French attack on Britain sours the summit

The war of words between Britain and France about Britain's future payments to the EEC Budget reached a new pitch yesterday with the charge by a French minister that the British Government was guilty of “terrorism” by threatening to veto increases in EEC farm prices until there is a Budget settlement.

The row soured the end of the two-day Common Market summit meeting in Brussels where President Mitterrand's rejection of compromise Commission proposals left EEC leaders close to despair.

The charge of terrorism was made by the French Agriculture Minister, Mrs Edith Cresson, yesterday. Denouncing British threats to delay higher prices for EEC farmers as “a kind of terrorism”, Mrs Cresson also said “the position of Britain is a great danger for the Community”.

Mrs Cresson's angry words and President Mitterrand's outright rejection of the compromise proposals put up by the EEC Commission for foreign ministers to discuss in Luxembourg on Saturday may be no more than deliberate tactics with an eye to sceptical national public opinion.

But there was increasing gloom here last night that there would be an early settlement of the Budget or the farm prices row, and that before there was Britain and France could be heading for a confrontation which could shake the EEC.

The President of the Commission, Mr Thorn, did not disguise his gloom about the prospects and admitted yesterday that President Mitterrand's refusal even to discuss the Commission's proposals made an early settlement less rather than more likely.

“It is ridiculous that any head of government should throw out one set of proposals even as a basis for discussion without suggesting an alternative” Mr Thorn said. “We can't go on making new proposals each week. It is more than time for Europe's leaders to take their responsibilities seriously and show the necessary political will to come to an agreement.

Mrs Thatcher left Brussels yesterday happy in the knowledge that at least on this occasion, President Mitterrand rather than she was being blamed for the latest crisis. In a low key defence of Britain's Budget claims which reflected some satisfaction at French discomfiture, Mrs Thatcher said she was “disappointed” at President Mitterrand's remarks, but reiterated that there was no question of Britain agreeing to higher farm prices in the meantime.

Asked by one correspondent whether she was not guilty of stubbornness, Mrs Thatcher replied: “Yes, I can be stubborn. It is in Britain's interests that I am stubborn, otherwise they would try to palm me off with a settlement which was very much less than my judgment would lead me to accept. [end p1]

Mrs Thatcher said that anyone who had seen her advocate Britain's Budget case at other summit meetings would know that she was not “palmable offable”.

The concluding session of the EEC summit took place as some 10,000 Common Market farmers demonstrated, demanding immediate increases of more than 16 per cent in EEC farm prices.

But with Belgian security police having cordoned off the entire area around the Common Market Council of Ministers building where the summit was held, the protesting farmers were denied even a glimpse of the departure of the heads of government and foreign ministers.

The demonstration was a reminder of the growing political pressure on France and some other EEC governments to get an early settlement of the farm prices dispute.

The French Government may also try to persuade the other EEC governments to agree on farm price increases and disregard any British veto. But this would almost certainly be illegal and might open the way for Britain to withdraw from the Common Agricultural Policy with resulting savings to the British Budget contribution and consumers.

Although such an outcome would not mean the break up of the Common Market, it would open the way for the kind of “two-tier” Europe traditionally rejected by all EEC governments.

It might also then be but a short step for the Conservative Government to suspend part or all of Britain's Budget payments pending a compromise.

Given this alternative and despite the gloom here last night, the money of most Brussels professionals was on the likelihood of a settlement before the end of May.

(2) Daily Telegraph, 31 March 1982: [end p2]

Budget row Threatens EEC unity

The two-day meeting of Common Market heads of Government ended in dismay and confusion yesterday as a result of major new differences between Britain and France over a scheme to cut Britain's contributions to the EEC Budget over the next few years.

The dispute took up only a bare five minutes of the formal summit proceedings, but this was enough to expose divisions which could seriously threaten the EEC's unity in the coming months.

The differences concern a scheme aimed at providing Britain with big cash rebates from the European Economic Community over the next three years and a pledge of further concessions in 1985 and 1986.

Britain's net contribution to the EEC budget this year is expected to exceed £1,000 million.

Unless the situation is corrected, the bill could go on rising indefinitely making Britain the largest single contributor to EEC revenues.

Mrs Thatcher said yesterday that Britain was prepared to negotiate a solution on the lines of the compromise plan.

Insisting that the Government sought a fair and lasting deal, she said: “I'm stubborn. I intend to go on being stubborn and I have a lot to be stubborn about.”

Asked if she would accept a temporary delay, the Prime Minister replied: “I'm not palmable offable.”

But President Mitterrand of France said at his Press conference that the philosophy and mechanics of the proposed compromise scheme “are not acceptable to France.”

He insisted that a five-year plan was “too long” and that any rebates to Britain must be progressively reduced year by year regardless of the size of Britain's net contribution.

EEC Foreign Ministers are to discuss the plan in Luxembourg on Saturday, but with such slender hopes of success that some consideration was given yesterday to cancelling the meeting.

“It would be a very optimistic person who thought we'd get a solution on Saturday,” Mrs Thatcher said.

This view was shared by M. Gaston Thorn, president of the EEC Commission, who said the statements made during the summit had meant the Community was now even further from a solution.

“We cannot go on making a string of proposals, like pulling rabbits out of a hat,” he said.

“If the delegations are so clever, then they themselves should make counter-proposals.”

France isolated

M. Thorn's remarks confirmed a general impression yesterday that France, rather than Britain, is now isolated on the issue.

At a meeting of EEC Foreign Ministers last week, the French Foreign Minister, M. Cheysson, had said France was ready to “study” the budget plan.

M. Mitterrand's remarks at the summit clearly came as a shock and a disappointment to most delegations, but some officials thought he might have been playing to his domestic audiences.

Mrs Thatcher has made clear that Britain will not permit the EEC to raise farm prices this year until the budget issue is settled.

This has enraged French farmers, who yesterday demonstrated outside the summit chanting “Thatcher to the stake” and burning effigies of her.

Another interpretation is that France is merely staking out an extreme bargain position for Saturday's meeting and will eventually come to terms with Britain.

But either way Mr Cheysson will find it hard to retreat on Saturday.

Other heads of government generally stayed out of the row.

Chancellor Schmidt of West Germany said he had confidence in the ability of Agriculture Ministers to fix farm prices, which they are to consider today, and in Foreign Ministers to solve, the budget problem.

But broadly there was a feeling that, as Mrs Thatcher put it, “The differences are not of Britain's making.”

Time is now on Britain's side in the dispute.

In linking the budget row to agricultural prices yesterday, Mrs Thatcher made the point that the root cause of Britain's huge net contributions to the budget was the EEC's farm policy which devours 70 per cent. of the community's annual spending of £12,000 million. but furnishes only meagre returns for Britain.

The longer Britain hold up the 1982 price increases then the greater pressure on France and others to settle.

The budget dispute seriously marred the basic conclusions of the summit, which was largely devoted to an examination of the problems of unemployment and inflation.

In general the heads of government agreed that productive investment should become a matter of priority throughout the ten and in this connection they deplored the present high level of interest rates.

There will be real pressure by the community to secure lower international interest rates when the leaders of the main industrialised nations meet at Versailles in June.

Meanwhile member states have pledged themselves to improve job prospects for young people and improve vocational training for school-leavers.

Israel denounced

On foreign policy matters, the EEC leaders issued a powerful denunciation of Israeli actions on the West Bank.

Saying they were “deeply concerned by the grave events taking place,” the heads of government appealed urgently “for an end to the dangerous cycle of violence and repression.”

The communique in particular “denounced measures imposed on the Palestinian population such as the dismissal of democratically elected mayors by Israeli authorities, as well as the violation of the liberties and rights of the inhabitants of these territories which followed the measures taken by Israel with regard to the Golan Heights, and which could only damage the prospects for peace.”

This statement will create problems for Lord Carrington, the Foreign Secretary, who arrives in Israel today on an official visit.

Though Lord Carrington will represent Britain rather than the EEC, he is bound to be tackled by the Israeli Government on this apparent toughening of EEC attitudes.

The heads of government also expressed concern about events in Poland and in particular the possibility of the departure of detainees from the country.

Any pressure on those concerned would be seen as “a further deterioration of the situation in Poland and a grave breach of fundamental human rights,” they said. [end p3]

Thatcher will not give in to France

France and not Britain is standing in the way of a settlement of the budgetary crisis which is undermining the stability of the 25-year-old European community was the message today from Mrs Thatcher, at the end of the EEC summit here.

The community spirit was not an irresistible force to draw these two traditional European rivals together. Their objections to compromise proposals, due to be discussed at a special meeting of foreign ministers in Luxembourg on Saturday, remained apparently as immovable as ever. In consequence there seems little or no chance of a farm price settlement later this week.

M. Francois Mitterrand, the French President, wrecked early British optimism that a settlement of the problem might just be possible. He said flatly that the end of today's meeting that the compromise formula was no basis on which agreement could be reached. Mrs Thatcher, for her part was proudly stubborn when asked if she would give way to French pressure. “I am stubborn and I intend to go on being stubborn. I have much to be stubborn about,” she said. Was she prepared to be palmed off with less than Britain wanted? “I am not palmable offable”. She retorted.

M. Mitterrand, who at present finds himself leading a minority group of one in the Community of 10 was at pains to emphasize that in the interests of European solidarity Britian ought to be helped. But he was quite clear that any idea of helping Britain substantially for as long as the five years suggested in the compromise proposal “Cannot be accepted”.

M Claude Cheysson, the French External Affairs Minister who last week described the compromise formula as “interesting,” sat glowering unhappily by his President's side throughout the press conference. He had been subjected to a grilling lasting an hour and a half the previous evening by his fellow foreign ministers who were horrified to discover that they were, because of French objections, destined to spend next weekend in Luxembourg arguing round in circles on the problem yet again.

Mr Gaston Thorn, the President of the European Commission and joint author of the compromse formula, was equally horrified. There was a limit to the number of times he could go on producing new miracle solutions, white rabbits from new top hats, he said, “If they are so clever they can make them up themselves,” he added petulantly.

Mr Leo Tindemans, the Belgian External Relations Minister and other joint author of the formula, was also adverse to pulling out new white rabbits of ideas. Even though rabbits bred quickly, he said, there was no point in going on and on producing them.

The budget question in fact took up only two sentences of the seven-page final statement.

There was little to show for the discussions about institutionalizing the European Monetary System and Britain refused to be wooed to join it.

Strong detachments of Belgian riot police protected the Charlemagne building, where the council was held in case a march by Europe's increasingly angry farmers should disturb the deliberations of the heads of Government.

They did not get near enough to the building to hear Mrs Thatcher say that the chances were “very slight” that there would be a farm price settlement this week. M Mitterrand, however, heard of the remark and commented: “Mrs Thatcher has a great good sense.” On that point at least Mrs Thatcher would not have disagreed. [end p4]

Pledge to aid young jobless

EEC heads of government today promised to try to end the tragedy of young people in Europe leaving school only to go straight on to the dole.

At the end of their two-day summit meeting in Brussels, the 10 leaders agreed that the member states would strive to ensure over the next five years that all young people entering the labour market for the first time received vocational training or initial work experience as part of special youth schemes or employment.

The pledge followed a lengthy discussion of economic and social conditions in the community in which the heads of government concluded that the slight economic recovery likely in the EEC this year would be insufficient to stop unemployment growing beyound its present level of more than 10 million.

In particular, they agreed that modest economic growth would be inadequate to deal with the “intolerable situation” created by high levels of unemployment among the young.

Mrs Margaret Thatcher said the heads of government agreed that there was “no magic formula” to deal with Europe's economic problems. The leaders agreed that increased efforts would have to be made to stimulate productive investment and control production costs while the gravity of the unemployment problem in the EEC demand that additional quick-acting measures be taken.

The emphasis in the discussions was on action in the individual member states rather than at Community level.

“We were all very practical, and down to earth about it. We were not waving a magic wand”, the Prime Minister said: “The achievement of this council was the recognition that if you want to have increased investment, you have to cut consumption.”

The meeting did uncover a considerable unanimity among the member states in analysing Europe's economic problems, although differences remained on how to tackle them.

Britain and West Germany laid great emphasis on keeping up the fight against inflation, maintaining monetary discipline and cutting production costs. Other countries, such as Denmark, had advocated greatly increased public spending in the course of the discussions, while the socialist governments France and Greece had urged emphasis of European policies as a way out of recession.

The 10 leaders agreed that there were areas where exploitation of the “Continental dimension” afforded by the large internal market of the EEC, could be a real advantage in promoting economic recovery.

Mrs Thatcher, said a greater liberalization of services such a insurance and air transport in the EEC could help to create jobs. The leaders also vowed to press ahead with promoting high technology; industries at Community level.

But the two-day summit meeting did not consider Europe's economic problems in isolation. It was the last time the leaders of the ten will meet before the next world economic summit at Versailles in June, and international economic policy played a leading role in the discussions.

In sketching out their hopes for Versailles, they called for increased cooperation between the important industrial nations of the world, aimed notably at encouraging a reduction in interet rates and making exchange rate movements less volatile.

Japan was urged to open its market more to imported goods, while the leaders called for a strangthening of relations between the rich northern industrial countries of the world and the poor developing nations.

But with the world economic summit still two-and-a-half months away, they were careful not to adopt too stern or specifiy a negotiating posture.

Providing the United States, Japan and Canada agree, the Community is likely to be more strongly represented at Verailles than at any previous summit. It was agreed that the smaller member states should be represented by both M. Gaston Thorn the president of the European Commission, and the head of Government of the country holding the EEC's six months rotating presidency.