Britain's new defiance
The major story from the latest European Union crisis meeting in Brussels was not the fact that leaders announced yet another plan to save the floundering euro currency. It was the fact that Britain took an unprecedented stand against the plan, which would have severely threatened its national interests.
Britain is a member state of the EU but does not use the euro, and London is Europe's most important financial center (in fact, the second most important in the world after New York). When it became clear that the other leaders were planning treaty changes which would transfer critical powers from the elected national governments to the EU's unelected central authorities, British Prime Minister David Cameron presented some fairly modest demands to safeguard British interests (you can read them here). The other leaders refused, and so Cameron rejected the treaty changes. Since such changes require unanimous agreement of all 27 member countries, this was effectively a veto.
EU leaders and media reacted with an outpouring of bile against Cameron and Britain. The EU has long been suspicious of Britain, a country which was never enthusiastic about European unification and which has linguistic and cultural ties with the EU's rival, the United States (which is also its biggest export market). Now that suspicion has hardened into outright hostility and erupted into the open.
In fact, Cameron had little choice, and many Europeans probably don't support what their leaders are saying (background here and here). Those leaders are openly threatening to punish Britain, but:
Growing popular hostility to the EU across Europe might come to Britain's aid. Democratic obstacles to the Euro-Plus treaty are beginning to materialise in Ireland, the Netherlands, Austria, Romania and Denmark, while parliamentary opposition in Finland, Latvia and the Czech Republic may also sink the deal.
The EU is forging ahead with the planned deal by other means, but the gist of it is just more of the same austerity and obsession with deficits that are already destroying so many countries' economies. It doesn't address the real problems and assessments so far are negative. It won't save the euro or pull Europe out of its economic death spiral. Britain would do better to strengthen its ties with the US, where tried-and-true Keynesian stimulus policies are bringing at least modest recovery.
And the EU-British breach could well widen. The current British government is a coalition between the Conservative party and the much smaller Liberal Democratic party (somewhat similar to our libertarians). The "Lib Dems" are strongly pro-EU and have been vehemently critical of Cameron's stand. If the coalition fractures, it might force a new election, or an exasperated Cameron might order an election, as a British Prime Minister has the power to do. In that case, the Lib Dems would face a wipe-out. Their pro-EU and pro-immigration stances are very unpopular and their support has been sinking; in fact one poll today showed them falling behind the UKIP, a new party dedicated to getting Britain out of the EU, and this doesn't yet reflect public reaction to the EU's new hostility to Britain, which will likely boost UKIP support even further.
If a new election left the UKIP as the only party that could join the Conservatives to form a majority, or if the EU pushes ahead with measures that really threaten the British economy, withdrawal might become inevitable -- and once one country leaves, others whose economies face ruin under intensified austerity may follow.