George Osborne arrived in Brussels on Tuesday with a mission to do much more than chat with his fellow finance ministers about the looming Greek catastrophe — he was in town to make progress on Britain’s demand to renegotiate EU treatiesahead of a planned referendum on whether or not to stay in the bloc.
But the timing proved to be poor — Osborne received a lukewarm reception from his counterparts, who were much more concerned with avoiding Greece’s unplanned exit from the euro, a currency the UK has refused to join.
Osborne, the most powerful minister in David Cameron’s reshuffled post-election cabinet, said he was in the Belgian capital with a “very clear mandate” to reform the EU — one of the central plank’s of Cameron’s election campaign. The crucial nature of that promise was underlined in London, when Cameron’s spokesman said that the UK might even hold an in-out referendum on EU membership as early as 2016, a year ahead of Cameron’s election pledge.
“He wants treaty change,” the spokesman said of Cameron.
But that is going to prove a challenge.
Germany’s powerful Finance Minister Wolfgang Schäuble was tepid in his support for British demand. He said he agreed with the British idea of reforming the EU, but added, “The German government wants treaty change one day. We don’t think it will happen tomorrow.”
Any changes to make the bloc more effective in the shorter term would have to be done without opening EU treaties, he continued. “All we need to do to strengthen the economic and monetary union can be done without treaty change.”
That means changes would have to be small, in all likelihood too small to allow Cameron to claim that he had reshaped the EU ahead of any referendum. The problem is that opening the treaties means that changes have to be approved by 28 different countries, all with different agendas and many of them unsympathetic to British demands.
Just how unsympathetic could be seen in the reactions of the other finance ministers in Brussels.
Michel Sapin, the French finance minister, pointed out that the priority at the moment was saving Greece. “After the ‘Greek weeks’ we will have the ‘British weeks,’ even if they are not of the same nature,” he said.
Austrian Finance Minister Hans Jörg Schelling decried the British idea of holding a referendum, saying, “I think politicians have to act decisively. And when politicians believe they have to ask the people, it’s an indication that they themselves are not willing to make the decisions and carry the consequences.”
It’s not much of a surprise that the EU finance ministers were otherwise preoccupied. It turns out that Greece’s repayment of a €750 million debt to the International Monetary Fund on Monday was made by taking most of the money from an IMF special holding account accessible only in emergencies. Only about €100 million of the repayment came from Greece’s own cash reserves.
The Greek government on Tuesday revealed just why it had to take that step. Its domestic cash reserves, even after being bolstered by squeezing money from local authorities, come to only about €600 million. That’s not enough to pay salaries and pensions due at the end of this month, to say nothing of additional repayments due to the IMF and other creditors in the next weeks.
On Monday Yanis Varoufakis, the Greek finance minister, said that Greece might face a liquidity crunch in a “couple of weeks” — he obviously wasn’t kidding.