EU wary of UK Conservatives but expects pragmatism

Britain's opposition Conservative Party leader David Cameron puts party leaflets through the letter boxes of homes in north London May 4, 2010. Britain's political leaders planned to campaign through the night on Tuesday in a final push for votes, two days before a parliamentary election that opinion polls suggest will be the closest in nearly 20 years. Prime Minister Gordon Brown's ruling Labour Party, in power since 1997, trails the opposition Conservatives by seven and 11 percent before the May 6 vote in the two latest opinion polls.

BRUSSELS (Reuters) - Britain's Conservatives will be seen by much of the European Union as unwelcome guests at a party if they win Thursday's election but will try to reassure their hosts quickly that they won't start a fight.

Many EU leaders are wary of the center-right Conservatives coming to power because they are more hostile to the 27-country grouping than the other two mainstream parties, center-left Labor and the centrist Liberal Democrats.

The latest British opinion poll sees the Conservatives winning with a small majority.

If he becomes prime minister, Conservative leader David Cameron will want to show more "eurosceptic" members of his party that he will defend Britain's interests strongly in the EU and may seek a particular issue on which to take the Union on.

But European officials regard him as a pragmatist who has more to gain from cooperating with the rest of the EU than in picking fights with his new partners.

"I know David well and we have our differences but I believe we can always talk about these differences and can work with him," said the center-right prime minister of one EU member state who declined to be identified.

Some of the policies Cameron has outlined have so alarmed some of his potential European partners that Pierre Lellouche, France's state secretary for European affairs, said last year the Conservative policies were "autistic."

But experts do not expect seismic shifts in British policy on Europe if the Conservatives oust Labor, which has kept Britain out of the single European currency and sought better economic and defense ties with the bloc it joined in 1973.

"Rhetoric aside, there has been consistency in British EU policy since 1973. A change of the party in power will not drastically change that," said Sir Stephen Wall, a former British envoy in Brussels and a former government adviser.

FINDING A BALANCE

British business leaders have made clear they believe cooperation with the EU benefits Britain's economy and will help cut its budget deficit and encourage employment.

But the Conservatives are widely seen as having become more eurosceptic in recent years and Cameron will face pressure from opponents of the EU to protect Britain's sovereignty in important areas and take out a firm position in certain others.

Despite being wary of the Conservatives, many other European governments would prefer them to win convincingly than by a narrow margin because otherwise Cameron could be dependent on the votes of hardline eurosceptics to push through legislation.

Cameron could face a difficult balancing act of trying to appease the eurosceptics in his own party while trying to establish a reputation for cooperation in the rest of the EU.

This would point to Cameron picking issues to make a stand on that will not endanger relations as a whole with Brussels.

"I'm of the view that they'll be looking for some little bone to throw their troops and then get on with the business of engaging with Europe," said Iain Begg, a professor at the London School of Economics who specializes in Britain's role in Europe.

Cameron has said he would try to negotiate the right to opt out of some areas of EU social and employment law, claw back powers on criminal justice and seek a complete exemption from the EU's Charter on Fundamental Rights.

He has also said he would put any future treaty ceding sovereignty to the EU to a referendum.

POSSIBLE AREAS OF CONFRONTATION

He could try to make a mark by showing he will protect the City of London -- Britain's financial center -- against what eurosceptics would see as over-regulation by the EU. This could come in a vote on plans to regulate hedge funds and private equity, strongly opposed by London. The government will have to make a compromise or risk being outvoted.

Another potential battle could be over social and employment policy, areas where Cameron has said he would like to ensure Britain regains more control from Brussels.

Cameron would likely to maintain Britain's opposition to capping the work week, blocking reforms that would prevent employees working more than 48 hours a week if they want to.

He would also likely to take a firm position against giving up Britain's large annual rebate, won by Conservative former Prime Minister Margaret Thatcher, in negotiations on the EU budget.

An area where Cameron could make a gesture to some of his EU partners would be to reverse his decision last year to pull out of the European People's Party, the main center-right grouping in the European Parliament, and form a rival force with parties more hostile to Europe.

Rejoining the EPP would be a gesture toward Paris and Berlin and could help Britain maintain influence with the United States as a bridge to the rest of Europe.

"Leaving the EPP has diminished their (the Conservatives') influence in the European Parliament. A lot of Conservatives, including the more eurosceptic ones, have realized that was not the smartest move," said Rosa Balfour, an analyst at the European Policy Center in Brussels.

"Britain would be far less of an important partner for the U.S. if it doesn't have good relations in Europe. To pursue an isolationist policy would be suicidal for Britain's role in the world."

(Additional reporting by Luke Baker; Editing by Matthew Jones)