THE EUROPEAN SUMMIT

There is both an economic and a political element to last week's European summit. More on the economics another time; first the politics.

In wielding a veto on treaty changes that will see future collaboration on economic matters by the other 26 Member States (the 17 that have the Euro and the other 9 that don't) take place outside of the existing E.U. treaty structure, the U.K.'s David Cameron has in my view crossed a Rubicon, whose effects will be very difficult to undo. Like any other club, it is difficult to be a member of the E.U. if you disagree with everybody else. True, some of the other Member States - Denmark, for example- probably have more sympathy for the U.K.'s position than they are letting on (at least publicly). Nevertheless, and this is the crucial point, when push came to shove, none of them were prepared to let that sympathy spill over into a veto. They all wanted to be part of the majority, even if it is not at all clear where and how that majority are heading.

Mr. Cameron and his defenders say that it was necessary for him to wield the veto in order to protect the City from future E.U. (over)-regulation and a possible financial transactions tax. Yet future regulation is, well, still in the future; and Mr. Cameron could veto any concrete proposal as and when it arose. On the other hand, by sitting on the sidelines, the U.K. risks being marginalised in any economic discussions, which fall short of a formal proposal not open to a veto. That can't be in Britain's long-term interests, even if it remains outside the Euro zone.

Conservative backbenchers disagree with me, and are celebrating Mr. Cameron's supposedly firm stance. But at least one person does think that this is a mistake; namely Nick Clegg, Mr. Cameron's partner in the coalition government, who has already said that the veto is "bad for Britain". Alhough he also blames intransigence from France and Germany, it is difficult to accept that line, when 23 other countries didn't.   

The U.K. has been threatening to disengage from the rest of the E.U. for some time. Now it has. It's a terrible strategic decision, that it will regret. Not now, and not in 5 years' time, but in 50.

Walter Blotscher