Merkel Pins Cameron in Corner; Will Cameron Bury His Head in the Sand, Pretending to Not Notice?

UK prime minister, David Cameron, promised to hold a referendum on whether Great Britain should remain in the EU, but only on two conditions. The first condition, that Cameron be re-elected as prime minister is iffy enough.

The second condition, that Cameron renegotiate the Lisbon Treaty, I said would never happen. And it won't.

German Chancellor Angela Merkel sealed the fate on that score as Berlin plans to streamline EU but avoid wholesale treaty change.

Berlin is drawing up plans for treaty changes to streamline decision-making in the eurozone, while stopping short of any wholesale renegotiation that would allow the UK to repatriate powers from Brussels.

Although Angela Merkel, German chancellor, has expressed her desire to keep the UK inside the EU, the move being discussed in Berlin would thwart a plan by David Cameron, UK prime minister, to piggyback on eurozone reforms to renegotiate the British relationship with Brussels.

Mr Cameron had hoped to exploit renewed interest in Berlin for wholesale EU treaty changes as a way to renegotiate the UK’s membership terms. But Berlin’s strategy for a new, narrowly focused treaty could force the UK premier into a repeat of the dilemma he faced in December 2011, when Mr Cameron rejected the fiscal compact treaty but most other EU countries went along without him.

Senior German officials acknowledged that they were isolated on treaty change, which is fraught with political landmines in several countries – particularly France, which would probably require a national referendum if major changes were made to EU law.

The timing of treaty changes remains a matter of debate but it could come as early as next year, after elections to the European parliament in May. The way ahead is due to be discussed at a summit next month.

Pinned in the Corner

The sooner Merkel proceeds with her strategy the better for everyone involved, especially UK citizens. Merkel has effectively preempted Cameron's strategy in a way he cannot deny.

Since there is now no possible hope of wholesale renegotiation (not that there ever really was in the first place), there is no reason for the UK to avoid a referendum now.

Will Cameron bury his head in the sand like an ostrich once again? We will find out shortly.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction.
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