"Cameron may well have severely underplayed the UK's hand" says Open Europe

Mats Persson of Open Europe examines David Cameron's performance at the EU summit.

The EU's immediate budget: "Cameron has the support from another 10 countries for blocking the European Parliament’s and the Commission’s ludicrous demands for a 6% increase to the EU 2011 budget, instead settling for a 2.9% increase. But a cash freeze looks very difficult to achieve. To be fair to Cameron, he was effectively handed a hospital pass from Tony Blair, as the main chunk of the budget for the period between 2007 and 2013 was decided in 2005, when Tony Blair lost in negotiations. The UK doesn’t have any real leverage over the annual budget as is decided by majority voting. In theory, Cameron can still achieve a cash freeze if member states and the European Parliament can’t agree on a compromise, in which case this year’s budget is carried over to next year."

The EU's longer-term budget: "Where the UK really has leverage is over the long-term EU budget, from 2014 and onwards (the EU budget is usually negotiated in seven years periods). Here, the UK has a veto and in terms of the EU budget, is what the Coalition really needs to start thinking about.  On the Today Programme this morning, William Hague said that Cameron had achieved a principal agreement with other member states that the post-2013 EU budget must reflect austerity in EU countries. Though it’s encouraging that the Coalition is thinking strategically about the looming post-2013 EU budget negotiations, Tony Blair’s deal to give away part of the rebate in return for vague promises of CAP reform (which never materialised) shows that such deals have rarely worked for the UK. This can therefore hardly be described as a diplomatic victory."

Merkel is getting her way on new €urozone powers: "It also appears as if Merkel’s push for a Treaty change is gaining momentum. As Open Europe has argued for a long time, Merkel is fiercely determined to achieve Treaty change in order to transfer risks associated with eurozone failure away from German taxpayers. According to Merkel herself, EU leaders now agree in principle to a limited Treaty change to insert a “permanent crisis mechanism” for the eurozone (there’s speculation that this could achieved through one of the Lisbon Treaty’s ratchet clauses, which would be a massive legal stretch in my view). Details will be discussed today and there’s still much to play for, but his could turn into a huge victory for German diplomacy."

Cameron has said he'll give Merkel her Treaty changes without UK referendum: "According to German Die Welt, Cameron has agreed to back Merkel's demand for a treaty change, reportedly assuring Merkel that he will secure the passage of a new treaty through the UK Parliament without a referendum. In return, Cameron would get  the “mere” budget increase of 2.9%, and presumably the vague agreement stating that the EU budget post-2013 must reflect austerity in member states."

Overall assessment of Cameron's negotiations strategy: "If true, Cameron may well have severely underplayed the UK's hand, missing the opportunity to get real concessions in return for treaty change. A one-year 2.9% as opposed to 5.9% budget increase, though important in face of budget cuts at home, is pocket change in comparison to what Cameron could have achieved with the leverage that suddenly was handed him."