The Downing Street Years (14 page)

By this time, the member states of the Community knew that we were serious. On 18 October I delivered in Luxemburg the 1979 Winston Churchill Memorial Lecture, which, as the occasion required, dealt principally with foreign affairs.

I warned:

We had also taken every opportunity to seek wider understanding of the merits of our case. I had talks in Bonn with Helmut Schmidt at the end of October, and on 19 and 20 November there was a two-day Anglo-French summit in London. The Germans and the French knew that I meant business.

In the run up to the Dublin Council, we examined carefully the measures available to us to bring pressure on the Community. Christopher Soames, who had great experience of the ways and wiles of the Europeans, sent me a note to the effect that the Community had never been renowned for taking unpleasant decisions without long wrangling and that I should not worry too much about the cards in my hand because a major country like Britain could disrupt the Community very effectively if it chose. I noted his advice. In this spirit, we had examined quite early on — though we looked at it again later — the possibility of withholding British payments to the Community. For practical and legal reasons this always seemed a non-starter. Nevertheless, I believed that even the possibility caused satisfactory anxiety in
the Commission, whose pressure to get a satisfactory settlement was vital. We also had the lever of refusing to agree agricultural price increases, which the French and German Governments — each facing elections — wanted to see. Our moral position was strengthened, too, by the fact that the French had broken the EC law by obstructing British lamb imports: the European Court of Justice found against them on 25 September — though morality counts for little in the Community.

At the next Council — in Dublin at the end of November, the Irish having now assumed the European Community Presidency — the issue of our budget contribution dominated the business. The obvious security risk from the IRA required that I be lodged overnight in splendid isolation in Dublin Castle, the former seat of British rule. The Irish press enjoyed the idea that I slept in the bed used by Queen Victoria in 1897, though I had the advantage over her of a portable shower in my room. Indeed, I was very well looked after. The hospitality was perhaps the best feature of the visit, and contrasted strongly with the atmosphere at the meetings which was extremely and increasingly hostile. I had expected something of the sort. I went to Dublin with a newly tailored suit. Ordinarily I would have enjoyed wearing something new on an occasion as important as this, but I thought twice: I didn’t want to risk tainting it with unhappy memories. This was not, though, the only wise decision I made at Dublin: the principal one was to say very clearly, and with at least as much force as at Strasbourg, the word ‘no’.

The Council opened amicably enough in Phoenix Park at the Irish President’s official residence where he hosted lunch. Back in the Council at Dublin Castle we got down to business. My opening speech set out the facts of our case in somewhat greater detail than at Strasbourg and I elaborated on them in the vigorous debate which followed. There was a good deal of argument about the figures, at the root of which was an obscure and complex issue — how to calculate the losses and gains resulting to individual states from the operation of the CAP. But which ever way one did the sums, there was no doubt that the UK was making a huge net contribution, and unless it was mitigated it was about to become the biggest. We were not arguing that we should be net beneficiaries (though some in Britain would have wished me to); in fact, we were only asking for a ‘broad balance’. It was unacceptable that at a time when we were making cuts in public spending at home we should be expected to make a net contribution of more than £1 billion a year. I emphasized Britain’s commitment to the Community and our wish to avoid a crisis, but I left no one in any
doubt that this is precisely what the Community would face if the problem were not resolved.

We had put forward our own proposals on the budget. But the Commission had come up with some of its own and I was prepared to accept their basic approach as a starting point. First, they proposed that action be taken to shift the weight of Community expenditure generally away from agriculture towards structural and investment programmes. The trouble was that this would take too long — if it happened at all. Second, they proposed, in addition, specific spending on UK projects to boost our receipts. But there simply were not enough suitable projects. Finally, on the contribution side, the 1975 Correction Mechanism had so far failed to cut our payments. If it were reformed on the lines the Commission was proposing, it could help reduce our net contributions — but still not by enough: we would still be contributing about the same as Germany and much more than France. Something far more radical would be required.

I made one other point which was to prove of some significance. I said that, ‘the arrangement [must] last as long as the problem.’ It seemed to me then, and even more so by the end of the Council, that we simply could not have these battles every year, all to establish what common sense and equity ought to have made self-evident from the beginning.

It quickly became clear that I was not going to make the other heads of government see matters like this. Some, for example the Dutch Prime Minister, Mr Andries Van Agt, were reasonable, but most were not. I had the strong feeling that they had decided to test whether I was able and willing to stand up to them. It was quite shameless: they were determined to keep as much of our money as they could. By the time the Council broke up Britain had been offered a refund of only £350 million, implying a net contribution of some £650 million. That refund was just not big enough and I was not going to accept it. I had agreed that there should be another Council to discuss the matter further, but I was not overoptimistic after what I had seen and heard in Dublin. For me it went much further than hard bargaining about money, which was inevitable. What I would not accept was the attitude that fairness as such did not seem to enter into the equation at all. I was completely sincere when I had said that Britain was asking no more than its due; and my anger when such a proposition was regarded with cynical indifference was equally genuine.

It was while reflecting on the quintessentially un-English outlook displayed by the Community at this time and later that I came across
the following lines from Kipling’s ‘Norman and Saxon’ in my old, battered collection of my favourite poet’s verse. The Norman baron with large estates is warning his son about our English forefathers, the Anglo-Saxons, and says:

At the press conference after the Council, I gave a vigorous defence of our position. I said that the other states should not have ‘expected me to settle for a third of a loaf. I also refused to accept the
communautaire
language about ‘own resources’. I continued to state without apology that we were talking about Britain’s money, not Europe’s. I said:

Most of the other heads of government were furious. The Irish press was vitriolic. One British newspaper,
The Times
, described my performance at the press conference as ‘bravura’, though there was more criticism from the leader columns. The best comment, I felt, was from
Le Figaro
, which said:

I liked the comparison.

We used the period between the end of the Dublin meeting and the next European Council to press our case, both in public and through diplomatic means. On 29 and 30 January I had talks with the Italian Prime Minister (later President) Francesco Cossiga. I had already
had dealings with Sig. Cossiga in 1979 when the Schild family, my constituents, were kidnapped in Sardinia. I had found him highly competent and deeply concerned. He was also a man of principle, as his earlier resignation as Minister of the Interior after the murder of the former Christian Democrat Leader Aldo Moro showed, and as I already knew him to be from my own experience. Italian politics and Italian politicians do not evoke much understanding or sympathy from the British, or indeed from the Italians, and I confess to sharing some of that disenchantment. But Francesco Cossiga was himself a sceptic about the usual Italian practices. He was the nearest thing to an independent in Italian politics; in negotiations he always played a straight hand; he could be relied upon to keep his word, as he did over the stationing of Cruise missiles in Italy; and he was an undoubted Anglophile and a strong admirer of the Glorious Revolution of 1688 as the birth of true liberal politics. I was glad that it was Sig. Cossiga who was due to host the next European Council.

On 25 February Helmut Schmidt came to London again. Our talks centred on the question of our budget contribution and on the German Chancellor’s repeated wish to see sterling within the ERM, and — contrary to the usual misleading press reports — they were useful and quite jolly. On 27 and 28 March there was a full scale Anglo-German summit in London. I sought once more to stress how seriously we felt about the British contribution. Subsequently, I learned that Helmut Schmidt had been telling other Community governments that if there were no solution there was a danger that we would withhold British contributions to the Community. So I had created the desired impression. The European Council due for 31 March and 1 April had to be postponed because of a political crisis in Italy (not an unusual event), but we pressed for a new Council before the end of April and it was finally called for Sunday and Monday 27 and 28, to meet in Luxemburg.

At this time, there was a marked hardening of public opinion in Britain as the result of our treatment by the Community. In particular, there was much speculation about possible withholding of Britain’s contributions, which did not displease me, though I was cautious in public on the subject. I said on
Panorama
on 25 February that we would consider withholding but would be loath to do it because it meant going against Community law. I also went on French television on 10 March and said:

The atmosphere in Luxemburg turned out to be a good deal better than in Dublin. I was optimistic. From a discussion I had had with Sig. Cossiga, who had spoken to President Giscard, it seemed at first that the French were prepared to set a ceiling on the size of our net contributions for a period of years irrespective of the growth in the overall Community budget, subject to review at the end of the period. This would have been a step forward. On closer examination, however, it became clear that what the French really wanted was to get decisions on their most politically sensitive topics — farm prices in the CAP, lamb and fishing rights — before settling the budget. Finally, it was agreed that parallel meetings should be held over the weekend: Agriculture ministers would meet and so would a group of officials working on the budget issue.

As a result we did not get around to talking about the budget at all at our first session. Indeed, only after dinner, and the usual foreign affairs
tour de table
, did I obtain agreement that the official group should resume effective negotiation that evening. The French were the main stumbling block: the proposals their officials presented were much less helpful to us than President Giscard’s had seemed to be. In the meantime, the Agriculture ministers of the other governments of the Community had agreed on a package of proposals which would have raised farm prices, increasing again the proportion of the Community budget devoted to agriculture (quite contrary to the proposals put forward in Dublin) and giving the French a sheep meat regime which was more or less all that they wanted. Against this — for us — distinctly unfavourable background, we received eventually the offer of a limit on our net contribution of about £325 million, applying only to the year 1980. Under a subsequent proposal our net contribution would have been limited to about £550 million for 1981 as well.

My reaction was that this was too little. But above all I was not prepared to have a settlement that only lasted for two years. Helmut Schmidt, Roy Jenkins (President of the Commission) and almost everyone else urged me to settle. But I was not willing to return the following year to face precisely the same problem and the attitude that
went with it. So I rejected the offer. The draft communiqué, moreover, was unacceptable to us since it continued to insist on the old dogma that ‘own resources are intended to provide the finance for Community policies; they are not contributions from member states.’ Nor did it make reference to the assurances we had been given on our accession to the Community that action would be taken ‘should an unacceptable situation arise’.