Chancellor Schmidt
… welcome Mrs. Thatcher and members of her Cabinet here in Bonn where we continue the exchange of views which we have had since May in London. Since the arrival of the Prime Minister at 1100 in the morning we had extensive talks and consultations. We also had a Plenary meeting with the participation of all the members of the delegation and this took more time than we originally expected. That is why we arrived here a little bit late and I apologise for being a little bit late. Further to our conversation and exchanges the Foreign Ministers the Finance and Economic Ministers, Defence Ministers and the Agricultural Ministers had talks. The Prime Minister also called on the President, President Carstens. As regards our talks, the Prime Minister and I had a broad exchange of views on current problems in the international situation including East/West relations and East/West matters, the situation in Africa, particularly in Rhodesia. We followed with great interest the negotiations which are at present conducted under the Chairmanship of the Secretary of State for the United Kingdom. This broad exchange of views also included East Asia, South-East Asia. We also exchanged impressions and experiences and compared notes so to speak with the visitor from China that we had last week here and with his presence in London. We also discussed questions relating to co-operation within the Alliance. We confirmed our mutual determination to contribute to preservation of the balance in this particular sector. We also discussed the question of disarmament; we discussed the the outlook for the ratification of the SALT agreement which we are aware of the importance of the position we will have to take in December within the framework of the Alliance which is being prepared at present. We also had an exchange of views on the preparation for the forthcoming meeting of the European Council in Dublin and we gave particular attention to the budgetary question. As you know, the publication of the Commission says the United Kingdom in 1980 is going to be the biggest net payer, with a commitment of about 1.5 billion units of account. The Prime Minister explained the situation of her Government and we understand the importance of the problem for the British Government and the effect this is [end p1] going to have domestically and economically for Great Britain. This is a problem of course that we cannot solve bilaterally, but this is a question on which the Community as a whole has to take a decision. This is by way not the only problem pending.
We will have to wait for the recommendations which are going to be made by the Commission. I understand that these recommendations are going to be announced in detail later today. The Foreign Ministers and the Finance Ministers are going to discuss the matter further in the course of November before we will have the European Council Meeting in Dublin. Naturally, it can not be a question of casting away or giving up or passing any doubt of the continued validity of the elements in this system. For example, the system of own revenues which is of course the definition of expenses on the basis of common policy, the legally defined ceiling of expenses and so on. But here I think Prime Minister I should interrupt my presentation. I have taken too much time away from you. And after you, Prime Minister, have made a statement we shall be ready for a few questions.
Prime Minister
Chancellor Schmidt, friends of the Press, I do not dissent in any way from what Chancellor Schmidt has said, and therefore I will be comparatively brief in my own remarks. This is our second Bilateral and we are very grateful to our hosts for making such excellent arrangements and for the interesting and valuable discussions we have had. I have with me Lord Carrington, our Foreign Secretary, Sir Geoffrey Howe, Chancellor of the Exchequer, Francis Pym, our Secretary of State for Defence and Peter Walker, our Minister for Agriculture. Each of us had separate bilaterals, also some group talk and a fourth Plenary Session. We certainly have had the tour d'horizon Chancellor Schmidt has already detailed to you: may I therefore just say a few remarks on three things upon which we concentrated.
First, because it has very great political significance for us at home, and is a major political difficulty for the United Kingdom, we did spend some time discussing our budget problems which arise because Britain, although being below average income per head, will [end p2] next year be the largest net contributor to the Community and will contribute net some £1,000 million which is a very substantial contribution. Being below average plus being the largest net contributor, we feel is very unfair and inequitable and we must seek relief from it. It is not enough really just to discuss the corrective mechanisms though it certainly can be devised. One has to try to look through those to see what they mean for the several countries concerned. Chancellor Schmidt has always been most understanding about this problem but that does not always mean to say that we can come up with an easy solution. But I am constantly asking my colleagues to think of it in this way. If it is as difficult for some of them being very much richer than we are, to find a little extra then they must at the same time understand how very much more difficult it is for us to find a very great deal each year and I hope they will look at it in that light. In the meantime we must continue behind the scenes before we go to Dublin to see if we can reach a greater measure of agreement with our other partners in the Community to relieve Britain of this which is undoubtedly a gross inequity in the relationship between the members of the Community.
The second problem which I spent some time discussing with our German colleagues was of course Rhodesia because we are engaged on constitutional and transitional talks at Lancaster House. Rhodesia is undoubtedly occupying the main part of our time on foreign affairs because it is Britain's responsibility and we feel that if we can solve this problem which has been now unsolved for some 14–15 years it will not only be of very great benefit to Britain and Rhodesia but also to the whole of the western world in that we hope to be able to achieve an area of stability in the central part of Africa where previously there has been war and instability. That would be of advantage not only to Rhodesia but to all of the countries in Africa which surround her. We do feel that Lord Carrington has done particularly well in that he has got agreement from all parties to the talks, both Bishop Muzorewa 's government and also those attending from the Patriotic Front, on a Constitution. That is a very great advance. We also have agreement to have elections on the basis of that Constitution and we are now therefore discussing the interim arrangements and it will be a tragedy if having got agreement on the Constitution and to have elections that we do not manage to get [end p3] reasonable agreement on the transitional period.
The third thing which we discussed in particular was the modernisation of the theatre nuclear forces, a decision which will come up by the end of the year, and which will have to be taken by the whole of the NATO alliance. You will be aware of my views on these matters. They are that deterrent and detente are part of the same policy but detente is not likely to succeed unless your policy of deterrent is also successful. And deterrent means to deter at each and every level. The level of intercontinental ballistic missiles is a matter for the United States and the Soviet Union. The level of theatre nuclear forces, where the NATO countries need to modernise to come up with the degree of modernisation of the Soviet Union and of course conventional forces as well.
Those are the three things that I would particularly like to highlight before we go on to your questions.
First question
inaudiblePrime Minister
No we shouldn't have the problem if the present corrective mechanism, ironically enough previously negotiated in Dublin. We shouldn't have a problem if that works. It doesn't work for existing circumstances. There are a number of adaptations one can make to the corrective mechanism or one can seek an alternative method. The point however I was trying to make was not so much specifically that it is not only a matter of accountancy, but looking through that to see who pays and under what circumstances and also how it will work in future when we come up to the ceiling of the budget which is as you know 1%; VAT to which we are committed totally, and committed not go beyond it.
Second question
… . so to speak as regards the fishery problem, fishing in the coastal waters of the British coast and what kind of concessions could you foresee?
Prime Minister
I do not link the two. The common fisheries problem has to be solved on merit and must be solved by the latest in 1982. We are already trying to negotiate on the Common Fisheries Policy. The budget case also stands on merit and equity. So the two are not [end p4] necessarily linked. We have to find a solution to both on merit of fisheries, on merit of the budget.
Third question
If £1,000 million is too much for a country with a sub-average per capital income, what would be a fair payment to the Community budget?
Prime Minister
We do not specify in money terms, we go for broad balance. Because we are below average we do not expect to be a net beneficiary even though we are below average income. We have not specified other than in broad balance. I was asked the same question in the House yesterday—I gave the same answer.
Fourth question
… result of your exchange with the Prime Minister and on account of the explanations given to you by the British Prime Minister, has your confidence grown that in Dublin it will be possible to find a solution to the problem which will satisfy the British?
Chancellor Schmidt
responded in German, then …
Chancellor Schmidt
…grown as a result of talks with the Prime Minister, it is my awareness of the complicated character of the problem involved. I believe that the wish expressed by the British Government is a well-founded wish, a legitimate desire to change the rules. I know that the solution is going to be difficult, but I still feel that it can be solved if all concerned are ready to contribute to such a solution. I very much hope that the German government will be able to contribute at this meeting at the end of November to at least establishing the principles on which the solution as such can be based.
Fifth question
…will you be able to reach agreement on this question of the budget?
Prime Minister
We shall obviously have as many meetings as we possibly can. There are several Council Meetings both of Finance Ministers and of Foreign Affairs Ministers. It is easier to analyse than it is wholly to solve and I do not think we shall have solved it wholly before we get to Dublin. We shall try extremely hard [end p5] to get an undertaking at the Dublin Summit of the kind we want and need to solve our political difficulties at home.
Sixth question
… the idea of broad balance for all contributors to the EEC budget—from all the nations—there should be a broad balance for Germany just as there is a broad balance for Britain, and will you support Mrs. Thatcher if that is what is being asked for?
Chancellor Schmidt
Mrs. Thatcher did not support the idea of the concept that all nine member countries have a broad balance individually for themselves, or what the French call le juste retour and what she pointed out was the negotiating objective for the British Government. And she pointed out in that context that Britain was below average as regards income per head. Now as regards the Federal Republic of Germany, I do not think in terms of broad balance or juste retour for all the member countries of the Community. In spite of the fact that this would save a lot of money, but on the other hand it would mean the end of the Community in a few weeks.
Seventh question
You have discussed a good many subjects—is there any field—any area—where your own opinion, your own position, was affected by what you heard from the Prime Minister, or where you have even changed your position.
Chancellor Schmidt
I learned a great deal more about the subject from her. I refer to one already answering a question asked by a woman and I gained considerably better understanding of the complexity, of the very difficult complex nature, of the budgetary problem and the other area—the other field—was Rhodesia. There again my awareness has grown considerably as regards the complex nature of the problems involved there. And in this context I would like to take up one remark made by the Prime Minister in which she said that Lord Carrington has done well in these negotiations. We too feel that so far the negotiations have been extraordinarily successful but we have not seen the end of the day yet. [end p6]
Prime Minister
…all the basic political difficulties which I have, having ourselves as a Party—the Party I represent—having been a very big supporter of the European Economic Community, and I shall go on until I get what I think is a fair solution for Britain.