There were strong signs yesterday that the proposals by John Major could now become the key to opening up a compromise agreement in the deadlocked discussions over European reform.
Securing greater harmonisation of immigration and asylum controls, as well as criminal justice, has become the priority for Britain's partners as they attempt to complete a reform treaty by June.
The Netherlands has suggested that the Schengen agreement, under which several EU countries already co-operate in these areas, should become part of EU law, and the European Commission is working on a plan to incorporate Schengen into the EU system.
Britain, however, which has the power to veto any treaty change, has so far blocked all efforts to make progress. Refusal to budge in this area has soured the atmosphere of the reform talks on every front. According to senior Whitehall sources, Mr Major is now signalling an important concession. Although he would not give up the right to veto a new "justice chapter" in the next European treaty, he would agree not to wield it as long as Britain's interests were protected at every stage.
The new justice "opt out" proposed by Mr Major is a novel concept for European decision-making, British officials say, because it is "extremely flexible". The countries "inside" the new justice area would be obliged to co-ordinate their policies with any country "outside", a Whitehall source said. Under the social chapter opt-out Britain has chosen to be excluded from all social policy-making. However, in certain areas of EU justice policy- making Britain would like to be involved. For example, Britain would demand access to any new Europe-wide data networks on crime and immigration, even though it will not participate in the common justice area.
Britain would also like to participate in the common measures to keep out immigrants and asylum-seekers. However, Britain would refuse to give up any frontier controls at all, and would guard all sovereign justice powers. Mr Major is now letting it be known he is not opposed to the "principle" of pooling powers in these areas, which he concedes make sense for some neighbouring countries. British officials concede that Mr Major could be accused of wanting to "have his cake and eat it" on the justice issue. However, EU member-states want a breakthrough and they believe this offer could provide the basis for productive talks.
All negotiations on EU treaty changes, intended to be competed by June, are highly sensitive, and details of the British offer have not been made public. Mr Major could come under strong attack from Euro-sceptics if he is seen to be offering any compromise proposals to his European partners in the run-up to the election campaign, particular in the sensitive area of justice policy.
According to Whitehall sources, the Prime Minister set out his terms over a private dinner in The Hague on Tuesday with Wim Kok, Prime Minister of the Netherlands, which has just assumed the EU presidency. Both leaders emerged from the dinner to say they were encouraged by their talks about "flexibility" in EU decision-making. British sources say the leaders were referring to their discussions of "flexibility" in securing an immigration and justice deal. "Flexibility" in the way EU law is applied to different countries is fast becoming the buzzword in the reform talks as attempts are made to accommodate the interests of different countries.
However, tough talks lie ahead as EU leaders attempt to define what precisely they mean by flexibility. The concept is favoured by Germany and France as a means of ensuring that countries who want to pool more powers can go ahead and do so in selected policy areas, without being held back by a lone objector like Britain. Germany and France have already laid out proposals for enshrining the concept of "flexibility", in which they say that no country should be able to veto a decision by others to move ahead. Britain, however, insists that when a group of countries want to pool powers which others do not agree to, individual member states should have a veto.
The risk, Britain argues, is that the interests of countries "outside" the new grouping might suffer as a result of being left out. Negotiations over the next few months will focus on finding a compromise between these two positions.