Cameron in need of plan B as EU leaders stand firm against benefits freeze

If David Cameron has a plan B to set before the leaders of Europe that buys him a ticket to a winning referendum, there is little sign of it surfacing. British negotiators deny point-blank that there is such a gift ready to be conjured out of a pre-Xmas hamper on Friday morning.

But it is increasingly clear that the prime minister will need one, whatever name it goes under. As he arrived for the biggest EU summit of his time in office on Thursday – a meeting that will go some way to deciding Britain’s European future – the leaders of the rest of Europe lined up to reject, politely but firmly, the centrepiece of his negotiating package, the attempt to reduce EU migration to Britain by withholding in-work benefits for four years from arrival.

“Unacceptable,” said Donald Tusk, chairing the summit and a close ally of Cameron’s on the negotiation. Angela Merkel said: “There can be no limits to fundamental liberties and principles.” François Hollande said that if Cameron’s proposals breached EU law, it would be a difficult negotiation.

The benefits freeze for non-British EU citizens does breach EU law and would require a change to the Lisbon treaty. It discriminates on grounds of nationality. And it impairs one of the European single market’s four fundamental freedoms – that of labour.

Cameron’s campaign over in-work benefits is included in one of four “baskets” of proposed changes. There is no agreement on any of them, but none of the other three are seen as deal-breakers, even though some of the changes would need renegotiation of the Lisbon treaty, off-limits to almost everyone except the prime minister.

Cameron tried to pull a fast one almost three weeks ago, telling Tusk and other EU leaders that he needed a treaty change to win the referendum and he needed it quickly, preferably before Christmas.

This set alarm bells ringing. German sources say Merkel feared the row could quickly career out of control and become difficult to manage. She called Cameron, who backed down and accepted there would be no settlement until February at the earliest. But over the past week Downing Street has emphasised repeatedly that it will not take the in-work benefits issue off the table.

Legal heads are being scratched in London, Berlin, and Brussels over possible ways around the impasse. Both Merkel and Juncker hinted at such possibilities on Thursday, and the government says it is open to different means to the same end.

Ideas being floated in Brussels include complex legal ways of enabling Cameron to declare victory on the issue without tampering with the EU treaty. Changing the treaty could trigger referendums elsewhere in the EU. Merkel and Hollande are dead set against that because in the current climate of widespread euroscepticism, any referendum on anything to do with the EU could be a losing proposition.

One suggested way of reducing EU migration to Britain is to establish an “emergency brake”, calling a temporary halt to immigration on economic or social grounds. But this would be refereed by the European commission and would need to be agreed by the other 27 governments, meaning Brussels would decide if and when the British government could invoke the emergency mechanism. This is unlikely to appeal to Cameron.

Another way would be to use a clause in the treaty that was used to set up the euro bailout fund without renegotiating the document. It is called the simplified revision procedure. But it would require an adjustment of Cameron’s proposal and would need to affect Britons, too – say, retirees returning from abroad – to have a chance of avoiding the discrimination problem.

Yet another option would be for the British to shift the focus from working EU citizens to the unemployed, with the aim of delivering similar results. This has not been part of the negotiations. British officials insist they are sticking to the issue of those in work, not out of work, and they also say they have no intention of fundamentally changing the UK’s welfare system.

The European Union generally excels at fudging and fixing seemingly intractable legal problems. But it’s hard to see a happy outcome to Cameron’s negotiation that satisfies the Europeans while also appeasing the anti-EU wing of his own party.

Powered by article was written by Ian Traynor in Brussels, for on Thursday 17th December 2015 17.04 Europe/ © Guardian News and Media Limited 2010