Still no deal for Britain on EU reforms after all-night talks

British Prime Minister David Cameron speaks to the media at the EU summit in Brussels on Feb 19, 2016.
British Prime Minister David Cameron speaks to the media at the EU summit in Brussels on Feb 19, 2016. PHOTO: EPA

BRUSSELS (Reuters) - European leaders argued through the night but reached no deal by Friday morning on a package of reforms that British Prime Minister David Cameron says he needs if he is to campaign to stay in the EU in a referendum.

"I was here till 5 o'clock this morning working through this and we've made some progress but there's still no deal," Cameron said later on Friday (Feb 19) morning, going in for more talks.

"As I've said I'll only do a deal if we get what Britain needs. So we are going to get back in there, and we are going to do some more work and I'll do everything I can," he told reporters.

An agreement that would allow 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 European countries were putting up a hard fight.

The stakes are high. Cameron says unless he gets the changes he seeks, he will not campaign to remain in the 28-member bloc. British voters are divided but polls show they narrowly favour staying in.

Officials and diplomats were seeking to rework a draft deal before Cameron and other key EU leaders resurfaced for more bilateral talks late in the morning.

Aides had previously said a proposed deal could served to the leaders over "English breakfast" on Friday. But after the night-long debates, officials spoke instead of "English lunch".

Many leaders said they were felt a historic turning point for European integration.

No country has ever voted to leave the Union. Britain is the EU's second largest economy and one of its two permanent members on the UN Security Council. Its exit would end the vision of the EU as the natural home for European democracies and reverse the continent's post-World War Two march toward "ever closer union".

Britain has always had an ambiguous relationship with the bloc, staying out of two of its most ambitious projects, the Schengen border free zone and the euro common currency.

The issue has historically divided Cameron's Conservative Party, crippling his predecessor John Major and bringing down his hero Margaret Thatcher.

Some Conservatives have criticised the reforms he is negotiating in Brussels, although most senior party figures are likely to follow his lead in campaigning to stay in if he wins the concessions he is seeking.

Energy Secretary Amber Rudd told the BBC's Today programme Cameron had made progress, but a deal was not quite in reach. "I don't think we can underestimate how difficult it is to get 27 other member states to agree," she said.

Still, politicians present at the summit centre in Brussels predicted an agreement eventually.

"I simply cannot believe that at some point today Cameron will not get some kind of concession because they know that if Cameron is sent home totally humiliated, Brexit will have got a bit closer," said Nigel Farage of Britain's anti-EU UKIP party.

Elmar Brok, a German Christian Democrat and member of the European Parliament, said the thorniest issues were always left until the last minute.

Cameron wants changes to would allow Britain to reduce some benefits payments to migrants from other EU states in a bid to reduce immigration, and safeguards over decisions that affect countries like Britain that do not use the euro.

Aides voiced frustration at a lack of concessions by partners. "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," a British official said.

Britain's mainly eurosceptic press referred to Cameron as begging or pleading, the Daily Mail adding that the prime minister was "rattled". "Shambles as embattled PM's deal is watered down," its front page read.

FRENCH, BELGIAN, CZECH RESISTANCE

French President Francois Hollande and the Belgian and Czech premiers showed the strongest resistance to various points of a draft agreement brokered by summit chairman Donald Tusk.

Paris has pushed for amendments to ensure Britain cannot veto actions by the euro zone 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.

And 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 Britain a guarantee it need never share more sovereignty.

Italian Prime Minister Matteo Renzi said there had been some backward steps: "I'm always confident but a bit less optimistic than when I arrived," he said.

How far the reform package will sway voters either way is unclear.

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.

Cameron told leaders on Thursday evening: "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."