BRUSSELS (Reuters) - Jeremy Corbyn and George Osborne have combined to remind Europe that London is now fully embarked on a turbulent, quickfire negotiation with Brussels that may see Britons vote next year to quit the European Union.
As Osborne was in Luxembourg on Saturday securing goodwill from euro zone finance ministers for his call for fair play for sterling, his Labor opponents in London were electing a new left-wing leader, Corbyn, who warns his support for continued EU membership is no "blank cheque".
Three months after Prime Minister David Cameron was re-elected with promises to reform Britain's relationship with the EU before a referendum by late 2017, Europe's attention is consumed by its migration crisis.
But discreet EU-UK talks are now under way to define how and what to negotiate to avoid a "Brexit" that Cameron says he does not want and which would shake the Union to its core.
Amid speculation he could call the vote as early as June to quell uproar in his own divided Conservative party, time is short before he must bargain on detail with fellow leaders at an EU summit in mid-December. The EU's disarray on refugees is helping Eurosceptics in tight opinion polls.
The prospect of Labor turning cool on Europe and worries that ministers like Osborne are slow to spell out what Britain wants at the EU council table have stirred unease in Brussels.
EU officials close to the initial discussions told Reuters they were encouraged by the talks so far.
"Mutual understanding is developing in a positive way," said one. "We are on the way to identifying a whole array of things that can be done."
Britain's Europe minister, David Lidington, who met European Commission President Jean-Claude Juncker in Brussels this week, said he liked what he heard, notably Juncker's call in a speech last week for more free trade and a competitive economy.
But Juncker's pledge of a "fair deal" for Britain also bore a warning that London cannot limit free movement for EU workers - a potential deal-breaker for Cameron's vow to cut immigration.
With the EU's second-biggest economy again demonstrating its aloofness from Europe's troubles by exercising its opt-out on a common asylum policy, senior officials across the continent caution London should not over-estimate its leverage over them.
"Britain has no real friends in the EU," said one veteran insider of the kind of summit coming up before Christmas, where Cameron can expect the first real round-table argument on his demands after six months touring capitals to outline his case.
Led by Cameron's Europe adviser and Britain's ambassador to the EU, British negotiators have been meeting key officials since July at the European Council, the forum of governments headed by Donald Tusk, and in Juncker's executive. Both sides call the dialogue technical talks, not yet real negotiations.
"The purpose of the talks is to explore the technical and legal options for delivering reforms," a British diplomat said.
Others involved say the British have explained their demands in broad terms and EU officials, including the head of the Council secretariat and its chief legal adviser, have responded with detailed questions requiring further clarification.
"The questions are friendly, but probing," an official said, adding that time was pressing for London to offer more detail but British domestic politics made that highly sensitive.
It will be up to Council chief Tusk, a conservative former prime minister of Poland, to craft any deal that can secure political buy-in from all EU leaders. For the Commission, responsible for legislation and guardian of treaties, Juncker has charged a senior British EU civil servant with coordinating the response of Brussels' often Byzantine law-making machinery.
"We're making it up as we go along," a senior diplomat said of the unprecedented bid by one member state to rework its ties.
British officials like to divide Cameron's demands into what they call four "buckets": competitiveness, sovereignty, "fairness" and migration. The first two, involving elements such as promoting free trade and markets and increasing oversight by national parliaments, are broadly in line with Juncker's plans.
"Fairness", a key objective for Osborne and the Treasury, is about ensuring that an expanding and more closely integrating euro zone cannot discriminate legally against London's financial industry while Britain insists on shunning the common currency.
It is on migration, which Cameron has made a centrepiece of his political argument with his own Eurosceptic Conservatives, that EU officials see the greatest difficulty.
British officials say the problem is not with the principle of free movement of labor but with the scale of immigration.
EU officials say Cameron has support in other rich states for efforts to curb "benefit tourism" and note EU judges have delivered recent rulings that help his case. [ID:nL5N11L1HW}
But making working in Britain less attractive to other EU citizens -- Cameron wants to make them wait four years before they get equal rights to in-work benefits -- "looks blatantly discriminatory" to one senior EU official involved in the talks, and as such incompatible with basic treaties.
It is also likely to face fierce opposition from Poland and other labor-exporting states.
The prime minister's allies are undaunted. "Let's not underestimate the smartness of the lawyers out here," said Syed Kamall, who leads the Conservatives in the European Parliament.
A further difficulty for Cameron will be to convince voters that any deal is legally watertight. He says that means at least legally binding promises to change EU treaties.
Other leaders are loath to commit to treaty change, saying the anti-EU mood in much of Europe makes winning ratification referendums in some countries highly doubtful.
British officials place some hope in German calls for change to treaties to help the euro zone withstand more shocks like the Greek crisis. London could have its own changes then, they say.
One senior diplomat in Brussels said he understood Britain would accept a form of promise of future changes to be effected at the next broader treaty revision. Mutual pledges could, as with Denmark in 1992, be enshrined in a separate EU-British treaty on the subject lodged with the United Nations.
Much remains uncertain in the process, however. EU diplomats complain they have yet to see a written proposal for specific legislative changes Britain wants. But in the hothouse political atmosphere at home, stoked by a vocal Eurosceptic press, British officials are fearful of negotiating details leaking out. Nonetheless, the December summit will need to see paperwork.
Cameron's next moves may become clearer at his Conservative Party conference in early October and a regular EU summit two weeks later. He must appear to be securing difficult objectives to persuade British voters of his success but avoid alienating his EU partners and demanding concessions they will not deliver.
German Chancellor Angela Merkel, the Union's power-broker, has pledged to help -- but not at the expense of EU principles.
British officials acknowledge Merkel is being helpful, but not offering a "blank cheque". A senior EU official familiar with Berlin's thinking had this warning for Cameron: "Do not climb too high into the tree," he said. "Let's be pragmatic."
Additional reporting by Paul Taylor; Editing by Angus MacSwan