Prime Minister
We welcome Herr Chancellor Schmidt here on one of our regular bilateral talks between Herr Chancellor and myself. I think you have already been fairly well briefed about the discussions which took place yesterday. May I make one or two points?
You have rightly said that the French Presidential Elections have been a very important feature of these talks, but France, being a democratic country like ourselves, has the possibility of transfer of power; it is for France to choose her President, and for us to work with France's choice. It is not the first time we have had a transfer of power in countries in the Community and we both very much look forward to welcoming President Mitterrand to establish a warm, personal relationship of the kind we have between Chancellor Schmidt and myself and to working together within the Community, as we have in the past, and we look forward to meetings taking place in the not too far distant future. There is, of course, a European Council Meeting scheduled for the end of June, so we are very much looking forward to meeting the new French President and working with him, and are sure that we can establish a good personal relationship and carry out the treaties of Europe as we have in the past. [end p1]
Of course, we have discussed European problems. The main one that we have to tackle is the reform of the Budget structure. You will be very much aware that there are two main contributors to the European Community Budget—by far the largest contributor is the Federal Republic of Germany and we are the second biggest contributor, and the rest of the Members are in fact beneficiaries, and we feel that a restructuring of the Budget must take place within the 1%; Value Added Tax ceiling which we both reaffirm, and also it must have some regard to the results under the present system. That is to say, we do not feel we can go on ignoring the fact that the present system results in two big contributors and eight beneficiaries and we must have some regard to the distribution of the net contributions as they relate to the wealth of the several countries concerned.
We cannot really restructure the Budget without also having a good attempt to change the Common Agricultural Policy, and in particular the amount of money which goes to surplus production, and that also is very much in our minds. We would like to stick, as far as we can, to the time-table, which means that we should have got a good way into the restructuring on the preliminary decisions by the end of our Presidency.
The Chancellor and I have also discussed, along with other Ministers who were present yesterday, matters such as textiles and steel and the impact of the latest decision of the United States on Japanese trade, but you will be aware that the Community has a surveillance scheme of Japanese imports and we expect to discuss those matters at the next Council Meeting.
Naturally, we have also discussed great international matters, such as the Middle East, where as you will know, none of us can solve it [end p2] alone. It will be for the United States and Europe and the countries involved to try to find a solution. None of us, we believe, can solve it without the other.
We have also discussed East-West relations and Herr Chancellor, of course, will be visiting Washington shortly and have the opportunity of discussing those with President Reagan.
I will just hand over to Herr Chancellor for him to make his comments and then we will go for questions. [end p3]
Chancellor Schmidt
I would like, in the beginning, to underline strongly what the Prime Minister said about our joint attitude to extend a warm personal welcome to the newly-elected French President. I am looking forward to an early opportunity for an exchange of views, particularly on foreign policy positions and lines shared by the Western Allies and partners of the European Community.
As the Prime Minister said, we have had an exchange of views on a variety of issues. I would just mention a very few of them. In agreement with what the Prime Minister said, we had, of course, a discussion on the problems and complexities and the time-table procedure for the restructuring of the Community Budget and CAP reform. We do expect the proposals of the Commission in Brussels to be tabled in time for the European Council at Luxembourg at the end of June, and to have a preliminary exchange of views there and possibly agreement on guidelines for preparing the decision or the decisions in the course of the second half of 1981 under the chairmanship of the United Kingdom.
There are a number of positions in which we were agreed as regards that restructuring. The Prime Minister may wish to elaborate on that one. I do not want to add anything to the economic subjects right now, but I would like to mention that we had a very rewarding comparison of the notes which both of us brought home from our recent Near and Middle East visits and that we also had an exchange of mind as regards possible European contributions [end p4] to a peace procedure there in that part of the world. We are agreed that there is the need of a close contact with the United States in order to ensure that what the Europeans do to not do in that region is of a complementary character.
We also discussed at length the problems which the Foreign Ministers had dealt with between them and had dealt with in the North Atlantic Council in Rome a couple of days ago. Both Governments were rather satisfied with the outcome of those deliberations and especially with the communique and we also welcomed in particular the reaffirmation of the December 1979 decision on long-range theatre nuclear force modernisation and arms control, and especially welcomed the United States intention to begin negotiations with the Soviet Union TNF arms control within the SALT framework by the end of this year. I would like to express my satisfaction about the thorough consultation with the United States. We, of course, did have the benefit of the Prime Minister's visit to Washington this Spring and the Prime Minister already has mentioned that I am going to Washington next week.
We have exchanged our views as regards the topics that have been dealt with between Americans and Europeans, whether it was in March or in Rome, or whether it is going to be next week.
I think we have made good progress in confirming the broad basis of common foreign policy positions during our talks yesterday and today, especially as laid down in documents like the North Atlantic Council Communique from Rome last week. [end p5]
Let me finally say that our normal consultations in this enviable surroundings of Chequers have, as always, taken place in a relaxed and friendly atmosphere. I am looking forward to continuing it in the course of Autumn in Germany. I am convinced that if there are problems between the United Kingdom and my country, they can be and will be solved and I really do look forward with confidence—and even some expectation—to the forthcoming period of the British Presidency within the EEC, although I do know the Chairman of European Council Meetings is not more responsible for the outcome than the other eight or the other nine! To act as a Chairman is not easy and it is not always rewarding, but still, I am looking forward to your Presidency, Prime Minister. [end p6]
Questions & Answers
Question (John Dickie, “Daily Mail” )
Prime Minister and Chancellor, we read from the newspapers that you are both agreed on the objective of controlling and restructuring the Budget in the Community, but are you agreed on the means of achieving that objective?
Secondly, if the problem remains unsolved by the end of the year, are both Governments prepared to go on being paymasters to the rest of the Community?
Chancellor Schmidt
I am not prepared to pre-judge the proposals of the Commission. The Commission has been told, by decision of the Council, to table their proposals by the middle of June or so.
There are, on the other hand, some elements in the solution which I think are indispensable:
Number one: the 1%; limit as regards the Value Added Tax basis.
Number two: I have said in the last Council—and there cannot be any doubt about the strong will to stick to that statement—that I will not have any solution by which some States get unlimited net transfers and other States have to pay unlimitedly net transfers. There ought to be a ceiling for net contributions.
Thirdly, this obviously leads to a restructuring in CAP and some other fields possibly as well. I would not pre-judge those. [end p7]
I would not like to answer questions of the type: “What are you going to do if it does not work?” It has to work!
Prime Minister
Can I just add one thing.
We cannot just agree, regardless of the other eight and there is obviously going to be some hard negotiation and bargaining ahead. That is bound to be so, because the present system suits some countries and it does not suit others.
The limit I think will come which will force certain changes, the limit will come when the 1%; Value Added Tax ceiling is reached, provided we do not permit too many coresponsibility levies, which are an alternative source of income and which could delay the onset of the effect of the ceiling of 1%; Value Added Tax.
So, yes, it is going to be very hard negotiations ahead, but we are convinced that those negotiations have to be undertaken, because it is not fair for two partners—and in particular Germany—to make such very heavy contributions when other countries have a richer income per head even than the Federal Republic of Germany.
Question (Edwin Ros, “Tagesspiegel” , West Berlin)
Chancellor and Prime Minister, about the Middle East: long after the Venice Declaration on the Middle East about negotiations with the PLO being conditional on recognition of Israel's right to exist in recognised and secure frontiers, the PLO declared most solemnly in Damascus only a [end p8] few weeks ago that it absolutely refuses to recognise Israel in any frontiers whatsoever and that what it called the “Zionist entity” must be destroyed, but those Government officials in London and Bonn who guide us—whom we are not supposed to mention except as “informed circles” —they say that privately the PLO say something totally different; that what the PLO say something totally different; that what the PLO said in Damascus they did not mean—privately they say something different.
Now, Chancellor and Prime Minister, have you any evidence from your recent visits to the Middle East, that the PLO does not mean what it said in Damascus, but that it meant something different; that what the PLO said in Damascus is not true?
Chancellor Schmidt
I have never talked to the PLO people, neither officially nor privately, so I do not know what they say privately, but I would like to repeat what I said in a Press Conference in Riyadh, Saudi Arabia, in the presence of Crown Prince Fahd, as regards the PLO.
On being questioned about the German attitude towards the PLO, I said that the German attitude will depend on the PLO's position vis-a-vis Israel and especially as regards the PLO having to acknowledge the right of the State of Israel to exist within acknowledged and secure borders—or “boundaries” I think is the word. This is my position. As the German Chancellor, I welcome the chance to restate it this morning in England. [end p9]
Prime Minister
May I just add to that. I have never talked to the PLO either, so we do not know their private position. It is their public position which matters and as we said in the Venice Communique, both sides have to recognise the legitimate rights of the other, and that is for the Palestinian people to recognise the right of Israel to exist behind secure borders and Israel to recognise the legitimate rights of the Palestinian people and there is absolutely no change whatsoever in that position and we shall not get a Middle Eastern settlement until both sides recognise those, and the difficulty has been to get it occurring simultaneously.
I think possibly both of us would accept that most of the Arab States—indeed, I do not think I have ever met one that does not—accept Israel's right to exist, and indeed, would say that the United Nations Motion 242, which called on Israel to observe and withdraw to the 1967 borders by definition, must accept her right to exist.
Question
Does the PLO accept it?
Prime Minister
If I have answered a bigger question than you asked, I apologise. I will not do it in future: [end p10]
Question
I wonder if there is any point, actually, in having the Luxembourg Council Meeting so soon after the French elections and whether the two of you might not be urging privately perhaps a week's delay so that there would be a French Government more clear of its direction.
And secondly, how are you both planning to respond to Saudi requests for increased security cooperation, for instance, Tornado-type aircraft? What do you both plan to do in that direction?
Prime Minister
With regard to the timing of the Luxembourg conference, as you know, the date is fixed at the moment. We are not quite certain what the date of the French elections will be until it is fixed. If the new President of France wished to delay the Luxembourg conference, then I assume that he would ask the President of the Council to do so, and then obviously we would have to consider it, but in any event, I think there would be some point in having a comparatively early meeting just for general discussion, even if we are not able to make specific progress on specific matters. But if the new French President wishes to delay it, then I am sure we would view his request sympathetically. I think it would be for him to make the first move.
Would you repeat your Tornado question again? [end p11]
Question
It was a general point about how could both of you respond to Saudi requests for increased security cooperation and wondering whether something like the Tornado-type plane might be in that context.
Prime Minister
I believe that Saudi Arabia is not at the moment interested in the Tornado. She has just bought some United States aircraft and is not at the moment interested in purchasing the Tornado.
Chancellor Schmidt
I do not know whether I understood you correctly. It was very difficult to hear you. But I would only like to add that the Community cannot make decisions on security matters, on defence matters. I would like to remind you of the fact that, for instance, one member of the Community—the Republic of Ireland—is not a member of the Alliance. Secondly, I would like to remember you (sic) that France is a member of the Alliance but not a part of NATO, and thirdly I would like to remind you that the Tornado is not a NATO affair; it is an affair between three countries, namely, the United Kingdom, Italy and Germany, so it would never come up in the Community.
Question
Chancellor, we understand that you talked a good deal about the problems of Japanese imports. Could you say, Chancellor, how serious [end p12] a problem you think this is, both in Germany and the Community as a whole?
Chancellor Schmidt
I think it is a problem not only for the Community—we have seen the problem in other parts of the world as well, North America for instance.
I am not the Secretary of Commerce of my Government; if Count Lambsdorff was here, he would be in a position to give a more detailed answer.
My feeling is that we have some legitimate right to ask the Japanese to be more forthcoming in opening up their markets for our industrial products, whether they come from Europe or North America.
Secondly, I would like to use this opportunity to warn against any trade wars between Western Europe or North America on the one side and Japan on the other. There is nothing more dangerous nowadays as the general temptation for neoprotectionism—a temptation which at the same time comes from the firms, cooperations, entrepreneurs, from labour, from the trade unions. If we permit the world to be split up in compartments tradewise, I think we are in for a deepening of the world structural economic crisis.
Question (Israel)
Chancellor, referring to your Middle Eastern deliberations, do you feel that a German Chancellor in the generation of the holocaust has the same freedom as the Prime Minister of Great Britain when you are discussing and deciding on the European initiative, on sales of arms to [end p13] Arabs, etc.—not being killed by British armaments is more enjoyable than being killed by German armaments—do you feel that you are in the same boat as all your colleagues?
Chancellor Schmidt
We certainly are in the same boat as anybody else in the Community and we have participated in shaping common foreign policies among ourselves, among the Nine formerly and the Ten in the future, and we will continue to do so.
Question
May I ask you if the question of Namibia was raised in your review of world affairs and do you think that the new French Presidency will change the working of the Five-Power Contact Group?
Chancellor Schmidt
It was mentioned in particular between Herr Genscher and Lord Carrington, but I understand that Pik Botha shortly is paying a visit to the United States and we did not discuss the matter in detail.
Question (Johnson, “Daily Telegraph” )
Prime Minister, the threat of a Soviet invasion of Poland or some sort of intervention has somewhat receded in the past few months, I think. Was Poland touched upon to any extent in the past day or two and was this possibly because of that reason? [end p14]
Prime Minister
Touched upon, but nothing new to report.
Question ( “The Scotsman” )
Was fishing raised, and are you hopeful of an agreement in June?
Prime Minister
We are both very anxious to have a fisheries agreement. It matters very much to the Federal Republic of Germany; it matters also very much to Britain. We had hoped that we would have a fisheries agreement very soon after the French election. We still hope—and both need—a fisheries agreement urgently.
Question (French accent)
Prime Minister, at the beginning of the Press Conference, you gave your feeling about the election of the new French President, but we did not hear it properly. Would you repeat your reply?
Prime Minister
France has chosen her new President and it is for the other countries in the Community to work with the choice of France. We not only do so, we welcome President Mitterrand to the groupings of which we are both members—the European Economic Community, the Atlantic Alliance and, of course, the Ottawa Summit. We very much look forward to working with him and we hope and we believe that we shall [end p15] establish the same kind of good personal relationship with President Mitterrand that Chancellor Schmidt and I now enjoy.
Question (John Dickie, “Daily Mail” )
Very briefly, Chancellor, after Maastricht, are you friends again?
Prime Minister
“Yes, we are!” is the answer!
Chancellor Schmidt
She said so!
Question
Chancellor, why not have a European initiative on what is happening in Ireland, calling to the IRA to associate itself with what is happening? These are two countries of Europe.
Prime Minister
Northern Ireland is part of the United Kingdom, the United Kingdom is part of the European Economic Community, the Republic of Ireland is part of the European Economic Community. We are sovereign states, each of us, the United Kingdom and the Republic of Ireland and the Community does not interfere in internal matters in one another's countries. [end p16]
Chancellor Schmidt
Margaret, would you allow me to make an additional remark here, because there has been a misunderstanding a couple of months ago at the occasion of a visit of Prime Minister Haughey at Bonn. At that occasion, I said that I welcomed that the difficulties in Northern Ireland now had become an international matter. This was being misunderstood and perhaps I was at fault to use that expression. What I meant was and the sense was that I welcomed the fact that the Governments of the United Kingdom and the Republic of Ireland were in contact about it—in closer and more intensified contact—nowadays than formerly and this, I think, is a good development.