Cameron plays hard to get as EU pushes reform offer

BRUSSELS (Reuters) - David Cameron told Brussels on Friday that a proposed "emergency brake" to curb European immigration to Britain was "not good enough" but he saw progress on a deal to persuade British voters to back continued EU membership.

After lunch with European Commission President Jean-Claude Juncker, whose staff described the meeting as "difficult but constructive", Cameron was at pains to play down talk that a draft package EU officials say could be ready this weekend will herald a deal at a mid-February summit and a summer referendum.

Referring to an EU proposal to help him meet an election pledge to curb benefits for EU workers for four years, Cameron told the BBC: "There is now a proposal on the table. It is not good enough. It needs more work. But we are making progress."

His proposal to simply deny British benefits to EU workers for four years was dismissed by many leaders as illegal discrimination against fellow Europeans. The suggestion described to Reuters by sources close to the talks would oblige London to first prove its welfare system was in danger and then give all other EU leaders a potential veto on the brake being applied.

Cameron's next key meeting will be over dinner on Sunday in Downing Street with Donald Tusk, the European Council president who will chair the EU summit in Brussels on Feb. 18-19.

Sources close to the negotiations say Tusk hopes some of the thorniest issues, notably around migration, can be smoothed out this weekend so he can send out a draft package to the other 27 leaders early next week, paving the way for a summit agreement.

But Cameron, who needs to display a resolve that can deflect Eurosceptic critics at home and perhaps squeeze more concessions from other governments, said he was in no rush. The referendum need be held only by the end of next year, though many believe Cameron, like EU chiefs, would like the issue settled very soon.

"If there is a good enough deal on the table that meets all of the concerns that British people have ... I'll take it," the Conservative party leader said. "If it's not, I won't."

Negotiations on four areas where Cameron wants reform -- on issues of national sovereignty and the power of euro zone states over Britain as well as on migration -- have moved up several gears this month, however. With attention turning to how reforms might be implemented, he also met European Parliament President Martin Schulz, whose chamber may have to pass new laws quickly.

DECISION TIME

Facing tight opinion polls on a referendum he must hold by the end of next year, and with deep Euroscepticism within his own party and cabinet, Cameron must decide when to compromise and launch a campaign to keep Britain in the EU. Signs that a summer flare-up in Europe's refugee crisis could swing Britons against staying in the bloc could also affect his calculation.

Without a deal, Cameron has threatened to campaign the other way, but fellow EU leaders insist they will offer him the best they can to avoid losing the second-biggest economy from a Union that is already beset with profound crisis. Cameron will meet Chancellor Angela Merkel in Germany a week before the summit.

Several states in the euro zone are also resistant to giving Britain all it wants in the package to be able to protect its sterling-based economy from decisions by the EU currency union.

Some east European leaders, anxious not to see their people discriminated against, have said they could accept the emergency brake idea on migration. Although the new, Eurosceptic foreign minister of Poland, the leading power in the east, said on Friday he was against such a measure, on which detail is scant.

(Additional reporting by Paul Taylor in Brussels and Elizabeth Piper and Kylie MacLellan in London; editing by Ralph Boulton)

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