British Prime Minister Calls For Referendum On EU Membership
ANDERSON: Right. You're watching CNN. This is Connect the World. I'm Becky Anderson for you in London. Now is Britain heading for the exits of the European Union. Well, in more than half a century, no country has given up membership of the club. Could the UK be the first? Well, British Prime Minister David Cameron says that is up to the voters to decide. We're looking at the reasons behind Mr. Cameron's strategy and its risks tonight. Plus, in a moment we'll bring you the reaction from Davos when Richard Quest joins us live from the World Economic Forum. First, though, our senior international correspondent Matthew Chance looks at the nuances of David Cameron's landmark speech.</s>MATTHEW CHANCE, CNN INTERNATIONAL CORRESPONDENT: It is an extraordinary move, a prime minister raising the possibility of Britain, a key European power, leaving the European Union.</s>DAVID CAMERON, PRIME MINISTER OF BRITAIN: I am in favor of having a referendum. I believe in confronting this issue, shaping it, leading the debate, not simply hoping that a difficult situation will go away. Thank you, Mr. Speaker.</s>CHANCE: His speech laid open one of the biggest divisions in British politics. Prime Minister Cameron may have placated euro skeptics, but europhiles across the political spectrum are alarmed, not least that Britain's economy may be damaged by years of uncertainty. Years, because the referendum won't come until at least after the next British election in 2015. Until then, the prime minister says he wants to try and negotiate a new settlement with Europe, clawing back powers currently wielded by Brussels, like the authority to decide employment law, or environmental policy when other European states are moving closer to political and economic union. It will be on that still to be negotiated relationship with Europe that the people of Britain will have their say.</s>CAMERON: I never want us to pull up the drawbridge and retreat from the world. I am not a British isolationist, but I do want a better deal for Britain. But not just a better deal for Britain, I want a better deal for Europe too.</s>CHANCE: Reaction from the consulate has been lukewarm, if not hostile. The French foreign minister calling the speech dangerous, saying it would be difficult for Britain outside of Europe. His German counterpart says he shares the vision of a better Europe, but the cherry picking by Britain is not an option. The key reaction, though, may be this one from the German Chancellor Angela Merkel. Being in Europe, she says, means finding a fair compromise. In this framework, we are prepared to talk about British wishes. Traditionally, Britain has been one of Europe's most skeptical countries, refusing to adopt the single currency, the euro, and opting out of various other European treaties. Now, a long awaited debate about the future of Europe and Britain's part of it is getting underway. Matthew Chance, CNN, London.</s>ANDERSON: All right, let's bring in Richard Quest who is joining us live from the World Economic Forum in Davos where, Richard, you've been getting the business reaction to Mr. Cameron's speech. What have you got?</s>QUEST: Well, first of all, the speech has been very much an undercurrent here at Davos. I don't think people have quite cottoned on to the size and magnitude of what the prime minister said. He will be in Davos tomorrow when of course it will move to the center stage. So far, Mario Monti, the Italian prime minister, has given the most official reaction of European leaders basically saying that whatever happens, Britain needs to stay within Europe.</s>MARIO MONTI, ITALIAN PRIME MINISTER: I am confident that if there is to be a referendum one day, the UK citizens will decide to stay in the European union and contribute to shape its future. I think the European Union does not need unwilling Europeans. We desperately need willing Europeans.</s>QUEST: If Mario Monti was slightly diffident one way, then Sir Martin Sorrell chief executive of WPP, which is the largest advertising and media company in the world, Sir Martin has already written previously to the Financial Times saying that the UK must stay in Europe. And now as the threat of a referendum becomes real, he believes that will be damaging and certainly not in Britain's interest.</s>MARTIN SORRELL, CEO, WPP: This is a political decision. It's not an economic decision. If I'm looking at it from the point of WPP it's not good news. It's at best neutral and at worst negative. So it can't be positive. So you just added another reason why people are going to postpone investment decisions. And the last thing we need is people postponing more.</s>QUEST: So I think just the view here is not so much whether there is a referendum or not, it's the fact that it is three to five years out minimum and that creates the uncertainty which as you know only too well, Becky, is the one thing markets and business loathe.</s>ANDERSON: It's the nemesis of those market traders and businessmen. Well, all right, at present the EU accounts for nearly 50 percent of Britain's total goods and services for exports. Is it clear, Richard, yet, how that figure would change if the UK were to pull out?</s>QUEST: No. By no means is it clear, because several things have to be understood. Firstly, there's no guarantee that the other European nations would have a full-scale negotiation. Secondly, the Norway option, or thirdly the Swiss option where I am is probably not available to the UK. So not only does David Cameron have to negotiate and get the others to go with him on that, that is the precursor to the referendum. Only after all that's been done could you have any idea what the effect, the real effect on trade would be.</s>ANDERSON: Yeah, and that's where the uncertainty comes in. All right, Richard, thank you for that. And you're going to be with us later on in the show. So look forward to that. Richard with the business view for you. What do British voters think about all of this, then? Well, the latest UGov (ph) poll shows that for the first time in the current parliament more people would vote for the UK to stay in the European Union than to leave. 40 percent of those surveyed say they are pro-membership. 34 percent are keen for Britain to withdraw. Now UGov (ph) took this survey last week just days before Mr. Cameron's big speech. Well, in the United States, Washington is watching Downing Street's every move. U.S. President Barack Obama told the British prime minister just last week that, quote, "the United States values a strong UK in a strong European Union." So I sat down with the former UK ambassador to the U.S. and asked him what today's big speech means for the special relationship. Have a listen to this.</s>NIGEL SHEINWALD, FORMER UK AMBASSADOR TO U.S.: And I think the prime minister actually, one of the things I welcome back his speech today was at the end he recognized that if Britain is strong in Europe it's also strong in Washington, in Beijing and elsewhere and actually vice versa. So if our stock goes down in Europe, then we have less influence elsewhere in the world. And I think that's ultimately the point that American interlocutors have been making to the UK government over the past few weeks is watch out, you're debate here does have wider ramifications. The UK on the sidelines of Europe, or even worse outside Europe altogether, is much less useful as a business partner and as a strategy partner than the rest of the world.</s>ANDERSON: Be that as it may, Cameron is elected to represent a constituency called the British public. And if they vote to get out that's the way it's going to be surely.</s>SHEINWALD: If they do ultimately, then Britain will have to forge a new path for itself outside the European Union of course. And that's why what -- that's the reason why what he said today is risky, because referendums not only deal with the issue on the table, which would be Europe, but there are obviously going to be subject to whatever the politics of the day happens to be alighting on...</s>ANDERSON: Britain out of the EU would most likely affect the pace of economic recovery in the European space. Is that -- is that ultimately what the Americans are worried about?</s>SHEINWALD: Actually a number of things. I think first of all, they worry about the fact that there will be a period of uncertainty in Europe now. There's a period of uncertainty anyway, because the EuroZone is still in crisis. But this adds another layer of uncertainty to all that. The second thing is Britain were to decide to get out, that would mean a period of huge disruption, not only for Britain, but for the rest of the European Union after that, because that's never happened in the EU. And obviously untangling all those relationships will be very difficult. But I think American business looking at this is going to be worried. America is Britain's largest investor. There are nearly a million jobs here in Britain which rely on American companies. So any new American company thinking about Britain, looking for Britain as the gateway to the rest of Europe, is going to be thinking actually is it still going to be in, in four or five years time.</s>ANDERSON: How much pressure can Washington these days put on an administration in London? How special is that relationship these days?</s>SHEINWALD: It's still a very, very important relationship to us. It's our most important single bilateral relationship. I think that would be what, you know, all three major parties in the UK would say. I don't think it's pressure. I don't think it's a crude as that. And I don't think it's interfering in the detail of our politics. It's just saying there are lots of people out here who are watching and who want -- and for our own interests, for the American interests, what we want is the UK active and centrally involved in Europe.</s>ANDERSON: Why wouldn't a Britain in the EU, but with renegotiated terms, be a stronger partner for Washington, not a weaker one?</s>SHEINWALD: I don't think Washington is taking a position on that. What it's saying is that it doesn't want Britain, through a series of miscalculations, to end up on the sidelines or to end up -- or to end up out. And I don't think any of us who have a direct experience of negotiating in Europe are saying that it's unreasonable for Britain to put demands down on the table. We've done that for decades. And usually our European partners are prepared to accommodate us. But I think the situation today is when we're there in crisis themselves, so they'll want to meet us but not at any cost, not at the cost of destabilizing the EuroZone itself, not at the cost of actually ripping up the core rules of the single market.</s>ANDERSON: Talking a possible exit for Britain from the European Union some years from now, I hasten to add. Live from London, this is Connect the World. I'm Becky Anderson. Coming up, polls have now closed in Jordan in that country's first ever election monitored by outside observers. We'll just what is at stake after this.