Cameron: We will sign euro treaty...on our terms

Britain will sign up for fiscal discipline in the eurozone, but not at the expense of its industries or independence, Prime Minister David Cameron has declared.

The following is written by David Cameron and appears in today's Times (may require subscription).

"The crisis in the eurozone is forcing the European Union to confront fundamental choices. As we head into a key European summit, people want to know the answer to some crucial questions: what is in Britain's national interest? What is our attitude to any proposals for treaty change? What do we want in return? Should there be a referendum in this country? And what does it all mean for our future relationship with the EU?

I want to answer these questions very directly.

What matters most to Britain's national interest now is that the eurozone sorts out its problems. These have been having a chilling effect on our economy for the past 18 months, and the longer the crisis continues, the more it will damage us. We need this resolved as quickly as possible.

That requires three things.

First - as Germany has argued - there needs to be much tighter fiscal discipline and closer fiscal co-ordination within the eurozone to restore market confidence and stop unmanageable debt and deficits occurring all over again.

Second, the members and institutions of the eurozone should take whatever action is necessary to prevent a second global credit crunch. In a world where the interest rates on Greek debt are 33 per cent, on Spanish debt 5 per cent and on Italian debt 6 per cent, we need to see the full implementation of all the elements that the UK has been pushing for - above all a big firewall to prevent contagion along with properly capitalised banks. Third, and more fundamentally, we need to see improved competitiveness, especially in the euro-area economies that are struggling to grow. Britain has put forward and consistently argued for bold structural-reform programmes and a comprehensive growth plan for Europe.

In all of these debates my job is to defend and protect the British national interest. Britain is a member of the European Union; its institutions belong to all its members, Britain included. We benefit greatly from the single market, which we must both safeguard and extend.

That brings me to the question of treaty change and the European Council this week. One way of introducing stronger rules for the eurozone - which of course wouldn't apply to Britain - would be a change in the treaty governing all 27 members of the European Union. This is the most comprehensive and credible way to provide tough sanctions to ensure that eurozone countries stick to the rules on debt.

But just as Germany and others have their requirements for treaty change to strengthen fiscal discipline, so Britain has its requirements for treaty change too. If we are changing the treaty that applies to all EU countries and allowing the eurozone countries to have new rules, it is also important that there are rules to keep the single market fair and open for key industries for Britain, including financial services.

Clearly, we will need to look at the right safeguards for Britain in the light of what is proposed. Our colleagues in the EU need to know that we will not agree to a treaty change that fails to protect our interests.

Alternatively, the 17 countries of the eurozone may choose to create a separate treaty of their own. This has happened before, with the Schengen Agreement on open borders and the new EU bailout mechanism, which Britain will not be part of. Again, in these circumstances, we would need to make sure our interests are protected.

Clearly, if they take this path, they will not be amending the treaties we are already signed up to, so this would not mean a change in our own treaty obligations. Some have argued that a treaty of the 17 would be more effective if it were applied through the various institutions of the EU such as the European Court of Justice and the Commission. But these institutions belong to all EU states and their use outside the treaty of the 27 would clearly require safeguards.

Our requirements will be practical and focused. But eurozone countries should not mistake this for any lack of steel. Fundamentally, the problem with the eurozone is a problem of competitiveness, with countries that have large trade deficits coexisting with Germany, which has a huge trade surplus. These imbalances have to be addressed. Without this there will be no lasting solution. We fully support the eurozone's determination to reform its own rules and structures, but not if they are just papering over the cracks and threatening Britain's own interests in the single market.

On the question of a referendum, this is the first government in British history that has introduced a referendum guarantee. Under our new law, the British Government is simply not able to pass powers to Brussels without a referendum.

While this week's summit will inevitably focus on the crisis in the eurozone, I am still committed to forging a new kind of Europe. Indeed, some of the problems underlying the crisis strengthen the case for a more competitive, dynamic and outward-looking Europe.

I have spoken about a Europe that has the flexibility of a network, not the rigidity of a bloc. A Europe that looks beyond itself, with its eyes to the horizon, and recognises that it must change fundamentally or fall behind. A Europe that cherishes its national identities as a source of strength.

That is the kind of Europe that is in Britain's national interest and that is the kind of Europe I am determined to help to bring about."