Mrs Thatcher would present her initiative to Kohl as ‘witness to the Community’s determination to speak and act as a single body in external affairs’.93 A text in German was prepared for his convenience. Despite Foreign Office pressure, Mrs Thatcher was determined that the document she proposed should not aspire to the status of a treaty, but remain an informal agreement. The plan was to hand it to Kohl at their Chequers meeting. If he liked it well enough, it should also, after informing Kohl of this intention, be handed to the French.
When the two leaders met, on 18 May 1985, Kohl described his response to the British document as ‘basically positive’94 and said, in answer to Mrs Thatcher’s anxieties about what might happen in Milan, that he did not want an IGC ‘for its own sake’. He agreed that the British ideas should be passed to the French. Apart from a clear disagreement about increasing the powers of the European Parliament, the meeting was harmonious. ‘During the flight home,’ reported Bullard, ‘Kohl was in excellent spirits, rhapsodising about Chequers and talking mainly about 19th century European history.’95 It was true that, both publicly and privately, Kohl reiterated his desire that PoCo should take the form of a treaty which should also, he wrote to Mrs Thatcher, ‘stipulate the goal of establishing European Union’,96 but Geoffrey Howe assured her that ‘it looks as though we have persuaded Delors and the presidency [the Italians] to present matters at Milan in terms of options: either Treaty amendment or our approach.’ Howe boasted that Britain had ‘taken the wind out of the sails’ by making its own proposals. ‘This has come as something of a shock to those who had expected us to place the emphasis on what we cannot accept – rather than on what we think can and should be done.’97
But the shock was on the other side. Two days later, Horst Teltschik,* Powell’s counterpart in Kohl’s office, rang Powell to tell him, for the first time, that the French and Germans had prepared a draft treaty on European Union. Kohl would table it in Milan the following day. Powell reported his own outraged reaction: ‘I said I took an extremely dim view of this message. The Prime Minister had taken the Chancellor into her confidence at a very early stage,’ but now he and the French had stitched Britain up,98 ‘producing a text behind our backs … Speaking personally, I thought it was a black day for our cooperation.’ In a way, it was even more humiliating than that. The text produced ‘behind our backs’ was actually little different from that originally drafted by Britain. It was simply, as Charles Powell later put it, that Kohl and Mitterrand stole what Britain had given them and ‘then called it “Treaty on European Union” ’, creating the very thing that Britain had sought to avoid.99 This effort had been carefully concerted. At the end of May, following his visit to Chequers, Kohl had a meeting with François Mitterrand on Lake Constance. Kohl had gathered ‘not at all a good impression’ from his Chequers meeting with Mrs Thatcher, he told Mitterrand. ‘She is moving away from Europe.’100 Mitterrand agreed – ‘Le pb [problème] c’est le GB.’ A week later, Horst Teltschik (for Kohl) and Jacques Attali (for Mitterrand) went to Rome to square the Milan summit in advance with their Italian counterpart, Renato Ruggiero. Their discussion centred on how to get round Mrs Thatcher: ‘For Mr Ruggiero, it was not conceivable that the heads of state and government would give the impression of giving in to … the reservations of Mrs Thatcher.’101 Teltschik and Attali proposed that their countries, with the Italian presidency, should pre-agree a plan which the Italians could then present to the summit. The plan must avoid any proposal which would require unanimity. A ‘significant political advance’ could thus be made ‘between only those states who have decided to go forward’. Ruggiero agreed: ‘Thus we will see how far the British are ready to go.’ Attali ‘underlined the … absolute secrecy obviously required to safeguard these ideas’.102
At the Milan Council meeting for which Mrs Thatcher had prepared so hard,* the Italian presidency in whom Geoffrey Howe had reposed confidence acted according to its secret agreement with the French and Germans: it suddenly took advantage of the rules. Although no treaty could be ratified without unanimity, the decision to call an IGC required only majority support. So the Italian Prime Minister, Bettino Craxi,† proposed an IGC and pushed it to the vote, the first ever taken in a European Council. An IGC was duly called for the end of the year, against Britain’s wishes. A pained Howe wrote to Mrs Thatcher, saying that the Italians had ‘worked throughout for disagreement rather than agreement’103 (words which Mrs Thatcher underlined) and had been enabled to do so by Kohl’s backing. Because they had given way to Mrs Thatcher on the European budget at Fontainebleau, he went on, Kohl and Mitterrand were ‘determined to show themselves ready to go further than us’. Howe’s view was that ‘Any reasonable German government should see that it is in their interests to go for things which we can agree. One’s faith that the Germans may have a clear perception of their interests … cannot be great after Milan.’
Was that actually so? Howe did not care to contemplate the possibility that the German (and French and Italian) trick made perfectly good sense to its perpetrators. They had a very clear perception of their own interests. They had studied revenge on Mrs Thatcher for Fontainebleau; they had got it, and now, after years of being blocked, they had found a way of going forward which she could not resist. The Foreign Office policy of reining in Mrs Thatcher so that confrontation with other member states could be avoided had failed. Indeed, it had been mocked. Britain had been, despite so many clever calculations and so much diplomacy, isolated. ‘There was dismay in the Foreign Office,’ recalled Stephen Wall;‡ ‘we felt “We should have spotted this.” ’104 Howe felt rueful about it ever afterwards: ‘Margaret worried about opening Pandora’s box. I was more optimistic that we could play a trick on the Community and persuade them to develop conventions rather than have an IGC and a new treaty, but the wretched Craxi and Andreotti [at that time the Italian Foreign Minister] turned it upside down.’105 Howe himself, however, was part of the reason for the behaviour at Milan which he disliked. According to Teltschik, ‘from summit to summit … there was a common strategy to isolate her.’ The Germans felt emboldened in this because ‘We knew the Foreign Office didn’t agree with her. We knew this from Genscher [Hans-Dietrich Genscher, the German Foreign Minister], who knew it from Howe.’106
Now Pandora’s box was opened. Milan helped confirm Mrs Thatcher in her Eurosceptic instincts. She told the Cabinet that the meeting had been ‘the worst chaired international meeting she had attended’.107 In private, she said that the actions of the French and Germans had been ‘the sort of behaviour that would get you thrown out of any London club’.108 In public, she was fairly restrained, following Foreign Office advice that she should not absolutely rule out treaty change and complaining only that the vote for an IGC had delayed and complicated changes which could have been made at once without a new treaty. In an odd way, however, Bernard Ingham’s press briefing brought out what she really felt. He admitted to journalists that Mrs Thatcher was ‘irritated’ by the result of the Council, but complained that the press always reported her in the same way: ‘The media allow her but one emotion – fury. The Richter scale ceases to operate. She is not permitted to be irritated. Irritation becomes a volcanic eruption. Krakatoa has nothing on it.’109 In the report in The Times, this characterization of the media was misunderstood (thereby making Ingham’s own point for him), and was represented as being his account of Mrs Thatcher’s actual views (‘fury’ and so on). The comparison with Krakatoa was included. Ingham wrote to the editor of The Times to say that the paper had got the whole thing back to front, which it had.* But in a deeper sense, though the paper had misunderstood Ingham’s remarks, its report was accurate. Mrs Thatcher’s reaction to Milan had, indeed, been little short of Krakatoan. She felt that Kohl, in particular, had shown himself in his true colours. At his post-Milan press conference, he declared that ‘The hour of truth had struck. He could not accept that Europe should degenerate into an elevated free trade zone.’110 He and Mitterrand, he trumpete
d, were now the motors of change – ‘the mission of the founding fathers had been to slowly dismantle national sovereignty … At the end a European federal state could arise.’ For Mrs Thatcher, the enemy was in plain view.
Mrs Thatcher did not, however, take the chance offered by the humiliation at Milan to alter her policy fundamentally. Nor did the Foreign Office, despite the setback, question the underlying logic of its own position. The biggest fear in Whitehall was still that of being ‘left behind’, and so the remedies sought included better co-operation with France and Germany (though they had just done Britain in) and a reluctance to oppose treaty amendments unless absolutely necessary. The ultimate direction of the European Community, and the problems this created for Britain, were not discussed in those terms within government. Instead, the differences were suppressed and the British government coalesced still further round the project of the Single Market.
Government unity on the Single Market was, in fact, entirely genuine, supported just as strongly by the Europhile Howe as by the sceptic Mrs Thatcher. The whole issue of ‘the free movement of goods, services, persons and capital’ (as Article 8A of the treaty was to put it) between member states was central to making the EEC live up to its name of being an Economic Community. There were hundreds of small ways – the difficulty of selling insurance in Germany, say, or the lack of mutual recognition of professional qualifications – which impeded this general principle. The attempts to address these, and the focus given by the target date of 1992 for the completion of the Single Market, gave Mrs Thatcher hope that the Community was at last concentrating on those practical areas which she valued so highly. She also felt that it would challenge Britain to improve its own economic performance. The openness of competition would be a salutary ‘cold shower for the British economy’.111 The trouble was that these gains tended to come at a cost in other areas which was not fully debated or acknowledged by the British government itself. They also, thanks to the operation of bureaucracy and the enthusiasm of Delors’ Commission for taking charge of the process, tended to create yet more rules rather than just stripping away old ones.
The IGC at which the future direction of the Community would be resolved was to be held in Luxembourg in December 1985. The British tactic was the opposite of the one which had failed at Milan. Britain would not show its hand, but would wait to see who proposed what. So, this time, when Mrs Thatcher saw Kohl in advance of the summit, she had nothing in her handbag to give to him. Just before they met on 27 November, Charles Powell advised her ‘to let Kohl out of the penalty box for his behaviour at the Milan European Council: but to play on his guilty feelings (so far as anyone so thick-skinned has them) to induce him to pay particular attention to your points of view this time round’.112* She should tell him that she did not intend ‘to be bounced by another Franco-German ganging up … You will in particular want to nail him down tight to opposing monetary amendments to the Treaty.’
At the same time as Kohl and Mrs Thatcher were meeting in London, in Brussels David Hannay, by now the UK Ambassador to the Community, was meeting Jacques Delors. Delors, he reported, was making ‘emotional appeals’113 in favour of the abolition of frontiers and the introduction of a single currency, and Hannay was replying that ‘We were simply not prepared to give treaty force to a concept like EMU which no one was capable of defining or describing and which appeared to imply a fundamental shift in the relationship between the member states and the Community.’ The next day, Nigel Lawson, the Chancellor of the Exchequer, wrote cheerfully to Mrs Thatcher that ‘Your Summit discussions with Chancellor Kohl yesterday confirmed that the Germans, like us, are totally opposed to amendment of the monetary provisions of the Treaty of Rome.’114 ‘Totally’ was not the right word. West Germany was torn on this subject at this time – on the one hand wanting to keep the Deutschmark, its proudest single creation of the post-Nazi era, on the other wanting never to compromise its devotion to European Union. Kohl had given Mrs Thatcher the impression that, so far as a new treaty went, his dedication to sound money would prevail.
Yet when the European Council actually met, and there was the expected push for EMU to appear in the new treaty, on the second day Kohl asked for a private meeting with Mrs Thatcher. Hannay, who was not permitted to attend the meeting, wrote that ‘to my considerable astonishment, they emerged to say that the two had agreed to accept the symbolic reference to EMU … so long as it was accompanied by a binding provision requiring the negotiation of a new treaty (and thus separate national ratifications) before any progress towards implementing it could be made.’115 In her memoirs, Mrs Thatcher says that she was ‘dismayed that the Germans shifted their ground’,116 but takes credit for persuading Kohl to accept a form of words which spoke of EMU in terms of ‘co-operation in economic and monetary policy’. The word ‘co-operation’, she and her advisers believed,117 avoided any commitment to the creation of a single currency. It was never made clear by Mrs Thatcher or by Geoffrey Howe, the only other British minister present at the meeting with Kohl, why Britain accepted Kohl’s wish to gainsay what he had previously promised. It may have resulted from a desire to avoid being blamed for any possible breakdown of the Council, combined with the sense that the words chosen were sufficiently anodyne. Probably Mrs Thatcher did not want to admit the weakness of her own position, and she did want to ensure that her Single Market agenda was not acrimoniously derailed. Stephen Wall states it fairly when he writes that ‘If, as she did, Mrs Thatcher subsequently felt that she had been double-crossed by Kohl, she was not double-crossed on the basis of official Foreign Office advice.’118 Mrs Thatcher’s account of her heroic role in moderating Kohl’s wishes is not really borne out by the facts: it is more that Kohl’s power forced her to compromise. But British officials had helped create an atmosphere in which the pressure to concede something to avoid isolation was too great to resist. Michael Butler, like most other officials, spoke with satisfaction of the process by which Mrs Thatcher’s ‘reason overcame her prejudices’.119 It is not surprising that the belief gradually took root on the Continent that ‘Mrs Thatcher always complains, but always comes along in the end.’ This was an unflattering but correct formulation of the result, if not the intention, of British government policy.
There was a case for saying – as did those, like Hannay and Williamson, who favoured greater European integration – that the concession on EMU was a small and chiefly symbolic price to pay for the more concrete gains of the Single Market. But the trouble for Britain and Mrs Thatcher was that symbols were extremely important in the development of the Community. The reiteration and expansion in all documents, over the years, of the aim of EMU made it harder to resist and easier to throw in Mrs Thatcher’s face. Sure enough, although he complained bitterly that the proposal for the ‘Single European Act’ agreed by the Council at Luxembourg was ‘une grande déception’ (which means ‘disappointment’, not ‘deception’) and ‘a compromise of progress’, Jacques Delors emphasized that EMU was now to be considered as ‘a treaty objective’.120 This went flatly against what Mrs Thatcher had said in her opening intervention in Luxembourg, when she accepted EMU as an ‘aspiration’, but added that ‘for it to be a specific treaty objective is a different matter’. She had also warned that its inclusion in the treaty would have ‘juridical consequences’.121 In his note to her before the Council, Nigel Lawson had advised that ‘the better course by far looks to be not to get caught up in this whole exercise.’122 Given Mrs Thatcher’s wishes in the matter, he was surely right. From now on, EMU would gather pace, and its prospect would make life extremely difficult for all remaining British governments of the twentieth century.
Bernard Ingham, advising her on what to say at her press conference at the end of the Council, reported that ‘a large number of popular newspapers yesterday urged you to go to Luxembourg to sort out the Europeans and have no truck with their expensive ambitions.’123 She would need to present very carefully, highlighting the completion of the internal
market. And he warned her to watch out for:
– the extent to which you are permitting majority voting (which the press see as a weakening of our sovereignty);
– the animal and plant protection (the ‘rabies clause’) and frontier controls over drug traffickers, terrorists, etc;
– the monetary issue which is arguably the most politically sensitive for you.124
At her press conference, Mrs Thatcher did more or less what she was told. She emphasized the importance of completing the internal market and justified moves to majority voting in that area. On the other hand, changes in taxation would require unanimity. She played down the text on monetary co-operation: ‘it does not represent anything new at all, but describes the existing position.’125 Britain’s special animal and plant health provisions stayed.* She boasted that the gruelling twenty-seven hours of intensive conferring over two days had been made necessary by Britain’s insistence on getting everything right. She glossed over the fact that the treaty, against her wishes, not only increased the standing of the European Parliament but also insisted that it be so called, rather than known, as stated in the Treaty of Rome and as she had always preferred, as the mere European Assembly.† And she emphasized that the ‘reserves’ (those areas where any individual member state had not yet agreed to a particular point) came from other countries as well as Britain. When one journalist incautiously remarked that all these reserves made the agreement ‘rather like a Cheshire cheese, full of holes’, Mrs Thatcher retorted: ‘A Cheshire cheese is not full of holes – that is Gruyere! A Cheshire cheese has got no holes in it – it is British!’126
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