PM's referendum gamble raises red flags in Europe

David Cameron's move means Britain is likely to be convulsed by years of uncertainty. Photo / AP

Prime Minister David Cameron has committed himself to a long, bruising battle in his bid to renegotiate Britain's deal with the European Union, and right now the chances of victory seem meagre.

Cameron has only a slender stock of political capital with the rest of the EU. And at a time when the bloc is only just emerging from the worst crisis in its history, patience and goodwill will be swiftly exhausted if he wants to unpick treaties that took years to stitch together.

Cameron had "finally yielded to the Eurosceptics in his camp" and "turned a deaf ear to those in his own country, as well as abroad, who warned him to be cautious," the French daily Le Monde commented.

Senior politicians in continental Europe flashed warning signs within hours after Cameron, in a long-awaited speech, declared he wanted more flexible trade, opt-outs from EU-wide policies and less Brussels bureaucracy and regulations.

If the Conservatives win the next election due in 2015, the deal would be put to a referendum by the end of 2017, the question being whether Britain should stay in the EU or leave, he promised.

Pitched at a domestic audience, Cameron hopes to see off an emerging threat from the right-wing UK Independence Party, which is demanding Britain pull out of the 27-nation bloc. UKIP and other sceptics say Britain could survive easily by trading as an outsider, as Norway and Switzerland do, an idea derided by opponents as economic and political suicide.

The speech raises red flags in many parts of Europe, both for ideology and pragmatism. His vision of "less Europe" to boost competitiveness collides head-on with the Franco-German belief that "more Europe" is needed to strengthen the economy and institutions of a fragmented continent that faces mighty challenges from Asia. "We do not need less Europe but more integration," said German Foreign Minister Guido Westerwelle.

Westerwelle and others voiced some sympathy for Britain's demand for less intervention by Brussels in areas that can, and should, be national, regional or local responsibility. Public backing for the EU is at a low ebb, even in founder nations such as France, Germany and the Netherlands, where the European dream has been strained by austerity and backing for debt-crippled Greece, Portugal and Ireland.

But support for Cameron would evaporate if he demanded concessions in policies that were approved by previous British Governments and transcribed into British law by the Parliament in Westminster.

This, say critics, would amount to cherry-picking, and it could lead to the unravelling of more than 20 years of treaties that have pushed Europe towards its goal of "ever-closer union".

"We can't have Europe a la carte," French Foreign Minister Laurent Fabius said. "Imagine the EU was a football club: after you've joined and you're in the club, you can't then say you want to play rugby."

Britain "had a say in negotiating all the rules and treaties. If we opened that Pandora's Box, all the to-ing and fro-ing would start again and we would probably end up back to where we started," said Gunther Krichbaum, a conservative German MP who heads the European Affairs Committee in Germany's parliament, the Bundestag.

The first reaction in Europe was relief that Cameron did not try to raise the stakes by setting out a detailed list of demands, although he also warned "nothing should be off the table".

Giving concessions to Britain would cause a stampede by other countries, "leaving you not with a union, but with a kind of regional association", said a source at the European Commission. "Anyone doing that will get short shrift."

Cameron also warned that loss of membership would mean Britain would lose influence in European decision-making and he cautioned, "If we left the European Union, it would be a one-way ticket, not a return."

His move means Britain is likely to be convulsed by years of uncertainty over the renegotiation and then the outcome of the referendum, assuming that Cameron's Tories win the next elections, say observers.

"You just added another reason why people are going to postpone investment decisions," said Martin Sorrell, the head of advertising giant WPP.

"There is no mistaking he is playing for very high stakes indeed, [but] I do not believe he is going to get what he wants by attempting to put a pistol to the heads of his fellow member states," said Lord Peter Mandelson, a former EU Commissioner and former Labour Cabinet minister.