- Associated Press - Tuesday, July 12, 2011

LONDON (AP) - He’s looked defensive. He’s looked outraged. He’s looked scared. But recently, Prime Minister David Cameron has rarely looked like he’s in charge.

The British leader has lost his confident aura as his friendships with figures central to the tabloid hacking scandal hand his government its biggest crisis since he entered No. 10 Downing Street. Questions are mounting about whether the scandal will poison his premiership.

From the moment allegations first emerged that the News of the World had hacked into the cell phone of missing schoolgirl Milly Dowler, Cameron has been on the defensive. He has repeatedly been forced to answer questions about his ties to Andy Coulson, his former communications director and a one-time News of the World editor who was arrested last week in the scandal.

The paper was under Coulson’s stewardship when a royal reporter and private investigator were jailed in 2007 for hacking into the phones of members of the royal family’s household. Coulson resigned as editor, though he maintained he knew nothing of the intrusions.

Soon after, Cameron, then opposition leader, hired Coulson as his communications chief and kept him on when he became prime minister in May 2010. Coulson resigned in January after a new wave of allegations emerged about phone hacking at News of the World.

Faced with withering criticism from opposition Labour Party leader Ed Miliband for his “appalling error of judgment” in hiring Coulson, Cameron said he believed Coulson deserved “a second chance,” and trusted Coulson’s assurances that he knew nothing of any phone hacking.

As Coulson, 43, was arrested and released on bail last week, Cameron looked at best naive.

“It doesn’t show him in a positive light,” said Victoria Honeyman, an expert on British politics at the University of Leeds. “It does make his judgment look questionable.”

Cameron’s friendships with a media elite now implicated in the widening scandal has also fueled a public backlash, in particular his chumminess with Rebekah Brooks.

Brooks was editor at News of the World at the time 13-year-old Milly’s phone was hacked and is now chief executive of News International, the U.K. newspaper division of Rupert Murdoch’s News Corp.

Cameron has been photographed with Brooks at parties, though all of Britain’s prime ministers for the past decade have made time for the 43-year-old media executive, one of the most influential women in British journalism. Television stations have run video footage of Tony Blair greeting her with a friendly wave as he walked through News International offices. Gordon Brown went to her wedding.

But while there’s a perception that past Labour Party leaders courted Brooks to secure the endorsement of the Murdoch media empire, the relationship between Brooks and Cameron appears tighter.

Her home is just miles from his country place in the Cotswolds _ an idyllic cluster of villages a few hours drive west of London. British media have described their social circle as the “Chipping Norton” set _ named after the village where Brooks lives. Murdoch’s daughter Elisabeth and her husband, publicist Matthew Freud, live nearby.

The Daily Mail newspaper paints a picture of powerful journalists and politicians who “go to the same house parties, dine together and even ride together.”

Cameron, 44, has tried in recent days to distance himself from both Brooks and Murdoch. At a news conference last week, he said he would have accepted Brooks‘ resignation had he been in charge.

And on Tuesday, Cameron joined the opposition in calling for Murdoch to withdraw his bid for control of the lucrative satellite broadcaster British Sky Broadcasting company. Cameron’s turnabout means all three major political parties are now lined up against the media magnate in his bid for the BSkyB gold mine, which enjoys profits that dwarf revenue from his British newspaper holdings.

Even so, it will be hard for Cameron to shake off the damaging association with Murdoch, whose newspapers supported him in the last election.

“Murdoch is not looking good at the moment and if you are close to someone who looks weak, you look weak,” said Tim Leunig, a historian at the London School of Economics. “If Cameron wants to appear strong he needs to go for broke _ ban all News International journalists from government briefings. “

Still, analysts suggest Cameron can survive.

Cameron is ultimately not responsible for this scandal,” said Honeyman. “He is implicated in it by appearing to be a relatively close friend of Rebekah Brooks, but he is not unique in that.”

Indeed, the breakneck pace of the unfolding drama could be Cameron’s saving grace _ each fresh revelation puts the scandal one step further away and drags in other names.

The focus was on Cameron and Coulson following the former communications chief’s arrest last week, but the news was quickly trumped by former prime minister Brown’s angry denunciation of the Sun for printing details of his young son’s cystic fibrosis, and lawmakers’ scathing interrogation of police officers who were charged with investigating the phone hacking scandal years ago.

Howard Wheeldon, a strategist at the brokerage firm BCG partners, suggests the biggest danger for Cameron is that the phone hacking crisis distracts him from the state of Britain’s faltering economy.

“Each minute that the prime minister is forced to be involved in the News International crisis the less work is able to be done by the prime minister and his team in relation to getting the U.K. economy on track,” he said.

“With several previously planned government announcements now pushed back until the autumn and with Parliament breaking for the summer recess on July 19 it appears to me that the nation is paying a far too heavy price for the failure of Mr. Murdoch to conduct certain of his business in a fit and proper manner,” Wheeldon said.

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