David Cameron’s formal letter/threat that officially opens pandora’s box for the UK

“I will open pandora’s box with my bare hands and then BOOM!”, Mr Cameron might as well be saying to Donald Tusk. Photo taken from the last EU Council on 15-16 October 2015. From left to right: Mr David CAMERON, UK Prime Minister; Mr Donald TUSK, President of the European Council (European Council TVNewsroom, 15/10/2015).

One of the most ambitious promises UK’s Prime Minister David Cameron made during the last years was to hold a referendum on the UK’s relationship with the European Union.

But after some time in which the attention was being dragged away by some major evolutions in the news agenda like the escalation of the migrants crisis or the Volkswagen scandal, Mr. Cameron finally decided it was high time for a revamped settlement over the ‘Brexit’ question. Indeed, with what many media outlets in Europe already call the “strongest warning”, UK’s Prime Minister is expected to tell his fellow European leaders today that he might back Britain leaving the EU after all, unless his demands for a radical reform of the bloc are heard. You heard right.

Formal demands

The main UK and EU media reported last Saturday that the British Prime Minister is finally going to formally table his long due wish list and ask for some must-haves like for instance a four-year ban on EU migrants claiming in-work benefits after entering the UK. That will be done in the form of a letter to European Council president Donald Tusk. The letter is due to officially open the “Brexit pandora box”, and subsequently mark the beginning of long and painful negotiations between his highly eurosceptic “Tory team” and main EU senior representatives, from now till the crack of dawn, or accurately said until his promised in/out UK referendum “before 2017”.

A direct threat

Moreover, in that letter-threat, Mr. Cameron will say that if no deal can be reached, he could officially back a British exit during the campaign ahead the in/out referendum before 2017. “If we can’t reach such an agreement, and if Britain’s concerns were to be met with a deaf ear – which I do not believe will happen – then we will have to think again about whether this European Union is right for us,” Mr. Cameron is expected to say, according to advance extracts of his speech “leaked” by his cabinet in London. “As I have said before, I rule nothing out”, he added.

“Fundamental changes”

UK’s Foreign Secretary Philip Hammond also made his echo voice heard. Speaking on Television Sunday AT BBC’s Andrew Marr Show, he said the letter to Tusk won’t include “detailed legislative changes”, but that it is all about a “fundamental change in the direction of travel of the European Union”. “We don’t want to be excessively prescriptive at the beginning of the discussion,” he underscored. “This letter is not the end of the process, it is the beginning of the process”, he added.

So the Brexit thing comes under the spotlight again, after a few, moderately quiet months. Surely business in the Brexit scenario is still the biggest question mark, as it has always been. Mr. Cameron is indeed expected to speak about economic stability. “What would being outside the European Union mean for our economic security?”, he “will” ask President Tusk – which is quite a long question. Let’s try to see how the markets are talking about Brexit.

Risks for Business

A recent study by Bank of America Merrill Lynch indeed warned of heavy near-term negative impacts on the economy of the United Kingdom and even a potential pound sterling crisis. The study issued by BofA, in a few words, reveals that the value of the GBP relies heavily on the flow of money into the UK made by inward investment.

Investors want of course a stable political environment and the uncertainty an in/out referendum would eventually bring is definitely not a bright element at all. “In our view there would be serious economic fall-out for the UK in the short- and long-term if voters choose to leave the EU,” according to that study by BofA Merrill Lynch. Also, Bank of America’s analysts also stress that the UK will lose global influence if it is to exit the EU.

Fragility

Similarly, the Financial Times reported recently that the chief executive of Goldman Sachs’ European investment business warned that a potential UK exit from the EU would “seriously damage” the British economy. As reported by FT, Mr. Andrew Wilson, who has managed the European business of Goldman Sachs Asset Management since 2006, said: “The economic argument for [Britain] staying in the EU is pretty compelling”.

Of course, not everyone agrees with those scenarios, but the economic situation for the UK after a Brexit now seems to be a bit more fragile than expected. As previously said, there are many open discussions around a British exit from the European Union, and Business is undeniably the biggest one.

“Real problems”

Prime Minister David Cameron seems now more determined than ever before to deliver a strong message to the EU leaders, rather than keeping the markets at peace. “Those who believe we should stay in the EU at all costs need to explain why Britain should accept the status quo. I am clear that there are real problems with this” he is expected to say to President Tusk.

Opening pandora’s box

All in all, David Cameron, following his predecessors and a traditional political game in Britain over the position of the country within the EU, decided to play the UK in or out referendum card back in 2013. The real problem that 10 Downing Street is facing though is that almost all political leaders of Britain played with the exceptionalist sentiment of the British people, manipulated to a bigger or smaller extent, but at the end of the day none of them did pull the trigger.

David Cameron instead, this successful young and bold politician, thought it was a good idea to actually open pandora’s box so that he gets re-elected. The biggest issue with that, while he is slowly and steadily placing his hands around the box, is that neither him, nor President Tusk, not even God know the catastrophies that this damn box is hiding inside.

Is it worth it in 2015 fragile global economic environment to open abyss’s gates just to get re-elected? If not, is it worth it then doing that just to stay in power as Prime Minister? In other words, when Winston Churchill once said “we are in Europe but not of it”, was it to polarise his electorate based on pop exceptionalist myths and ghosts or to jump off the cliff like Mr Cameron feels like doing recently?