Sarkozy hails birth of smaller European bloc without UK


BRITAIN’S DECISION to veto a new EU treaty has created “two Europes” and marks a major step towards integration within a smaller bloc, French president Nicolas Sarkozy has said.

Outlining what France sees as the far-reaching implications of the “fiscal compact” agreed in Brussels, Mr Sarkozy hailed “the birth of a different Europe” that would converge without the British.

French claims of a decisive split came as British prime minister David Cameron rejected the idea of a two-tier Europe and insisted the UK would remain fully engaged on the issues that concerned it most.

Throughout the crisis, Paris has pressed for closer integration within the 17-country euro zone, where its influence is greater, and an intergovernmental deal was seen as being a French preference. Asked yesterday if he had pushed the British on to the sidelines, Mr Sarkozy said: “I didn’t see it that way. We did everything, the [German] chancellor and I, so that the English would be on board.

“But from now on, there are clearly two Europes. One that wants more solidarity between members, and regulation. And one that is attached solely to the logic of the single market . . . You have to understand this is the birth of a different Europe – that of the euro zone,” he said in an interview with Le Monde.

Amid Irish concern that London could be isolated by its stance and debate across Europe over its future relationship with the EU, Mr Cameron insisted Britain would remain a “full, committed and influential” EU member.

“I do not believe there is a binary choice for Britain: that we can either sacrifice the national interest on issue after issue or lose our influence at the heart of Europe’s decision-making processes,” he told the House of Commons.

Mr Cameron rejected suggestions that a two-tier Europe was emerging, saying the euro and the Schengen free-travel area showed the EU could operate at different levels. He was roundly applauded by conservative backbenchers, but deputy prime minister Nick Clegg, who had voiced “bitter disappointment” with the outcome of last week’s summit, was absent for the prime minister’s address.

In Brussels, EU economics commissioner Olli Rehn dismissed claims that the City of London would be exempt from regulation by European authorities as a result of Mr Cameron’s refusal to sign up to the new fiscal rules. “If this move was intended to prevent bankers and financial corporations of the city from being regulated, that’s not going to happen,” Mr Rehn said.

He added that Britain would also have to uphold budget limits.

Mr Cameron had threatened to block the involvement of bodies such as the European Commission in the new arrangement, but yesterday he softened that position by saying he was willing to discuss whether they could be used to govern a treaty between 26 states.

Despite a tougher sanctions regime for countries that break budget deficit rules, France stressed that states would still have the last word on any decision to punish a country. In what will be seen as an attempt to play down the role of the European Commission, Mr Sarkozy said “not a single area of competence will be transferred to any supranational authority”. The French president has been under domestic pressure not to cede further powers to EU institutions.

On more immediate measures to tackle the debt crisis, Mr Sarkozy said the Brussels accord had paved the way for the European Stability Mechanism, the euro zone’s permanent bailout fund, to come into force next year and act as a “European monetary fund”.

He said he hoped the European Central Bank’s recent moves to avert a new credit crunch would help spur economic growth and ease the “unwarranted concerns” about sovereign debt. “I have confidence in the ECB in deciding, in the future, on the strength of its intervention,” he added.

Taoiseach Enda Kenny has invited the leaders of the Opposition parties into Government Buildings at 8am today to brief them on the outcome of the European summit.

Earlier Mr Kenny said no decision would be made before March on whether or not a referendum relating to proposed EU treaty changes would be required.