EU referendum: Paris could send Europe summit into overtime

Paris is threatening, if not to block David Cameron’s Brexit-defying EU reforms, then at least to send the epoch-making summit in Brussels into overtime

Should Britain have to comply with decisions made by countries who want to move towards common policies for managing the euro? (Reuters)

Britain hates Europe telling us what to do. France detests the notion that a semi-detached Britain can stop Europe from doing what it wants to do. Paris is threatening, if not to block David Cameron’s Brexit-defying EU reforms, then at least to send the epoch-making summit in Brussels into overtime.

The points of contention are dense and obscure. They concern the rights of British financial institutions – ie the City – to trade in the European single market without being bound by future rules imposed by the countries that use the euro.

The problem may well be resolved in the next few days but a lightning visit by the Prime Minister to Paris on late on 15 February failed to overcome the objections of the French finance ministry and banking industry.

Although dense, the dispute goes to the heart of this week’s negotiation between Britain and The Rest.

Should Britain, standing outside the eurozone, have to comply with decisions made by countries who want to move towards common policies for managing the single currency? Should British banks and insurance companies have the right to trade in the world’s biggest market without accepting the same rules and constraints as their continental competitors?

French officials say that this is not just a technical-economic dispute. It is also a philosophical-political one. If Britain is allowed too much freedom to pick’n’mix, other countries will start to make demands of their own.

To resolve these issues of “economic governance”, the President of the European Council, Donald Tusk, has proposed a code of conduct to define boundaries between the financial rule-making of national governments, the eurozone and the EU as a whole. Britain could object if eurozone countries attempted to impose “federalising” rules – on bankers’ bonuses, say – which applied to all EU states. There would be no UK veto as such but future turf wars would be referred to EU summits.

Eurosceptics in Britain complain that this is too vague. France argues that, au contraire, it is too clear. It gives Britain an implicit right to block proposed EU-wide financial legislation disliked by the City of London.

If the proposed legislation fell, Britain, the semi-outsider, would have dictated policy to all 28 states. If Britain won an exemption, the City might have a competitive advantage against French or German or Dutch banks or insurance companies.

Brussels began to tamper last weekend with Mr Tusk’s original wording. Alarm bells rang in Downing Street. Mr Cameron dashed to Paris on late on 15 February.

The argument is further muddled by the fact that the UK Government, in principle, likes the idea of stronger “governance” within the eurozone. The French government accepts, in principle, that eurozone rules should not necessarily apply to non-euro countries.France does not want to risk “Le Brexit”. A form of words will probably be found to bridge the cross-Channel gap.