EU leaders go into a make-or-break summit on Thursday facing difficult compromises to keep Britain in the bloc and wrangling with Europe's worst migrant crisis since World War II.

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Conservative Prime Minister David Cameron's demand for key reforms in return for Britain's continued membership has exposed a rift over whether the EU's future is to move ever closer together or to ease ties, becoming a looser group of distinct sovereign nations.

Fail to get a deal and Cameron has said that anything is possible, including the United Kingdom becoming the first country to leave the 28-nation bloc after an in-or-out referendum that could come as early as this summer.

Cameron has staked his political survival on securing a reform deal sweet enough to sell to a wavering British public, in the hope of finally putting to rest an issue that has plagued British politics for a generation.

Leaders will also seek to get a new grip on the refugee crisis, which has seen over a million migrants flood into Europe.

Most of them are Syrians making their way from Turkey via Greece, which has been overwhelmed by the numbers.

Some member states are taking measures unilaterally, such as re-imposing border controls in the passport-free Schengen zone to halt an apparently unending tide of humanity.

Brexit sticking points

To avoid a so-called "Brexit", Cameron has four key demands -- welfare restrictions to help curb immigration, safeguards for non-euro Britain, increasing EU competitiveness and an opt-out from closer EU integration.

The key sticking point is his demand that EU citizens working in Britain not have access to welfare benefits for four years.

Poland and other east European member states who have hundreds of thousands of citizens in Britain bitterly oppose such a change, saying it would discriminate against them and undercut the EU's core principle of freedom of movement.

Brussels has offered what is known as an "emergency brake," which Britain could invoke if its welfare system is overwhelmed by the inflow of workers, as it believes it has been.

An issue for Cameron may be that at least 30,000 British nationals are in fact claiming unemployment benefit in countries around the EU, research by the UK's Guardian newspaper has found, based on responses from 23 of the 27 other EU countries.

Expat Brits living in Europe fear Brexit consequences

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To right wing Cameron's call that non-euro Britain have safeguards against closer integration of the single currency area, French President François Hollande has repeatedly reiterated his country's stance that there "can be no veto by countries outside the Eurozone" on Eurozone policies.

"We have reached a point that should give Britons the reassurances needed while respecting European principles," Hollande said, warning the UK against asking for more concessions ahead of the Brussels summit.

An opt-out from the EU's mission of "ever closer union" is also proving controversial amid charges that concessions to London will create a two-speed Europe of countries wanting to limit integration and those wanting to press ahead.

Cathérine Mathieu, a UK specialist at the Paris-based French Economic Observatory (OFCE) told FRANCE 24 that the issue between Paris and London is specifically a fundamental disagreement about the role and scope of the European Union.

In Britain’s view, the EU is first and foremost “a free market that should not limit the sovereignty of member states,” Mathieu stated.

“No guarantee of deal’

Against this backdrop, EU President Donald Tusk warned Thursday there was "no guarantee" of a deal at the two-day summit.

Cameron won crucial backing, however, from German Chancellor Angela Merkel, the bloc's undoubted power-broker, suggesting that despite Tusk playing down expectations, progress was being made on an agreement.

"Like David Cameron, I believe that it is necessary for the EU to improve our competitiveness, transparency and (reduce) bureaucracy. Germany has shared these concerns for many years," she said.

Even the controversial proposal to curb benefits was "justified and understandable because the jurisdiction for each respective social system lies not in Brussels but in each individual member state," Merkel said.

Cameron has promised Britons an in-out EU membership referendum by 2017 but it is widely expected that if he can get a deal in Brussels, he will call the vote for June.

In London, a UK government official said the prime minister had taken "a very personal involvement" in the talks and now "this is crunch time".

"We think we have made a lot of progress and we will be going into this summit to nail down the rest of the details," said the official who asked not to be named.

(FRANCE 24 with AFP)

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