The European issue has not as much damaged the Conservative Party, given its march in the sceptical direction, as damaged the coalition. Nevertheless, I think the person to emerge from this the worst is Nick Clegg. Perhaps I would say this, in that I cannot see myself voting Liberal Democrat without Nick Clegg standing down.
David Cameron faced with a treaty intent to bind together countries fiscally for the longer term benefit of the euro used his veto. He wanted to protect essential British interests, including the very City of London that had played such a part in landing us in the economic mess in the first place. But actually, go back decades and you find British policy towards the pound always coming first and manufacturing and business coming second. The Treasury has competed with, overshadowed and finished off other economic departments over and over again: more often with Labour governments that tried to build a different economic base. The last Labour government (both Blair and Brown) was more like Conservative governments in its liberal economics and light touch regulation towards the City, and thus weak regulation was unable to detect the mess (see recent news items regarding the Royal Bank of Scotland).
In playing his veto, Cameron has stopped nothing, though he is right on the limited point that a set of treaties between EU countries cannot override existing core treaties of the 27. If the 26 make rules that contradict the core treaties of the 27 then the British government can use other institutions, like the European Court, for a defence of its interests. But these would be based on an issue by issue basis, and presumably there won't be any other actual treaties set up for fiscal unity that contradict the core ones. In simple terms, the veto on economic matters like national budgets cannot be overturned (into say QMV) without a treaty change affecting the 27.
The question is did Cameron act alone. According to government accounts, Nick Clegg was consulted and he gave Cameron consent regarding the need to veto. Clegg then says it was a bad decision, and today stayed away from the House of Commons. Some think that in between Clegg saying yes to Cameron and making his criticism on Sunday, he received nothing but negative reaction from his MPs and Lords' grandees. So as much as Cameron tilting to his backbenchers, Clegg bent towards his own political party.
Did Clegg say yes? The cabinet approved the strategy in general ahead of the Council of Ministers (Prime Ministers) meeting but with warnings, as from Vince Cable, as regarding the effect of isolation on the British economy. Of course, here again, Vince Cable has responsibility for trying to recover the real economy, whereas George Osborne's focus stretches to the fate of the pound and banking. Then Cameron consulted Clegg during the meeting...
Comparison is made with Chris Huhne representing EU interests in the Climate Change conference who has been seen (even by John Prescott) as constructive and positive, showing how Britain can be at the centre of the EU.
There is no doubt that Nick Clegg has made several blunders during his time in government. There's also no doubt that he loves being in government and next to his soul mate Cameron (in terms of upbringing and social status). Cameron and him probably still get on far better than Blair (who would have got on with both of them) and Brown did in the previous government. The point is that Clegg lacks political skills.
If Chris Huhne can run free of questions that might otherwise dog him, he'd be a far better leader of the Liberal Democrats. As I understand it, Nick Clegg is going to lead the Liberal Democrats into the next election in 2015. This will be a disaster, as it was he who created all that litter in the notorious election advert about politicians not being truthful, only to operate a bare faced turnaround in government regarding student fees. Furthermore, the policy was always going to be sacrificed for a coalition, so the electorate was told a bare faced lie. This was yes under a collective party decision, but Clegg fronted it, and the one way a political party can signal its remorse and change of direction is for the leader to go. Paddy Ashdown went too quickly (his own decision) whereas others afterwards were forced out. Clegg needs to indicate he will go, or the party, to avoid disaster, needs to force him out.
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