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Cameron wields UK veto in game of call my bluff

By Geoff Meade

David Cameron use of the British veto has thrown European Union into confusion and possibly changed the nature of Britain's EU relationship for ever.

For all the wranglings and rows of the Thatcher era, nothing is calculated to trigger deep-seated fury more than Mr Cameron's game of call my bluff with Britain's EU partners.

World leaders, including US President Barack Obama, were watching this summit for desperately needed signs of unity and stability in a club floundering over the eurozone crisis.

The problem was, Mr Cameron wasn't bluffing: without safeguards to ensure that UK interests were protected over the single market financial services, he would not go along with the desired changes to toughen the existing EU treaty on economic prudence.

The changes would not have affected the UK - we are not in the eurozone - but Mr Cameron's fear was "mission creep", and the prospect of being sucked into rules and regulations which would affect the single market.

He thought he would get his safeguards against such fears, but German Chancellor Angela Merkel and French President Nicolas Sarkozy were not bluffing either: they left him dangling and isolated by going ahead with a new treaty of the 17 eurozone countries.

The offer to extend the new "club" to non-eurozone nations was immediately snapped up by six of the remaining 10. At best, Mr Cameron is bracketed with Hungary, Sweden and the Czech Republic in the rebel camp.

President Sarkozy is the only protagonist content with the result; Chancellor Merkel wanted full solidarity as her country is effectively the paymaster of the costly bailout schemes being hatched to help out struggling eurozone states.

David Cameron returns home with no safeguards at all - except total exclusion from the new club, and the real risk that Britain will not be in the room when crucial decisions are taken in future which directly or indirectly affect the UK.

He says he was acting in Britain's interests - seen as a selfish act when pitching in with the others would not, technically, commit the UK to any tougher economic rules or commitment.

But Mr Cameron knows that we have been here before: one of the commonest-heard phrases in the world of EU policy-making is "thin end of the wedge".

Mr Sarkozy perhaps unwittingly justified Mr Cameron's concerns overnight by saying that, of course, EU financial services policy, including its effect on the City of London, should come under closer scrutiny as part of an economic crackdown, because much of the trouble started in Europe's main financial centres.

One EU commissioner turning up at the summit as the dust was settling said Mr Cameron was now "out of the decision-making process".

Not exactly true, but psychologically many believe he has pushed the UK towards the margins - for no apparent great gain.

"He completely misread the Germans, and maybe they misread him," said one EU official. "Only Sarkozy is happy with an inner core of 17-plus, but what does that say to the outside world about tackling the immediate eurozone crisis?"

One Liberal Democrat MEP said Mr Cameron had "relegated Britain to the second division of Europe".

Chris Davies said: "Far from keeping Britain strong, Cameron has ensured that we will lose our influence at the top table.

"By seeking to protect bankers from regulation, he has betrayed Britain's real interests and done nothing in practice to help the City of London.

"The fear now must be that we will increasingly lose the opportunity to affect decisions being taken that are bound to affect us.

"The consequence of the xenophobic attitudes towards our European neighbours that have been allowed to develop has been to leave Britain weak. We have shot ourselves in the foot."

How deep the ensuing rift will be will only become clear in the longer term - and after expensive lawyers have had a field day sorting out the legal relationship between the newly formed club and the traditional 27 construction.

The general consensus today was that "it's all been a bit of a disaster", to quote one senior EU insider.

The only clear agreement was on which direction to point the collective finger of blame.

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