February 3, 2012
The euro-area crisis is forcing many of the European Union’s long-running political disputes to the surface at the same time. As they wrestle to save the currency, Europe’s leaders -- above all Britain’s David Cameron, France’s Nicolas Sarkozy and Germany’s Angela Merkel -- need to make sure they don’t dismantle the union in the process.
Political tensions peaked in December, as Europe’s leaders were rushing to put together a fiscal compact that would convince markets that euro-area countries can get their sovereign debts under control. Cameron tried to leverage the need for a treaty to protect the U.K.’s lucrative financial sector from new EU regulations, in particular a transactions tax that is being proposed by France. When he failed, he vetoed the treaty, forcing the others to work outside the EU.
As after any domestic fight, it’s taking awhile for EU leaders to figure out whether their marriage of 27 can be the same again. In one positive sign, despite political opposition within his party, Cameron agreed this week to make an important concession: The U.K. won’t stand in the way of letting other EU members use the union’s buildings and bureaucracy to carry out their new, non-EU, fiscal compact.