What the PM Really Asked For In Brussels
Let's be clear about this: what David Cameron tried to do in Brussels wasn't merely to try to safeguard Britain's financial services. He just attempted to repatriate powers which have already legally been transferred to Europe.
It's gradually becoming clear that there was nothing intrinsic in the European Council's conclusions it agreed to early on Friday morning that would have directly threatened the City - save, perhaps, for the proposal to move the HQ of the European Banking Authority out of London.
None of the extra fiscal rules would have directly affected the UK. There was no detailed discussion or proposals about a financial transactions tax (and, anyway, tax is decided on a unanimity basis so Britain would never risk having something like that imposed on it without its approval).
None of the new fiscal rules will be imposed on non-euro EU members such as the UK. So although the Prime Minister told Adam Boulton earlier that the decision would have involved an erosion of UK sovereignty, the reality is that the erosion happened (in legal terms at least) some time ago. The PM's tactics in Brussels amounted to an attempt to reverse some of those legal sovereignty erosions.
Let me explain. The City is extremely important to Britain - far more important than any of the other industries which are currently regulated from Brussels. At 10% of Britain's GDP or thereabouts it is enormous in comparison with agriculture (0.65% of GDP) and fisheries (0.05%).
The issue is that for some time Brussels has been allowed, legally, to impose regulations on and supervise the City through qualified majority voting (QMV), which means Britain wouldn't have a veto on certain new regulations which would directly affect the square mile.
Under the letter of the law, Brussels could well impose stringent new rules on trading in London, could well demand that they supervise any American bankers working in London. It hasn't necessarily *used* these rules, since, under something called the Luxembourg Convention, Brussels has tended, in practice, to steer clear of imposing new rules on countries' key industries by QMV.
The fear, however, is that Europe was increasingly looking as if it was going to ignore these long-standing conventions and start to impose itself, via QMV, on the City - potentially undermining Britain's biggest industry.
Which brings us back to Brussels: Mr Cameron tabled an extra amendment to the existing Treaty (known in eurocrat-speak as a protocol) which would put these conventions (no intrusive new supervision under QMV, no new rules policing non-EU employees in the City) into law.
The Telegraph has laid its hands on the protocol. Having read the protocol myself, my judgement is that these requests amount, in de jure if not de facto terms, to a repatriation of powers. That is what the Prime Minister tried to achieve in Brussels.
He failed to achieve it this time around, but one suspects this is only the beginning of the story. Under the letter of the law, Brussels can indeed now impose the kind of regulations Mr Cameron and George Osborne are privately so worried about - but there is a possibility that they may not be written directly into UK law, something that would go against Parliamentary convention since the foundation of the EU.
Many questions still remain: can the signatories to the pact actually achieve a new fiscal union? Can the euro find a big enough bazooka to save it? Will this mark the beginning of a quiet war between the UK and the EU? Will either side relent?
Either way, this was not merely a gamble but a statement of intent. David Cameron wants to claw back powers he wishes had never been handed over to Brussels. He can brand this as "safeguarding" all he likes, but the reality is rather more equivocal.
P.S. It's well worth reading the report from Open Europe which seems to have influenced and informed the Prime Minister's position negotiating in Brussels.