May I make a few comments first?
One of the difficulties here has been to get clear the nature of the problem. We are not asking for a penny piece of Community money for Britain. What we are asking is for a very large amount of our own money back, over and above what we contribute to the Community, which is covered by our receipts from the Community.
Broadly speaking, for every £2 we contribute we get £1 back. That leaves us with a net contribution of £1,000 million pounds next year to the Community and rising in the future. It is that £1,000 million on which we started to negotiate, because we want the greater part back. But it is not asking the Community for money; it is asking the Community to have our own money back, and I frequently said to them: “Look! We, as one of the poorer members of the Community, cannot go on filling the coffers of the Community. We are giving you notice that we just cannot afford it!”
So that is the nature of the problem. I must say the other very big net contributors are Germany and many of the [end p196] others are either broad balance or very substantial beneficiaries. It is we and Germany who are big net contributors and next year we would be the biggest of the lot, although one of the three poorest members.
The second point is, starting from that, that we wanted £1,000 million of our own money back, we could have settled at this particular European Council had we been prepared just to take away £350 million, because that is what was offered provided one was prepared to say that that was the end of the story. Now, you would never have expected me to settle for one-third of a loaf, and indeed, it would still have left Britain with much much much too big a net contribution—a contribution next year of the same size as the German one and many many many times that of France. So, of course, I was not prepared to settle.
Now, that left us in great difficulty for a time and for a time it looked as if we were not going to get any further at all. I expect Mr. Lynch will have told you that the £350 million for which we could have settled is on the contributions side; it would put down our contributions to the budget. The other problem is that we do not get very much back, and it seemed as if the rest of the Council was not prepared to turn its mind to the receipts side and expenditure which should come to Britain. [end p197]
I am afraid we discussed quite long and hard and it was very very obvious that some of the nations were very anxious to help—very anxious to help. Yesterday, one of the countries suggested that we might have a second Council on this subject, between Councils, and that suggestion was made by one or two other countries.
We then discussed whether it really would be a genuine negotiation, because there is not much point in having a second Council or an early Council unless it is going to be a genuine negotiation, and still, some of the small countries and one of the larger ones were very very anxious that we should not just break or precipitate a crisis at this Council, but we should find a way of going ahead.
Now, most of this morning was taken up by very detailed discussions on that part of the communiqué which you have before you. You will see that it sets out that the contributions side could be a basis for a solution, but it goes on for trying to find a solution on the receipts side, which would give us a very much larger proportion of what we want.
The question of when another Council is called, to be an advance edition of the Council which should have taken place in March, will be left to the new President of the Council and he will decide.
So, if I were asked to sum up: we could not possibly accept £350 million in full and final settlement of our [end p198] claim, so the position has gone into suspense pending another Council.
I must tell you that I am not over-optimistic about the result of that Council, but did not want to precipitate a crisis, in view of our friends in the Council, without genuinely trying to find a solution. So, although not over-optimistic, although not having very much room for manoeuvre, indeed very little room for manoeuvre, we are going to try to have another Council to see if we can find a genuine compromise.
Now, shall I take questions now? [end p199]
Question (Geoffrey ????, Week-end world)
If you have been unable to get the other eight Heads of Government to accept the justice of your demand for broad balance here at Dublin, how do you think you can achieve this at the next European Council?
Well, this is exactly the question which I myself posed in the statement. Is it going to be a genuine negotiation? It is quite clear that there are a number of countries there who are prepared to help and some mentioned some figures. Now, therefore, some are prepared to help and go further, and so we can only go to a next Council standing by some of those who are trying to help us, and see if we can get a solution. As I said, I am not over-optimistic, because the gap between £530 million and £1,000 million is a very very big one; but they were very anxious we should not precipitate a crisis now, and were willing to help. And who am I to turn down offers of genuine help from genuine friends? It would have been a very nasty thing to do not to have said: “All right, one last chance!” [end p200]
Mrs. Thatcher, the President of the French Republic has given a clear indication that a second meeting of the European Council to even attempt a negotiation and a compromise will not be called unless you have delivered on a number of other policies, including fishing and a common energy policy. This would seem to imply that he believes you either have or will agree to some linkage of these issues with the budget problem. Is this a correct reading of the situation?
I'm sorry. There is absolutely no linkage at all. If you look at the communique, you will see no linkage whatsoever between the budget—the solution of which stands on its own merits—and of course we want to make progress on fish; of course we want, and are trying to negotiate a regime on sheep meat; we want a satisfactory fisheries policy for Britain and we want a satisfactory sheep meat policy for Britain, and those stand on merit. But, yes we do want them sorted out, but there is no linkage at all between them. The communique makes that very clear.
If you say now that there is only one last chance. … . that there might be a campaign of disruptive tactics … . policy if Britain does not eventually get its way, does that still hold good from Dublin today? [end p201]
Britain has a very just and equitable case. It is a case which was in line with one of the assurances given us when we entered the Community and which is committed to writing: that if inequitable situations arose, then it would be up to the Community to find a solution. Such a situation has arisen. We are asking the Community to find a solution. We refuse to accept the settlement they offered and we are going to one last chance.
Now let us just see what that produces before we make the threats. We have a number of friends who are very anxiously trying to help us. Let us just stand by them.
Question (John Dickie, Daily Mail)
Other delegations have suggested that their readiness to attend another meeting is based on a statement by you that you are prepared to compromise. What is your interpretation of Britain's room to compromise?
Just exactly what I said in my opening statement. They offered £350 million as a full and final settlement. I could not possibly accept that. I have not very much room for manoeuvre, because we are very very heavy net contributors and most of those with whom we are in fact negotiating are net beneficiaries. I have not very much room for manoeuvre, but room I have I am prepared to use to seek to find a genuine compromise. [end p202]
Question (New York Times)
Following on that question, you seemed to stress twice the word “final” … . “full and final” . Are you prepared … . are you suggesting that you might be prepared for a kind of two-tier or two-stage settlement?
No. I think—subject to your correction—the use of the word “final” was in connection with the settlement that they offered us, namely that they offered the £350 million which comes from the modifications of the corrective mechanism; that they offered that in the spirit that that would be a full and final settlement of the problem. I could not accept that. To accept a third of a loaf when you are asking for a whole loaf, is no settlement of a problem, and it was that which I could not possibly agree to. That was the use of the word “final” .
Prime Minister, you did however refer to the phrase “a last chance” at the next Council. Is that how you feel?
On the budget, yes, because we had a directive, as it were, from the Strasbourg Council to this Council first to find the facts of the problem and secondly, for the [end p203] Commission to propose solutions. Now the Commission has found the facts. I did not find anyone who actually argued with the facts. The Commission proposed solutions. The solutions were of three kinds:
One: the structural nature of the budget goes far too heavily on agriculture and far too little on investment and regional policies, and therefore you need to alter the structure of the budget, which is long-term getting down to changing the proportion taken by the Common Agricultural Policy. We agree with that solution.
The second solution it proposed was a solution on the corrective mechanism, on the contributions side. That was the £350 million solution. That was not enough, but we are prepared to take that as a start.
The third part of the solution—and the essential component—is that because Great Britain receives less than half the average receipts per head that the Community receives, that our receipts should go up. So, in other words, we get more of our own money back by way of receipts.
Now, it is that that the Council was unwilling to look at, but some members were prepared to look at. In the final communique, you will see that paragraph 3 of the piece relating to the budget, directed to that, says that in addition the Commission is requested to pursue the examination of proposals for developing supplementary Community measures within the United Kingdom which will contribute to greater economic convergence and which will also lead to greater participation by the United Kingdom in Community expenditure. That is the third part of the [end p204] solution. So, structure, contributions, receipts.
We agree with structure, but it will take a long time—too long for the budget. We would agree with the contributions solutions, except that it was not enough; and we now have to go on to receipts. But we cannot just go on talking, and why it has to be a last chance is we need the solution for our financial year 1980/81 which is April/April. That is why the next Council meeting is last chance. It is a much much more complicated subject than many people realize.
(not clear, wants to put a question on Northern Ireland)
No, I am afraid you cannot. This … . I'm sorry … . I am afraid you cannot. This is a press conference about the European Council. I am sorry, no. When I say no, I mean it.
Will you continue, after Dublin, to see a broad balance between Britain's payments and receipts?
Well, of course. That is the negotiating position which you take up. That is the position we are on now, but [end p205] the Council is on £350 million; I have not much room for manoeuvre, but we have to start out from there and see where we get.
Is there any chance that Britain will pursue a foot-dragging policy on its oil price increases and not follow so avidly in the steps of OPEC? I believe this criticism of Britain's oil-pricing policy was made at the Council Meeting.
Well, it was certainly not made at length, but let me give you the facts. Are you an expert on oil? You might be the world's biggest expert on oil … are you, because if you are I can make it short.
I am not.
Right! The OPEC price of oil is determined usually by reference to one particular oil, which is South Arabian marker crude. All other grades above that, have a price linked to South Arabian marker crude. Ours is not the marker crude, but our grade of oil is rather above that and it is the same grade as possessed by Libya, Algeria, Nigeria [end p206] and ourselves. The OPEC price for that is now about 26 dollars a barrel. The four of us usually move at pretty well the same time. We have moved after Libya and Algeria moved to put up their price to 26 dollars a barrel. Nigeria moved at about the same time and as you well know, we have had great trouble in Nigeria for the simple reason that all our oil in Nigeria has been nationalized and BP no longer has access to that supply. So our price went up to 26 dollars a barrel after similar grades in Algeria and Libya, about the same time as Nigeria. I may say that we are still having to buy in some oil at prices 30, 35, 40, 45 dollars a barrel, and it is not only spot market prices—the fact is that some governments are selling at non-OPEC prices and about 15%; of all the oil which changes hands changes hands not at OPEC prices, but in fact at very much higher prices arranged between governments.
In fact, we have still been selling at 26 dollars a barrel to countries which have been buying at a far higher price per barrel, and there is no justification for any criticism of Britain. Those countries which have had access to oil at 26 dollars a barrel, when we have not been selling on spot market, have had a thoroughly good deal.
Right! Now, let us get away from South Arabian marker crude! [end p207]
… . from Mr. Lynch. … all resources, duties and levies, were owned by the Community and the member countries only acted as a collecting agent. Is this a principle you accept? That is number one.
Number two: in view of what must be slight disappointment at the outcome of this Summit, will you at agricultural council level play a full part in arriving at settlements of all the various issues outstanding?
The solutions proposed by the Commission in the Paper before the Council this time were all in tune with Community rules, regulations—both the letter and the spirit. That is quite clear and that question therefore should never arise.
What, in fact, the Council did was to give us a solution on the contributions side which modifies the contributions we were to make, but it was all in tune with the “own resources” philosophy. None of the proposals for solving our problem were outside the Community framework of principles.
What the Council refused to do—and the Commission had proposed we should do—was go on from the contributions side to consider how very little we receive of the Community's expenditure and if they had brought those receipts up, then we could in fact come into broad balance. [end p208]
So we sorted out the contributions side. It does not infringe “own resources” . We have not yet sorted out the receipts side.
Question (Stephen Miligan, Economist)
I wonder if I could ask you a question of tactics. You are saying that you want the money by the next financial year, and yet two-thirds of what you are proposing—two-thirds of the loaf that you would like—would be in extra receipts by extra Community spending, presumably by new Community policies.
Now the record of the Community is such that new spending takes a long time to agree and even longer to implement. Do you really think it is possible to get new spending which will actually be cash in Britain by the end of this year or the end of next year?
It is possible if there is the will. It is perfectly possible if there is the will. You could have a very simple mechanism. One of the mechanisms we proposed for bringing receipts up was a very simple one—that there should be a cash refund of our money … . I am only talking about our money, no-one else's … . there should be a cash refund of our money to bring our receipts up to the average level of receipts in the Community. [end p209]
As a matter of fact, if it were brought up to average level of receipts in the Community, it would take us way over the top of the amount which takes us into broad balance. It is perfectly possible and there is enough left within the 1%; VAT ceiling—perfectly possible, if there is the will.
I say to you, I am not over-optimistic, but please do not think we are asking for money from other European nations. We are not. We just cannot go on financing the rest of the European Economic Community to the tune that we are or anything like it.
Mrs. Thatcher, given the conviction with which you state your case, have you considered withholding or reducing Britain's contributions to the budget and would you consider this a valid option if there is no solution at the next Summit meeting?
We want to try to have one last change. After that, I will have to consider all kinds of things and that would be one possibility but we must look very carefully at both the legal and practical implications. [end p210]
Question (Murray, Liverpool Daily Post)
Prime Minister, what response did you have from your colleagues round the table to your warning about the political problems that are arising in Britain, especially the fact that public support for membership is rapidly crumbling in view of the fact of the resistance met to what you are trying to do?
What response did I have? Obviously, one puts that point very clearly, particularly as we have been a party that is what I might call very “Communautaire” for the larger reasons. We believe that it is better for Britain to be in the Community and better for the Community to have Britain and highly damaging to the Free World if the Community—a community of free nations based on free movement of capital and ideas and people—cannot get on together and solve our problems within.
So I did make that point strongly. You asked me what response there was. I can tell you. It was that they have political problems too!
Mrs. Thatcher, the European Council expressed its deep concern at the tragic situation in Cambodia. I would like to ask you whether you feel it should be a little more tangible than just expressing deep concern. Do you feel that [end p211] the rich countries of the West should in fact—and particularly the European Community—set up a special fund for situations like Cambodia?
But as you know, we in Britain have contributed a great deal to the relief of Cambodia—something like £4 million from Britain—and then we also contribute to the Community Relief Fund as well, and people in Britain have contributed very generously, so I do not think we can be taken to account at all for not contributing—we have, and on a reasonable scale.
I might just use your question to make one point that perhaps has not been made to you.
One of the things I said to our Council colleagues was this: “Do you realize that we in Britain, under the present budget, are contributing more to wealthy Europe than we are to the whole of the Third World?” The figures next year are £1,000 million net to Europe, and our contribution to the Third World is of the order of £785 million. And I said that just does not begin to make any sense; that the Community keeps us to a system which gets more of Britain's money to the Community than Britain actually gives to the Third World, and I might say, our contributions to the Third World in terms of percentage of GNP are above those of some of the Community countries. [end p212]
Question (Lugi Forni, La Nazione in Florence)
Mrs. Thatcher, you have said that you hope for genuine negotiations. May I ask you—and this is also a philological question—how would you describe with an English adjectivation, the negotiations conducted so far?
Well, how would I describe it? Totally unsatisfactory. Otherwise, we would have got a solution.
My first problem, in a way, has been to get over the nature of the problem. I mean, some people think I am asking for other people's money. I am not. We in Britain, together with Germany, are the financiers of the European Economic Community. We are a poor country. We are the seventh poorest out of the nine, whereas Germany is one of the wealthier ones. We, next year, will contribute more than Germany. We are saying we cannot go on financing the Community; we cannot go on putting money in the Community's coffers. We are giving notice of that and we want a very large proportion of our own money back, because we need it at home and we are having to cut expenditure at home.
The first difficulty here—I do not disguise it from you—has been to get over that fundamental thing to the Community, that all we are doing is asking for our own money back because we cannot go on being Europe's biggest benefactor. [end p213]
Do you include Ireland among the countries which are trying to be helpful?
Yes. I must say that Ireland was very good in the Presidency and really did realize our problem.
Question (Christopher Hume, [Huhne] The Economist)
Prime Minister, do you still believe that Britain should never break Community rules or defy a European Court judgment?
Look! If you have a Community in which everyone observes the rules, then no-one should break them!
Prime Minister, I wonder if I could ask you to clarify one point. If I understood correctly your answer to a previous question, you do accept the view that own resources are Community funds. How do you square this with your insistence that Britain wants its money back?
Because … . let me come at it a third time … . a third time.
“Own resources” has its adaptations through the Dublin financial mechanism, so that mechanism applied with some of [end p214] the constraints removed gives us £350 million back, but that is in accordance with Community framework of principles and practice.
You say, how do I square that with wanting my own money back? Because if we had the kind of Community spending policy that gave a fair deal to Britain, we would get that money back by way of Community expenditure on things in Britain. What it does at the moment is take the money and spend it very much more on other nations. That leaves us an unfairly high net contribution.
We are saying if they put up our receipts even to average receipts per head in the Community, we should get more than our own money back. So we are not asking for that right up to average, but for something below average.
You really have to look at the budget, with respect, from three viewpoints: one, that the agricultural policy takes far too big a percentage and therefore you must look at the structure of the budget and reduce the agricultural proportion; secondly, you look at the contributions which they have and thirdly, you must look at the distribution of receipts; and it is there that we lose out.
Several times in the past weeks, you gave the British people to understand that this problem had to be solved in Dublin. Now, for reasons which you have explained, you are [end p215] going back empty-handed on the morning after Dublin talking again about the next Council meeting being the time when the problem has to be solved.
Do you think your campaign for reform is starting to lack credibility?
No, not in the least.
First, we could have gone back to settle for £350 million. I am not prepared to settle for as small an amount as that.
Secondly, we are not going right forward to the March meeting, although I have not the slightest shadow of doubt that if it is not solved it will be discussed there, and even though the March meeting is before my financial year.
What we are asking for is an advanced Council meeting at which this can be discussed. I say “what we are asking for” ; what they agreed on. I said we could not wait until March. That was my position.
If this communique related only to discussing it at the next Council meeting at the end of March, that was not acceptable to me. Now, at that point—I will be frank with you—it looked as if we would precipitate a crisis immediately and break, but again, some of our friends came in and said they were all prepared to go to an earlier meeting and that the new President should judge when that earlier meeting was called. [end p216]
Now what was I faced with then? Either precipitating a crisis immediately or recognizing that quite a number of people within the Community, round the table, were trying to help and were asking for an advance Council meeting. So at that point, I am bound to say, I stood by those who were trying to help me and said: “Right, we will take one last chance, but it is not good enough for that to wait until the end of March at the regular meeting.”
… . crisis if she had not given a little more time. Is she talking about the possible withdrawal?
No, I made it perfectly clear. We are in the Community and we are staying in and no-one has the right to turn us out. We are in the Community and staying in, because I believe it is for the good both of Britain and for the larger world that what I call the free nations of Europe are able to work together.
So I would have had to have gone straight back at the next Cabinet to discuss exactly how we would tackle it and exactly what measures we would take and, of course, it would have precipitated a crisis within the Community.
But let us have it quite clear, the Treaty does not give powers to the Community to expel members. [end p217]
I would like to discuss a little bit. You say “We want to get our own money back!” Now, we consider—the old members at least—the Community as a club and you pay your fee according to the existing rules and you do not like the result.
Now I think there are two possibilities; you either try to improve the rules and if you don't succeed you can't withdraw from the club, but you think of a third possibility—wrecking the club.
No, it is very convenient for those who are very big beneficiaries from the Community, although above average income, to argue that the Community rules should stand with no modification. Of course I recognize that. Very convenient for those nations who have above average income and who benefit enormously from the contributions therefore of others, because they are net beneficiaries to argue that the rules and the mechanism should not be changed.
I would submit that for them to argue that, that though they are above average and net beneficiaries, for them to argue that a below-average income nation should be a very considerable contributor is inequitable and unacceptable and it is unacceptable within the terms of the Commission document approved by the Council in November 1970 which accompanied the Accession Document to the Treaty. [end p218]
I don't argue with your reasoning. I ask about your reaction. If you don't get your way, would you withdraw? You say “No” , so what other solution would you have if you can't get your way to wreck the Club?
I am afraid you must wait and see to that, but other nations have in the past pointed the way!
You said that you wanted to increase Britain's receipts from the Community and I was just wondering in what directions do you want this money to be spent on? We have heard the three headings: agriculture, coal extraction and transport. Have you put your mind to this? Have you got definite projects in mind?
As a matter of fact, both the coal and transport and regional would take the receipts right up—the three things, but, I make it quite clear, it has to be that Community expenditure substituting for British expenditure in order to get some balance of our public expenditure right. But it is perfectly possible. [end p219]
Was there at any stage … . did British membership of the EMS come up in the discussion?
We really scarcely discussed EMS. It just came in perhaps once or twice in someone's speech on the first debate we had on the economy and it came up only in the connection which the stability of currency which EMS had brought about had been helpful.
But, of course, as you know, had we been in, our currency would have gone right off the top of the grid because at that time, at the beginning of the Iran troubles, when being a petro-currency, we went right up to 2 dollars 30, right up in relation to the European currencies, and that is one reason why it is much more difficult for us to come in than others.
The other reason, of course, is that we have just released all exchange controls and we want obviously to see how they work.
One last question.
You mentioned the beginning of the British financial year as a kind of deadline. Are we right in assuming that the beginning of the negotiations on the agricultural prices for the following year are also some kind of a deadline? [end p220]
We must have what I would call “redress” for the financial year 1980/81.
It is true that our financial year starts in April—until the following April 1981, and so long as we got a refund within that financial year, it would in fact sort out the massive expenditure to Europe which you see in our Public Expenditure White Paper.
So, in theory, you are quite right. One could wait for the actual rebate much longer, but it is about time one arranged how much and when it is going to come.
… . asking about the price review for the European prices under the … .
The Agricultural Price Review is not normally settled at least until June. I seem to remember that we had Strasbourg and the price settlement at approximately the same time last year—in June. I seem to remember getting telephone calls on what had happened there after I had decided what we had done in Strasbourg—at about this time after the conference.
Right, gentlemen and ladies, thank you very much.