Why Britain Is Holding Up Europe's Debt Deal

As European leaders descend on Brussels today to save the euro, British Prime Minister David Cameron is threatening to veto any treaty that doesn't cater to Britain's national interests.

As European leaders descend on Brussels today to save the euro, British Prime Minister David Cameron is threatening to veto any treaty that doesn't cater to Britain's national interests. For leaders in France and Germany, it's an infuriating stance as the currency of an entire continent hangs in the balance. But Britain has its reasons.

The legal issue The country is not in the 17-member euro zone, so why should it care? This all depends on the makeup of the treaty negotiated in Brussels today and tomorrow. German Chancellor Angela Merkel seeks to strengthen the EU's ability to monitor national budgets, which ideally involves a treaty signed by all of the EU's 27 member states, which includes Britain. If euro-skeptic Britain is forced to sign a treaty, it wants something in return. “The more the euro zone countries ask for, the more we will ask for in return,” he said at parliament Wednesday.

Britain's financial sector One of the main concerns for Cameron is a proposed tax on financial transactions supported by Merkel and French President Nicolas Sarkozy. As the AP's Robert Barr explains, "Such a tax would hit hardest on Britain's big financial services industry, and Cameron has strongly opposed it. Cameron has vowed to make sure whatever the euro zone or the entire EU does, London's status as a global financial center will be protected."

Britain's geopolitical power A push to further consolidate the EU's euro zone members is also something that threatens Britain's relevance on the continent, as The New York Times' Sarah Lyall and Stephen Castle explain. "There is looming recognition at 10 Downing Street that if the euro falls, Britain will sink along with everyone else. But if Europe manages to pull itself together by forging closer unity among the 17 countries that use the euro, then Britain faces being ever more marginalized in decisions on the Continent."

Tory 'Zealots' Another motivating factor for Cameron is the strong push from his own conservative Tory party to reign in the EU's consolidation of power. As The Economist explains, "The zealots on the Tory backbenches ...  want Mr Cameron to get some (or all) EU powers back. For them, the prime minister is far too flexible. He has resisted calls for a British referendum. He has said his priority is to find a solution to the euro crisis. And he has given himself lots of room to decide which interests to defend."

So is there a way to satisfy both Britain and France and Germany? As The Economist notes, EU lawyers have cobbled together a plan that could work that wouldn't force Britain to sign a treaty. "The EU’s lawyers ...  have come up with a partial fix so that changes to governance rules will require only a vote by the 27 leaders, rather than a full revision procedure involving a convention, an inter-governmental conference and ratification in all 27 countries (including some referendums)." Still, not everyone's satisfied with the plan. "British officials like this idea (though their parliament would still have to ratify the changes), but the Germans think it does not provide enough powers to impose fiscal discipline."