Prime Minister David Cameron's decision to veto Germany's demand for a new European fiscal union will define his premiership.
More than that, Cameron has raised a banner for patriots everywhere fighting to retain their national independence.
With his no vote on fiscal union, Cameron declared to the EU: "British surrenders of sovereignty come to an end here. And Britain will deny Brussels any oversight authority of any national budgets or any right to sanction EU members."
The euro-skeptic right is understandably ecstatic.
"He Put Britain First," thundered the Daily Mail. "There is now a wonderful opportunity for Britain gradually to loosen itself from the shackles of a statist, over-regulated, anti-democratic, corrupt EU."
The Sun featured Cameron as Winston Churchill, flashing a wartime V-for-Victory sign over the banner headline: "Up Eurs—Bulldog PM Sticks up for Britain."
The British left, however, almost took to bed.
"Cameron Cuts U.K. Adrift," wailed the Guardian. "The EU Leaves Britain," moaned The Independent.
Coalition partner Nick Clegg of the Liberal Democrats went weak in the knees, claiming the prime minister had left Britain "isolated and marginalized ... hovering somewhere in the mid-Atlantic."
Yet one imagines that Britain will somehow survive.
And while he may have been unaware of the firestorm that would follow his decision, Cameron has exposed the backroom game that is going on in Europe. The Germans have seized on the crisis caused by the fiscal promiscuity of Club Med—Greece, Italy, Spain, Portugal—to effect a giant leap forward into European fiscal and political union.
Berlin is basically offering the bankrupts a bribe, saying:
"All right, we will bail you out. But, in return, all 17 members of the eurozone shall accept revisions to the EU treaty under which they submit their budgets to Brussels. And if their deficits and/or debts exceed permissible limits, those nations will be sanctioned and fined.
The Germans are exploiting the crisis to impose their model on the eurozone today and all of Europe tomorrow.
Well, some may ask, since Germany is the most successful economy in Europe, why not impose that model?
Answer: For a nation to submit its budget for review by a higher authority, and accept the right of such an authority to alter that budget or punish that nation, is to cease in a fundamental way to be free.
Cameron may seem isolated, but he speaks for tens of millions outside Britain—Italians, Greeks and others fed up with the imposed austerity, North Europeans fed up with having to bail out Club Med deadbeats who do not work as hard or as long.
Nationalism is on the boil across Europe, and it is impossible to believe the leaders of those 26 EU countries, by cutting some deal with Angela Merkel and Nicolas Sarkozy, can bind their countrymen forever to cede veto power over their future budgets to Brussels.
Will Greeks and Italians really accept a decade of austerity to pay off debts larger than the national economy, to banks and bondholders, for hundreds of billion of euros already spent?
Were Italy and Greece U.S. citizens rather than EU countries, both would long ago have declared bankruptcy, been forced to pay what they could, then been released from remaining obligations, while their creditors would have been forced to swallow their losses.
Moreover, there are pragmatic reasons for rejecting the German plan. Europe appears headed for stagnation or recession. Yet under the fiscal union scheme, virtually all eurozone nations would have to raise value-added and income taxes to balance budgets where the domestic welfare states consume almost all of the national economy.
Does raising taxes make sense in a recession? Would it not risk deepening the recession, raising debt-to-GDP ratios, forcing interest rates to rise to attract investors to new national bonds as old bonds came due?
All of this raises the larger question. Can the eurozone survive? And if it cannot, can the EU?
Given the hostile attitude of Greeks, Italians and many others to years of austerity to pay back debts, given the growing reluctance of the European Central Bank, Germany and Northern Europe to bailing out deadbeats, given the lack of resources available, are not defaults in the eurozone almost inevitable?
And if that happens, given the size of the debts, the result would be like the collapse of Lehman Brothers raised to the third power.
Trillions of euros of debt that appear today as assets on the balance sheets of giant banks and within the portfolios of millions of investors would vanish overnight.
Like the "fire bell in the night" Thomas Jefferson heard in 1820, a harbinger of civil war, Cameron's declaration that European fiscal and political union goes forward, only without Britain, may be a harbinger of the breakup that is coming.
And if the eurozone collapses, and the EU follows, what, then, is Europe—other than a geographic expression?
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