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Death of Tory Euroscepticism?

Gavin Hewitt | 15:16 UK time, Monday, 4 October 2010

Conservative PM David Cameron (right) and Lib Dem Deputy PM Nick Clegg

Wherever I go in Europe I am asked what happened to the Eurosceptics in the Conservative Party?

Some imagine, mistakenly, that they have quietly joined the endangered species list.

Before the UK election there was fear in Europe that a British Conservative Party would usher in an era of hostility towards Brussels. The new intake of Tory MPs were said to have a "visceral" dislike of the European project. This was a party committed to repatriating powers from Brussels.

The leader of the Liberal Democrats, Nick Clegg, before the election accused David Cameron of having chosen European allies who were "nutters" and "homophobes". It was assumed that Cameron would have strained relations with Merkel and Sarkozy and that Britain once again would be isolated in Europe.

Then came the election and coalition government and everything changed. The Conservative-Liberal Democrat nuptials were scarcely completed when the idea of "repatriating" powers from Europe was quietly dropped.

Almost immediately David Cameron signalled he wanted to co-operate with Europe. Paris and Berlin were his first ports of call. William Hague said the new government wanted to be activists in Europe. They emphasised areas of agreement. The Tories wanted to extend the single market and David Cameron set himself up as the champion of Turkey's entry into the EU.

The crisis in the euro helped. It was widely seen as a flawed currency. The Liberal Democrats were forced by circumstances to curb their enthusiasm. The Tories believed their distaste for the Euro had been justified by events.

The government would not use British money to bail out the euro, but there was no schadenfreude coming from London. A strong, healthy single currency was in everyone's interest - that was the official line and that, too, played well in Europe.

Part of this was the reality of sharing power with Nick Clegg, a man who cut his political teeth in Brussels. But before the election David Cameron decided he would not choose fights over Europe. Sure he had told the electorate "I want to be in Europe but not run by it". But in power he had no intention to get drawn into fights over Europe, which had destroyed previous Conservative prime ministers. The Conservative leadership, as far as was possible, wanted to park Europe as an issue.

So the smiling faces of British ministers have charmed the suspicious in Brussels. And it has gone beyond presentation. The government has accepted a new European Banking Authority that will have powers of supervision over banks and financial institutions. A second watchdog will oversee markets and securities and a third pensions and insurance. Even though some argue that these bodies will give EU officials "a mandate to enforce EU laws at the expense of national regulation," the UK government has not objected.

The government has not stood in the way of an expansion of powers in the field of justice and home affairs and the European arrest warrant. Britain has accepted the new European diplomatic service, despite its costs and its ambitions for Europe to "speak with one voice".

Now this has not gone unnoticed by Tory activists who believe the party's views on Europe are being diluted. A poll of activists found that 71% regarded it as unacceptable to drop proposals to bring back powers from Europe.

One commitment the government is sticking to is to introduce legislation to hold a referendum on the transfer of new powers to Brussels in any future EU treaty.

But for both activists and the government more challenging days lie ahead.

There is the matter of the British rebate. The EU Budget Commissioner Janusz Lewandowski has already hinted that the rebate is "no longer justified". This year it is worth £3.1bn.

The rebate is of totemic significance to many in the Tory party. It was won by Margaret Thatcher in 1984, when she banged the table and demanded "our money back". Many in the Tory party will expect David Cameron to keep the rebate. But, in extremis, would he veto the entire EU budget to preserve the British rebate? It's what officials refer to as the "nuclear option".

Then there are the Commission's proposals to enforce sanctions against those countries that breach debt and deficit levels. Initially they will only apply to countries in the eurozone, but the Commission hopes to extend this to all 27 countries including Britain. British officials have already been briefing that "the UK is exempt from all sanctions". The British say that under Article 126 they have a clear opt-out. Many in the Tory party will expect David Cameron to use that opt-out if necessary.

In the proposals to get an early glimpse of national budgets the government has said that British budgets will be delivered to the Westminster parliament first. But there are officials in Brussels determined to be involved at the earliest stages of drawing up the budget. Will the UK compromise?

William Hague has pointed out that there is a "profound disconnection between the British people and what has been done in their name by British governments in the European Union". In power the government has chosen to be pragmatic, choosing carefully its battlegrounds. It may not be what the activists hoped for, but the real tests lie ahead. They will define what kind of European David Cameron is and whether he has laid to rest Europe as the most divisive issue within his party.


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