Prime Minister
Ladies and Gentlemen,
You will already have heard from some of my colleagues exactly what took place in the European Council. May I give you my own interpretation and then I know you will cross-examine me about the questions you want to know.
First, there are quite clearly two wholly different aspects of the work of the European Council: the one is the international aspect, which assumes very great proportions in the difficult times in which we live. This was carried out extremely successfully and in no way affected by the difficulties we had over the financial and agricultural arrangements for the Community. The whole of the European Council showed complete solidarity with the United States in reaffirming the conclusions of the Foreign Ministers reached a few days ago. So, the international aspect was conducted with very great success, total solidarity, and not affected in any way by the problems we had over the financial and agricultural and other settlements.
The second aspect of our work is obviously that which affects the Community and this time there was particular interest in both the budget and the proposals for the settlement on agricultural prices, the proposals for the settlement on sheep meat and the proposals for the principles on which fisheries would have been settled had we agreed to them. [end p1]
My colleagues, in fact, had made the linkage between the budget and other matters and were really thinking in terms of a package; because it was obvious that we were not going to get anywhere on the other matters unless we got a satisfactory settlement on the budget, our colleagues agreed to call the Ministers of the Agricultural Council together, so that they could put forward proposals on the agricultural, fisheries and sheep meat matters.
Now, we therefore came to Luxembourg in a way which I would describe as cautiously hopeful. We got some way at Dublin; we knew we had got a good deal further on amount, but we knew that we would have to do some quite hard bargaining on the budget when we got here.
What happened, I think, was this:
We both compromised. My partners moved and offered more; we compromised both on amount and on duration, both of which are important. Duration is particularly important, because we have had so many troubles on the budget question that I did not really feel that we could have a very temporary settlement only to be back within a year or so arguing again.
The upshot was that when the amount was almost satisfactory, the duration was only about a year or so, which clearly was not enough; and when the duration was of something like 5 years, the amount was wholly unsatisfactory.
Now, we both tried to compromise, but in the end there was a gap left, and that really is where we got to and where we left it.
There were certain other aspects to which I refer. I said that my colleagues in the Council had already made a very definite linkage in the form of a package, and that was one reason why the agricultural Ministers were asked to put forward their proposals to see if they [end p2] could agree on other things, and I must stress that even had we got a satisfactory amount and time on the budget, we would have been in very considerable difficulty with some of the other proposals put before us, but to which Britain did not agree, in the Agricultural Council.
First, as you will already be aware, there is a very substantial price increase on products in surplus. For example, milk is in surplus to about the tune of 20%; and sugar about 30%;. Very substantial price increases were agreed by our other partners, but not by us, for those commodities, and the whole of the agricultural settlement, had we agreed it—but we did not—would, in fact, have increased the proportion of the budget which went to agriculture, just at a time when we were trying to move in another direction.
Secondly, the proposed agreement on sheep meat, which we did not agree to, would have been extremely difficult. It provided for intervention, it provided for export rebates and it provided for an unsatisfactory premium and price structure which I believe would have been extremely harmful to British interests, and it was a sheep meat agreement which had not been seen by the Council of Agricultural Ministers until two or three days ago. And, really, one of the problems has been that these matters have not been properly prepared thoroughly enough for us to agree to them.
Thirdly, there was an attempt to have a kind of agreement on principles for fisheries and I have always said that fisheries would take very much longer to sort out, and I could not agree to some of the principles proposed in that, although we could agree to others.
That, broadly speaking, is where we left it. We were not very far [end p3] apart, when you take all things into account, but there would have been other things in the agricultural price settlement, in the sheep meat regime and in fisheries, which we would have had to oppose strenuously on merit.
Now, Gentleman. I do not despair. I never do. I believe that we have got a good deal further at Luxembourg; not quite far enough, but a good deal further. The agenda, of course, for the next Council is a matter for the President and I believe that he will be very active to try to secure the settlement which we have not achieved at Luxembourg. [end p4]
(Note: Sound Quality of Questions is not good—James Lee)
Question
You have said in the House of Commons on a number of occasions in the past year, in the past six months in particular, that if there was not a satisfactory solution to Britain's budget problems at this “last chance” summit, the Cabinet would have to consider taking measures such as the suspension of Value Added Tax payments to the Community. Will the Cabinet now consider that possibility and what recommendation, if any, will you make to the Cabinet?
Prime Minister
Withholding Value Added Tax we will only consider absolutely as a last resort. I do not believe we are at a last resort yet. As you will already have concluded, we shall not get an agricultural price settlement until and unless we get a satisfactory settlement on the budget. We shall not get settlement on other things until and unless we get satisfactory settlement on the budget; and I hope that that will be enough to enable us to come to satisfactory settlements on all those things without having to go to the last resort measures.
Question (Foreign)
Who is at the moment losing prestige, Great Britain or the Continent?
Prime Minister
I do not think anyone is losing prestige. Both of us moved, both of us were willing to compromise both on amount and duration, but in the end we just could not cross the gap this time. I stress again, as I [end p5] have stressed in my Opening Statement, the international work of the European Council is not affected in any way. The resolve to remain absolutely solid together in support of the American position and still to concert all our actions is very great indeed and not affected. So in that way, no one is the loser, because we have not yet reached agreement.
Question
Two of your colleagues have said that they are not prepared to have the issue of Britain's budgetary contribution put on the agenda at the next Council. What is your attitude to this?
Prime Minister
Well, the plain straightforward one: the agenda is not a matter for the Council; the agenda is, by tradition, a matter for the President and I know—because having been to many European Councils and having tried to find out when and where the budgetary matter would be considered, one has never been able to find out, and until we arrived here today, yesterday, we did not know when the budget would be considered and, as you know, it was not in fact considered by the Council until today. That is a matter for the President. If, by any chance, it can be happily resolved in the Council of Finance Ministers, no one will be better pleased than I shall be, but there is a good basis for them to go further now.
Question
(inaudible) [end p6]
Prime Minister
It is a fair statement. There are some things, I think, which were damaging to Britain's interests in some of those packages and, indeed, you will note that the Commission itself was not very pleased with the compromise proposal put forward, and you know also that I have been very firm in saying that each particular agreement must be arrived at on merit, and I could not possibly agree that if we came to a satisfactory solution on the budget, that I must automatically accept the other three proposed settlements to which Britain had reserved her position in the Agricultural Council—and when you know those settlements, you will certainly see why.
Question
(inaudible)
Prime Minister
That only goes towards the amount in 1981; it makes no reference to the duration; no reference at all to the duration, which happens to matter. The smaller amounts were offered for 5 years, decreasing in amount, although the actual budget might have gone up in amount. The higher amount was offered positively for one year, and then we were haggling about a second year and did not get any further than that.
I felt that we should, as a minimum, have a settlement that would endure for 3 years so that we could plan on a reasonable basis. I was also very much aware that for the kind of fundamental changes in the budget which some people were talking about, I could not possibly see us getting those changes through within 2 years ready to be implemented in the third year. It is wholly true to the extent that there was [end p7] 150 million units of account difference in the amount we were discussing for year 2; but as I had already compromised quite considerably, I just could not take on that extra 150 million units of account. We had already gone such a long way.
Question
(inaudible)
Prime Minister
No, it would not necessarily be a question of describing it as obstruction. It would be saying that we have a very very real problem to resolve. So have other countries in the Community; they also have problems to resolve. We expect that they will be solved within roughly the same period of time, with the exception of fisheries which will take longer, and if I am prepared to solve theirs, I expect them to be prepared to solve mine—it is a wholly reciprocal process. So I think in the end they will be solved together, but it is because we all of us have problems and we try to help solve the problems together.
Question
(inaudible)
Prime Minister
I think there is a slight misunderstanding. I have been saying for some time that if we expect our partners to help us solve our problems on the budget, we equally must help them to solve theirs on other things [end p8] of the kind we have mentioned, and as you know, last year the Agricultural Prices Policy was solved in June. So, if we expect help, we must offer help.
That is quite different from trading off one settlement against another. To some extent that is what we were offered, that is what we were asked to do this time, only it is called a “package deal” and I am saying that there were some things in the package which were not acceptable because they were not acceptable on the merit of the individual settlement.
Question
(inaudible)
Prime Minister
There was a time, because after we had decided year 1 and were moving on to year 2, I thought that agreement was within our grasp, but I could not go any further on compromise and I had hoped that our partners would come further towards me. After all, if there is only 150 million units of account in year 2, that meant an awful lot for me to take that on as extra, because we are one country; but it would not have been very much to have been shared among eight other people, and I would have hoped we could have got a settlement, but they felt they had moved far enough and I just could not move any further. But we did both try to compromise and we were left with this particular gap in year 2. [end p9]
Question
(inaudible, but about military force in Iran)
Prime Minister
Can I first define what we are calling “military force” . I think most of us would say that a rescue operation was not within the normal meaning of military force. I think most of us would say that a country which has had hostages taken, wholly contrary to international law, not released by the government of that country, was entitled to try a limited rescue operation; and we would not define that as military force.
When it comes to the ordinary meaning of military force, like mining or blockading, that moves things into a totally different dimension and we would be opposed to that, which is why we are trying by every possible means to help our American friends and to stand solid with them to secure release of the hostages by peaceful means, and to demonstrate that we are behind America in her efforts to release those hostages; to demonstrate that we are true friends; and that, too, is important.
Question
(inaudible)
Prime Minister
Why did I have a breakfast? I was hungry!
I got the question. I do not know whether it was necessary or not. We had a discussion amongst all Heads of Government and Foreign [end p10] Ministers last night on the wider international issues. This morning, I had already received an invitation to breakfast—Lord Carrington had too—we were very pleased to receive it; we went along and discussed many things. What is strange about it? It would have been very strange had I refused.
Question
(inaudible)
Prime Minister
No, it did not and it is not for us to try to evaluate that. That is wholly a matter for our American friends. We are very sorry indeed Mr. Vance is no longer Secretary of State. We had a very fruitful relationship on foreign affairs with him. He was a delightful person to work with and we are sorry that he is no longer Secretary of State for Foreign Affairs; but that is a matter twixt him and the Jimmy CarterPresident.
Question
(inaudible)
Prime Minister
Insofar as its international work is concerned, I do not think differences on the budget and on agricultural prices of the kind we have at the moment will affect the international work and the strength and force and vitality which it has through the Council of Foreign Ministers and through the European Council. After all, the Community [end p11] has survived differences of view before and it will survive them again.
With regard to your suggestion of a summit, there will of course in a way be one in Venice, what is commonly called the “Economic Summit” but which this time will discuss wider issues, and I doubt very much whether it is necessary to have one before then. Lord Carrington will be going to the United States within a few days; that will be a contact between the two sides of the Atlantic, and as you will already be aware, you have not only to propose summits, but you have to think very carefully what you expect to get out of them and plan for them extremely carefully; and as we have one coming up in June, I think that will be sufficient.
Question
(inaudible)
Prime Minister
That I just do not know. We obviously know no more than you do about whether there will be a Secretary of State within a short time. We must just wait upon events.
Question
(inaudible) [end p12]
Prime Minister
Well, we were able today to agree a statement, a communique, from our discussions on energy, so we were indeed trying to cooperate as far as we could. On things as fundamental as the others, where new … price agreement … assessing some 75%; of the budget, nearly 75%; of the budget, and of course that is fundamental to budgetary matters. Sheep meat was a totally new regime which had not really been properly discussed; fisheries is absolutely fundamental. We must, in fact, look after British interests in all of the other matters and I doubt very much whether we shall make much progress on those matters, indeed any, before the budget question is settled.
Question
(inaudible)
Prime Minister
As you know, the Japanese Foreign Minister was about at the Foreign Ministers Council and we would expect maximum cooperation on matters affecting Iran and sanctions from Japan. Indeed it would be necessary, and I am sure it will be forthcoming.
Question
(inaudible) (re Iran)
Prime Minister
No. There was no private or public agreement. If there had been a private agreement I would not have told you, but there was not.