Bid to change EU treaty founders on British opposition

BRUSSELS: European Union leaders on Friday abandoned a bid to convince Britain to change the bloc's treaty to combat the eurozone debt crisis.

"I can confirm that Britain is out of the discussion about revision" of the treaty, said one senior diplomat after hours in which British Prime Minister David Cameron demanded paybacks his partners were not prepared to grant.

A second diplomat confirmed that talks would now go forward seeking a new inter-governmental agreement designed for the 17 countries that make up the eurozone and others aiming to join the currency union.

The failure to keep London on board makes more likely fears expressed by some leaders that the EU faces breaking up into a multi-speed Europe although backers will seek to tack on signatures from eight other nations who are legally committed to taking up the euro.

"The crisis will seal our coffin if we choose to alienate the Europe of 27," Polish Prime Minister Donald Tusk said at a meeting of right-wing European parties ahead of the key summit.

Denmark is the other state alongside Britain that has an opt-out from adopting the single currency, but its Prime Minister Helle Thorning-Schmidt said earlier that Copenhagen was "open to treaty change if that is seen as part of the solution".

European powerhouse Germany insisted that the treaty change Chancellor Angela Merkel believed was needed to fight the crisis should include all 27 countries, including the 10 that do not share the euro currency.

However, Cameron threatened to veto any such deal unless he obtained assurances that what he says are vital "British interests" are safeguarded.

"If I can't get what I want, I will have no hesitation in vetoing a treaty at 27 because I am not going to go to Brussels and not stand up for our country," he said on his way into the talks on Thursday.

Diplomats said that London wanted to ensure it maintained a veto on EU regulations on financial regulation if it believed its interests were under threat.

Cameron has vowed to protect the City of London -- which plays a huge part in Britain's economy -- from interference from Brussels, whereas France and Germany want a financial transactions tax.

Treaty change requires unanimous approval from the bloc's 27 nations, and in a statement issued in The Times this week Cameron also said that if the 17 countries of the eurozone alternatively chose to create a separate treaty of their own, Britain also would make sure its interests were protected.

Institutions such as the European Commission and the European Court of Justice involved in such a treaty "belong to all EU states and their use outside the treaty of the 27 would clearly require safeguards", he stressed.