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Cameron Takes Pandering Too Far

Clive Crook is a Bloomberg View columnist and writes editorials on economics, finance and politics. He was chief Washington commentator for the Financial Times, a correspondent and editor for the Economist and a senior editor at the Atlantic. He previously served as an official in the British finance ministry and the Government Economic Service.
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David Cameron's gamble in promising the U.K. a stay-or-go referendum on membership of the European Union is growing more hazardous. Britain's prime minister wants the country to stay in the EU, but not on the existing terms. He'd like to renegotiate the contract and then recommend the new deal to voters -- but he needs the other EU countries to go along.

Repatriation of some policy-making power to the member states makes sense, as I've previously argued: more union where necessary, less where possible. Cameron could find allies in arguing for certain kinds of reform, but not if he challenges core EU principles. One of these is the free movement of EU citizens, which Cameron appears to be adding to his list of targets.

German Chancellor Angela Merkel has already said that measures to limit the rights of EU citizens to live and work anywhere within the union would breach a fundamental principle. The implication is that the U.K. can't insist on that and expect to remain a member.

Charles Grant of the Center for European Reform explains:

   Until recently, the ideas he has floated -– more powers for national parliaments, restrictions on benefits for EU migrants and safeguards for the single market -– have been seen by other EU governments as negotiable.

     But now he is looking for new ways to cut migration from the EU –- including caps on numbers. Action is necessary, he believes, because the combination of a prosperous Britain and a stagnant euro zone will attract crowds to the UK for years to come. However, his partners regard free movement of labor as an essential pillar of the single market. Allowing the UK to set quotas on migrants would require both treaty change, which nobody wants, and unanimity, which is inconceivable -– even with the threat of a British exit concentrating minds. If Mr Cameron makes quotas his priority and then fails to achieve them, how can he campaign to keep his country in the EU? 

Grant is right: Cameron is at risk of defeating his own strategy. He ought to drop the quota idea -- and concentrate instead on reforming migrants' benefits.

The two issues are often conflated because of confusion over the meaning of "EU citizenship." As a U.K. citizen, I have an unconditional right to reside in the U.K.; as an EU citizen, I have only a qualified right to live in other EU countries. EU citizens can move to another member country and live there for three months; after that, they're entitled to stay only if they have "sufficient financial resources" to support themselves.

The idea, according to the relevant EU Directive, is to prevent migrants becoming "an unreasonable burden on the social assistance system of the host member state." In other words, an EU citizen's right of free movement does not imply a right to move to the U.K. (or to any other member state), stay unemployed and live on social assistance.

A further complication arises over in-work benefits, such as income support and housing subsidies. In some countries, entitlement builds up over time (as taxes or other "contributions" are paid); in others, if you've got a job, you qualify. Countries with relatively generous in-work benefits and rapid entitlement -- like the U.K. -- will be attractive destinations for low-income migrants. The taxpayers financing those benefit systems have grounds for complaint.

This isn't just a U.K. preoccupation. Germany's Bundestag, for instance, voted last week to tighten benefit rules for EU migrants (Merkel's comments on Cameron notwithstanding).

In fact, that's the right answer: Don't block migration, change benefit rules to better suit an open EU labor market that spans economies at very different levels of development. Essentially, link social entitlements to national citizenship. This can likely be done by amending existing EU law, with no need for a new treaty.

Cameron and his ministers need to make clear that they see freedom of movement as a core principle of the EU (which it is) and that they value it highly (as they should). And they ought to renounce the term "benefit tourism" -- because the vast majority of migrants move to get work, not to be idle, and because EU rules already include a "sufficient resources" condition for jobless benefits.

Instead, they should start emphasizing the net economic gains that migration within the EU has delivered to the U.K. And they should do all this while reforming in-work benefit rules at the national and EU levels so that the system is fairer, and seen to be fairer, to non-migrants.

I'd characterize this as a smart pro-migrant policy. Unfortunately for Cameron, that's not what many British euro-skeptics, or conservative defectors to the U.K. Independence Party, actually want. In most cases, these anti-EU voters are simply, ardently and avowedly anti-immigrant. If Cameron panders too much to this benighted nativism, he'll find himself rejecting one of the best things the EU stands for; the cause of intelligent reform of the EU will be lost; and the UK and the EU will be headed for the divorce Cameron wishes to avoid. 

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.

To contact the author on this story:
Clive Crook at ccrook5@bloomberg.net

To contact the editor on this story:
James Gibney at jgibney5@bloomberg.net