Tusk: UK reform talks are 'difficult'

"All in all it is my assessment that so far we have made good progress," he wrote in his letter. But he warned that "all member states and the institutions must show readiness for compromise for this process to succeed".

While "geopolitcs is back in Europe," the Council chief noted. "Uncertainty about the future of the UK in the European Union is a destabilising factor".

"That is why we must find a way to answer the British concerns as quickly as possible," he told EU leaders, hoping that a deal can be reached in February.

'No consensus'

Among the four baskets of reforms required by British prime minister David Cameron before putting his country's EU membership to a referendum, the main blocking point remains the demands for cuts in social benefits for EU citizens in the UK.

"There is presently no consensus on the request that people coming to Britain from the EU must live there and contribute for four years before they qualify for in-work benefits or social housing," Tusks noted.

Cameron's demand on benefits has been characterised as 'highly problematic" by the EU Commission and several EU countries have expressed their opposition.

"Preservation of free movement is not a divisive issue but must remain the key objective for all member states and the European Union institutions," the prime ministers of the Czech republic, Hungary, Poland and Slovakia said in common statement on 3 December.

Considered as one of Cameron's best allies, the Polish government said it would defend the interests of its citizens living in the UK.

"The only matter of absolute principle is differentiating between people within the EU based on their passport," Polish EU affairs minister Konrad Szymanski said last week.

Cutting benefits of EU citizens "is so obviously discriminatory against EU citizens," a MEP closely following the talks told EUobserver last week. "We don't know how" to solve the problem.

'Set of principles'

On the three other baskets - economic governance; competitiveness; sovereignty - Tusk noted that talks held since Cameron laid out his demands a month ago show that "there is a strong will on the part of all sides to find solutions that respond to the British request while benefiting the European Union as a whole."

On the first issue, Tusk suggested, the UK's partners could agree on "a set of principles" to let the eurozone further integrate "while avoiding any kind of discrimination" on non-euro countries.

In the meantime, non-euro states would be able "to raise concerns, and have them heard … without this turning into a veto right."

On competitiveness, which has been seen as the least problematic basket, "everybody agrees on the need to further work on better regulation and on lessening the burdens on business while maintaining high standards," Tusk wrote.

"Full use" of the internal market and development of EU international trade are also ground on which the UK and EU should easily agree.

Cameron's demand that the reference to a "ever closer Union" ceases to apply to the UK is met with a cautious reminder that the concept "allows for various paths of integration for different countries".

"Those that want to deepen integration can move ahead, while respecting the wish of those who do not want to deepen any further," Tusk wrote.

'Far-reaching agenda'

But on this point as on others, much work remains to be done, first to find a political agreement and then to translate it into EU law.

"We need some more time to sort out the precise drafting on all of these issues, including the exact legal form the final deal will take," Tusk admitted in his letter.

The Council chief left it to EU leaders to "address all the political dilemmas related to this process". Then, "based on a substantive political discussion we should be able to prepare a concrete proposal to be finally adopted in February".

In short, Tusk told EU leaders: "Clearly this is a significant and far-reaching agenda."