Prime Minister
… talking about. Obviously our Italian friends have problems with the Common Market and so do we. Ours centres on the Budget; theirs centres on really rather different things—theirs centres on the way in which the Common Agricultural Policy works. But all of us have problems with it. As you know their problems appear to be slightly different financially this year from what they were last year.
Press
So the Common Market dominated the——
Prime Minister
The Common Market, and other matters which were of interest to everyone.
Press
Well, can we draw your ideas a bit on——
Prime Minister
Well to a person who in fact visited Great Britain in his capacity in charge of terrorism, of course you discuss these things with world-wide interest.
Press
Question about nuclear weapons?
Prime Minister
This is under discussion in the Alliance as a whole. The nuclear planning group of the Alliance. Our decisions are due to be taken by the end of the year; they have not yet been taken.
Press
Question on the PLO?
Prime Minister
That's a matter for Italy. If Italy wishes to do that, that is a matter for Italy. If we make a joint communique for Europe as we have done in the past, not specifically I think on the PLO, that's different. But what Italy does in that is a matter for her, as you know.
Press
Political co-operation with Italy. Are you optimistic about getting further with this agreement? [end p1]
Prime Minister
We'll have to get some progress, and quite a lot, sooner or later, because we can't go on——
Press
But how sooner or how later?
Prime Minister
Well I hope it won't drag on. 1980. The Community budget starts on the 1st January. The calendar year is the financial year. And we simply cannot drag on being the biggest ever bank in Europe. We have not got the money.
Press
No question transcribed.Prime Minister
Let's try to get satisfaction. Let's try to co-operate as partners first. There was a phrase right at the beginning of the administration. I can't remember the precise one. There was a sentence to the effect when we went in that if the arrangements proved very unfair——
Press
An unacceptable situation——
Prime Minister
If an unacceptable situation should arise—unacceptable in terms of being unfair—we would have to look at it again. And that was right at the beginning. And to us this obviously is unacceptable, our net contribution next year. Most important factor—it would be of the order of £1,000 million. As you know, we are hit by it. We contribute a much bigger proportion gross for our proportional GDP, so we put more in than our proportional GDP would warrant, and we get very few benefits out compared to our other partners. We put more in, we get less out, which gives us the biggest net contribution of the lot next year. And at least we have got this home between Strasbourg and now.
Press
The Italians used to be regarded as being much in the same boat, very large net contribution. Recent figures appear to show that that is no longer the case. Do you find the Italians accept that? [end p2]
Prime Minister
I don't think that they were very large net contributors over very many years. Net contributors I am talking about. Because they have had very considerable benefits out. I think one of their main complaints is the way the Common Agricultural Policy works. They in fact buy a very great deal of agricultural produce from the rest of Europe, although their agriculture is not necessarily the kind that produces most of the things that Italy wants. And that, they feel, does give them a very considerable cost which is not reflected in the budget figures.
Press
So they accept that, overall, they are not large——
Prime Minister
Well I think they would say there are certain other things which those figures don't take into account, such as the way the CAP works for them. We are not over enamoured of the CAP either.
Press
Question about meeting in Dublin.
Prime Minister
Don't forget—one has quite a number of bilaterals—West Germany and France. We have two bilaterals in any year. We go to Bonn and Paris once; they come to London once. I have gone to Rome to see Mr. Cossiga. I expect he will come to London during the course of the year. He will be very busy, obviously. And in fact I think you get further with getting to know the case and problems of other countries—you get further by talking to them in bilaterals than you could possibly at the Summit. The Summit is the place where you go and try to take conclusions but you really get to know what the problems are by spending a little longer with each country. Then you also learn what problems you are up against and by that to achieve a solution to your own problem
Press
Mrs. Thatcher: do you think this is a profitable style of new diplomacy? Do you think you are going to start a new style of getting to know people in government in a way which has not been practised before? [end p3]
Prime Minister
I had no idea it was a new style. Don't you remember when Giscard did the State Visit to London that the Anglo-French bilaterals came out of that? He suggested meetings, once in Paris and once in London. I inherited that. I think obviously we have been working closer than our predecessors with Europe, because after all we believed it was in Britain's interest to go into Europe, to be part of a larger unit. I believe it is in Britain's interest to do the things together that are best done together but to keep our separate identity and do things separately, which are part of the variety of life. I think one must do away with the idea that harmonisation is standardisation—it isn't. We are in need to harmonise the things which affect you all; we must not interpret that as standardisation because variety is one of the most important things. But we were certainly very very anxious to prove that we are absolute partners in Europe and it would help us very much better if we could get rid of this major factor on the budget because it is a major unfairness. Consequently every time we come to talk about any European matter we have to talk about the unfair way in which the Budget affects Britain and we will be very much better when we have solved that. I think we can give a lead on many many more other things and work together more successfully.
Press
I think the meetings should take place. I think the atmosphere is different.
Prime Minister
But we still have to fight our own corner to get rid of this particular problem. And we shan't really I think play our full role until we have got rid of this problem because if you have got an unfairness, all right an equity between the partners—it doesn't matter what the inequity is between the partners—you have got to sort it out. [end p4]
Press
Changing the subject, Prime Minister, are you discussing the Irish question in the aftermath of the Pope's visit and any possible political implications?
Prime Minister
No. The Pope's visit was not to the United Kingdom it was to Ireland, so we have not done.
Press
Mrs Thatcher on the EMS do you have any Italian pressure encouraging you to bring Britain into …
Prime Minister
No we haven't come under any pressure on EMS. I think it is recognised that we are a petro-currency and that this gives us unique problems and therefore our currency levels are affected by things outside our economic performance, and no other country in Europe is affected in quite the same way. Therefore you do get an up and down movement of a kind which you don't get elsewhere. This is understood and I think they are perfectly prepared to leave us time to sort it out.
Press
(Unclear)
Prime Minister
Well, it would mean that you would have to take action yourselves.
Press
Yes but this massive intervention fund (unclear)
Prime Minister
Some people would like to drag it down others would like to keep it up. It depends. Supposing you are a manufacturer who has to import a lot of raw materials or a lot of semi-fabricated products on things affected by the dollar price. Then your input prices are down. It is the ones that import very very little and in fact price their exports in dollars that have problems. But you know Germany and Japan have very high exchanges so did Switzerland. It did not adversely affect their export performance. Mind you, the strength of their currency is due to the strength of their economic performance—which is sort of different factor. [end p5]
Press
Is it correct to assume that you do not regard the pound as overvalued?
Prime Minister
It is not correct to conclude anything like that. I really cannot accept that. What are you suggesting I could in fact do about it? Risk a fantastic amount of reserves constantly to intervene to try and help it at a rate when the market will have its way. You can't do it. You can go on discussing this for hours. But you know all you can do as a Government is to smooth out the technicalities and the sharp uprises and the sharp falls, to smooth them out. You cannot in the end beat the market. Germany found that.
Press
Therefore a policy of limited intervention in support of the pound …
Prime Minister
No, no, no. You do the technical intervention because you cannot do anything. You can't in the end beat the market. The market will have its way.
Press
Have you discussed Mr Schild and his family?
Prime Minister
We discussed terrorism in general.
Press
Thank you.
Prime Minister
Thank you very much.