly under way, and you are accused of trying to bounce your colleagues. Set out what you want in full and in advance, and when you inevitably get less than you asked for, the mission is branded a failure.

  The real story behind the veto is more complex, and more deeply rooted in the European dynamic.

  Germany’s unfailing ability to get what it wants in the end is matched only by its devotion to the euro. I wasn’t wrong to attempt a deal with Merkel to get the British safeguards – after all, two years later we would, together, drive through a deal to cut the EU budget that very few other countries wanted. But I was wrong to think that, at a time of crisis, she would expend German political capital to help Britain out. Another pathway – a treaty outside the EU – was open to her. She hated it, but she took it.

  My battles over bailouts, the referendum motion and the fiscal compact had two other clear lessons for me. On Europe, the Conservative Party (reflecting broader opinion in the country) was becoming increasingly ungovernable. And Britain’s current status in Europe was becoming increasingly unsustainable, as the whole project continued to mutate into something so different from what we signed up to all those years ago.