Cameron steps up efforts to heal rifts with Europe

Cameron steps up efforts to heal rifts with Europe

By George Parker in London and Peter Spiegel in Brussels

David Cameron stepped up his efforts on Wednesday to repair Britain’s strained relations in the European Union, as he joined forces with Mario Monti, Italy’s new prime minister, in promising to deepen the single market.

Mr Cameron and Nick Clegg, deputy prime minister, have engaged in a little-noticed but intensive round of diplomacy in the weeks since Britain deployed its veto in Brussels treaty talks in the early hours of December 9.

An EU summit at the end of this month – devoted to developing a European growth strategy – has given Britain an early chance to get back on the front foot after what Mr Clegg admitted was a “damaging” rift with its 26 partners.

Downing St admitted that Mr Cameron has not spoken to Nicolas Sarkozy since that night in Brussels, but the prime minister has been active in trying to place himself in an alliance of liberal-minded EU leaders who feel uncomfortable with the French president’s European vision.

“There are clearly now two Europes,” Mr Sarkozy said last month. “One that wants more solidarity and regulation between its members, and the other that is attached to the sole logic of the single market.”

Mr Cameron may be isolated on the question of a new eurozone fiscal treaty, but there are many other leaders who share his belief that Europe can only escape its debt spiral if it commits itself to breaking down barriers in the single market.

Angela Merkel, German chancellor, is among those who want Britain at the table when single market issues are being discussed, not least because of her country’s dependence on open markets.

Ms Merkel telephoned Mr Cameron in his Oxfordshire constituency last month to explain that she did not want Britain pushed to the sidelines and to reiterate her insistence that Britain would “remain an important partner”.

The German chancellor insisted that Britain should have “observer status” in the drawing up of a new fiscal compact for the eurozone and has resisted French suggestions that the treaty should be expanded to cover single market issues.

But Mr Cameron has also been working his network of northern European leaders – typically just as committed to open markets as the UK – that he first assembled at a Baltic-Nordic summit in London in January 2011, including his friend Fredrik Reinfeldt, Sweden’s prime minister.

Mark Rutte, the young Dutch prime minister, was in London last week for a summit hosted by Mr Clegg (a Dutch speaker), where the assembled leaders and European commissioners from liberal parties across the EU vowed to press for expansion of the single market.

Among those commissioners is Olli Rehn, EU monetary affairs commissioner, who was an Oxford contemporary of George Osborne, chancellor, and Karel De Gucht, the Belgium trade commissioner.

Despite a historically rocky relationship with the UK, the European Commission has emerged as one of the strongest allies of London in fighting against Mr Sarkozy’s efforts to create a “two-speed Europe”.

Both José Manuel Barroso, the anglophile Commission president, and Mr Rehn have argued that nearly everything Germany would like in a new treaty could be accomplished through normal EU legislative procedures, where Britain would have its normal say.

Meanwhile, Mr Cameron has been on the phone to Helle Thorning-Schmidt, the new Danish prime minister, who wants to use her EU presidency to heal rifts in Europe. She sees Britain as having a valuable contribution to make on issues such as trade and regulation. Another key British ally is Enda Kenny, Irish premier.

However, perhaps the most unexpected upside of the eurozone crisis – from a British point of view – is the appointment of Mario Monti as Italian prime minister, a champion of free markets dating back to his time as a highly respected European commissioner.

Both leaders committed themselves in Downing St to championing the single market in areas such as services, the digital economy and energy at the Brussels summit on January 30 – and Mr Monti stressed the need to ensure the rules are rigorously enforced.