Those who follow EU affairs will remember Tony Blair’s extraordinarily naïve decision to give away a big chunk of our EU budget rebate negotiated by Margaret Thatcher at Fontainebleau, in exchange for a promise of a “root and branch reform” of the Common Agricultural Policy. Our partners in Brussels happily pocketed the money, but somehow the promise of CAP reform never materialised. Now, rumour has it, Cameron is about to make a similar elementary negotiating blunder — offering a real and immediate benefit to the other side (like Blair’s decision, involving many billions of Pounds) in exchange for promises which are not only vague, but which actually look undeliverable.
I freely admit that I am retailing gossip here, but it is gossip that chimes with what we know. I think my sources are reliable, but I am not in a position to reveal them. I should be very happy to be told that I was mistaken. Maybe somebody at Number Ten, or somebody at DECC, might like to put me right.
The Coalition government is rightly desperate to get on with its nuclear programme, and is having serious difficulty — largely, I believe, because no company wants to commit a multi-billion Pound investment over six decades, in the face of massive regulatory uncertainty. When politicians like Angela Merkel can close down the German nuclear industry in response to some bad publicity, investors will think twice.
Currently the government and DECC are negotiating with French nuclear company EDF over two new reactors at Hinckley Point. I’m told that the Brits are prepared to guarantee a price of £80 per MWh over twenty years, while the French want £100 over 35 years. MPs are claiming that EDF could make £90 billion over the course of the contract. And of course it’s the poor bl**dy consumer — whether household or industry — who will end up paying.
This whole proposal is a huge bet on oil futures. If fossil fuel energy follows the script, and becomes more and more expensive, there may come a time when even £100 per MWh looks attractive. But future prices so rarely do follow the script, and with unconventional oil and gas in the picture, the proposed EDF deal could be a disaster. Equally, of course, renewables are a similar bet on oil futures. And that’s without even considering cheap coal.
Cameron is said to have had a meeting scheduled with French President Francoise Hollande to seek to break the impasse — though this meeting was cancelled as a result of the Thatcher funeral. They are expected to meet shortly. While the British government is under pressure to kick-start its nuclear programme, Hollande is also under pressure to deliver a major project overseas for a leading French industry.
Now the difficult bit. I’m being told that Cameron is prepared to be flexible on the pricing for EDF in exchange for undertakings from Hollande that he, Hollande, will be helpful in the matter of Cameron’s EU renegotiation. So our “heir to Blair” will be following his mentor, and giving away real money — rather a lot of it — in exchange for promises of future support in Europe.
It is frankly extraordinary naïveté on the part of Cameron to think he can gain unilateral concessions from Brussels in the first place. Those of us who’ve followed the EU issue for decades know that British politicians regularly attempt reform in the EU, and regularly retire hurt. The EU is beyond reform, and deserves to be put out of its misery. But it’s doubly naïve of our Prime Minister to imagine that a few obliging words from Hollande will seal the deal. The EU has its own agenda and its own Juggernaut momentum. The only way in which Cameron might hope to achieve change is to brandish Article 50 of the Lisbon Treaty. Set out our intention to quit, and then let them propose terms to keep us in.
Cameron seems to be set on spending a great deal of our money on promoting political objectives which, as anyone could tell him, are simply unachievable. He is becoming a liability.