We had been promised that by last November we would get a formula on the refunds this year. That promise in fact did not come to fruition and after the end of the last year, when the Parliament indicated that it did not want any particular annual settlement: it wanted a long term budgetary settlement, there was a considerable amount of disarray because much as we want a long term settlement, we were all very much aware that we were not going to get it in time to get our budgetary refunds this year. So we therefore had a fundamentally new situation to tackle. We have been doing quite a lot of work on it. But at this council we did get a considerable amount of success both in a timetable and an undertaking to include the budgetary refunds in the 1984 budget which is of course already being prepared. You will have seen the budget section of the communique: it is divided into two parts. The first states that the long term settlement should take into account the development of community policies, the problems connected with enlargement, budgetary imbalances, and the need to strengthen budgetary discipline. Proposals for the long term settlement should be prepared in the foreign affairs council through the Commission, and the Foreign Affairs Council should report its conclusions to the June European Council. In addition to that long term, that same Foreign Affairs Council should deal with this year's budgetary refunds. It should make acceptable decisions on the matter, report them to the next European Council, and then the consequential figures for this year will be incorporated in the draft Community budget for 1994.
It has been a bit of a battle, rather uphill work. We had great support from the presidency, from Chancellor Kohl. The Danish and the Greeks and the Irish put in reservations on the phrase budgetary imbalances. I said if no-one liked that we could replace it with the phrase unacceptable budgetary situation. But I think that most people preferred budgetary imbalances. So on the budget, I think a satisfactory conclusion to this Council's work, a good timetable and commitment to get the refunds in the budget that is now being prepared. [end p1]
Q
Are you convinced now on the budget that you have a concrete commitment to resolve the short term as well as the long term budget?
A
Yes, very much so. I am not quite sure if you have the communique. It is in two paragraphs. The first one really deals with the fundamental, long term reform of the budget and the factors which have to be taken into account in making proposals for long term reform. The second paragraph then goes on to deal with the immediate problem. Both have to be reported to the June Council. And there is the final sentence that the conclusions of the foreign ministers on the short term budgetary problem must be incorporated into the draft Community budget for 1984. So it has a real timetable, it has got guidelines on how to solve it and it is specific.
Q
Is there a commitment …?
A
Shall I read what it says—the second part? “the European Council agrees that this report shall contain conclusions also concerning the subsequent solution in accordance with the undertaking made by the Foreign Affairs ministers on the 25th may and the 26th October 1982 regarding compensation to the United Kingdom. Consequential figures for 1983 will be incorporated in the draft community budget for 1984” . The subsequent solution there goes back to the wording of previous communiques.
John Palmer
Should we read anything in the conclusions on the Middle East (which we havent seen yet) which suggest that the us might redouble its efforts to produce the flexibility in the Israeli governments position which you've indicated is necessary?
Prime Minister
With regard to the Middle East were very much aware that time is short if there is to be a new initiative. You know there are two aspects to the problem … . the Lebanon problem. The immediate one of securing the withdrawal of foreign forces in the Lebanon. There is also the fundamental palestinian problem and it is really necessary to make progress on both. We believe the time is right to make progress on both. We have said a number of things in the council which have not been said before. We have found that in some ways the other peoples are expecting a signal from President Reagan that now is the time to go ahead, and in a way he is expecting a signal from them to say that they are going to seize the present opportunity to enter into negotiations through the discussions between King HusseinKing of Jordan and the Palestinian people. We [end p2] just dont want the whole thing to fall between two stools. We do recognise the urgency and the opportunity of the problem so in that sense you will find that we are trying to direct our attention to the existing problem and the necessity of taking an initiative while there is this present possibility of doing so.
John Palmer
(words indistinct) … . going to do something additional in the next few crucial days that will help, do you think?
Prime Minister
I think we've just indicated there that we don't believe that there should be any more Israeli settlements on the West bank, no enlargement of existing ones. We have tried to make our views very clear on that so we're trying to say that quite clearly, which we believe would be a welcome statement in arab quarters. We're also trying to say that we very much welcome the talks that are taking place between King Hussein and the Palestinian peoples, … . if the palestinian people could agree to go forward to negotiation on that basis we think that would also be a very very favourable signal for all concerned. So I think you'll find those are comparatively new things. Where we were promised the interim refunds pending a long terms solution. So I think you will find it is very specific and better than we have had before.
John Wyles Q. Two questions
You referred to a bit of a battle and an up hill struggle. Did you have to struggle particularly with President Mitterrand, who last night appeared to be very reserved on the whole question of an interim arrangement? Secondly, does it not seem to you extraordinarily optimistic to believe that you can agree a long term solution by June, given the fact that you are opposed to any kind of increase in own resources while our Community partners want an increase?
A
Can I deal with the last part first? I don't think the long term will be resolved by June. I think the Foreign Ministries will have to report progress to the June Council. The long term will sadly not be resolved by June. Indeed, if it were, we would not have needed special arrangements for the short term, the short term must be resolved by June. On the earlier part of your question, no we did not encounter opposition today from President Mitterrand or from the French delegation at all.
Q
Two questions pm. As regards the Middle East, should we read anything into the conclusions on the Middle East which suggest that the U.S. Might redouble its efforts to produce the flexibility in the Israeli governments position which you've indicated is necessary, and if I could ask you a question on your bilateral meeting with the Irish PM this morning. Are relations still so sensitive with the Irish government that you both felt unable to go beyond a statement merely saying that you met and not indicating what you discussed? [end p3]
A
Meeting with Dr Fitzgerald? I think it is because we are very well aware of the sensitivities of other people and their propensity to read all kind of things into any words we utter. We therefore erred on the side of caution, and pointed out that we would be meeting again at the next European Council.
Q
Successful meeting?
A
Successful? Yes, a reasonable meeting. I think I would say successful.
Q
It had been agreed that we would have some agreement by November 30 of last year. Why was it necessary to argue the case again at such length? Why was it so difficult?
A
After November last year, remember that we came into certain problems with the European assembly and they said that they really did not want any more interim settlements at all: they wanted a long term solution. Well, we had been trying to get a long term solution for three years now. It has not got very far because I personally think that there was still a lot of leeway in the existing budget and although we expected to come up to the ceiling of own resources, we have not yet done so. Well, now we are coming up to the ceiling of own resources and therefore you have to consider the whole question of agricultural expenditure. Also coming up to enlargement, and you have to consider a position on which if you carried on in the present way, expenditure is going to be very much greater than the resources within. So the circumstances are right now for getting a long term solution: that does not mean it will be easy but it means that there is an understanding that we have positively to address our minds to a long term solution. That was absent before. Now after the European assembly had indicated that it did not want short term solutions, our people really did not know which way to turn. I think the rapporteur in the European Parliament in February or March made it perfectly clear that the need for long term solutions did not preclude another refund this year. We have then been doing quite a lot of work behind the scenes to make it clear that there positively has to be an interim solution this year and we have to have it quick, because not since 1980 have I been in such a difficult position and had no understanding or no formula. And of course the 1984 draft budget is now being made up so we have to have it by June. So we set about it in no uncertain way and I think we might have convinced our colleagues.
Q
Were your partners impressed by the fact that we might have an election this year?
A
My partners don't know any more about the date of an election than I do
Q
You talk about the rebate. But the Parliament has made it quite clear that it is not happy with the rebate. How are you going to dress this year's rebate up? Were there any ideas that you have for what the money could be allocated for in the budget?
A
We have had no difficulty about allocating the refunds [end p4] to acceptable communautaire things for the past three years. There are no shortage of projects at all. Many of those are in the development areas, connected with coal, many of those are connected with training. Massive number of projects which we spend money on can be allocated to European refunds.
Q
And yet this did not satisfy the Parliament last time how are you going to persuade them that this interim solution is going to be acceptable?
A
Well, it did satisfy the Parliament the last time round because we got the refunds on that basis, and the time before and the time before that. We got the refunds on that basis.
Q
But only after some difficulty.
A
… . we got them. I don't expect to get things easy … it is uphill, it is a battle, but we do climb uphill, and we do win our battles.
Q
Now that you and Dr Fitzgerald have reestablished contact, how do you see relations with the irish republic?
A
I don't see any new initiatives of any kind. Things just continue.
Q
I guess in the economic debate there was some suggestions from the commission and others that Germany and the United Kingdom should change their policy slightly by maintaining financial discipline to create a better kind of investment. Could you please tell us your answer to this?
A
No, there was no suggestion that Germany and the United Kingdom should in fact change their policies at all. We all want growth and there are ways of trying to bring that about. If you look at the economic summaries of the positions of the several countries in the community, you find they are very very different. Some have high inflation, some have very high deficits, some have high expenditures, some are trying to get their public expenditure down. Two of them at least, France and Germany, have delayed their problem increases for six months. I think Holland has a freeze, but then she is only on 2 percent inflation. You have very very different economic summaries of the countries in the community and we each in fact have to tackle our problems in our own way, trying to set our own house in order and we recognise that that's the best way of securing stability in exchange rates and of securing growth. But there was no suggestion that there should be the old fashioned economic locomotive theory of some countries expanding and trying to pull everyone else behind. That question did not even arise.
Q
PM, will you consider witholding Britain's contributions to the EC budget unless there is some real progress made on the interim budgetary measures by June?
A
Well, progress has to be complete and the figures have to be entered into the budget by June. I believe that the Community realises that and they have to be satisfactory figures if they are entered into the budget. So let's wait until we get to June. We have tremendous help from the Presidency on this subject and from the largest members of the Community and also very considerable help from the Netherlands. [end p5]
Q
I wonder if the PM could give us her assessment of how important the budget problem is in domestic British political terms. Would she find it difficult to fight an election, whenever that may be, without a proper solution of the budget?
A
Well, I hope now just to keep you guessing on the basis of this communique that I would say that we were going to get a proper resolution of the budget. And I firmly believe we shall. But we do have these battles, and heaven knows I've been embattled and beleaguered on this for some time, but we won through last time. It's nothing like this time—it's nothing like the terrific battles we had last time. But it is as I say uphill work and a bit of a battle. I think we've got the kind of undertaking now which gives an assurance that we shall get a satisfactory conclusion. And I'll tell another reason why we shall get a satisfactory solution. First because our case is good and equitable, and secondly because everyone knows we shall go on until we do. And that's quite a good basis on which to be starting.
Q
Mrs T, do you feel that you can't say anything at all about the talks with Mr Fitzgerald, even to say whether perhaps you discussed his idea for an all-Ireland forum, or the progress on the Northern Ireland assembly?
A
I can go no further than the statement. Anything I say is going to be distorted, misrepresented, or worried about, not necessarily by you, but by people who have genuine fears and therefore it will be very very short and … . tells you that there were no new initiatives of that kind. “the talks were informal and introductory in character and covered a number of matters of mutual concern and common interest” . There is nothing which need worry anyone there, nor in the talks themselves. That's the way I wish it.
Q
Mrs T, we have managed to get irish officials to describe the discussions with Dr Fitzgerald as friendly and constructive. Can you go that far?
A
Yes, they were friendly. Yes, they were constructive, yes, they were nice, and there was only one Irish official there—a very nice one.
Q
Going back to the monetary system would you care to tell us what you think of the last meeting of the finance ministers and would there be any change for the United Kingdom to go back to this system?
A
I don't see any chance of the United Kingdom becoming full members of the EMS. We do deposit, as you know, certain of our funds there and guarantee certain borrowings. In that sense we [end p6] are a member which was why Geoffrey Howe was there and played such a distinctive part in the solutions. In a way it was better that we weren't full members because we did have a colleague that could come in and play a very conspicuous part in reaching the solution when things were getting a little bit difficult. So we shall not go into the EMS: we are really affected much much more than the others by the petro-currency factor. It takes us up sometimes, it takes us down sometimes, and therefore I don't think there is any possibility of us going into the EMS yet.