Speeches, Interviews & Other Statements

Margaret Thatcher

Speech to Borsen Executive Club

Document type: Speeches, interviews, etc.
Venue: Copenhagen
Source: Thatcher Archive: speaking text
Editorial comments:
Importance ranking: Major
Word count: 4770
Themes: Conservatism, Monetary policy, Trade, Economic, monetary & political union, Foreign policy (Central & Eastern Europe), Foreign policy (USA), Foreign policy (USSR & successor states), Foreign policy (Western Europe - non-EU)

Introduction

It is a great pleasure and a privilege to address this distinguished audience.

A pleasure because you have made possible my first private visit to Denmark. Previously I have come in connection with the Heads of Government Summit of the EEC. Like today's visit they too usually fell in the winter months! In that context may I say that I worked for 10 years with Paul Schluter. He was an able and highly respected colleague.

A privilege because it enables me to pay tribute to those who like yourselves create the wealth of nations which some politicians spend all too freely. [end p1]

A privilege too at this particular time when Denmark and the United Kingdom are bracketed together in that our peoples seem to take a similar approach to the Maastricht Treaty, considering its implications carefully before taking a decision which will affect our whole future.

It is true that our first encounter in 789 A.D.—when Danish long boats attacked the coast of England at Dorset—was perhaps not the most auspicious. And later the word ‘Danegeld’ came into our language, as the Danes plundered our coasts. [end p2]

As one of our poets Kipling wrote:

“You never pay anyone Danegeld No matter how trifling the cost For the end of that game is oppression and shame And the nation that plays it is lost”

As always Kipling 's warning—never submit to threats or you endure endless humiliation—is relevant to today's problems.

The similarity of our approach to Maastricht is no accident. The peoples of both our countries are outward looking. [end p3]

As maritime nations we are both used to trading well beyond the confines of today's European Community.

Of great significance too is the value we both place on our own systems of Justice and of Parliamentary Government. It was as far back as the thirteenth century that our Magna Carta and your decree of King Eric first expressed the rights of man and protected him from imprisonment without trial. Today our law courts which, are independent of politics, administer laws which are consecrated by time and custom, or which were made by a freely elected Parliament answerable to the people. That is the basis upon which obedience to the law is required. [end p4]

With such similar traditions of Crown, Law, Parliament and people we look at the nation state from the same perspective. We also appreciate the importance of character, culture and history and are wary lest our centuries-old institutions should be undermined irrevocably.

Europe—the Political Choice

We are now faced with the political choice between two visions of Europe. [end p5]

First—a Europe of nation states based on the idea of co-operation between independent sovereign states, linked in a single market with their own currency, and competition between their economic and tax systems.

Second—the federalist vision, whose peoples are united by common citizenship, harmonised by bureaucratic regulation, equipped with common monetary and economic policies and a single currency administered by a Bank not answerable to the people, having common foreign and defence policies and acquiring all the flags, anthems and symbols of nationhood. [end p6]

It was the first vision that inspired the post-War international order and led to the formation of the United Nations, the IMF and the GATT—separate nations with unity of purpose. In such a world, multi-lateral and non-discriminatory, a small nation had nothing to fear because it was small—its independence was unimpaired.

This kind of Europe would accommodate the countries of Eastern Europe and give them reasonable stability. It would maintain and not jeopardise our relations with our great friend and defender the United States without whom our future is not secure. [end p7]

But some people object to this vision: wrongly, they equate nationhood to nationalism which they argue has been responsible for many of the world's troubles.

But the concept of nationhood is as old as the Bible itself.

“Righteousness exalteth a nation” (Prov. 14, v 34)

Moreover, national pride in combination with liberty and the rule of law powerfully strengthen democratic government. The vital ingredient of democracy—public opinion—can then come into being. [end p8]

People will consent to be governed and accept common sacrifices most readily when they feel themselves to be part and parcel of one another, with a shared history, similar institutions and loyalties, above all a common language and culture.

It is when nations fall under the sway of a tyrant who exploits hatred and racialism that things go wrong. But, as we discovered earlier this century and in the Gulf War, it needs nation states to defeat the despot. The Security Council passes resolutions but nations do the fighting. [end p9]

However, we must not confuse the nation state with whatever unstable status-quo happens to be at hand. There were those who wanted to retain the Soviet Union as a structure, as others wanted to keep Yugoslavia. They were wrong. Both of these were held together by suppression and an ideology that denied the sanctity of the individual. What we are witnessing today is the collapse of Communism and of states put together artificially, with no real roots and precious little freedom. The fact is, we have now seen the collapse of both the Versailles and the Yalta Treaties. [end p10]

Yugoslavia must rank as one of the world's worst experiments in federalism. We should by now have learned that national sentiment cannot be created by bureaucratic fiat.

The conventional objection to the nation state approach is that it creates a multitude of economically inefficient small states. But free trade under the GATT creates its own economic network regardless of the size of the nation. Taiwan, a nation of 20 million, is a bigger creditor nation than China—or for that matter the United States. With international free trade you can have both small scale political decentralisation and large scale economic efficiency. [end p11]

(Indeed Switzerland has the highest income per head in Europe, according to the Economist Intelligence Unit.)

People then enjoy the stability of their own nationhood, the benefits of free trade and local and international co-operation.

When it comes to currency matters as events last September demonstrated—fixed exchange rates between countries with vastly different economies and problems just won't work; and the suggestion that they could, especially in today's circumstances, has led to deeper recession than we need have suffered and to turmoil in the markets—not to mention loss of reserves.

But at least under the ERM there is an escape hatch which would not be the case with a single currency. [end p12]

We should not blame the Bundesbank for carrying out its statutory duty of protecting the DM by high interest rates. But as the ERM transmits Germany's interest rates to other countries when their need is for a low interest rate, the answer has to be to realign or to leave the system. And there should be nothing unusual or shameful about that. There is no substitute for each nation taking responsibility for running its own economic, monetary and fiscal policy and being answerable through its own Parliament. After all, if Germany can control the money supply—surely our own banks and treasuries are capable of doing the same. [end p13]

I wonder why some people contend that every new European initiative requires the participation of all members of the Community? It will sometimes be the case—especially after enlargement—that only some Community members will want to move forward to another stage of integration. An enlarged Community can only function if we build in flexibility of that kind.

Within a common market, we should aim at a multi-track Europe in which ad hoc groups of different states forge varying levels of co-operation and integration, according to their circumstances. Indeed that is what the Schengen Group does. [end p14]

We should not try to pour different countries into the same mould. The test should be: will it work? And do the peoples of those countries want it? That way you avoid the strains and resentments that will otherwise occur.

It is argued that the indefinable word “subsidiarity” will prevent the centre from becoming stronger. On the contrary, that thought is based on the notion that the Community has the power which it then parcels out to Member States. The true situation should be the reverse.

Maastricht is much more than just a technical adjustment to the Treaty of Rome. [end p15]

It moves from being an economic community to a European political union. It increases the powers of the Commission; at present under the Treaty of Rome the Commission has sole right of initiative in 11 areas of policy. In Maastricht that reaches 20 to which have to be added 5 other areas of co-operation where the Commission is fully involved, monetary, judicial and immigration matters as well as foreign policy and defence. This alternative federal model is spawning bureaucracy at the expense of democracy in a continent which is the home of democracy. [end p16]

Further, most federal states have experienced a steady trend towards centralisation as central governments have a natural appetite for more expenditure and therefore more taxation. The Commission is already demanding more resources and yet more again for ‘cohesion’. Germany is the largest contributor, but has enough to cope with at present without being called upon for more. The UK is the second largest contributor. This year £2.6 billion net will go to the EC; this exceeds the amount we give to the developing world. It would make more sense to give a large proportion of it to Russia and the East European states whose need is great. [end p17] In deciding between the two visions of Europe it is not a question of whether we are ‘European’ or not but of what kind of Europe we wish to build.

Denmark and the Edinburgh Charade

Until last May the assertions and assumptions of the Maastricht Treaty went completely unchecked, but then Denmark held a referendum. For the first time the Treaty was exposed to the examination of the people and they rejected it. Since then we have seen growing discontent throughout the member states on the provisions of the Treaty. [end p18]

In France a referendum designed to rubberstamp their Government's approval of the Treaty came within a fraction of throwing out the whole proposal. In both Britain and Germany opinion polls show the public full of misgivings and eager to be allowed to have their own say in the matter which both are denied. Your decision gave the whole of the Community a breathing space in which to re-examine the Treaty and the direction in which Europe was heading.

For you and your political leaders the time following the June 2 referendum was one of reflection. [end p19]

What emerged was a set of proposals entitled “Denmark in Europe” which outlined the conditions which would have to be met if a second referendum was to be held. It was on the basis of this document that the Community discussed Denmark's position at the European Summit in Edinburgh last month.

Much has been said about the Edinburgh Summit and its conclusions. Most attention has been concentrated on whether the “decisions” reached at Edinburgh are legally binding. What has been less sufficiently discussed is whether the assurances given to Denmark have any substance at all. [end p20]

Then, in an article in the Centenary edition of the Financial Times published in London on 4th January the German Chancellor Helmut Kohl revealed the true position. He said:

“At the recent Edinburgh summit, the leaders of the European Community expressed their sympathy for Denmark's special reservations, but decided not to change the Maastricht Treaty. Reopening negotations was not, and is not, on our agenda. In Edinburgh we therefore could go no further than to clarify the relevant treaty clauses to respond to the main Danish concerns. [end p21] This purely declaratory ‘decision’ neither changes nor complements the treaty, and therefore does not require ratification by member states.”

With these words Chancellor Kohl delivered a shattering blow to those who seem to claim that what happened at Edinburgh makes a difference to the Treaty itself.

It was said last December that the summit meeting, under John Major 's chairmanship, had solved the problem posed by the Danish people's rejection of the Maastricht Treaty in their referendum last June. [end p22]

The suggestion was that a legal formula had been found which allowed Denmark to opt-out of major areas of the Treaty such as European citizenship. This summit formula they suggested was legally binding and watertight, but, strange as it may seem, that did not mean that the Treaty itself had to be altered and so re-ratified by other countries.

A comparison of the wording of the Edinburgh summit conclusions with what the Danish Government had asked for in the way of opt-outs and special treatment for Denmark reveals a very considerable difference. [end p23]

If the opt outs are of little effect the argument as to whether they are legally binding is not important.

Chancellor Kohl is quite right: even if they had the legal force of being written on tablets of stone and handed down from Mount Sinai, Edinburgh did not alter Danish obligations under the Maastricht Treaty or give any new opt-outs. The carefully inspired media stories about special treatment for Denmark, and suggestions of summit arguments over whether or not the Edinburgh deal should be made “legally binding” , were a smoke-screen designed to obscure this simple fact. [end p24] I will now go through Denmark's five conditions and demands in turn as laid out in “Denmark in Europe” .

European Citizenship

The Maastricht Treaty introduces two new concepts: a European Union and citizenship of the European Union. The European Commission has said that the object of European citizenship is “to encourage the feeling of involvement in European integration” . The rights to be enjoyed at first by European citizens are to move and reside anywhere in the Community, and to vote in local and European Parliament elections if they are living outside their own country. [end p25] But under the Maastricht Treaty the rights of European citizens may be extended.

Denmark therefore asked, as part of the “national compromise” , that Denmark will have no obligations in connection with citizenship of the Union.

The Edinburgh summit deal says nothing more than that European citizenship gives additional rights to nationals of member states, and does not take the place of national citizenship. But this is so under the Treaty as it stands: what matters is whether it is European or national citizenship which becomes the more important as time goes on. [end p26]

The danger is not that national citizenship will cease to exist, but that it will become of little importance.

The new Article 8e of the Maastricht Treaty reflects the concept of progressive expansion of the rights associated with European citizenship by laying down a procedure whereby the Council of Ministers may “strengthen or add to” those rights.

Such additions would require unanimous consent. This however is less of a protection than it might appear. If in future the majority desire such extensions, member states withholding their agreement to them will be subject to pressure to agree in return for concessions elsewhere. [end p27]

In practice, it might be very hard for one or two states to hold out against pressure for extension of the rights of European citizens. After all, we are both under heavy pressure now and we know what it's like.

The Edinburgh “compromise” does not exempt Danes from being European citizens, nor exempt them from the duties of such citizenship. Nor does it exempt Denmark from having to give all the rights, both as they stand under the Treaty and as they may be extended in future, to non-Danish European citizens resident in Denmark. [end p28]

Monetary Union

There is another clause in the Edinburgh “compromise” , about monetary union. At the time of the Maastricht Treaty, Denmark negotiated a special protocol which exempts her from having to join the third and final stage of monetary union, when the Danish currency would otherwise be replaced by the ECU issued by the new European Central Bank.

The Edinburgh deal simply restates the effect of the protocol, and therefore does not alter the Treaty as it already stands. [end p29]

There have been some doubts about whether the drafting of the Danish monetary opt-out protocol does achieve its intended purpose. If these doubts are warranted the Edinburgh deal does nothing to cure them.

This is because we are now talking about European Community law: a system of law which is outside the laws of member states, and has its own institutions to interpret and apply it, most notably the European Court of Justice and the European Commission. Community law also has its own precise procedures laid down as to how it may be made or amended. [end p30]

That is why we are now having to have the Maastricht Treaty ratified in all member states. If it were lawful for leaders at a summit meeting simply to alter the Treaty of Rome without the need for ratification then we would not be going through this process of agreeing a Maastricht Treaty and having it ratified.

The leaders gathered at the Edinburgh summit meeting are simply not a body authorised under European Community law to make or amend Community law. Their resolutions would not be recognised by the European Court of Justice as having this effect. [end p31]

There have been suggestions that the Edinburgh summit deal could be enforced, if not by the European Court of Justice, then by the International Court which sits at The Hague. But Article 219 of the Treaty of Rome requires members states not to submit EC disputes about that Treaty or its amendments to any institutions other than the European Court. Taking a case before the International Court on this aspect would be contrary to the Treaty of Rome.

Furthermore, the part of the summit “decision” on monetary union does nothing to address the fundamental problem with the Danish opt-out Protocol. [end p32]

This relates only to the third stage of monetary union, not to the first and second stages. Even if Denmark is effectively exempted from the legal obligation to merge its currency in Stage 3 she will still be subject to important obligations arising from Stage 2 which will render its 3rd Stage opt-out of little, if any, value.

Under the legally binding Treaty Protocol, once the third stage has started, the Danish Krone will be treated as if it were a “derogated” currency. [end p33]

Denmark will therefore be obliged to treat its exchange rate policy as a matter of “common interest” under Article 109m(2), and will be subject to “recommendations” as to the conduct of its national exchange rate and monetary policy from the European Central Bank under Article 109f(4) as a derogated currency.

But as in accordance with her own declared policy the Danish currency will be pegged to the ECU, then in practice, Denmark will have to follow interest rate policy set by the European Central Bank even though it is outside the single currency. This is the logic of the existing Treaty and Protocol. [end p34]

Justice and Internal Affairs

Under its national compromise, Denmark objected to the mechanism whereby policies agreed under the justice and home affairs intergovernmental machinery (Title VI) would then become part of the Community law.

The Danish government has abandoned its attempt to opt out of this area. The Edinburgh “decision” simply records that “Denmark will participate fully in co-operation on Justice and Home Affairs on the basis of the provisions of title VI” . [end p35]

There is also a declaration pointing out that to make justice and home affairs agreements part of Community law may in certain cases require Denmark to amend its constitution. This adds nothing to the existing Treaty text.

The Edinburgh summit has given Denmark nothing at all under the Justice and Home Affairs heading.

Defence

Probably the most important Danish demand for an opt out is on defence. [end p36] Denmark's precise demand was that she “does not participate in the so-called defence policy dimension which involves membership of the WEU and a common defence policy or a common defence” .

The Maastricht Treaty uses the Western European Union as the Community's defence arm. But Denmark and Ireland are not full members of the WEU. This was always going to lead to an anomaly, since the non-WEU members would not fully participate in the common defence policy of the new European Union. [end p37]

As far as the WEU is concerned the Edinburgh Summit says nothing that commits Denmark to become a member of it. Consequently, Denmark does not participate in the “elaborations and implementations” of decisions. However, Denmark is still bound by the decisions themselves and the duty to obey and support them.

What the Edinburgh Summit conclusions do not reveal is that the partial opt-out may have only a limited life. The 50 year initial life of the Western European Union Treaty, signed in 1948, comes to an end in 1998. [end p38]

The Maastricht Treaty contains a commitment to revise the new European defence policy clauses in 1996 in order to take account of that 1998 expiry. The possible implication is that the European Community will then directly take over the defence functions of the WEU, which will be wound up. Denmark will then be pressurised as Community members to take part in the new common defence arrangements. The Danish demand is that the Edinburgh Summit opt-out should be unlimited in time. It is doubtful whether these very complicated and limited provisions on defence meet that requirement. [end p39]

Objectives of the Union

Finally Denmark concluded that if its demands were all met then the objectives of the Union set out in the common provisions of the Maastricht Treaty would not apply. This requirement seems to have been abandoned as it is nowhere reflected in the Edinburgh Summit conclusions.

Let me summarise what was demanded by Denmark and what the Edinburgh Summit agreed. [end p40]

The Danish “Compromise” At Edinburgh Summary

Danish Demand

European Citizenship:

Denmark to have no obligations regarding European citizenship; but will permit voting by other EC citizens in local and EP elections. Monetary Union

Denmark not to participate in third stage of monetary union. Defence:

Denmark not to be required to participate in membership of WEU or in defence policy. Justice and Home Affairs:

Denmark objects to measures under inter-governmental co-operation being transferred to Community law once joint policies are agreed. Objectives of Treaty:

Objectives on above matters in Title I of Treaty not to apply to Denmark.

Edinburgh Summit “Compromise”

Recites that European citizenship additional to national citizenship. No alteration to position under Treaty. Denmark not opted out, now or in future.

Recites effect of Protocol already in Treaty. No change to existing Treaty.

Recites that Denmark not obliged to join WEU and “accordingly” will not take part in elaboration or implementation of defence decision. No exemption from defence policy itself or duty to support it. Probably no change to Treaty. Non-participation in WEU membership of limited relevance in view of 1998 expiry of WEU Treaty.

Denmark abandons its objection and will participate fully. No change at all to Treaty.

No change to Treaty: objectives to apply to Denmark. [end p41]

Real opt-outs require Treaty change

It is easy to slip into the fallacy of thinking that procedures under the Treaty which require unanimous consent will provide a safeguard for Denmark. Additional rights for European citizens, approval of justice and home affairs legislation (such as a common immigration policy for the Community), and revision of the Treaty in 1996 to replace the WEU defence functions with Community functions, need in theory to be approved unanimously.

But what will happen if Denmark stands out and says “no” to any of these future developments? [end p42]

The answer is clear from what Chancellor Kohl says: “We all want the EC to develop further as a Community of 12. I am against the idea of a two-or three-speed Europe. But I would add just as clearly that, in view of the importance of European Union for us Germans, we cannot accept that the speed of European integration will be dictated by the slowest ship in the convoy.”

So surely the choice for Denmark is whether to stand up to and resist this kind of bullying now, or to do so later when the process of European political union has gone further and it will be harder to resist. [end p43]

If Denmark wishes to enjoy in reality the opt-outs from the Treaty which it sought in the Danish national compromise then it needs to press for the inclusion of real, substantive, amendments on these matters in the Treaty text (or in protocols which are legally part of the Treaty). Only then will Denmark have secured the “genuine, substantive amendments to the basic elements which were rejected on 2 June” which are called for in the national compromise ( “Denmark in Europe” , page 3). [end p44]

What happens if Denmark says “no” again?

Our Foreign Secretary Douglas Hurd has made it clear that if Denmark says “no” again, then the Maastricht Treaty “would fall” . He continued “the Treaty is a Treaty for twelve” and even if a smaller number of members wanted to negotiate a new Treaty “that wouldn't include us” (BBC “On The Record” , 13th Dec 1992).

If Maastricht is not ratified, the EEC will still be there. There is very little in the Maastricht Treaty which has to do with the single market. [end p45]

The Treaty of Rome and the Single European Act, which lay down the single market, would continue in force as it stands at present. The British Government has stated (in response to 20 Questions issued by the Institute of Directors, Q12): “The Maastricht Treaty will have aboslutely no affect on progress towards the removal of barriers to trade in the European Community. The Maastricht amendments have no effect on the substance of the main Single Market Articles of the [Rome] Treaty.” [end p46]

There is no legal power to compel a member state to agree to Treaty changes it does not want, or to threaten it with expulsion if it does not agree. Only if a group of member states were to tear up their existing Treaty obligations would the single market and the existing Community structures come to an end that would be unthinkable.

It is not possible to bring the Maastricht Treaty into force for some member states only. [end p47]

Even if an inner group were to go ahead with a new Treaty or arrangement like that of the Schengen Group, this would still leave member states that did not join the new block inside the internal market and all states would be bound by the existing Treaty of Rome and the Single European Act.

Personally I much prefer Chancellor Kohl 's blunt honesty to the obfuscation by others. [end p48]

He said: “From time to time, we hear objections that the Maastricht Treaty does not give a clear enough picture of what tomorrow's Europe should actually look like. This was not, however, the aim of the treaty, nor could it be. Maastricht was an interim step, albeit an important one, on the road to European Union. The parts of the treaty dealing with political union are just as important as those concerning economic and monetary union.”

An interim step—of course he is right. The Maastricht Treaty itself provides for a review in 1996. [end p49]

Conclusion

If the Maastricht Treaty were to be agreed, we should soon be on another slippery slope.

We must not let the Maastricht blue print have a monopoly option on the future. It was prepared when things were different. Would it not be better to pause and think afresh?

Europe is looking inward just at the time when a global vision is needed:—

1. The lessons of this century have taught us that freedom and democracy are only secure if there is an American presence in Europe. We must keep the Atlantic Alliance alive and well. [end p50]

2. The prosperity of the world depends on the success of the GATT round, and yet the protectionist parts of the EEC are preventing an agreement.

3. We talk about helping the newly freed countries of Eastern Europe—yet we (the Community) restrict their exports to us and put anti-dumping orders on them.

4. In Russia, Communism has collapsed but the structures of an enterprise society have yet to be put in place. We must not equate the collapse of Communism with the success of democracy. To defeat Fascism in Europe required great sacrifice of life and vast resources. [end p51]

Yet we turned and helped the defeated nations to rebuild their economies and to build democracy. The fall of Communism cost us virtually nothing (Korea, Malaysia, Vietnam) and yet we are doing pathetically little to help Russia and the other countries. Further generations will blame us if Russia is not won for democracy and free enterprise. It is our duty to do more to help.

5. While politicians and leaders have been absorbed with negotiating and attempting to ratify the Maastricht Agreement, at the heart of Europe

— two and a half million people have been “ethnically cleansed” [end p52]

— tens of thousands of souls have died or been massacred, including children

— brutal rape camps have been set up.

I never expected to see this again in my lifetime. And yet it is here in Europe, and nothing effective has been done to stop it.

Europe was the place from which the Judeo-Christian ethic the basis of human rights, spread to the world.

What has happened to its conscience?