Mats Persson

As the isolation hysteria over Cameron’s EU veto starts to fade, attention is now shifting to the more existential question of what kind of relationship the UK should have with Europe. In a piece for today's Times (£), the chairman of Business for New Europe, Roland Rudd — who, incidentally, used to argue passionately in favour of the UK joining the euro — takes aim at those who want Britain to replicate a Norway-style model of European cooperation. Arguing that Norway endures so-called ‘fax machine diplomacy’ — no influence over EU laws that it must nonetheless accept — Rudd says that ‘the choice now is to do what Norway does, or remain in the EU.

The EU veto that Cameron pulled in the early hours of Thursday morning has been widely misunderstood on all sides. Here are the 10 most common myths: 1. Because of Cameron’s veto, Britain lost a seat at the negotiating table. Not true. The UK was never itself going to take part in the Merkozy pact (and potentially be subject to EU sanctions), and therefore not in the monthly, parallel EU meetings that will begin in January, either. Even if he had approved the Treaty changes, Cameron still would not have had a seat at the table. Wider political challenges aside, the veto didn’t change anything structurally in terms of UK influence. 2. Cameron’s veto created a two-tier Europe.

There's just over a week to go until the crunch EU summit on 8-9 December, so David Cameron has to decide how best to play his cards — and quick. The problem, as Daniel Korski has pointed out, is that Britain faces the risk of ‘structural isolation’ in Europe in the short-term. To counter this, Cameron effectively has two options. First, work with allies on both sides of the euro divide to seek political assurances — formal or informal — against the formation of a two-tier Europe with a more integrated eurozone in the driving seat. Or, second, press ahead with UK-specific carve-outs from the EU structure.

As Portugal bites the dust – following Ireland and Greece in asking for an EU bail-out – the most important question is still not being asked by EU policy-makers, or by the British government for that matter: will a bail-out actually solve any of Portugal’s problems? The simple answer is, it won’t. Asking the European Central Bank to take on more junk bonds, or piling more taxpayer-backed loans on Portugal’s already heavily indebted economy is not a long term solution. Ireland and Greece have already sought to renegotiate their bail-out terms as they are struggling to grow fast enough to repay their EU/IMF loans (ECB rate increases like the one we saw yesterday are unlikely to help).

As if the budget and Libya weren’t enough, the UK Government woke up today with another major challenge on its hands – yet another flare-up in the eurozone debt crisis, which has been continuing to bubble away under the radar.   Yesterday, Portugal’s Prime Minister José Sócrates literally walked out of Parliament, during a debate on EU-backed austerity measures. The austerity package was subsequently voted down and shortly afterwards Sócrates announced his resignation. Portugal is now facing the prospect of being without a government for months, as its electoral rules require a 55 day break between the dissolution of Parliament and new elections.

“We will want to prevent EU judges gaining steadily greater control over our criminal justice system by negotiating an arrangement which would protect it. That will mean limiting the European Court of Justice’s jurisdiction over criminal law…” That was David Cameron a year ago when he presented the Tories’ EU policy ahead of the General Election. As we all know, much has changed since then. The pledge to ‘repatriate’ powers has been dropped, a victim of the Coalition deal. But despite this, MPs now have a huge opportunity to make good on pledges to regain control over EU justice laws, and even to repatriate powers should they want to – without having to change a single comma in the EU Treaties. How?

The EU Bill is back in parliament today, amid speculation that Cameron has a Europe-fuelled rebellion on his hands. Despite the talk, the chances are that the Bill will go through Parliament wholly unscathed in its first test.   Today’s debate is about the so-called ‘sovereignty clause’ – or Clause 18 – within the EU Bill. Of the Bill’s 17 pages, the clause only takes up four lines, but has still managed to cause the most fuss (the vast majority of the text relates to the EU ‘referendum lock’).

As David Cameron stays in Brussels for his third European summit as PM, it’s becoming increasingly clear that the EU's approach to the eurozone crisis – put up short-term cash and pray – isn’t convincing anyone.   On Wednesday, Moody’s threatened to downgrade Spanish government bonds another notch, citing the fact that, between them, the country’s government and banks have to raise €290bn next year to keep the party going. And, across the eurozone, banks and governments face daunting refinancing targets in 2011, which begs the questions: at what cost? And what happens if they fail to meet them?

This morning, it sounds as though Ireland has finally buckled to demands that they accept a bailout from the EU. Their central bank governor, Patrick Honohan, has said that he expects a "very substantal loan" from Europe – although the details, and debtees, are yet to be clarified. In the UK, of course, backbench MPs and others have been quick to condemn any move which would force British taxpayers to cough up cash under the EU’s various bail-out arrangements. Only problem is: the UK may not have a choice. The part of the eurozone bail-out package which Britain could be underwriting to the tune of £6-7 billion - the so-called European Financial Stability Mechanism – is not protected by a UK veto.

The British media woke up this week, realising that Europe still exists. As David Cameron travels to Brussels, questions loom over what, exactly, he can achieve in Europe – at this summit, and more importantly, moving forward.   Much of the commentary surrounding the summit has focussed on the increase to the EU’s 2011 budget, which Cameron is fighting.  And for good reason. It’s insane that Britain – or any other net contributing state – should be forced to accept any increase to the EU budget, at a time of tough austerity at home.   Cameron has spent considerable time talking up the negotiations on the budget increase, so he may have an ace up his sleeve to achieve a cash freeze tomorrow or in the coming weeks. But a 2.

The Coalition Government’s proposal for a 'referendum lock' on future transfers of powers to the EU has already been branded “worthless” by some Tory backbenchers . It’s easy to share their frustration at the Coalition’s lack of interest in EU reform so far. After all, the Government has chosen to opt in to the European Investigation Order; signed up for new EU financial supervisors; and chosen not to challenge the UK’s participation in the eurozone bailout (making British taxpayers potentially liable for up to £8 billion in loans to eurozone governments). However, the referendum lock is still significant. New crises, situations and politicians’ egos will always drive the need for another treaty and further integration.