Angela Merkel created a small breathing space for David Cameron on Wednesday when she gave a guarded response to his landmark speech on Europe, paving the way for the prime minister to campaign in favour of an in-out referendum on Britain's membership of the EU at the next election.
As most European leaders rejected Cameron's demands for a radical overhaul of the terms of Britain's EU membership, the German chancellor indicated she was open to negotiating a "fair compromise".
The intervention by Merkel, hours after the prime minister called for Britain to be exempted from the EU's founding objective to create "an ever-closer union", delighted Downing Street which had worked hard to brief on Cameron's speech.
He outlined the scale of his ambition to transform the terms of Britain's membership of the EU in his long-awaited speech when he cast himself as a modern-day heretic ready to challenge the defining declaration of the 1957 treaty of Rome which founded the EEC.
"We understand and respect the right of others to maintain their commitment to this goal," he said of the commitment to forge an ever-closer union. "But for Britain – and perhaps for others – it is not the objective. And we would be much more comfortable if the treaty specifically said so, freeing those who want to go further, faster, to do so, without being held back by the others."
Cameron did not set out his specific negotiating objectives but said "nothing was off the table" as he set out a vision of a flexible Europe unlikely to find many friends in Europe. He made clear he wanted repeal of the current working hours directive, a clawing back of EU powers in fields of environment, social affairs and crime, fewer EU commissioners and protection of UK rights in the single market as the eurozone members strengthen their co-operation.
His demands will be tabled in negotiations if he wins the 2015 general election. A new settlement would then be put to voters in a referendum by the end of 2017.
"I believe in confronting this issue – shaping it, leading the debate," he told an audience at the London headquarters of Bloomberg. "Not simply hoping a difficult situation will go away."
The speech delighted Tory MPs across the party, on a temporary basis at least, and prompted Ed Miliband to harden his position when he rejected an in-out referendum on the terms proposed by Cameron, riling some of his frontbench team. But Tony Blair led an immediate fightback by pro-Europeans when he likened the speech to the scene in the Mel Brooks film Blazing Saddles where the sheriff points a gun at his own head.
Merkel gave a guarded response in which she was careful not to reject Cameron's demands out of hand. "Germany, and I personally, want Britain to be an important part and an active member of the European Union," she said. "We are prepared to talk about British wishes but we must always bear in mind that other countries have different wishes and we must find a fair compromise. We will talk intensively with Britain about its individual ideas but that has some time over the months ahead."
German officials made clear Merkel's words were chosen with great care to ensure Berlin would not block Cameron from placing a referendum commitment in the 2015 Tory manifesto. But Berlin remains highly sceptical of the Tories' tactics and is likely to fight hard against any attempt by Cameron to give Britain a major competitive advantage in the single market.
EU diplomats and officials said Merkel, who is keen to keep Britain in the EU, would drive the hardest of bargains amid acute concern that Cameron had plunged the EU into years of uncertainty when the paramount priority for the others is to recover from the euro crisis.
Other EU leaders showed the strength of opposition to the prime minister as they lined up to declare there would be no "cherry-picking", nor "à la carte" terms tailored to suit the British. Cameron's only whole-hearted backing came from the prime minister of the Czech Republic while his allies, the prime ministers of Sweden and the Netherlands, sat on the fence. The leader of Austria's far-right Freedom party was the only other political figure in Europe to follow suit, calling for a referendum on whether the country should give up the euro and leave the EU, saying he was inspired by Cameron.
The French president, François Hollande, told his cabinet in Paris that being an EU member "brought obligations", according to an Elysée Palace spokeswoman.
Hollande said it was "not possible to negotiate on Europe" or use a referendum to "diminish it".
"The United Kingdom can decide perfectly well by a referendum to stay or leave the European Union, it's a decision for the leaders and the British people to make," Hollande said during a visit to Grenoble.
"But what I say, in the name of France, and as a European, is that it's not possible to negotiate Europe to make that referendum. Europe has to be accepted as it is. We can make it evolve tomorrow, but we cannot dismiss it or diminish it under the pretext of proposing to stay in it."
During a council of ministers in Paris on Wednesday morning, Hollande "clearly expressed his wish" that Great Britain remains within the European Union, said government spokesperson Najat Vallaud-Belkacem.
The French foreign minister, Laurent Fabius, said: "You can't do Europe à la carte," adding mischievously that Paris would roll out the red carpet to fleeing UK businesses if Britain quit the EU. "I'll take an example which our British friends will understand. Let's imagine Europe is a football club and you join. Once you're in it you can't say: 'Let's play rugby'."
While no one believes the Hollande administration wants to engineer a UK exit from the EU, Paris is certain to complicate Cameron's quest for a new settlement, highly unlikely to accede to British demands.
Despite the mounting opposition to the British case, there is anxiety in France that Berlin might nonetheless toy with the notion of indulging the UK arguments for tactical gain. There was broad relief on Wednesday that Cameron avoided spelling out specifically which powers he wanted "repatriating" from Brussels.
Guido Westerwelle, the German foreign minister, said: "Not everything has to be decided in Brussels and by Brussels, but a politics of cherry-picking will simply not work. Europe is not a sum of national interests but a community of fate in difficult times."
Cameron, who was greeted by ecstatic Tory MPs waving their order papers as he arrived for prime minister's questions, won overwhelming support from the 1922 committee on Wednesday. MPs from across the party hailed his decision to hold a clear in-out referendum by a deadline of the end of 2017.
But senior figures warned that the unity could break down if France and Germany press ahead with plans to create new governance arrangements for the eurozone before the 2015 general election. Cameron is banking on a delay in any major revision of the Lisbon treaty until after the election after Nick Clegg dismissed his strategyon Wednesday on the grounds that it will create "years of grinding uncertainty because of an ill-defined, protracted renegotiation of Britain's status within the EU". One senior Tory warned that up to 20% of the party will campaign for a no vote if the prime minister achieves only "token" concessions in any negotiation. "If the prime minister does a token renegotiation and comes back and says: 'Well I've got hospital doctors off the hook' and it is a great game set and match – a John Major situation with Maastricht – most of the Conservative party would go awol. The Conservative party is happy that we are getting a vote but it is not focusing on what the substance of the position will be."
Ed Miliband said he was opposed to an in-out referendum at prime minister's questions, though aides rushed to stress the Labour leader was ruling out calling for a referendum at this stage before it is clear how Europe is going to be reshaped by the demands of a stronger European union. The Labour leader has gambled as he admits Cameron may score a short term tactical victory in the polls. But he believes the prime minister will find he has made a strategic error as the Tory sceptics continue to make demands, his European partners reject his demands and business blames him for creating five years of uncertainty.
The prime minister said he would campaign with all his "heart and soul" if he secures favourable terms. But he refused to say whether he would back UK's exit from the EU if he failed to secure his negotiating objectives arguing no one goes into a negotition expecting to lose. While he believed the UK could survive outside the EU, he said withdrawal would be a "one-way ticket and not a return" as he appealed for "cool heads" in the debate to come. he repeatedly emphasised the downsides of leaving the EU, including loss of markets, diplomatic influence and respect of America.
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