The Downing Street Years, 1979-1990

by Margaret Thatcher

  As it happened I talked to Sr. Felipe González, the Spanish Prime Minister, when we were both in Moscow for Mr Chernenko’s funeral the following March. Sr. González, whom I liked personally however much I disagreed with his socialism, was indignant about the terms being offered Spain for entry into the Community. I had a good deal of sympathy with him. I had earlier stressed to President Mitterrand just how vital it was to get Spain and Portugal in quickly and not let short-term selfish considerations stand in the way of what must be done to strengthen democracy in Europe. But I now cautioned Sr. Gonzalez against holding out for better terms, which I doubted he would get. I said it was better to argue the case from within. For whatever reason, he accepted the advice and at the otherwise fairly uneventful Brussels Council the following month, chaired by Italy, negotiations for the entry of Spain and Portugal were effectively completed. There would be a special bonus to Britain in having Spain in because she would over time have to dismantle discriminatory tariffs against our car imports, which had long been a source of irritation in the motor industry.

  But the Greek Danegeld had to be paid. I was alone in Brussels in arguing vigorously against the size of the bill we were presented for the ‘Integrated Mediterranean Programmes’. The Germans seemed strangely reluctant to defend their own financial interests and refused our attempts made at ministerial and official level to set up a working partnership with them. Even France and Italy turned out to be net contributors. Greece could expect a bonanza.

  At Brussels I also launched an initiative on deregulation designed to provide impetus to the Community’s development as a free trade and free enterprise area. It was intended to fit in with our own economic policy: I have never understood why some Conservatives seem to accept that free markets are right for Britain but are prepared to accept dirigisme when it comes wrapped in the European flag. In my statement to the Council, I employed a little ridicule to make my point about the way in which directives spewed forth from Brussels. I noted that the Treaty of Rome was a charter for economic liberty and we must not allow ourselves to change it into a charter for thousands of minor regulations. We should seek to cut the bureaucracy on business and see that labour markets worked properly so as to create jobs. Some Community legislation had been amended up to forty times: we should think what this meant for the small trader. I pointed to a large pile of directives in front of me on VAT and company law. There had been fifty-nine new regulations in 1984. Of these my three favourites were: a draft directive on sludge in agriculture; a draft directive on trade in mincemeat; and a draft directive amending the main regulation on the common organization of the market in goat meat.

  I received a good deal of support for the initiative; but of course it was for the Commission — the source of the problem — to follow it through. It would take more than this modestly useful gesture to change the way the Commission worked: and soon we would entrust still further powers to it.

  It was at Brussels that the new Commission was approved with M. Delors as its President. At the time, all that I knew was that M. Delors was extremely intelligent and energetic and had, as French Finance minister, been credited with reining back the initial left-wing socialist policies of President Mitterrand’s Government and with putting French finances on a sounder footing. The French socialist is an extremely formidable animal. He is likely to be highly educated, entirely self-assured, a dirigiste by conviction from a political culture which is dirigiste by tradition. Such was M. Delors.

  I nominated Lord Cockfield as the new British European Commissioner. I was no longer able to find a place for him in the Cabinet and I thought that he would be effective in Brussels. He was. I always paid tribute to the contribution he made to the Single Market programme. Arthur Cockfield was a natural technocrat of great ability and problem-solving outlook. Unfortunately, he tended to disregard the larger questions of politics — constitutional sovereignty, national sentiment and the promptings of liberty. He was the prisoner as well as the master of his subject. It was all too easy for him, therefore, to go native and to move from deregulating the market to reregulating it under the rubric of harmonization. Alas, it was not long before my old friend and I were at odds.

  In retrospect, the Dublin and Brussels summits had been an interlude — even if a lively one — between the two great issues which dominated Community politics in these years — the budget and the Single Market. The Single Market — which Britain pioneered — was intended to give real substance to the Treaty of Rome and to revive its liberal, free trade, deregulatory purpose. I realized how important it was to lay the groundwork in advance for this new stage in the Community’s development.

  The pressure from most other Community countries, from the European Commission, from the European Assembly and from influential figures in the media for closer European co-operation and integration was so strong as to be almost irresistible. But what kind of integration? My aim had to be to ensure that we were not driven helter-skelter towards European federalism. The thrust of the Community should be towards achieving the genuine Common Market envisaged in the original treaty, a force for free trade not protectionism. To do this I would have to seek alliances with other governments, accept compromises and use language which I did not find attractive. I had to assert persuasively Britain’s European credentials while being prepared to stand out against the majority on issues of real significance to Britain. Such an approach was never going to be easy.

  THE MILAN EUROPEAN COUNCIL

  I hoped that a significant first step would be the paper which Geoffrey Howe and I worked up for the Milan Council, hosted and chaired by Italy, on Friday 28 and Saturday 29 June. The language and direction of this paper were ostentatiously communautaire. It covered four areas: the completion of the Common Market, strengthened political cooperation, improvements in decision-making and better exploitation of high technology. The most significant element was that dealing with ‘political co-operation’, which in normal English means foreign policy. The aim was closer co-operation between Community member states, which would nonetheless reserve the right of states to go their own way.

  At that time there seemed a number of good reasons for this approach. The Falklands War had demonstrated to me how valuable it would be if all Community members were prepared to commit themselves to supporting a single member in difficulties. President Mitterrand had been a staunch ally: but some of the other members of the Community had wavered and the instincts of one or two were downright hostile. Even more important perhaps was the need for western solidarity in dealing with the eastern bloc. Foreign policy co-operation within the European Community would help strengthen the West, as long as good relations with the United States remained paramount. What I did not want to do, however, was to have a new treaty grafted on to the Treaty of Rome. I believed that we could achieve both closer political co-operation — as well as make progress towards a Single Market — without such a treaty; and all my instincts warned me of what federalist fantasies might appear if we opened this Pandora’s box.

  I was keen to secure agreement for our approach well before the Milan Council. So when Chancellor Kohl came to see me for an afternoon’s talks at Chequers on Saturday 18 May I showed him the paper on political co-operation and said that we were thinking of tabling it for Milan. I said that what I wanted was something quite separate from the Treaty of Rome, basing co-operation on an intergovernmental agreement. Chancellor Kohl seemed pleased with our approach and in due course I also sent a copy to France. Imagine my surprise, then, when just before I was to go to Milan I learnt that Germany and France had tabled their own paper, almost identical to ours. Such were the consequences of prior consultation.

  The ill-feeling this created was, in its way, an extraordinary achievement, given the fact that nearly all of us had come there with a view to proceeding in roughly the same direction. Matters were not helped by the chairmanship of the Italian Prime Minister, Bettino Craxi. Sig. Craxi, a socialist, and his Foreign minister, the Chri
stian Democrat Sig. Andreotti, were political rivals but they shared a joint determination to call an Inter-Governmental Conference (IGC). Such a conference, which could be called by a simple majority vote, would be necessary if there were to be changes in the Treaty of Rome, which themselves, however, would have to be agreed by unanimity. An IGC seemed to me unnecessary (as I said) and dangerous (as I thought). Quite what the French and Germans wanted was unclear — beyond their desire for a separate treaty on political co-operation. They certainly wanted more moves towards European ‘integration’ in general and it had to be likely that they would want an IGC if one were attainable as — for reasons I shall explain shortly — it was. It is also possible that some kind of secret agreement had been reached on this before the Council began. Certainly when I had a bilateral meeting with Sig. Craxi early on Friday morning he could not have been more sweetly reasonable; an IGC was indeed mentioned as a possibility, but I made it very clear that I thought that the relevant decisions could largely be taken at the present Council without the postponement inevitable if a full IGC were to be called. I came away thinking how easy it had been to get my points across.

  It is worth recalling just how the pressure for an IGC had built up in the first place. A year earlier, in one of those gestures which seem to be of minor significance at the time but adopt a far greater one in the light of events, we had agreed (at Fontainebleau) to set up an ad hoc committee under the chairmanship of the Irish Senator James Dooge to suggest improvements in European co-operation. Some of the committee’s proposals were sensible, such as its stress on more effective political co-operation and a Single Market; some were objectionable like the ‘achievement of a European social area’, which prefigured the approach of the later Social Charter; and some were plainly dotty, such as the promotion of ‘common cultural values’. But above all the Dooge Committee proposed an IGC to ratify all its proposed treaty amendments with a view to the creation of a ‘European Union’. So such a proposal was inevitably on the table at Milan. And once this happened the proposed IGC seemed the perfect vehicle for almost everyone else’s particular ideas about European development. This made it difficult to resist.

  It was, in fact, Sig. Craxi himself as President who suggested at the Council that we should have an IGC. Battle lines were quickly drawn. I argued that the Community had demonstrated that it did have the capacity to take decisions under the present arrangements and that we should now at the Milan Council agree upon the measures needed to make progress on the completion of the Common Market internally and political co-operation externally. There would, I granted, be a need for improved methods of decision-taking if these ends were to be met. I proposed that we agree now to greater use of the existing majority voting articles of the Rome Treaty, while requiring any member state which asked for a vote to be deferred to justify its decision publicly. I called for a reduction in the size of the Commission to twelve members. I also circulated a paper suggesting some modest ways in which the European Assembly might be made more effective. I suggested that the Luxemburg European Council, due to meet in December, should as necessary constitute itself as an IGC. There agreements could be signed and conclusions endorsed. But I did not see any case for a special IGC working away at treaty changes in the meantime.

  But it was to no avail. Having come to Milan in order to argue for closer co-operation I found myself being bulldozed by a majority which included a highly partisan chairman. I was not alone: Greece and Denmark joined me in opposing an IGC. Geoffrey Howe would have agreed to it. His willingness to compromise reflected partly his temperament, partly the Foreign Office’s déformation professionelle. But it may also have reflected the fact that Britain’s membership of the European Community gave the Foreign Office a voice in every aspect of policy that came under the Community. And the more the Community moved in a centralized direction the more influential the Foreign Office became in Whitehall. Inevitably, perhaps, Geoffrey had a slightly more accommodating view of federalism than I did.

  In any case, to my astonishment and anger Sig. Craxi suddenly now called a vote and by a majority the Council resolved to establish an IGC. My time — not just at the Council but all of those days of work which preceded it — had been wasted. I would have to return to the House of Commons and explain why all of the high hopes which had been held of Milan had been dashed. And I had not even had an opportunity while there to go to the opera.

  SINGLE MARKET-MINDEDNESS

  Annoyed as I was with what had happened, I realized that we must make the best of it. I made it clear that we would take part in the IGC: I saw no merit in the alternative policy — practised for a time in earlier years by France — of the so-called ‘empty chair’. There has to be a major matter of principle at stake to justify any nation’s refusing to take part in Community discussions. That was not the case here: we agreed with the aims of enhanced political co-operation and the Single Market; we disagreed only with the means (i.e., the IGC) to effect them. In general, too, I believed that it was better to argue our case at the earlier stage, either in the Council or in the IGC, rather than in the last ditch, when the proposal had become an amendment to the Treaty of Rome. My calculations here, however, depended upon fair dealing and good faith in discussions between heads of government and with the Commission. As time went on, I had reason to question both.

  There now followed an apparently endless stream of meetings and texts in preparation for the European Council which would meet at Luxemburg in December. The reports of some of these discussions, which I read, illustrated how widely differing were the objectives of different participants. M. Delors urged fulfilment of what he had described as the ‘two great dreams’ for Europe — an area without frontiers and monetary union. Every exemption or derogation which other countries, like Britain, sought seemed to be regarded as a kind of betrayal. I was told that at one time or another he had denounced almost every member state except Italy, Belgium and the Netherlands.

  The second prize for overambition had to go to the Italians. Sig. Craxi and Sig. Andreotti had come to regard the expansion of the powers of the European Assembly as the touchstone of their federalist principles. They wanted to give the assembly a power of ‘co-decision’ with the Council, something which would have effectively paralysed the Community by subjecting heads of government to perpetual interference by this incohate, inexperienced and frequently irresponsible body.

  The smallest European countries were really aiming at the fastest and — for them — cheapest route to European economic and political union and so were likely to go along with any moves in that direction which did not alienate the Germans and the French. It was all summed up in a letter to me from M. Jacques Santer, the Prime Minister of tiny Luxemburg, which would host the Council. He urged that we should ‘recall our great objective of monetary and economic union’, and added: ‘a resolutely ambitious attitude will without doubt allow us to achieve stimulating results and provide a starting point for the economic and psychological changes which are essential as Europe assumes its new role.’ We in the British delegation were inclined to dismiss such rhetoric as cloudy and unrealistic aspirations which had no prospect of being implemented. We were correct in believing them to be lacking in realism; where we were mistaken was in underestimating the determination of some European politicians to put them into effect.

  More important to British calculations at the time was what the French and Germans wanted out of it all. By now, the Franco-German axis was again as strong as it had been under President Giscard and Chancellor Schmidt. President Mitterrand and Chancellor Kohl, in contrast to their predecessors, had little in common personally. Chancellor Kohl has the sure touch of a German provincial politician, which has always stood him well politically. Only recently — since German reunification in fact — has he struck out with a distinctive German foreign policy. For most of the 1980s, he seemed willing to subordinate German interests to French guidance, since this reassured Germany’s neighbours. Furthermore as a Ch
ristian Democrat, he is more of the social than of the economic Right and so sees the world from a perspective far closer to that of the Socialist President of France than would any British Conservative. President Mitterrand is cultivated and cosmopolitan, but somewhat aloof in French domestic politics. Like so many Frenchmen of his generation, he is driven by a fear of the consequences of German domination. But, whatever he said to me in private, his public line and his actions would for this very reason always be directed towards keeping the Germans bound into the European Community, where the French might be able to exercise greater influence over them. Consequently, I knew that the French attitude at the forthcoming Council would be to press hard for closer ‘European Union’, since this is the phrase which allows both nations to pursue their own national interests with respectability. These trends were, as I shall describe, to become still more important as time went by.