Planned Justice Opt-Out Sets Stage for EU Battle

The British government took the first step in its strategy of disengagement from the European Union when it said it would exercise its block opt-out from co-operation on justice and home affairs.

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EU collaboration on crime and policing have helped to apprehend money launderers, trap child traffickers and stop fraudsters. But Theresa May, UK home secretary, told parliament that Britain's "current thinking" was to opt out of all 130 EU justice powers when the option is presented in 2014.

Britain's decision to extricate itself from justice co-operation is the first move in what is likely to be a fraught confrontation between London and the EU over a range of measures including banking union and the seven-year budget.

This is part of an attempt by prime minister David Cameron to neutralize the electoral threat from the hardline UK Independence Party and pacify backbench Conservative MPs whose calls for a referendum on the UK's membership of the EU are getting louder.

It puts in action the UK wish to adopt a second tier position in Europe as the 17-member eurozone bloc moves towards closer fiscal and political union.

But there is already some doubt over whether the first of these broadsides against Brussels will have the desired effect. Central to the government's strategy is that the UK will sever its co-operation with the full 130 measures, before opting back in to a select few it regards as essential. However, before Ms May goes into battle with eurocrats, she faces a potentially bitter struggle with her pro-European Liberal Democrat coalition partners over what exactly they will choose to salvage from the junk heap.

Even after this negotiation has been completed, it is already clear that Ms May will not simply be able to choose from a menu of EU powers she wants back, because the Commission itself must propose those which the UK is allowed to re-enter. One Brussels official even warned on Monday that the UK could face a heavy financial penalty because of the administrative costs caused by opting out and opting back in again.

It is doubtful whether the UK's other potential clashes in Brussels this winter will be any more successful. Mr Cameron likes to point out that he is a position to wield up to three vetos in forthcoming EU negotiations: on the seven-year EU budget, the banking union and on a possible wider treaty on eurozone political union. "We are in a fairly strong position," the prime minister has told colleagues.

But he knows that political capital is not inexhaustible in European negotiations and that he will have to pick his battles as he tries to secure a new EU destiny for Britain — outside an integrated eurozone but still wielding clout in areas such as the single market, trade and foreign policy.

In a phone call last night, Mr Cameron and Angela Merkel, German chancellor, agreed that "further work" was needed in order for proposals on banking union to respect the integrity of the single market.

Lord Kerr, a former UK ambassador to the EU, had already acknowledged this as an area where Britain was particularly vulnerable. "There are dangers to the single market — which is the UK's principal interest — from not being inside so many of the European rooms," he said.

Negotiating that new "settlement" will be doubly complicated because of the noises off from MPs on the Tory right, some of whom want Britain to leave the EU unless Mr Cameron wins big concessions from Europe.

Michael Gove, education secretary and a possible future Tory leadership contender, let it be known at the weekend that he would be happy for Britain to exit the union unless significant powers are returned to London. A Tory activist website also reports that eight cabinet ministers in total are in favour of the UK quitting the EU completely.

Mr Cameron's chief of staff Ed Llewellyn, an old Brussels hand, has warned the prime minister that the patience of Britain's partners may quickly wear thin, especially when countries like France and Germany are more concerned about the imminent economic danger of the eurozone crisis.

Indeed, one senior EU official involved in Brussels strategic planning for the new push towards EU treaty changes said: "More and more member states are getting fed up with one member state blocking all the progress for others."

The official added that Britain may be miscalculating that other EU members will be willing to negotiate an amenable second-class status for the UK in a two-tier Europe, saying that instead Britain may find itself completely shut out of policy areas were it has strong interests, like financial regulations and the common market.

"They think they're moving away is a problem for the EU that the EU will be willing to negotiate. They're wrong," said the official. "They stand to lose much more than we do."