Ladies and Gentlemen:
We came to Copenhagen hoping that we could put to rest the problem which has increasingly bedevilled the European Community during the 1980s—rocketing spending, especially on agriculture.
As you know, agricultural spending is up from £9 billion in 1984 to £19 billion in 1987. It now takes about two-thirds of all Community money and against that background, Geoffrey Howethe Foreign Secretary and I came here to try to achieve the objective first set in Stuttgart in 1983, then reaffirmed in The Hague in 1986 and finally confirmed at our meeting in Brussels last June, namely that the Community must submit the use of its resources to effective and binding discipline—everyone now knows the words, they just come out automatically; effective and binding discipline—and to adopt regulations to keep the level of expenditure within the budget framework.
We were under no illusions that the task in Copenhagen would be easy. Bringing Community spending under control is painful for many countries, including Britain, and will become no less painful next year when we resume our discussions, but in spite of a big effort by the Commission and the Presidency, to whom I pay my [end p1] tribute for a very well-conducted Council. We have not succeeded this time round. We have, however, made progress on the basis of a constructive Presidency report which, in my view, provided the basis for the real negotiations today. We shall come back, as you know, early in the New Year and have another go.
I think we can draw encouragement from three things:
First, the argument now is not whether we should get spending under control, but how.
Second, there is obviously increasing urgency, as we get into 1988 without an agreed Community budget, to get the whole thing sorted out.
The Community will not, of course, run out of money at midnight on New Year's Eve, but once again it will have to live from hand-to-mouth on the basis of one-twelfth of the Community's £25 billion revenue this year.
And the third point: I have no doubt that our insistence on the need for effective and binding control over spending is ever more widely accepted and I also think it is infinitely preferable that we should try again in the New Year rather than go for a bad agreement or a fudged one. A fudged agreement would have been the worst possible result, because failure to face up to reality would be more damaging to the Community in the long run than failure to agree here in Copenhagen. [end p2]
So when we meet again, I hope we can record success. We had a similar experience at the meeting before Fontainebleau and at Fontainebleau we sorted out the fundamental financial problems of the Community. I hope the precedent will be followed again this time, we shall get real success based on real substantial control over spending. There has been a significant move in the right direction at this meeting at Copenhagen. [end p3]
Could I just refer to yesterday's meeting with the Irish Premier, Mr. Haughey … that you had been misreading the treaty.
What is your response to that?
I do not think I was quite misreading the treaty.
I indicated to Mr. Haughey how deeply I felt about the changes in extradition that have been made, but he indicated very firmly to me what he had said already to the Dail, that if the arrangements are not satisfactory they will be reviewed because he wants to make the arrangements satisfactory. He is as anxious that people should be brought to justice as I am and so he did give me considerable reassurance on that point.
John Farmer (The Guardian)
Prime Minister, one of the problems this week-end, it is clear, concerns the difficulty the Federal Republic has in accepting some of the demands that you and others have made on agricultural discipline.
Now, the West Germans have to take over the Presidency, in a sense arbitrating between themselves and others on this problem. Is the fact of the German Presidency not going to make matters more difficult in February rather than easier? [end p4]
No, I do not think so. We got a very long way on agricultural stabilisers—a very long way indeed—both on the cereals stabiliser and also on the proteins and the oils.
There is a very very tough oils stabiliser. There was only, I think, just one comment about that.
On the cereals stabiliser, it is much more detailed and we were working on it right up to the end and there also is the question of the threshold amount which we had wanted to be at 155 million tonnes this year, next year the same as this year, and in fact it has been put up to 158. That makes a considerable increase in expenditure and, of course, a considerable increase in funds going to export subsidies, but we were working on it and getting, I think, an overall measure of agreement.
I think perhaps the greatest success of the Copenhagen meeting is how far we got on agreement on stabilisers. There is not a lot left on the three main ones. The minor ones will have to be worked out in detail. There are still some gaps to be filled in and they will have to be worked through with the agriculture ministers.
… . (inaudible) [end p5]
No. Monsieur Mitterrand got a little bit sad towards the end and I did remind him of the precedent when we had had a very difficult meeting in Brussels—very very difficult indeed—and no-one thought we would ever reach agreement and the atmosphere was very difficult—which it has not been here—we then went to Fontainebleau and we did not even know whether we would get through at Fontainebleau. He himself had chaired it brilliantly and we came through to one of the historic agreements.
I think that the very detailed discussions we have had this time have helped us all. If you look at both the Presidency compromise, which none of us could accept as it was so we were going through it, and also the Presidency draft conclusions—if you look at those in detail you will realise the extend to which heads of government as well as foreign secretaries were dealing with intricate technical details. Of course, it takes you a time, but at this Copenhagen meeting the time spent has been well spent, the atmosphere very good, and it does give us a very good basis, I hope, for agreement in the coming eight or so weeks.
Richard Owen (The Times)
Prime Minister, you said the atmosphere here was not difficult and we have heard that from other people. To what do you attribute that?
Secondly, you are accentuating the positive, but nonetheless [end p6] a lot of people in Europe will be very disappointed by the results of this meeting. Would it be possible for you to identify for us the main obstacles and perhaps the countries which in your view caused those obstacles?
No, I am not going to identify countries which had particular problems.
Most of us had some problems with some things in the Presidency compromise. We all knew, as we gradually went through it, we had to look at the thing in total when we had been through the lot. We did not get through the lot, but everyone would reserve their position until they could look at it—some more interested in the structural funds, some particularly interested in the agricultural stabilisers, some particularly concerned with the method of financing with the new own-resource, the fourth resource—we had about two hours of real technical stuff on it. So everyone had some problems and some things on which they could agree.
I think the atmosphere of the place we were meeting was very good, the hall, the old warehouses. I have been here before. We always have a good meeting here, and a lot due to Poul Schluter. He really is a very very good chairman and, again, there was a great deal to discuss. So yes, we have still a long way to go, but in [end p7] life it is best to accentuate the positive. You are quite fortunate if you like to look at it that way, aren't you? You should see some of the real problems we have to deal with, when you get down to some of the real international political problems, when you get down to some of the Third World problems, when you get to some of the tragedies.
You know, you are quite lucky! Smile! So am I!
Question (Very Faint)
Mrs. Thatcher, with so many promises made and tomorrow Sunday, surely … . some time tomorrow perhaps to press forward for a final agreement.
… . disagreements you are admitting is nothing that you could…tomorrow… .
There were still quite a number of things to discuss, but I think we felt that it would be best to have a gap, to have further discussions with our own ministers and often we find that with two or three of us meeting together we can sometimes unblock a problem or reach a compromise, and I think we thought that we were more likely to do that if we went away and came back and did a lot of intervening preparation than if we tried to go through this time, when we felt the chances were that we would not reach an overall settlement. [end p8]
Prime Minister, are satisfied as a result of this meeting that the British rebate of its contributions to the BBC budget will remain unchanged in future?
The Fontainebleau mechanism will have to remain substantially unchanged. In the Commission last paper that came in, we could not have agreed with the last part of it because it said that the Fontainebleau mechanism would be reviewed.
The Fontainebleau mechanism will have to stay. The Fontainebleau mechanism is linked to the own-resources, 1.4 percent VAT. The 1.4 percent VAT cannot be changed except by unanimity and so we are totally unlikely to agree to any mechanism which is worse than Fontainebleau and very much likely to agree if the mechanism continues as it is now.
If you get a fourth own-resource, then it needs just to be modified to enable it to have the same effect—the language modified, but the effect the same.
Prime Minister, given what you say about the progress made on stabilisers, what in your judgement is the most serious sticking point now? [end p9]
I think there are two quite big issues to be solved.
One is the level of the structural funds and the other is the level of the new own-resources. The latter, of course, will depend on totting up the cost of the agricultural stabilisers and the thresholds and the agricultural guideline as well as the structural funds themselves.
There are also a number of other things:
There is a clause, as you know, on exceptional circumstances. Some of us feel that the exceptional circumstances should be very very strictly limited, otherwise it would undermine the strict financial discipline, and some of us—indeed many of us, I think—would like that limited only to the exchange rate problems caused by the dollar and then, because you do not want your guideline to go constantly up and down with exchange rates, we think that there should be no change, some of us, unless there is about a ten percent change in exchange rates after that…it would trigger exceptional circumstances, but we should not widen that clause, otherwise the financial discipline will not have any effect. But that is one of the kind of more detailed things—detailed but quite fundamental—that we were dealing with. [end p10]
Prime Minister, can I ask about the talks with M. Chirac yesterday discussing the hostage release?
Are you now satisfied that Britain and France share the same philosophy in refusing to deal with kidnappers and refusing to sell arms to terrorist groups?
Secondly, could you confirm some reports that we have been hearing that you have apologised to M. Chirac about the way that he has been treated… .
I made it quite clear to Mr. Chirac that I had said nothing whatsoever about the way France had dealt with the hostage situation. I had made no comment about it. If there was anything said about France, it was for France to answer any of the questions that were raised and nowhere—neither in Parliament nor anywhere else—had I said anything about the hostage situation.
You can look at that in Parliament. I said in Parliament what was our view towards dealing with hostages and also I made it quite clear to him that on many occasions—and I repeated—we thank the French Government for its cooperation on terrorist matters. They apprehended the “Eksund” which prevented many many weapons getting to the IRA and we have very close cooperation with France on terrorist matters and we are very grateful to them. [end p11]
Now that is all that I have said. There have been other quite heightened reports in papers. There is the customary “Maggie furious!” . It is the only emotion I am ever permitted. I very rarely am furious as you probably can see. I usually take things very calmly, and I have made no other comment.
Mr. Chirac assured me, as we were then talking about it, no ransom money had passed for the hostages, nor indeed had there been any supplies or promises of supplies of any weapons whatsoever to Iran, assurances which I accepted.
You were not furious. Were you also not apologetic to him?
What I am supposed to be apologising for?
For the way in which the issue was discussed in Britain.
But I did not discuss it!
So you did not apologise? [end p12]
And you would not except me to apologise for what the press did, would you? (laughter) You are free, as I know only too well!
… . (inaudible but regarding meeting with Mr. Haughey)
It was a very good meeting because I explained to Charles Haugheyhim how very strongly I felt that the extradition arrangements had been varied—how very strongly I felt about it—and he indicated that he understood the strength of my feeling and that he had made it clear that if it did not work to secure the necessary extradition, the matter would be reviewed.
But the Anglo-Irish … .
The Anglo-Irish Agreement continues. [end p13]
Prime Minister, you have been meeting at a time of great momentous events in world affairs, the Gorbachev-Reagan summit, the collapse of the dollar, the world financial crisis.
Do you feel any damage has been done by the fact, for instance as I understand it, no political statements on these and other questions have been issued unless … . a decision has now been taken…I stand corrected… .excellent! (laughter)
We were told earlier that it would be not thought appropriate to issue the statement …
Even politicians change their minds sometimes!
Do you feel you have had enough time to discuss the global economic situation … .?
Yes we did.
…and what conclusions did you come to about the action that Europe should take? [end p14]
We did discuss the financial situation at dinner last night, before dinner, and then we discussed the Reagan-Gorbachev meeting, the INF, the arms control and the relationship between East and West and Afghanistan after dinner. You will find the conclusions on the political texts after dinner in the texts.
I think that as far as the financial situation is concerned we will be very pleased and very relieved when the United States has fleshed out the agreement that has been reached. I think that must happen by 18 December.
I think that we are all of us aware that the stock exchange fall might lead to less expenditure, both on the part of individuals and companies, which is something obviously which we are watching very carefully.
We were all pleased that we had quite close cooperation this week on reducing interest rates, which did show the kind of cooperation which we felt should happen, and also, as you will know, frequently when we have discussed economic affairs in the Community, as well as in the economic summits, we have made it absolutely clear that the first requirement is for each country to run its own economy well and soundly and to keep down inflation, to encourage enterprise and to have as small a budget deficit as possible. When you do that, that is the maximum condition under which you can get cooperation. Unless each country keeps its own house in order, then no amount of international cooperation can overcome that. [end p15]
Do you think the Germans should keep their budget… .as low as possible?
The Germans are keeping their own financial house very much in order, as they have done for many many years.
Prime Minister, as you can see I am smiling—I usually I am.
Look what I have achieved!
If I could just pitch this forward rather than backwards, to look ahead to your meeting with Mr. Gorbachev on Monday… .could you just say a few words about what you hope to achieve at that meeting and why you think Mr. Gorbachev is calling on you before going to see Mr. Reagan?
I am obviously very pleased Mikhail Gorbachevhe is calling. I think that we have a very good relationship between the Government of the Soviet Union and the United Kingdom. We can discuss things in a very [end p16] frank and very constructive way. I think that helps both of us and I think that is perhaps why he is coming this time.
I think I would rather tell you about it afterwards than before.