As Crisis Widens, Fears That Britain Aims to Exit European Union

http://www.nytimes.com/2012/10/18/world/europe/as-crisis-widens-fears-that-britain-aims-to-exit-european-union.html

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LONDON — When the European Union unexpectedly won the Nobel Peace Prize last week, the leaders of Germany, France and Italy spoke of their pride. The British prime minister, David Cameron, who will join those leaders at an E.U. summit meeting in Brussels on Thursday, maintained an awkward silence.

In Britain these days, even peace is controversial if associated with the Union.

On Monday, the British government said it wanted to opt out of an estimated 133 E.U. police and judicial cooperation measures to which it had once agreed.

A week earlier, Mr. Cameron supported a plan for a new budget for countries that use the euro, something that would place his country, which does not use the euro, firmly in Europe’s outer tier. The prime minister has been hinting he could hold a referendum on Britain’s relations with the Union, and one newspaper reported Sunday, to no denial, that a senior cabinet minister wanted Britain to threaten openly to leave the 27-country bloc.

All of this has fueled concerns that Britain is moving inexorably toward the E.U. exit door. Political and financial pundits have coined a term for this development: “Brixit,” a variant on “Grexit,” the shorthand for Greece’s much-predicted departure from the euro zone.

Mr. Cameron says that he is trying to keep Britain in the Union. He argues gamely that popular consent to E.U. membership can be regained only by refocusing the relationship on Europe’s single economic and free trade market — which accounts for half of Britain’s foreign trade and investment, according to the government — and loosening other ties.

Britain has always been ambivalent about the European project. Unlike the six founding countries — Belgium, France, Germany, Italy, Luxembourg and the Netherlands — and all of them defeated or occupied in World War II, Britain was a victor. In national mythology, that war was neither a moment of disgrace nor a humiliation; it was widely considered the country’s finest hour, when it stood against fascism.

So the idea of reconciliation through integration never had the appeal in Britain that it did on the Continent.

Unlike many member countries, Britain always paid more into the Union in contributions than it received in subsidies.

With the euro zone almost three years into a crisis, British public opinion has hardened. The overwhelming majority of Conservative lawmakers are euroskeptics and many privately favor a withdrawal.

For some, this is a question of conviction, while others feel a competitive threat from the United Kingdom Independence Party, which wants to take Britain out of the Union altogether. Adept at winning over Conservative voters, the U.K.I.P. threatens to deprive many Tory parliamentarians of their seats in future elections.

So government strategy toward the Union — always hampered by what Chris Patten, a former Conservative minister and former European commissioner, has called “the psycho-drama of Britain’s relations with Europe” — has turned on its head.

When he was prime minister, Tony Blair sought to exploit strains between France and Germany, the twin engines of European integration. Mr. Blair, whose Labour Party was less averse to Europe than the Conservatives under Mr. Cameron, courted allies among smaller countries and tried to compensate for Britain’s self-exclusion from the euro by leading in areas like defense and police cooperation — a policy Mr. Cameron has reversed.

Previous British governments argued that if they did not like something, they had a chance of changing or stopping it only if they sat at all tables with their European partners.

Mr. Cameron seeks a new arrangement that abandons any pretence of being at the heart of the European Union. He does not, for instance, want to stop the euro zone from integrating without Britain. Indeed, he recognizes that this is necessary to save the euro.

But can a more remote relationship work?

According to a recent study for the European Council on Foreign Relations by Peter J. Kellner, president of YouGov, a polling organization, there is a parallel with 1975, when Britain held its referendum on membership in the European Economic Community.

“Then, as now, the prime minister, then Labour’s Harold Wilson, had a problem managing party divisions,” Mr. Kellner wrote. “Then, as now, most voters wanted to leave the Common Market (as it then was). Then, as now, polling (specifically, a Gallup Poll in November 1974) suggested that if the prime minister renegotiated the terms of Britain’s membership and recommended acceptance of the new terms, opinion would swing in favor of British membership.”

Mr. Kellner went on to note that Mr. Wilson did talk to his European partners, claimed victory — and there was subsequently a 2-1 vote to stay in Europe.

In July this year, a YouGov poll suggested that, if Mr. Cameron renegotiated the relationship to his satisfaction and recommended a yes, 42 percent would vote to stay, and 34 percent to leave.

The strategy may have domestic political logic — but there are simultaneous risks: of reducing Britain’s influence on the world stage and making a “Brixit” a self-fulfilling prophecy.

Britain, which has one of the European Union’s largest economies, carries weight with other member states that rely on British influence to bolster the bloc’s free-market wing and counterbalance France’s more statist approach.

But in order to anchor Britain in Europe, Mr. Cameron needs to emerge from a series of negotiations successfully, or at least persuade his own skeptical party he has done so.

Most urgently, he faces tough discussions on the European Union’s next seven-year spending cycle. Many officials and other observers expect Mr. Cameron to veto a budget deal at a summit meeting in November.

That will satisfy euroskeptics only if Mr. Cameron can bring home an improved offer later. Yet playing to his domestic gallery with an aggressive veto may alienate the very European allies Mr. Cameron would need in later talks in any effort to redefine E.U. ties.

Meanwhile, the emergence of a more clear-cut two-tier Europe, with much greater integration among the 17 euro zone countries on issues like banking and financial services, is putting a strain on Europe’s unified economic space, and could ultimately threaten London’s status as Europe’s financial capital.

“Deeper integration in the core would come with disintegration in the E.U.’s periphery and shrink the single market,” Sebastian Dullien wrote in a separate paper for the European Council on Foreign Relations. In other words, it could undermine the one part of the European bargain that Britons seem to like.