When David Cameron urged European Union leaders last week to do a deal to keep Britain in the bloc, he knew he will have to to face a riddle that has haunted Conservative prime ministers for three decades: a row with Europe or a row with Eurosceptics at home?
Cameron’s bid to renegotiate the terms of Britain’s membership of the bloc ahead of a referendum he sought mid-2016, has hit the rocks over a demand to make working EU migrants wait four years before getting some benefits.
EU partners call that measure impossible while Conservative opponents of membership have pounced on hints that he may drop it as evidence that the renegotiation is a choreographed sham that will end in a fudged deal early next year.
Senior Conservative Eurosceptics are waiting to see the final results of Cameron’s high wire act before making their views explicit, though Defence Secretary Michael Fallon quipped in October that “We’re all Eurosceptics now”.
Pro-Europeans fear Cameron could edge Britain towards an accidental Brexit if he overplays his hand in talks to appease sceptics in his party and senior Conservatives who are jockeying for a battle to succeed him due before 2020.
A British exit would rock the Union - already shaken by differences over migration and the future of the euro zone - by ripping away its second largest economy, one of its top two military powers and by far its richest city, London.
An exit from the EU could also trigger the break-up of the United Kingdom by prompting another Scottish independence vote. The $2.9tn British economy would face years of uncertain negotiations over the terms of a divorce.
Cameron says he will recommend Britain stays in the EU if he gets what he wants but has repeatedly warned that he rules nothing out if he doesn’t - code for campaigning to leave, a step that would make Brexit highly likely.
The timing of the referendum is uncertain but Cameron has said he would prefer it as soon as possible. If he gets a deal in February, as European Council President Donald Tusk has said is possible, the vote could be as early as June.
Opponents of EU membership say that it took back full sovereignty, Britain could prosper as a global trading centre outside a bloc they say has slipped far behind rivals.
Opinion polls show British voters are evenly split over membership with a significant number of people who have yet to makeup their mind, though perceptions that the EU has failed to deal with the migrant crisis may be turning towards a Brexit.
Europe has divided the Conservative Party for three decades and played a major part in the downfall of two of Cameron’s two Conservative predecessors, Margaret Thatcher and John Major.
Major, prime minister from 1990 to 1997, was undermined by Eurosceptic Conservatives whom he famously called “bastards”. Cameron has a majority of 16 in parliament, smaller than Major’s after the 1992 election.
The EU inflames such passions that Cameron warned in 2006 that the party had to stop “banging on” about Europe.
But less than seven years later, under pressure from lawmakers who feared the electoral success of the anti-EU UK Independence Party, Cameron promised a referendum on membership.
So far his renegotiation has failed to impress Conservative Eurosceptics who believe the leaders of the euro zone must forge a much deeper political union to save the euro.
Cameron has demanded a promise than any deal he gets would be enshrined in a future EU treaty.
Up to a third of Cameron’s cabinet, including Home Secretary Theresa May, Foreign Secretary Philip Hammond, Business Secretary Sajid Javid and Work and Pensions Secretary Iain Duncan Smith - have expressed Eurosceptic sentiments.
Cameron is likely to eventually secure agreement on most of his demands, including a call for better regulation and more open markets to promote growth, though no deal is yet drafted, partly due to the deadlock over in-work benefits.
His manifesto pledge to introduce in a four-year residency rule for migrants seeking tax credits and social housing has created the most concern because it would discriminate among EU citizens and hence breach EU law and precedent.
