Cameron’s gamble on EU membership: free agency in the football club

British Prime Minister David Cameron’s promise to hold a referendum on his country’s membership in the European Union was immediately hit with ridicule. As pundits were quick to note, Cameron seems to be angling not to leave the union (a poll showed that most Britons don’t want to, anyway) but to win the UK new freedoms in a changing Europe.

“If you join a football club, you can’t say you want to play rugby,” grumbled French foreign minister Laurent Fabius after Cameron’s speech. But in a football club of EU nations bound together by the blood of a single currency, Britain—which, along with Denmark, retains its own currency—has fewer obligations to the team and sees a much smaller benefit from playing the game. Britain isn’t asking for rugby; it’s asking for free agent status.

Britain’s request would be far more ridiculous if the EU were not already rapidly evolving. When 11 countries launched the euro currency in 1999, European leaders had failed to agree on the adequate financial framework to support that monetary union. This was a decent status quo for the UK. But European leaders on the continent are now building those foundations rather than see the euro collapse, changing the rules of the game for the EU. In fact, future treaty change is still likely. Although policymakers have expanded supervisory roles of the European Central Bank and passed new legislation to prop each other up, debt mutualisation through collectively issued eurobonds is still in the cards for the distant future.

The UK has no place in many of these institutions because it’s not part of the euro currency. Not only has its economy been hit by the euro crisis, it faces repeated attempts from France and Germany to steal London’s financial spotlight. The financial transaction tax, which 11 EU countries agreed upon yesterday, is the lastest in what Britons see as a series of regulatory measures from Europe meant to deprive London of its status as Europe’s financial center. The proposed tax would divert funds raised towards rescuing troubled European countries, something the UK has so far avoided. Further, a much lauded plan to establish an EU-wide banking supervisor could subject British banks to new regulations, despite the fact they use a different currency.

“[Cameron] is right to say that doing nothing is no longer viable for the UK, given increasing eurozone integration and the increasing risk of the UK public demanding an exit from the EU, if there is no change. He was also right to stay clear of a specific ‘shopping list’ of powers that he wants back, this far in advance,” says Mats Persson, the director of UK-based think tank Open Europe. “Given that virtually all of the broad proposals mooted for more eurozone integration require some re-opening of the EU treaties at some stage, to which the UK must give its approval, Cameron will most likely get opportunities to negotiate a new deal.”

Cameron’s plan is not to put a referendum on the EU up to a vote (as we’ve noted elsewhere, the UK will probably stay in the union), it’s to wield the leverage of uncertainty against Europe to negotiate a new contract. CEOs attending the World Economic Forum in Davos, Switzerland, this week were immediately wary that Cameron’s timetable on the referendum would make for a long period of uncertainty.

It’s little surprise, then, that German Chancellor Angela Merkel immediately said she was willing to listen to Britain’s proposed changes, although she hinted that she might drive a hard bargain in the negotiations. “Europe also means that one should find fair compromises…Germany and me personally wishes Great Britain to remain an important part and active member of the EU,” she said .

While European countries move closer together, Britain’s role in the union is drying up. Like everything else in Europe, power struggles are slow—and sweeping promises are rarely kept.