Roy Jenkins

by John Campbell

  The Italians strongly backed the ‘little five’ in pressing for Jenkins to be invited, and the Americans had no objection; but the British government, which might have been expected to welcome another British voice at the table, played a typically ambivalent role. Callaghan was bluffly unhelpful to his old rival; and Owen, now chairing the Foreign Affairs Council, followed his lead, though he claimed in his memoirs that he was more supportive behind the scenes than Jenkins knew.60 After tortuous negotiations between the heads of government in Rome in March, Giscard, finding himself isolated, made a partial climbdown, agreeing that Jenkins could attend some sessions of the summit but not others and some of the accompanying meals – where most of the real business was done – but not others. The result was that at London he was subjected to a series of farcical snubs. Callaghan, in the words of one experienced official, ‘made him as welcome as a polecat’.61 At dinner on the first evening, which Giscard boycotted in protest at Jenkins’ presence, he was placed not at the top table with the leaders, nor even with the foreign ministers, but at the third level with the finance ministers (‘This was a gratuitous piece of nonsense by Callaghan’).62 He was then excluded from the Saturday session (on the world economy), but admitted to the Sunday morning session (on the so-called ‘North–South’ dialogue) where, according to Tickell, he ‘did very well with measured interventions that were well received’.63 He was allowed to dine at Buckingham Palace on the Saturday evening, where he had ‘no contact with Callaghan at all, which was probably as well’, but some slightly edgy joshing with Giscard (‘Ah, mon ami Jenkins, bonsoir’) and a bizarre conversation with the Queen in French (‘Her French is somewhat better than mine, but not much I guess’).64 On the Sunday he was relegated again to lunch with the foreign ministers to draft the communiqué, which he did mainly with the US Secretary of State, Cyrus Vance. (Owen, ‘acting too much as Callaghan’s office boy . . . was less good . . . than I had expected.’)65 At the final press conference he was allowed to sit with the heads of government – but without a microphone.

  This was all intensely embarrassing for Jenkins, since in fighting for his right to be present it looked as if he was concerned solely for his personal dignity rather than for the place of the European Community on the world stage. His old colleague Barbara Castle – whom Callaghan had sacked on becoming Prime Minister – was bitchily delighted to read of Jenkins being forced to wait in antechambers and ‘eat below the salt’. ‘It almost makes me a Callaghan fan,’ she wrote in her unpublished diary.66 In fact, as Christopher Tugendhat wrote, ‘there was a major issue of principle at stake’:

  If he had lost the battle, the Commission would have been relegated to being a Secretariat like that of the OECD. By winning, Roy secured for himself and his successors the right to speak as practically an equal of prime ministers and presidents both at the G7 and within the community itself. This made the Commission a political force in its own right, which in turn gave it the self-confidence and clout to relaunch the idea of European Monetary Union and later, under Delors, the Single Market programme.67

  London was only a partial victory, but it was a foot in the door. At subsequent meetings – Bonn in 1978, Tokyo in 1979 and Venice in 1980 – Jenkins’ presence was accepted and he made increasingly confident contributions. At Bonn he had a microphone at the final press conference, but chose not to use it; at Tokyo and Venice he had a microphone and used it. ‘By then,’ Tickell wrote, ‘the precedents had been set and were carefully followed. The absurdity of the London experience in 1977 had been largely forgotten, except of course by Giscard.’68 In fact Giscard never quite gave up trying to clip his wings. He threw a petty tantrum in 1979 when Jenkins dared to take a marginally different line at a joint press conference in Paris, and insisted that in future the President of the Commission should hold his own press conference or speak only after the President of France had left. He later consented to stay for Jenkins’ statement, but left before his questions.69 By this time, however, Jenkins had established his position. Once he had found his feet in the job he became both effective and respected. The other leaders, in the Community and beyond, treated him as an equal because they knew that – unlike Ortoli before him or Gaston Thorn after – he could easily have been Prime Minister of a major country, and probably should have been. As a result he permanently raised the standing of the Commission within Europe, and of Europe in the world. This was supposedly what Schmidt and Giscard had intended in appointing him in the first place.

  But this breakthrough was yet to come in the summer of 1977. He was still depressed and wishing he had never taken the job when he was shaken by ‘a particularly disobliging article’ in The Economist, which he read on the way to a picnic with Jennifer in the Forêt de Soignes on 16 July. Reviewing his first six months, the writer (anonymous, as always in The Economist)fn7 declared that Jenkins was ‘visibly bored by Brussels’ and lacked his predecessor’s grasp of issues like fish and steel; the Commission worked poorly as a team and staff morale was low, partly because all but one of his personal staff were British and his chef de cabinet, though undoubtedly a first-class brain, was ‘a little short on tact’:

  His own press conferences have fallen flat, mainly because he does not seem to appreciate that the commission is more of a think-tank than a government. He tells the press where he has been travelling, but not what he has been saying, and he is ultra-cautious about criticising governments.

  As a result the Brussels press had all but given up on him. Jenkins was being made a scapegoat for recession and the member governments’ refusal to pool sovereignty. But there was little he could do about it, the writer concluded: the expectations vested in him had been too high.70

  This was depressing because he knew that much of it was true (though there were actually two non-Britons in his cabinet) and because The Economist was widely read in Brussels. He was in danger of being written off as a failure halfway through his first year. But it also gave him a salutary shock, as he described in his memoirs: ‘After moaning under the beech trees I was given a great talking to by Jennifer, and began to feel that if I wanted to escape from these doldrums rather than wallowing in self-pity I had better strike out with some major new initiative.’71 Jenkins rather gives the impression that he had to cast about to find such an initiative. In fact he already knew that he needed an eye-catching departure to give his presidency a purpose and had a good idea what it should be. As long ago as January, in his very first speech to the European Assembly, he had spoken of the Ortoli Commission having had to ‘live in winter quarters’:

  I do not yet feel any benign stirrings of the breezes of spring. But what I do feel is that there comes a time when you have to break out of the citadel or wither within it. That time is now very close upon us.72

  Among other possible ideas – direct elections, reform of the CAP (Common Agricultural Policy), ways to engage the young – he touched on economic convergence in the broadest terms. He did not specifically mention monetary union. But, scarred by his experience as Chancellor trying to defend sterling, he had long criticised both the vulnerability of competing fixed exchange rates and the instability (since 1972) of floating exchange rates; and in an interview for American television in January and again in an interview with The Times in April he had floated the idea of European monetary union as a desirable objective. It was not a new idea: before losing office in 1970 he and Wilson had been ready to accept a single currency as the next step forward for the Community they then hoped to join, and in 1973 Pompidou, Brandt and Heath had set a target to achieve it by 1980. But that was before the 1974 oil shock put a stop to such optimism. Jenkins’ bold initiative was to put it back on the agenda.

  He began, slightly oddly, by trying it out at home. Just five days after his ‘great talking to’ by Jennifer in the Forêt de Soignes, he paid an official visit to London. This was a slightly strange experience, being entertained in familiar places as the representative of an outside organisation and holding formal conve
rsations with everyone from the Queen and the Prime Minister down – including his first meeting with Mrs Thatcher as Leader of the Opposition. Callaghan he found far friendlier than in May. ‘He even sounded rather pro-Europe . . . He was sufficiently forthcoming that I began to think he must have had some news . . . that all North Sea oil was turning out to be salt water, and that they needed the Community more than I thought!’73 According to Tickell’s minute, Jenkins told the Prime Minister firmly that ‘his own considered view was that members of the Community should work out a phased programme over 10 years towards monetary union’. Callaghan was sceptical, thinking there was too much divergence between the various economies; he was not impressed by any scheme he had heard so far, ‘but he knew that Mr Jenkins would give one practical sense and meaning. He looked forward to hearing more from Mr Jenkins.’74 The next day Jenkins called on Tony Benn at the Department of Energy and told him of his plan for EMU within ten years. ‘Mr Benn expressed interest.’75

  Next, he broached it with his cabinet. He summoned them all to East Hendred for a strategy meeting on 2 August and seven of them – plus Jennifer and John Harris, with Laura Grenfell taking the minutes – sat in the garden in hot sunshine discussing the mistakes of the past six months and the way forward. Jenkins’ introductory remarks, distinguishing subjective factors from objective difficulties, were frankly critical of his own performance:

  [I] underestimated . . . taking over a highly complicated, to me wholly new organisation, with its own methods of work both internally & in relation to the Council, Parlt., Press etc + have not yet clearly & confidently worked out what one’s style shd be. That is nobody’s fault but mine, and the Cabinet in my view has worked almost superlatively well in the circs.

  The first objective difficulty had been dealing with the British presidency. But a deeper basic difficulty was that ‘none of the three major powers are prepared to support the Commission in any major initiative. Only Italy + the small ones. Not enough.’

  So what should they do? There were two possible courses. Either they could settle for making ‘such limited advances as we can’, but the options were limited: they could not just be an intermediary between governments – ‘Schmidt/Giscard axis precludes that.’ Alternatively, ‘we have to proclaim a new way forward’. In that case they could either go for monetary union, which would enthuse the Commission (with two important exceptions) but not the governments; or reform of the CAP, which would split both the Commission and the governments, ‘but has to be done’. ‘How far,’ he asked, ‘should we strike this controversial role & let the Governments go to hell? How far will this damage our ability to deal with ongoing business?’76

  It was clear that Jenkins wanted to go for monetary union, on lines set out by one of his Balliol economists, Michael Emerson. But the Italian Renato Ruggiero – present as head of his press department – took the lead in urging him not to stake his reputation on such a risky venture;77 and others too stressed the difficulties and the need to get other Commissioners and the Parliament on board if he were to have any chance of success. Jenkins agreed, but believed – on what basis is not clear – that the German government would support it. He thought a speech in Bonn in December would be ‘a good platform to put forward some of the problems, and proposals for solution’.78

  In fact he accelerated this timetable. In mid-September, having discussed it intensively with various friends (the Gilmours, Bonham Carters, Beaumarchais and others) over his summer holiday in Italy, he held another strategy weekend with his fellow Commissioners at a hotel in the Ardennes at which he overcame the doubts of his predecessor, Ortoli, and won the support of all but two of them (not the two he had predicted) for ‘an early leap forward’.79 Then he expounded his plan to the foreign ministers of the Nine at another weekend get-together in Belgium on 8–9 October. ‘David Owen was sceptical, but not particularly hostile or indeed particularly informed’; but the other eight were encouragingly positive.80 By now he had decided to launch his big idea in a lecture that he was due to give in honour of Jean Monnet in Florence on 27 October. But he had already trailed it quite fully in advance. On 24 September The Economist, which had sparked his moment of epiphany barely two months earlier, applauded his ambition while doubting that he would succeed. Restating the goal of monetary union, it conceded, was ‘an astonishingly bold idea for Mr Jenkins, himself nursing a thousand political cuts in his new Brussels role, to espouse’:

  Mr Jenkins is right to be radical. It is, or should be, his job . . . At the very least he is giving a little spark of that leadership in the midst of economic crisis that national governments are manifestly failing to give. Whether that will make him friends in the chancelleries and treasuries of Europe must be doubted. Brave though he is to attempt it, monetary union in the absolute form Mr Jenkins is suggesting is all too likely to prove a bridge too far.

  The Economist doubted whether divergent exchange rates were the real constraint on growth and presciently questioned whether Germany would wish to subsidise the weaker economies of Europe. Rather than replace the existing currencies, it proposed making more use of the European Currency Unit (ECU) for internal transactions alongside them.81

  In his speech at Florence Jenkins gave seven reasons why he believed this approach did not go far enough. First, he argued that monetary union would promote ‘a more efficient and developed rationalisation of industry and commerce than is possible under a Customs Union alone’, allowing business to take full advantage of the single market. Second, he urged that ‘a major new international currency’ backed by the economic strength of the EEC would form ‘a joint and alternative pillar of the world monetary system’, leading to greater international stability. ‘Economic welfare in Europe would be improved substantially if macro-economic policy was not subject to present exchange rate and external financial risks.’ Third, he maintained that monetary union would help reduce inflation by controlling the money supply. At this point he conceded that this would involve some loss of national sovereignty, but argued that ‘governments which do not discipline themselves already find themselves accepting very sharp surveillance from the International Monetary Fund’ – as Britain had just discovered. Fourth, he believed that monetary union would stimulate employment. And, fifth, he suggested that it would do far more than existing policy instruments to even out regional differences, protecting the weaker regions while assuring stable markets for the stronger. Without wanting to push the analogy too far he argued that the United States fifty years before had far greater regional inequality than Europe in 1977.

  His sixth and seventh arguments were more political. He believed that monetary union could be reconciled with the demand in almost all member states for more decentralised government, and with the reluctance to cede sovereignty. There was no need for social and welfare spending – around 25 per cent of GNP in most states – to be centralised. But some functions were better done at the European level. Monetary union, he reckoned, need take ‘only’ 5–7 per cent of GNP. He envisaged ‘a highly decentralised type of monetary union in which the public procurement of goods and services is primarily in national, regional or other hands. The public finance function of such a Community could be stripped down to a few high-powered types of financial transfer’, run by ‘a quite small central bureaucracy’.fn8

  He admitted that such a step had major political implications; but this, for him, was the whole point:

  The relocation of monetary policy to the European level would be as big a political step for the present generation of European leaders as for the last generation in setting up the present Community. But we must face the fundamental question. Do we intend to create a European union or do we not?

  Real national sovereignty over monetary issues, he insisted, was already a chimera for medium-sized European countries. ‘The prospect of monetary union should be seen as part of the process of recovering the substance of sovereign power. At present we tend to cling to its shadow.’

  This w
as the clearest statement Jenkins had ever made that his ultimate goal was a full-blown European union. He had now decided that early monetary union was the best way to forge it. He concluded his case, characteristically, with a metaphor: ‘Let us think of a long-jumper. He starts with a rapid succession of steps, lengthens his stride, increases his momentum, and then makes his leap.’ Europe had taken a lot of small steps since 1945, was now lengthening its stride in several areas – ‘external policies, establishing more democratic and thus accountable institutions, elaborating more coherent industrial and regional policies, and giving our financial instruments the means to keep the whole movement on a balanced course’. It was now ready to take a qualitative leap: ‘We have to look before we leap, and know when we are to land. But leap we eventually must.’ He finished by invoking the founding father in whose honour he was speaking. Politics, Jean Monnet had said, was ‘not only the art of the possible, but . . . the art of making possible tomorrow what may seem impossible today.’82

  This Jenkins later described as ‘the most fructuous speech of my life’.83 But the immediate reaction was predominantly sceptical. In Britain The Times was surprised that he should have ‘attached himself so firmly and personally to the idea’ of monetary union, and raised two major objections: first that it ran ‘clean counter’ to the process of enlargement, which would be difficult enough anyway; and, second, that it would require a massive central budget to support the weaker countries.84 Before leaving Italy Jenkins extracted an assurance from the Prime Minister, Giulio Andreotti, that he could count on his support; but there was ‘no echoing applause from the Elysée or the Bundeskanzlei, let alone Downing Street’.85 Over the next few weeks he toured the major capitals trying to sell his vision to the various leaders. On 10 November he had a typically gloomy conversation with Schmidt, who said that he would welcome EMU in theory, but was afraid that it would push German inflation up to 8 per cent: ‘Mr Jenkins said that perhaps it would be the other way round, and the Germans would impose their inflation rate on the others.’86 On the 19th in Paris he found Giscard’s Prime Minister, Raymond Barre, quite supportive, happy to agree in principle to make EMU ‘a firm objective’ rather than a mere aspiration, promising Giscard’s goodwill, but non-committal in practice.87 In London on the 25th Callaghan cheerfully admitted that he had not actually read the Florence speech.88 By contrast when Mrs Thatcher visited Brussels a week later she had read it: she acknowledged the force of Jenkins’ argument that the world monetary system needed a European pillar to balance the decline of the dollar, but homed in unerringly on the problem of the weaker economies. ‘Mr Jenkins explained that he thought these problems could be solved.’ Douglas Hurd, who accompanied her, assured Tickell later that her attitude was ‘one of scepticism rather than hostility. He felt that she was open to persuasion.’89