18 December 2015

There was no major dust-up as all stress the need for compromise

Some have suggested that David Cameron needed a theatrical bust-up with other EU leaders as part of his renegotiation for domestic ‘presentational’ purposes. But, to the extent there were disagreements – and there still are, most notably over the issues of migration/access to welfare and safeguards for non-Eurozone states – these were pretty muted and civilised, particularly in the context of recent EU summitry which has seen blazing rows over the Greek bailout, for example.

For all the talk of “unacceptable” demands before the meeting, the post-dinner press conferences all talked of the need to find workable solutions, albeit within the constraints of ‘fundamental EU principles’. Perhaps this reflects the realisation that the stakes are now so high. David Cameron reportedly used his 40-minute presentation to impress on other EU leaders that without reform there is a real chance that the British electorate could vote to leave – this is borne out in a series recent opinion polls, including our own.

EU leaders working for “mutually satisfactory solutions” in all areas, including migration

The EU summit ‘conclusions’ on the UK negotiations do not provide much in the way of detail:

The European Council had a political exchange of views on the UK plans for an (in/out) referendum. Following today’s substantive and constructive debate, the members of the European Council agreed to work closely together to find mutually satisfactory solutions in all the four areas at the European Council meeting on 18-19 February 2016.

As we said beforehand, it is likely Cameron would have liked to have seen more than just this commitment to further work. But perhaps the most interesting thing about the conclusions (though it is slim pickings) is that unlike European Council President Donald Tusk’s previous letter on the UK’s demands, which outlined potential for agreement in three of the four ‘baskets’, last night’s council conclusions explicitly commit leaders to fining “solutions” in “all four areas”.

However, this should not be overdone. The deal isn’t done until it’s done and the details will matter. All the recent focus on migration has distracted from the other issues, which if ambitious could have just as an important, and arguably more important, bearing on the terms of the UK’s EU membership if it remains in:

  • What powers will national parliaments have to block EU rules, and crucially, what threshold would be required to trigger this blocking power?
  • Exactly what will the settlement between Euro and non-Euro countries look like? Will there be a mechanism to ensure non-Eurozone states’ rights are protected under EU voting rules?
  • How will the concept of ‘ever closer union’ apply to the UK and others in future and how will the principle of subsidiarity – that decisions should be takes as close to citizens as possible – be better enforced?
  • What concrete measures will the EU take to cut red tape and liberalise the market in cross-border services?

These questions all need answers and we will only know once an official text has been drafted. Tusk has said he will do so in the weeks ahead of the next summit on February 18-19th.

Where do we stand on migration and welfare?

There was a strong message from EU leaders that direct discrimination on the basis of nationality would not be acceptable. Tusk and several other leaders, including French President Francois Hollande and German Chancellor Angela Merkel, were pretty clear on this. However, it was also clear that something needs to give.

So what is the scope for a compromise? There are two ideas currently doing the rounds. One is to explore the existing precedents in EU policy of ‘indirect discrimination’ via residency tests. This could potentially enable the UK to deny welfare access to new arrivals from elsewhere in the EU, but in a way that would not directly discriminate between UK and EU nationals (but rather use residency as a proxy). The question would be how many British people might be affected, a devil which would need to be addressed in the detail of the plan. But a residency test – such as that applies in Danish law on the purchase of property or on the issue of access to student maintenance grants – could be designed in a way that would catch a very small number of UK nationals.

This would still require legal guarantees at the EU-level to avoid legal challenges, since indirect discrimination would still need to justification (it should be noted that the Danish carve-out has been incorporated as a Treaty protocol, see here for more details). The aim will be to get as close to Cameron’s original proposal as possible. Given that this approach was already a significant compromise from previous considerations of a cap or a quota, it is clear that any further significant watering down of the proposal would make it harder to sell to the electorate.

Other options reportedly being discussed include the idea of an ‘emergency brake’ on flows – but, for reasons set out here, the key questions about this idea would be who decides and what is classified an ‘emergency’?

Merkel paves the way for legal solution to UK’s demands

Perhaps the most significant intervention (in terms of laying the framework for the eventual agreement) came from Merkel. She stated that

If we need Treaty change, and I believe that could be the case, then we all understand that this does not have to take place now, but as per the British proposal it could take place later at the next available opportunity…However, we need to see it a Treaty change that we deposit for the future as one that we have to agree now.

As we’ve noted before, it would severely test the limits of voters’ patience and goodwill to put forward a fully post-dated package.  The question is how to fulfil the Government’s demand for ‘legally binding, irreversible’ change and how post-dated treaty change plays a part. The answer to that is it depends what is in the agreement.

The so-called ‘Edinburgh Agreement’ potentially provides a useful precedent. Following Danes’ rejection of the Maastricht Treaty in a referendum, it allowed the EU to offer Denmark legally binding opt-outs which were later incorporated in the EU treaties and still stand (the government recently lost a referendum on giving up the justice and home affairs opt-out). But voters need to be assured that reforms will come into force immediately. The trickiest issue here could again be migration – if treaty change is required will the deal allow Britain to impose whatever measures it secures from day-one after the referendum?

In summary, there are still more questions than answers but it looks like everyone now has their sights set on concluding the renegotiation in February. Whether that’s the case will likely depend on whether this broad political impetus is sufficient to see the process through the tricky background negotiations on the technical details and the questions outlined above.