Technical parts of UK deal left to EU leaders

"All the political issues will remain open," European Council president Donald Tusk warned on Thursday in his invitation letter to the leaders.

"There is still no guarantee that we will reach an agreement. We differ on some political issues and I am fully aware that it will be difficult to overcome them," he wrote, asking EU leaders to "remain constructive".

When they start talks, at 5pm local time, the EU heads of state and government will be assisted by a "war room of lawyers", an EU official said on Thursday.

The so-called "new settlement for the United Kingdom in the European Union" will consist on several statements and declarations on competitiveness, EU law implementation and EU internal migrations.

The most important one will be the legally binding decision of the heads of state and government.

Bigger role for MEPs?

The 18-page document encompasses all four "baskets" of issues raised by British prime minister David Cameron in November - economic governance, competitiveness, sovereignty, social benefits and free movement.

The main issue to be settled is the one on benefits. EU leaders will have to decide for how long the UK can limit in-work benefits to new EU workers.

"The authorisation would have a limited duration and apply to EU workers newly entering its labour market during a period of [X] years, extendable for two successive periods of [Y] years and [Z] years," the draft decision reads for now.

In previous versions, the decision to trigger the mechanism was take by the EU Council through an implementing act. The latest draft refers to an "authorisation", which according to the FT means that the EU Parliament could have a say.

The so-called emergency brake would be triggered when a member state faces "an exceptional situation … on a scale that affects essential aspects of its social security system".

Eastern EU members want to ensure that the agreement will not create possibilities for other member states to restrict access to free movement.

"We do our utmost to keep the discussion about that," a diplomat from one of these countries said. 
The debate is over how to define a specific situation and how that situation is likely to last, another EU diplomat said.

"But we cannot solve everything at this stage, there will be a EU Commission proposal after the [UK] referendum," he said.

'Single rulebook'

In a nod to eastern countries, the decision also specifies that the possibility offered to the UK and other member states to index child benefits on the cost of raising a child in his country of origin will not be extended "to other types of exportable benefits such as old-age pensions".

On treaty change, EU leaders will have to decide whether to promise to include in a future EU treaty revision a clause reminding that the UK "is not committed to further political integration" in the EU.

The legal and political meaning of the mention to "an ever closer union" has been debated between member states and some are wary to commit themselves to a revision of the treaties.

The last point of disagreement is the financial governance. The debate will be over whether to free British financial institutions from EU rules.

The draft decision specifies that an EU "single rulebook is to be applied by all credit institutions and other financial institutions in order to ensure the level-playing field within the internal market."

It also tackle the issue of supervision or resolution of financial institutions from non-euro countries.


This highly technical debate comes because the UK want to ring-fence the City from eurozone rules and that countries led by France and Germany have made unity of the internal market rules a red line.