When Europe’s finance ministers sit down to a working breakfast in Brussels on Tuesday, after deciding whether to order the continental or the full English, the British delegation will be faced with an even tougher decision.

Chancellor Philip Hammond and his counterparts will be asked to approve a list of those countries, island states and former colonies which the European Union has deemed to be “non-cooperative jurisdictions”. Put more plainly, the EU will be announcing a blacklist of tax havens.

Coming as it does less than a month after the publication of the Paradise Papers – an investigation by the Guardian and 95 partners worldwide into a leak of 13.4 million files from two offshore service providers – the announcement is hotly anticipated. Campaigners, lobbyists and politicians on both sides of the offshore debate are on tenterhooks.

For the kind of small island economies whose GDP depends on selling secrecy and tax breaks, a blacklisting could be devastating, particularly if Brussels follows up with a series of sanctions for doing business in these countries.

Speculation about who will be placed on the EU’s naughty step has reached fever pitch. The latest draft, according to reports last week, contains 20 names, down from a possible 92 at the beginning of the year. That number could be further whittled down – the horse-trading is continuing up to the wire. So fierce is the debate that some believe publication might be postponed.

“The finance ministers of the member states must not let political considerations cloud their judgment when agreeing their final list next week,” says the influential tax reform campaigner and German MEP Sven Giegold.

One of the big questions is how many, if any, members of the UK’s sprawling offshore network will be named.

Any decision taken by ministers on Tuesday will have to be unanimous. Britain may be exiting Europe, but it retains its veto until 2019 and Theresa May’s government has been pulling every lever to protect its dependencies. Whitehall sources have confirmed that those Caribbean territories which suffered the most damage during this year’s devastating hurricanes will be given extra time to get their house in order.

It has been reported that seven jurisdictions, not all of them British, have been given a temporary reprieve in order to recover from the damage. This is likely to mean the British Virgin Islands, Montserrat and the Turks & Caicos Islands – all of which are UK territories that took a battering from hurricanes Harvey, Irma and Maria – are safe for now.

They are likely to be included on a “grey” list. This second register will name jurisdictions currently acting as tax havens that have told the EU they intend to improve their transparency, information sharing and tax rules. The grey list could be made public, or ministers may decide it should remain unpublished for now.

Leading the project is Frenchman Pierre Moscovici, in his role as finance commissioner. He has been working on it for two years. “I hope that next week this blacklist will be decided and made public,” he said. “There must be no delay and no compromise.”

In January this year, 92 countries received a screening letter. They included some of the world’s biggest states, including China, the US and Japan; small European countries such as Monaco and Andorra; and tiny developing nations such as Niue in the Pacific. They were informed that they would be assessed against three broad criteria: tax transparency; fair taxation; and commitment to implementing measures agreed by the OECD intended to stop countries stealing each others’ tax bases.

The commission has published specific measures by which countries can earn the brownie points needed to stay off the list. These include signing up to the common reporting standard, which sees countries commit to sharing information on bank accounts held by individuals who are not their own citizens. The names of bank account holders are handed once a year to the tax authorities of those individuals’ home countries.

A corporation tax rate of zero is not by itself a black mark, but the country should not facilitate offshore structures or give tax breaks to companies with no real presence in their jurisdiction.

In October, the commission wrote to 41 countries warning they had failed the test and were likely to be blacklisted, unless they promised to change their ways. None were British territories – under pressure from Westminster, Brussels had agreed to hold back. Then the ground shifted once more.

Stories began appearing in the press that a major new offshore leak was about to be published by the team behind last year’s Panama Papers. The Isle of Man called in the Treasury to review $1bn (£740m) of VAT refunds it had issued to private jet owners. Five days before the publication of the Paradise Papers, Jeremy Corbyn picked up the cudgels, marvelling at how 957 private jet owners had chosen to register their aircraft on one small island.

Pierre Moscovici: ‘There must be no delay and no compromise.’ Photograph: Anadolu Agency/Getty Images

“When it comes to paying taxes,” Corbyn told May, “there’s one rule for the super-rich and another for the rest of us.”

A day or two later, Britain relented. The commission fired off letters to a further 12 tax havens, including the Isle of Man, Bermuda and the Cayman Islands.

Since then, May’s government appears to have regained some sway. Sources close to the process say UK dependencies are likely to feature on the grey list if they are named at all.

Moscovici wants the grey list made public, and has offered to act as a monitor, ensuring the promised improvements are delivered. He claims transparency is the best weapon against tax evasion, telling MEP’s last week: “Those who practice fiscal optimisation are a bit like vampires. They fear the light.”

In a draft dated 21 November and seen by Bloomberg, the 36 countries named included Panama, Tunisia, Serbia, Armenia, the Cook Islands and the Marshall Islands. There has been talk of adding Turkey. The US, despite being the location of secrecy states like Delaware and Wyoming, where companies can be set up without declaring who owns them, is definitely not on the list. Neither is Switzerland. Most controversially, no EU country will be named.

“Hypocrisy on this front tends to turn against the blacklisting power,” the campaign group Tax Justice Network warned last week as it published its own blacklist.

Using the EU criteria, it singles out 41 countries, six of which are EU member states with a mixture of low tax rates, poor transparency, and generous deals on offer to multinationals. They are Cyprus, Ireland, Luxembourg, Malta, Netherlands – and the United Kingdom.

The Green MEP Molly Scott Cato also believes that, after Brexit, Europe may have the power to force through more change.

“The EU should use the opportunity of Brexit to blacklist the UK overseas territories and force the government to end their poisonous tax secrecy,” says Scott Cato. “The EU needs to be clear that it will not sign a free trade agreement with the UK until its cleans up its act on tax.”

WHO WILL BE ON THE LIST?

In a recent report, Blacklist or Whitewash?, Oxfam applied the criteria the EU is using to draw up the blacklist to 92 countries screened by the union and its 28 member states. The criteria exclude EU member states, but if they did not, Oxfam concluded that four countries should be blacklisted: Ireland; Luxembourg; The Netherlands; Malta.

It also concluded that 35 non-EU states should be on the list: Albania; Anguilla; Antigua and Barbuda; Aruba; Bahamas; Bahrain; Bermuda; Bosnia and Herzegovina; British Virgin Islands; Cook Islands; Cayman Islands; Curaçao; Faroe Islands; Macedonia; Gibraltar; Greenland; Guam; Hong Kong; Jersey; Marshall Islands; Mauritius; Montenegro; Nauru; New Caledonia; Niue; Oman; Palau; Serbia; Singapore; Switzerland; Taiwan; Trinidad and Tobago; UAE; US Virgin Islands; Vanuatu.