Europe Letter: Immigration now hot topic in UK referendum debate

Britain's plan to renegotiate its relationship with the EU was back in the news this week as George Osborne kicked off a fresh round of diplomatic efforts. The British chancellor was in Paris on Sunday for two days of talks, with more visits planned over the next six months, including to Berlin in September.

Almost three months since the Conservative Party won a decisive election victory, the renegotiation campaign is entering a new phase.

The June EU summit proved to be something of a damp squib for prime minister David Cameron, with the British question overshadowed by Greece. Osborne's visit to Paris can be seen as part of a new, more technical phase.

Over the last month, senior diplomats from Brussels and London have been meeting officials from the European Commission and European Council, including outgoing secretary general of the European Commission Catherine Day, Jean-Claude Juncker's chief of staff Martin Selmayr and new secretary general of the European Council Jeppe Tranholm-Mikkelsen.

Treaty change

Both sides have been exploring the legal and technical options open to the UK, including whether treaty change or secondary legislation is needed.

Cameron is expected to update his party at the Tory conference in early October. A cursory discussion on the British referendum is expected at the October leaders' summit in Brussels, with more extensive discussion in December.

Reports in Britain suggest the government could hold the referendum as early as next June, though officials have played this down.

Sources say discussions so far have been exploratory – no political mandate has yet been given by the British government to request specific changes from Brussels. But while Cameron has been criticised for not articulating his demands, his approach is, in many ways, highly strategic. Rather than promising changes he cannot deliver, the government is instead finding out what it can achieve before over-promising to the electorate.

As it stands, Britain has said it is exploring four main areas: EU competitiveness and the single market, greater protection for non-euro member states, changes to intra-EU migration and an opt-out from the commitment to “ever closer union”.

The last few weeks have given some inkling of the direction in which the talks are going. The decision to dispatch Osborne to negotiate is instructive. The ambitious chancellor, seen by many as Cameron’s successor, confirmed this week the economy would be a key focus of the renegotiation.

While this touches on issues such as the digital single market, liberalisation of the services market and free trade, it also incorporates the question of rights for non-euro member states. The issue has emerged as a key issue for Britain in recent weeks.

As well as the fact that Osborne is integrally involved in the issue as chancellor, it has been given enormous prominence in Britain due to the Greek crisis. The chaotic negotiations that finally led to an agreement on a third Greek bailout not only strengthened the argument of British Eurosceptics about the flaws of the EU, but also intensified the need for Britain to reassure the public that non-euro countries are sufficiently protected in Europe, particularly if the euro zone moves towards greater integration as has been suggested by France, Germany and Italy in the past week.

Migration issue

The technical complexities involved were given an unfortunate airing earlier this month, when Britain agreed to contribute more than £1 billion to the bridging loan for Greece through the EFSF fund, despite securing written assurance in summit conclusions of December 2010 that the fund would provide no further money for Greece.

The affair reflected badly on the European Commission in particular, with sources indicating that German chancellor Angela Merkel had flagged the British issue during the all-night talks on Greece on July 13th.

While securing protection for non-euro member states is achievable, the migration issue is likely to be much more difficult to resolve.

With most EU officials insisting the root of the “benefits tourism” problem lies with Britain’s own non-contributory benefits system, rather than with the EU, virtually all national capitals have warned that EU free movement rules are sacrosanct.

As pictures of desperate migrants trying to make the crossing from Calais into England continue to feature on TV screens, immigration rather than economics is likely to determine the outcome of the British referendum on EU membership.