Analysis: Prime minister is likely to be successful on sovereignty and competitiveness, but immigration and welfare will be the toughest nut to crack

David Cameron’s letter laying out his EU reform shopping list shows two things – that he has done as he was told while also doing what he wants.



Downing Street releases David Cameron's EU renegotiation letter – Politics live Read more

By putting the UK demands in writing to Donald Tusk, the European council president, the prime minister has delivered on the request of his EU colleagues who were irritated that the negotiations were based on nothing but hearsay, verbal discussions, public speeches and newspaper articles. This was not enough for the lawyers. It also means Britain can now be pinned down to a finite list of demands.

Yet, while Cameron has conceded to those critics, he has also declined to show his hand. The letter is six pages long and reiterates the well-rehearsed demands that have been known for the best part of a year, split into four areas known as “buckets” in Downing Street-speak. There is nothing new here. There is little detail.

This is understandable. To reveal too much would be to walk into the negotiating chamber naked, leaving Cameron a hostage of the anti-Europeans at home while weakening his bargaining position with the Europeans.

As expected, the demands focus on economic competitiveness, sovereignty, fairness in the single market and between those inside and outside the euro, immigration and welfare.

The letter states:

Immigration and welfare will be the toughest nut to crack for Cameron. In an unusual admission in his speech, Cameron affirmed that freedom of labour in the EU was fundamental, but he still called for a four-year timeout on in-work benefits and child benefits for EU migrants working in Britain. EU and UK government lawyers agree that this is discriminatory, untenable and highly unlikely to pass.

EU migrants claiming benefits: questions the government must answer Read more

“I have strong doubts about the legality of the four-year ban on access to welfare benefits for EU citizens,” said Martin Schulz, the European parliament president.

Downing Street is looking for other ways of securing similar results, perhaps using residency criteria rather than immigrant status to get away with the welfare changes. But if Cameron succeeds, he will encounter stiff opposition from and possible retaliatory action by Poland and other eastern European countries.

“The most difficult area and I think the one which could determine how fast we come to a conclusion is welfare and benefits, a very sensitive issue,” said a senior official. “A very conservative Polish prime minister will probably not agree to this. Poland is the most mobile country in Europe.”

The issue of economic governance is is also complex. Cameron is demanding a watertight legal definition of the relationship between the 19 countries who share the euro single currency and the nine EU countries with their own currencies, to ensure that the eurozone cannot outvote the UK on issues affecting the single market. The aim is to protect the pre-eminence of the City of London as Europe’s leading financial centre.

This element is probably the one with the most lasting impact. Last week in Berlin, George Osborne sounded confident that a deal was doable and his German counterpart, Wolfgang Schäuble, also sounded optimistic.

There is talk of resurrecting an obscure EU legal instrument from the 1990s which would allow the UK to apply an “emergency brake” to proposed legislation deemed to favour the eurozone over the others. Senior sources in Brussels say this is problematic and there will be tough talks over what the prime ministerial letter said should be a “safeguard mechanism to ensure these [fairness] principles are respected and enforced”.

Britain also wants emphatic acknowledgment of its euro optout by having the currency not described as that of the EU, but that the EU is a “multi-currency” union.

European competitiveness is the easy part: it is also the German chancellor Angela Merkel’s priority for economic recovery, and the European commission under Jean-Claude Juncker and his number two, Frans Timmermans, is pursuing a broadly sympathetic course on trade liberalisation, single market extension and deregulation.

The potential problems here depend on how detailed and specific the mooted changes become and whether France, for example, cuts up rough about some of the proposed changes. This would mean trouble not only for Cameron but for Merkel and others.

Cameron argues that Britain is allergic to the EU’s treaty commitment to “ever closer union” (it’s actually “ever closer union of peoples”) as it signals a federalist mission. He also wants national parliaments, in an unspecified numerical formulation, to be able to block EU legislation.

The Europeans yawn at the Conservative party fixation with ever closer union, which they say is meaningless, symbolic and moribund. But it is difficult to change because to scrap it would mean renegotiating EU treaties.

“We have no member states ready to open the treaties at this minute in time. Everyone who’s realistic knows that it’s not feasible before 2017 to reopen them and get them ratified,” said a senior EU official.

But Downing Street is concerned that the phrase has a creeping influence on EU legislation and on the rulings of the European court of justice, which uses it as a guideline and criterion.

The issue is already semi-resolved. At the UK’s insistence, EU leaders addressed the concern in June last year and decided: “The UK raised some concerns related to the future development of the EU. These concerns will need to be addressed. In this context, the European council noted that the concept of ever closer union allows for different paths of integration for different countries, allowing those that want to deepen integration to move ahead, while respecting the wish of those who do not want to deepen any further.”

A more formal and legally binding optout from ever closer union, to be attached to the treaties in the future, will fix this. It might be tricky, but it is not a dealbreaker.

Angela Merkel backs UK calls for EU reform Read more

So will anybody be talking about this at the time of the referendum?



Privately, EU officials concede that Downing Street’s shopping list is quite modest and easily negotiable, but they do not say so publicly for fearing of stirring resentment among British Eurosceptics.

But the broader concern in Brussels and elsewhere has less to do with Cameron’s demands and the state of the negotiations. Rather, the Europeans are worried about the referendum itself and the distinct possibility that the negotiations will be a waste of time if Britain votes against staying in the EU.



“The real issue won’t be the negotiations. That’s tricky, but we’ll get there,” said a senior EU diplomat. “The real difficulty is quite simply the referendum campaign. The pro-Europeans always appear to be on the defensive.”