Speeches, Interviews & Other Statements

Complete list of 8,000+ Thatcher statements & texts of many of them

1981 Jun 30 Tu
Margaret Thatcher

Press Conference after Luxembourg European Council

Document type: Speeches, interviews, etc.
Document kind: Press Conference
Venue: Kirchberg Conference Centre, Luxembourg
Source: Thatcher Archive: COI transcript
Journalist: -
Editorial comments: 1305. The tape ended before the completion of the press conference; it is not clear how much is missing.
Importance ranking: Major
Word count: 4926
Themes: Agriculture, Economy (general discussions), Industry, Monetary policy, Energy, Public spending & borrowing, Taxation, Trade, European Union (general), European Union Budget, Economic, monetary & political union, Foreign policy (Asia), Foreign policy (Central & Eastern Europe), Foreign policy (Middle East), Foreign policy (USA), Foreign policy (USSR & successor states), Foreign policy (Western Europe - non-EU), Law & order, Northern Ireland, Terrorism

PM

Ladies and Gentlemen, I assume you heard Mr. van Agt 's summing up of the conference.

I had perhaps better give you one or two matters upon which you can question. Obviously the main new matter from the conference is the initiative on Afghanistan, and that is a European initiative, and Lord Carrington will be going to Moscow on Monday to discuss it with the Soviet Government, and we wish that initiative all success. The main subject obviously with regard to home affairs was the economy. We're all concerned about three things—the levels of unemployment, we're all concerned about inflation, and we're all concerned that we would like interest rates lower because that would be conducive to more investment. There is something of a difference about how each nation can in fact cope with these matters because each nation is in a different position. Some have a strong balance of payments position, some have a weak one, some have low inflation, some have high inflation. The degree of unemployment varies, but I think all of us have a worrying degree of unemployment, save perhaps Luxembourg and Greece. And we agree that while our objectives are the same, the methods of reaching those objectives have to be worked out nation by nation according to their own background, for example, nations that have had a very orthodox financial policy and therefore have an extremely low deficit as a proportion of their gross domestic product can do things which the rest of us can't. And indeed there was very considerable agreement between the German Chancellor and the Italian Prime Minister and myself and Belgium that we must do nothing to increase inflation because that in fact would not help our unemployment position. It could make us less competitive, and if we become less competitive, then it's not long until we get even higher unemployment. So we all agree very firmly that we really must fight inflation as a way of getting more jobs. France, as you know, takes a slightly different position. She has a very, very small percentage deficit, and she in fact thinks that she can increase demand by the classic way of increasing her budget deficit—I can only point out that when she's done everything she intends to do, for her percentage of deficit related to her gross domestic product will only be 3%;, whereas ours is already 4½%;, and therein of [end p1] course lies one of the differences between us which comes from the complex of our own financial and economic policies in the past. So although we have common objectives, we recognise that in the first place Governments themselves must correct their own position—and the means will be different in France, Germany, Italy and various other places. Now I think the other thing that I might say a little bit about is how we hope to tackle the Presidency which we take over from tomorrow. Obviously, the main problem we'll have to deal with is the restructuring of the budget. We have a paper before us from the Commission. It is not as fundamental as I would have liked to have seen. It'll take some time to tackle this subject because France has made it clear that she'll not be ready to discuss the substance of it for some two months. In the meantime we really must get all of the figures and issues clarified through the Commission, and we shall do that. That will be problem no. 1, in priority. We also of course have to complete the negotiations over a Common Fisheries Policy, and that is extremely important to the United Kingdom, and I hope we can pursue that very urgently. We also have to try to complete the Common Market. As you know, we've not yet got a Common Market in services. Insurance, air fares, all of these things in which we in Britain happen to be very good indeed—we've not yet got agreement for Common Market policies on these things. We will also want to make a contribution to advancing enlargement of the Community between Spain and Portugal. We shall not of course be able to complete it during our time, but perhaps we can make progress towards enlargement. We will need to make our contribution to a Middle Eastern settlement in conjunction with the United States because the Camp David process is not yet complete. We will also have to try to deal with the situation through the Community, the situation which faces us with regard to problems arising from Japanese trade. Most of us feel very strongly that we do not have the same access to the Japanese market that they have to ours and we also feel that the way in which the Japanese tackle some of our markets with selective concentration in certain sectors does in fact put some of us in very considerable difficulty, and we will have to consider these matters further at Ottawa and, of course, we've already embarked upon renegotiation of the Multi-Fibre Agreement—again a very important matter to the people of the United Kingdom. [end p2] But we have such enough to be going on with. So I first asked Lord Carrington to say a word about the Afghanistan initiative and then we're open for question—Lord Carrington.

LC

Well Prime Minister, I don't know if there is very much more to be said about it because it has been so thoroughly leaked over the last week or so. But the idea is that the time is now right to have another attempt at getting a settlement in Afghanistan which will be satisfactory to everybody, a two-stage conference—a conference divided into two stages. First to discuss the external affairs, intervention and so on and then the second stage with the representatives of the Afghan people and we have made preliminary soundings round the world about whether this is considered to be a good idea and possibly profitable in the sense of being successful. And it has been generally speaking very well received round the world and as the Prime Minister said I shall be going to Moscow on Monday to talk to Mr Gromyko. Of course he already knows about this but obviously will want further details of what we have in mind.

PM

Right now questions.

John Dickie of the Daily Mail

Are you confident Prime Minister that the time is now right for Lord Carrington to achieve the sort of success he made over Rhodesia this time in Afghanistan?

PM

I think its a mistake to mention the two things really in the same sentence. Rhodesia was very different, we had total responsibility for Rhodesia because we were after all the old colonial power. We were given total responsibility to carry forward in our own way, the two situations are totally different. The fact is that we just cannot leave Afghanistan as it is. There can never come a time when the occupation of Afghanistan is acceptable to the Western democracies. If that is so we have to try to make some effort to resolve it and I am happy that now is the time to do that, particularly happy that it falls during our Presidency and is Lord Carrington 's initiative.

John Brown

Prime Minister—I wonder if I could ask you a question about the prospects for the Middle East settlement in the context of what we understood President Mitterrand said to you at breakfast [end p3] this morning. We understood he cast some doubts on the relevance of the Venice Declaration as the best way of proceeding with the Middle East initiative and had ideas of his own. Do you think this French reserve on the Venice way of proceeding is an obstacle for Lord Carrington 's mission?

PM

I think it is more a matter of words than a matter of substance. The comments fell upon the phrase a comprehensive settlement. Now we know full well that we're not just going to get a comprehensive settlement. When you read the Venice Declaration, and as you know its mostly about the Palestinian question and, of course, that would make a very very important contribution for a full and final peace settlement. But I don't think any of us thought that we could at any time settle the whole thing immediately. So I would not say there was very much difference in the approach.

The Times

Following that up Prime Minister, are you confident the French Government supports the association of the Palestine Liberation Organisation in the peace process?

PM

The Venice Declaration was not that we should negotiate directly with the PLO but that the PLO should be associated with the settlement. That was the phrase reached by the whole of the European conference and, of course, approved and signed by President Giscard. I do not think that M. Mitterrand is going back on the Venice settlement.

Financial Times

Prime Minister, [inaudible]. Mandate by the Commission, I wonder if you could clarify that?

PM

If you look at the Commission report on the mandate it really has a number of proposals which take into account our own special position with regard to agricultural expenditure. It does not go into what I would call an equitable distribution of the burden of financing Europe. And I myself think that we shall have to go into that. I don't think we can continue with Germany being very much the bigger subscriber knowing full well that there are other countries whose income per head is even greater than that of Germany, you're in a beneficiary position. And if we try to go that [end p4] way and don't take that factor into account I think there would come to be the kind of resentment felt in Germany we began to feel over our very big contribution. If you are going to have a really true partnership I really think we must settle things on the basis of equity between partners, and I believe we will have to look into that aspect which is not yet dealt with in the Commission paper.

Question

[Question] Prime Minister—If I could ask you about the interest rate issue the reference in the final communique to “US meaning to have regard for its international trading partners in its monetary policy” but concretely what would you expect to say to President Reagan at Ottawa along with your Community partners on this issue?

PM

Well I think we will just have to wait until we get to Ottawa. The fact is that most of Europe's problems arose before the United States had high interest rates; unemployment was sharply rising, that was because of world recession, secondly because we have a number of structural problems in Europe and those structural problems have absolutely nothing to do with the United States interest rates, nor does the world recession. We also have to recognise, which we dealt with in discussion, that the whole pattern of world trade has changed. And its changed in a way which affects some of the old industries in Europe very greviously. Many of the things on which we rely for jobs and standard of living are now produced in the newly developed countries, in Korea, Taiwan and Singapore, and remember of course Japan. The whole electronics trade tends to have moved away from us and to those countries. Now that's got nothing to do with the United States interest rate. And what we have to do is to tackle these underlying things; we did think that there was a little bit more hope at the moment from the viewpoint of coming to the end of world recession because its the first European Council which I've attended when we haven't faced almost automatically an increase in oil prices, a dramatic increase in oil price almost from alternate month to alternate month. Now if that can be kept stable it really does give a sign of hope. We may have a chance to do all the other things; structural things we must still deal with, because as far as interest rates are concerned Mr Reagan did get through quite a package of public expenditure cuts in a way which some us rather envy. [end p5] I think one or two partners really put a little bit more emphasis on the interest rate than I did. But you know when you come back to it, they do realise that our problems arose and indeed have matured long before there was a high interest rate policy. And now they have got through their public expenditure package well, of course, they are not relying on a monetary policy only. They are also going to reduce public spending. And that phrase will not be unfamiliar to you.

Irish Times

Lord Carrington mentioned that soundings had been taken throughout the world and had been well received about Afghanistan. Does the rest of the world include Moscow or is it not the case that the Russians so far have been sceptical about the proposal for … or is it to try and change the minds of the Russians?

PM

Not quite try to change the minds of the Russians, to consider the proposal with them.

Lord Carrington

That's right. I don't think that immediately it was regarded by the Soviet Union as being a solution which they couldn't accept. But they didn't reject it, and it will be my hope that I can explain more fully what we have in mind and consequently it will be acceptable.

Question

inaudible

PM

Taking the last point first, I must tell you absolutely frankly that budget matters take longer to resolve than one thinks when one embarks upon them. After all it took us quite a long time to resolve one particular matter concerning Britain,—I think it took about three Councils, and then a final go at the Foreign Affairs Council. The important thing is that we must get as far as possible during our Presidency. The procedure is as good as can be expected bearing in mind that we have certainly three new Heads of Government and we don't know quite what will happen to Ireland. Three new Heads of Government at this particular conference. The procedure is that we get cracking on finding the facts, and clarifying the issues, and getting all of the figures [end p6] from the Commission, and we do get through the Permanent Representatives Organisation in two months. After two months we set up a different organisation in which each of us nominates one particular person of Ambassadorial rank—it could be our own Permanent Representative at Brussels or it could be someone else—actually to negotiate on the substance of the budget restructuring. The whole thing will be carried out under the aegis of the Foreign Ministers Council and they should indeed have some proposals to put to us in November. I must tell you that I think you would be slightly optimistic to think that the whole matter would be resolved during our Presidency, particularly in view of what I've said earlier, but I think we ought to have a very fundamental look at it. We will hope to get it very very far on the road.

Question

Have you discussed during your meeting with M. Mitterrand this morning the problems of the Common Fisheries Policy, and if this gave you any hope that the problems could be settled within the next months.

PM

I am always concerned to get the Common Fisheries Policy settled. I could not possibly see the French President without raising this matter. I wanted it settled at Maastricht, as you know, and thought that it was within our power to do it. I did put that forward as one of the most urgent things that we have to resolve, and I hope that we shall have the cooperation of the French Government in trying to get a satisfactory solution. It is a matter which I regard with considerable urgency, and I did raise it.

Question

Japanese Government …   . did you succeed in unifying your plea?

PM

We agree that we should negotiate with Japan as one unit. In the meantime, until that is completed, we have of course to continue with our voluntary arrangements. We have one on cars. Germany, I understand, has one. France has only about 3%; of Japanese cars in any event, and Italy had agreement with Japan which pre-dated the Treaty of Rome. We believe now that we should [end p7] in fact negotiate with Japan in the normal way that the Community negotiates as an entity, and of course the Commission has set up a surveillance of the important Japanese goods. And that's been in operation for some time now.

Question

(supplementary) What do you see as the incentive for the Russians to withdraw their troops from Afghan now, and what guarantees do you think we can offer to the Russians that there would be other intervention later?

PM

We're trying to have the first conference to which Lord Carrington referred to resolve that matter. If the Russians really do wish to withdraw from Afghanistan on the understanding that Afghanistan will be—can return to her previous status—then one would like to give her an opportunity to do it. If she doesn't, then we wish totally and utterly to condemn, and will continue to condemn the continued occupation of an independent country by the Soviet Union.

Lord Carrington

I think it is possible that the Soviet Union might wish to withdraw for two reasons. First of all because they are in some difficulty in Afghanistan militarily and in other ways, and secondly, the action of invading Afghanistan has proved to be exceedingly unpopular with the Third World. They have got a great deal of blame for it. And I would have thought that if a solution could be arrived at which is satisfactory both to the Soviet Union and to the Pakistanis, the Iranians and everyone else, it would be to the advantage of everybody, and I think there is a chance that one might be able to do it.

Question

To resolve the Gibraltar question …   .

Lord Carrington

As the questioner will know, I signed an Agreement in Lisbon about the opening of the border between Spain and Gibraltar in April of 1980, and this Agreement has still not been put into effect by the Spanish Government. I hope very much that it will be put into effect as soon as possible because I don't believe we can take the question any further until that agreement has been honoured. With regard to the entry of [end p8] Spain into NATO I think our views about that are very clear. We welcome it absolutely.

[Question]

Prime Minister—Did you discuss Poland and the question of financial aid to Poland at all?

PM

No, not in full session no. It had already been dealt with in another forum. The Foreign Ministers might have had some words about it but it's very delicate at the moment.

[Question]

Prime Minister may I ask you about your impressions about M. Mitterrand, and do you think a change of Government in France is maybe a change for Europe?

PM

I had an hours talk with M. Mitterrand this morning. I didn't mention it because news travels fast and I assumed you already knew. I very much enjoyed it and we got on very well together and we had we had what is the customary phrase of full and frank discussion about the issues which concern us both. We got on very well together.

[Question]

Prime Minister, we understand that Chancellor Schmidt was concerned about …   . inaudible

PM

On the stand of Chancellor Schmidt was concerned about coordinating. But Chancellor Schmidt was the first to recognise that conditions vary from one country to another and that each of us have to try to put our economies in order so that we can achieve our objectives of reducing unemployment. Therefore, I find this question somewhat surprising. After all Germany, I think, has had one of the most successful economic policies in the Community, low inflation, much, much lower unemployment; she's been hit very badly by the oil price increase and has an adverse balance of payments position. She reckons she must correct and that if she were to increase inflation it would make it the more difficult to correct that balance of payments.

Question

But what you suggested earlier was a country, France, worsening its deficit situation to expand. Is that a direction you think countries should go or have to go? [end p9]

PM

If you look at the tables of the economic position of each of the Member countries you will find that France has for some time and up to now has a particularly low budget deficit. She has always, if one might say so, a very orthodox policy. She's covered her expenditure by her taxation. Indeed if I were to have levels of indirect tax on some things France has I would be accused of being reactionary. There is in fact as you know a Value Added Tax of 7%; on food. There is 17½%; Value Added Tax standard and of course 33%; or something like that on luxuries. But France has always had this orthodox budgetary position certainly for a very, very long time. She covers her expenditure by her taxation therefore her deficit is only of the order of 1½%; of her GDP. But that does give her a possibility which we haven't got. We have not had a balanced budget since 1970 and this year. I'm trying to be a little bit more conservative with a big C, the budget deficit is still of the order of 4½%; so in a way I could say that if you are urging me to go the way that France is going I would be reducing my deficit because I would not wish to put Value Added Tax or anything like that on food, or to increase the Value Added Tax to their level. I am not sure that that is the answer you wanted but it's interesting in any event.

Question (Economist)

Prime Minister, you indicated that you were dissatisfied with … [inaudible] proposals which didn't take account of the large contribution that Germany would pay. Did Chancellor Schmidt have anything to say about this during your discussions?

PM

We did not discuss the budgetary structure in any substance because we recognise that France is not ready to do so. We are not limited in our considerations of budgetary structure by any document that the Commission has put forward. I think we have a duty to try to approach the problem in such a way in which we finish up with an equitable solution. When you are dealing with partners in good faith you must finish up with an equitable solution. You know what the problem will be, I know what the problem will be. It will be of those who benefit substantially from the present budget arrangements will naturally plead that they are in accordance with the Treaty of Rome and that they stand by the Treaty of Rome. It isn't so much that it's that they benefit from the budget arrangements. Those of us who in fact pay heavily, and Germany pays by far the most heavily of all; we also have a fairly large contribution, We have to say, look if that gives inequitable [end p10] results we must deal with the inequity in the terms of today's conditions. But this was not foreseen at the time when the arrangements initially were made and I really must say that I do believe in having an equitable arrangement between partners and I don't think it would be conducive to the future health of the Community if Germany were to go on paying enormously higher contributions than any other member. And I am concerned with the long-term health of the Community. I am not constrained in any way by the limits which we have so far seen from the Commission paper.

[Question] (Daily Telegraph)

—Does this put the pressure on Britain to join the European Monetary system and has your own view on this …

PM

It wasn't mentioned, and indeed I don't think we can. I would not even know at what level of exchange to go into the system, and the fact is that our exchange rate is a good deal more volatile than the others for reasons of which you'll be aware.

Question

inaudible

PM

Yes, of course. Delighted.

Question

Most important … that is contained in the Venice Declaration …   . Camp David … so far as we know, the Reagan Administration has only come up with one formula which is so-called strategic consensus …   . Soviet influence in the area, and are ignoring the crux of the matter …

Lord Carrington

I don't think that any of us know at the present time exactly what the US policy will be because they are clearly awaiting the result of the Israeli election of today, and I think that they are quite right to do so …   . we should ourselves have a much clearer idea of where we can go.

Question

Mr. Haughey wasn't present, but issuing a statement yesterday calling on you to take a fresh move on the H blocks. What's your reaction to that statement? Secondly, what's the future of Anglo-Irish relations after today's election in the Dail? [end p11]

PM

Well now, with regard to Ireland and Britain, We had two bilaterals, one in London and one in Dublin. I assume we'll have future bilaterals as we usually do with our partners in the European Economic Community. I don't think one can go further on anything else until one knows what happens today in Dublin. We have made our position with regard to the hunger strike very clear indeed. We do not wish it to continue. We hope that every effort will be made on the part of those who are encouraging them in the hunger strike to ask them to desist. And I can only point out that the prison regime in the Maze is one of the most liberal the world over, that we have done everything the European Commission on Civil Rights asked us to, and that no one in the Maze has made a further complaint to the European Commission on Human Rights, and if they did we'd give the Commission every facility to investigate it.

Question

…   . Afghanistan, and particularly last night's leaking of Lord Carrington 's planned visit …

Lord Carrington

I don't think so, but it'd be very nice for all of you.

PM

I don't know. I think it came too late for the Press and the radio got it.

Question

In spite of the differences of economic circumstances between the states that you've referred to, there does seem to be a fairly wide consensus among your colleagues that the Community should play a more active role in encouraging selective investment in certain key areas in technology industries, energy and so on. How far down this road do you want to see the Community go?

PM

There was a very very good paper on this. Last time we were in Luxembourg. An extremely good paper which pointed out the extent to which the new technologies have moved away from Europe to places like Japan, Singapore, Taiwan, and I would very much like there to be more investment in these matters because this is where our future lies, and this is where our future jobs lie. We did agree that if we're to have more in investment [end p12] we have indeed to have less in consumption. You simply cannot have it all ways, and I would prefer myself less current expenditure, less in consumption, to get more in investment. The kind of investment we want is the productive investment. We believe that this is where the productive investment lies. As you know, in our own country there have been times when we've had a lot of investment, and the difficult thing is that we've not been able to get a full and proper return from that investment, and that has delayed in my view a greater investment. And also, again as far as Great Britain is concerned, profits have gone right down, and profits are the source of investment for the future. So that's a problem that we have to try to …   .

Question

inaudible

PM

The Commission doesn't woo the Community. We are not limited by the Commission's proposals, and that is one of the points of having a two month period in which we can find facts, clarify issues, and get facts perhaps on other ways of solving the problem. I don't see any difficulty in that at all.

Question

inaudible

PM

Yes indeed, but I'm not the only person who's talking about my approach. I come back to it again and again. Our budgetary position and the rules which I apply to Great Britain I expect to try to apply to other countries as well. You must have equity between partners, and if you don't, you will be fostering sources of friction within the Community, and I think it's better to diminish the friction and increase the cooperation, in the sense of equity that we're all getting a fair deal. It's always been my position, it is my position, and we'll have a look at the budget with that in mind. [end p13]

[Question]

Prime Minister, I take it that this is a very major initiative—an attempt in fact to bring Russia back into contact with the West. What is the indication do the Russians regard in any way favourably the present initiative on the subject of Afghanistan?

PM

You're right—it is a major initiative. We've continually condemned Soviet occupation of Afghanistan. It is unacceptable, and will continue to be unacceptable. Therefore we've got to try to do something about it, and there seemed to be a vacuum about what to do. Lord Carrington 's been working on this for some time. He's talked to one or two other Governments about it. It's been endorsed by the European Council. I don't know what reception it will receive in Moscow. I don't see how we can possibly know until he's talked to them …   .

(Tape Ends)