British Prime Minister David Cameron Picture: EPA/ANDY RAIN
British Prime Minister David Cameron Picture: EPA/ANDY RAIN

BRUSSELS — Prime Minister David Cameron argued through the night in Brussels on Thursday with European Union (EU) partners determined to limit concessions on offer to help keep Britain in the bloc.

Fellow leaders and diplomats said an agreement that would allow Mr Cameron to return to London and launch a campaign to stay in the EU at a June referendum still seemed feasible by the end of a two-day summit on Friday, but some said the outstanding issues were proving tough to crack.

A late-night dinner, lasting more than five hours and devoted to renewed arguments over the response to Europe’s migration crisis, also meant that a plan for an "English breakfast" on Friday for all 28 leaders to try to hammer out a final deal was now set to turn into "brunch".

"It might take longer than they think," Irish Prime Minister Enda Kenny said on leaving the summit centre, where Mr Cameron remained locked in overnight talks with top EU officials, French President Francois Hollande and the Belgian and Czech premiers.

Those three national leaders made the case on the various points of most resistance to a draft agreement brokered by summit chairman Donald Tusk, who told reporters: "For now, we have made some progress but a lot still remains to be done."

Mr Cameron had appealed to EU leaders to help him settle the question of Britain’s EU membership for a generation by agreeing a "credible" deal he can sell to the British public.

But aides voiced frustration over a lack of concessions by partners who are wary of Mr Cameron’s bid to sidestep EU regulation and cut immigration. "I would say the going is tough, this could be a long night," a British official told reporters.

"While many countries were saying they want to help, they want to make sure they keep Britain in the EU, there wasn’t much sign of how they are planning to do that in practice, not showing much room for manoeuvre," the official said.

Stubborn differences

Paris has pushed for amendments to ensure Britain cannot veto actions by the eurozone countries or give City of London banks competitive advantage through regulation.

A group of east European states chaired by the Czechs is trying to hold back how far their citizens can be denied welfare benefits in Britain, or have family allowances reduced, as part of Mr Cameron’s drive to cut immigration.

Belgian Prime Minister Charles Michel is fighting a rearguard action for the federalist cause to limit damage done to European plans for "ever closer union" by giving eurosceptic Britain a guarantee it need never share more sovereignty.

Italian Prime Minister Matteo Renzi said there had been some backward steps after a roundtable session to discuss London’s demands of reform in the EU before dinner: "I’m always confident but a bit less optimistic than when I arrived," he said.

German Chancellor Angela Merkel said: "The wish is there to keep Britain as a member of the EU…. It became clear that agreement will not be easy for many, but that the will is there."

Many leaders said they felt they were at a historic turning point for European integration. No country has ever voted to leave the EU. A British exit could deal a blow to the UK economy and certainly damage the EU’s standing and self-confidence.

Mr Kenny, who fears Brexit would badly damage Ireland, told peers, according to one participant: "You all have your problems but no one has bigger problems than David. He’s got half his cabinet against him, he’s got half his party against him.

"We have to give him a deal he can take home and sell to the British people."

How far the reform package will sway voters either way is unclear. Mr Cameron’s left-wing Labour opponent, Jeremy Corbyn, was also in Brussels where he echoed Conservative eurosceptics in describing the likely immigration deal as a "theatrical sideshow". But Labour plans to campaign to remain in the bloc.

Mr Cameron told leaders on Thursday evening: "The question of Britain’s place in Europe has been allowed to fester for too long and it is time to deal with it.

"If we can reach agreement here that is strong enough to persuade the British people to support the UK’s membership of the EU then we have an opportunity to settle this issue for a generation," he said, describing the new relationship as a flexible one that allows countries to "live and let live".

The outstanding issues

• Eurozone: One of only two EU states to neither use the euro nor be bound to adopt it in time, Britain stands alone in insisting there will never be just one currency in the bloc, and Mr Cameron demanded safeguards, particularly for London’s financial sector, against being harmed by decisions taken by the eurozone.

An initial draft secured assurances to that effect but raised concern in France that different banking regulations in London and the eurozone could unfairly benefit the former. A second draft introduces wording to strengthen the need for rules to be uniform among states inside and outside the EU banking union. A third draft, sent to leaders early on Thursday and seen by Reuters, shows an explicit reference to there being a "level playing field" in banking regulation. But it also places a full section on how to ensure that in square brackets — denoting that only the top political leadership will settle the matter.

Mr Cameron is also pressing for Britain to able to hold up eurozone legislation if it feels its vital interests are at risk.

Other states want Britain to need support from other states to trigger that move, and tighter wording to ensure it has no veto.

• European integration: Mr Cameron has secured a repeat of an EU assurance that treaty commitments to an "ever closer union" of the peoples of Europe are not "equivalent to the objective of political integration".

But in a nod to federalists, notably Belgium, the later drafts say that, nonetheless, political integration "enjoys wide support in the Union". In assuring Britain that EU states retain sole responsibility for their national security, it says: "The benefits of collective action on issues that affect the security of all member states is recognised." Belgian Prime Minister Charles Michel is still unhappy about setting a precedent of a legal guarantee that states do not have to participate in deeper political integration.

• Treaty change: Ensuring reforms are legally binding and amount to a lasting change in the EU treaties has become a touchstone of domestic credibility for Mr Cameron. Passages of the draft text, referring to eurozone issues and that of ever closer union, which say that EU leaders agree to incorporate "the substance" of their agreements on the eurozone and sovereignty into EU treaties when next they come up for amendment remain in doubt.

EU officials say an agreement among leaders at the summit will constitute a binding intergovernmental treaty and so a pledge to treaty change may be unnecessary. Many governments fear a mounting euroscepticism across Europe will make it very difficult to win popular ratification for new EU treaties.

Some officials say even a mention of future "treaty change" in the proposed text may create problems of ratification and would rather it did not appear at all. However, negotiators say they recognise that it is politically important for Mr Cameron.

• Migration: Long seen as the trickiest of the British demands, the EU offered an "emergency brake" mechanism to help Mr Cameron fulfil promises to reduce immigration from the EU by curbing welfare benefits to EU workers for up to four years after they arrive.

Most governments have accepted that extraordinary circumstances give Britain the right to apply this "brake".

But Poland and its eastern allies want to limit to four years the period Britain can penalise their citizens. The text sets a maximum of four years during which an individual can be denied benefits. But it refers to the total period that a state can exercise the emergency brake only as an unspecified number of years, extendable for two successive periods, which it also does not yet specify.

Britain would like that to add up to at least seven — equal to the period it did not exercise its EU right to bar eastern European workers after they joined the EU in 2004. That early British welcome to workers from the former communist east appears in the final draft, which says one ground for using the emergency brake relates to countries that did not bar new members’ citizens for a transition period. That wording aims to reassure those worried that states other than Britain may try to use it.

The final draft also includes the word "noncontributory" in defining the kind of benefits that can be withheld — very few states other than Britain offer significant payments like that.

Some East European officials indicate they could accept the emergency brake being used for up to seven years — perhaps three years extendable for two years then two years. However, they want tight limits on a proposal to let states cut child benefit for workers whose children live in poorer states by indexing them to living costs there. They want that to apply only to new migrant workers and ideally only to Britain, not the whole EU. Britain sees the limitation to new workers as unviable. Other rich states want to be able to cut payments too.