The Downing Street Years (131 page)

I made my speech early on in the proceedings over a working lunch. I said that the way to dispel fears was to make clear what we did not mean when we were talking about political union. We did not mean that there would be a loss of national identity. Nor did we mean giving up separate heads of state, either the monarchies to which six of us were devoted or the presidencies which the other six member states favoured. We did not intend to suppress national parliaments; the
European Parliament must have no role at the expense of national parliaments. We did not intend to change countries’ electoral systems. We would not be altering the role of the Council of Ministers. Political union must not mean any greater centralization of powers in Europe at the expense of national governments and parliaments. There must be no weakening of the role of NATO and no attempt to turn foreign policy co-operation into a restriction on the rights of states to conduct their own foreign policy.

To deliver a ten-minute speech with one’s tongue in one’s cheek is as much a physical as a rhetorical achievement. For of course this was precisely the route which political union, if taken seriously, would go. Perhaps only my remarks about heads of state — which were widely reported — added a new element to the barely hidden agenda of the European Commission and those who thought like it. My speech did also have some immediate effect, for it rapidly became clear in the discussion that heads of government were either unable — or perhaps at this stage unwilling — to spell out precisely what political union meant for them. Top marks for calculated ambiguity, however, must surely have gone to Sig. Andreotti, who suggested that although we must set up an IGC on political union, it would be dangerous to try to reach a clear-cut definition of what political union was. Mr Haughey wound up the discussion by announcing blandly that almost all the points I had mentioned in my remarks would be excluded from political union. And perhaps that was said with tongue in cheek as well.

At the end of June we were back in Dublin again. The Community Foreign ministers had been told to go away and produce a paper on political union for the European Council’s consideration. I hoped that I had at least put down a marker against the sort of proposals which were likely to come before us at some future stage. But I was in no position to stop an IGC being called. I spent more time elaborating on our latest thinking on the hard ecu proposal. Anything that I could do to influence the discussions in the IGC on EMU which would run in parallel with that on political union was of value. I took most satisfaction, however, at this Council from stopping the Franco-German juggernaut in its tracks on the question of financial credits to the Soviet Union. I was not generally convinced that allowing former communist countries in eastern Europe — let alone the communist USSR — to build up more debt would do them any favours. Above all, any assistance must be properly targeted and must be intended to reward and promote practical reform rather than — as I was to put it in discussion at the G7 in Houston the following month — ‘providing an oxygen tent for the survival of much of the old system’.

President Mitterrand and Chancellor Kohl, however, were more interested in power politics and grand gestures. Shortly before the Dublin Council opened they had agreed to propose a multi-billion dollar loan to the Soviets and over dinner on the second day they tried to bounce the rest of us into endorsing this. I said that this was quite unacceptable. No board of directors of a company would ever behave in such an unbusiness-like way. We should not do so either. There must be a proper study done before any such decision was made. After much argument, which continued the following morning, my approach prevailed.

Of the two, it was EMU rather than political union which posed the more immediate threat. What was so frustrating was that others who shared my views had a variety of reasons for not expressing them and preferring to let me receive the criticism for doing so. The weaker economies would have been devastated by a single currency, but they hoped to receive sufficient subsidies to make their acquiescence worthwhile. The classic case was that of Greece. I became all too used to a Greek chorus of support for whatever ambitious proposals Germany made.

Nor were the Germans at one on the move towards European economic and monetary union. From time to time Karl Otto Pöhl had been outspokenly critical of the concept. As I understood it, the pressure for EMU was coming from France which found it unacceptable to have monetary policy dominated by the deutschmark and the Bundesbank. The Bundesbank would not have had any problem sticking with the ERM rather than going further, but the political pressure for EMU was now very strong. I always had the highest respect for the Bundesbank and its record of keeping down inflation in Germany and I found it significant that those who contributed most to this achievement often had least time for a single European currency which would, of course, have meant the end of the deutschmark.

To get away from the often parochial atmosphere of the over-frequent European Councils to a meeting of the G7 was always a relief. That at Houston in July was the first chaired by President Bush, who was by now imposing very much his own style on the US Administration. These economic summits were by no means just ‘economic’ any longer: nor could they be when the economic and political world
order was changing so radically and rapidly. In the forefront of all our minds was what needed to happen to ensure order, stability and tolerable prosperity in the lands of the crumbling USSR. But no less important was that at the G7 I could argue much more effectively for free trade and recruit allies for my cause than I could within the narrower framework of the Community.

It was scorching hot in Houston — so hot indeed that as heads of government stood watching the opening ceremonies the ever thoughtful and technology conscious Americans arranged for us to have special air conditioning around our feet, blowing up from the ground. President Bush asked me to open the discussion on the economy and, after noting the implications of the collapse of communism, I concentrated on the imminent danger of the collapse of free trade unless the GATT round was successfully completed. I said that it was vital that the world did not relapse into blocs, particularly in trade and monetary matters. That would be a step backwards with damaging economic and political consequences, particularly for the countries which were excluded. We should, in fact, be looking beyond the present GATT round to see how the process of freeing up world trade in goods and services could be continued.

The discussion returned to trade the following day. I now strongly supported Brian Mulroney who argued that the biggest losers if the GATT failed would be the less developed countries (LDCs). I also reminded those present of the huge amounts still being spent by the European Community, the United States and Japan on agricultural support. In fact, the section of the Houston communiqué which dealt with trade constituted the best and toughest statement ever made by the major economies on the subject. The tragedy was that the European Community’s commitment to trade liberalization was only skin deep, as subsequent events were to show.

I flew into Rome at midday on Saturday 27 October knowing full well that this would be a difficult occasion. But I still did not realize how difficult. This time the excuse for holding an ‘informal’ Council before the formal Council in December was even more transparent than in Paris or Dublin. The idea was allegedly to take stock of preparations for the forthcoming CSCE summit and to discuss relations with the
Soviet Union.
^*
In fact, the Italians wanted to pre-empt the outcome of the two IGCs on EMU and political union. Nobody bothered to explain why a special Council was necessary before the IGCs reported.

As always with the Italians, it was difficult throughout to distinguish confusion from guile: but plenty of both was evident. In his ‘bidding letter’ to the Council Sig. Andreotti made no mention of the need to discuss the GATT Uruguay round. I wrote back insisting that if the Community Trade and Agriculture ministers had not reached agreement on the Community offer on agriculture beforehand we must discuss the matter at Rome because time was running out.

More of a clue to the Italians’ intentions was perhaps given by the Italian Foreign minister’s letter which went so far as to suggest a provision for future transfer of powers from member states to the Community without treaty amendment. The Italians gave out — and it was well reported in the press — that they would be taking a moderate line, not pressing for a specific date for the start of Stage 2 of EMU and noting that Britain’s hard ecu proposal must be taken seriously. A long and often contradictory list of proposals on political union had been drawn up by the presidency, including plans for a common foreign policy, extended Community competence, more majority voting, greater powers for the European Parliament and other matters. The precise purpose of this paper remained unclear. What I did not know was that behind the scenes the Italians had agreed with a proposal emanating from Germany and endorsed by Christian Democrat leaders from several European countries at an earlier caucus meeting that the GATT should not be discussed at the Council. Had there been such a discussion, of course, they would have found it more difficult to portray me as the odd one out and themselves as sea-green internationalists.

Chancellor Kohl had spoken publicly of the need to set deadlines for the work of the IGCs and for Stage 2 of EMU. But on the eve of the Rome Council he took a surprisingly soft line with Douglas Hurd, now Foreign Secretary, about his intentions. Herr Kohl suggested that perhaps the conclusions of the special Council could say something about a ‘consensus building around the idea’ of a specified starting date for Stage 2. But Douglas recorded his impression that the German Chancellor was not set on seeking even this much, and that he might be open to persuasion to drop references to any date. Moreover, Chancellor Kohl said that he did not oppose discussion of GATT in Rome. What he would not get into was negotiation of the Community position. He said that he recognized the importance of the
Community’s offer on agriculture in the GATT and accepted that December was a real deadline for the Uruguay round. He also recognized that Germany would have to compromise. He would be prepared to say tough things to the German farmers in due course — but not yet. Apparently he implied to Douglas that there could be a trade-off. If I was prepared to help him during the discussion of the GATT, he might be able to help me during the discussion on the EMU IGC. This, of course, turned out to be far from his real position.

I myself lunched with President Mitterrand at our embassy residence in Rome on the Saturday. He could not have been more friendly or amenable. I said that I was very disturbed at the Community’s failure to agree a negotiating position on agriculture for the GATT negotiations. I understood that agreement had very nearly been reached after some sixteen hours of negotiations at the meeting of Agriculture and Trade ministers the previous day but had been blocked by the French. President Mitterrand said that this was all very difficult, that agriculture must not be looked at in isolation and that Europe — or more exactly France — should not be expected to make all the concessions at the GATT talks. He asked me when I proposed to raise the issue at the Council. I said that I would bring it up right at the beginning. I would demand that the Council make clear that the Community would table proposals within the next few days. Failure to do so would be a signal to the world that Europe was protectionist. President Mitterrand interjected that of course the Community was protectionist: that was the point of it. Clearly, there was not much to be gained by continuing this particular argument.

The French President did, however, agree with me — or so he claimed — about the political union proposals. Indeed, he was highly critical of some of M. Delors’s remarks and had no time at all for the European Parliament. Somewhat more surprisingly, President Mitterrand claimed that France, like Britain, wanted a common currency, not a single currency. This was not true. But let me be charitable — there may have been some confusion in translation. In any case, I detected no hostility or wish to force me into a corner.

I was too well versed in the ways of the Community to take all this
bonhomie
at face value. But even I was unprepared for the way things went once the Council formally opened. Sig. Andreotti made clear right at the beginning that there was no intention of discussing the GATT. I spoke briefly and took them to task for ignoring this crucial issue at such a time. I had hoped that someone other than me would intervene. But only Ruud Lubbers did and he raised a mild protest. Although something found its way into the communiqué, no one else
was prepared to speak up for these imminent and crucial negotiations.

Then M. Delors reported on his recent meeting with Mr Gorbachev. To my surprise, he proposed that the Council should issue a statement saying that the outer border of the Soviet Union must remain intact. Again I waited. But no one spoke. I just could not leave matters like this. I said that this was not for us in the Community to decide but for the peoples and Government of the Soviet Union. I pointed out that the Baltic States had in any case been illegally seized and incorporated in the USSR. In effect, we were denying them their claim to independence. M. Delors said that he had received an assurance from Mr Gorbachev that the Baltic States would be freed, so we should not become alarmed on that point. I came back at him, saying that we had heard this sort of reassurance before from the Soviets; and, in any case, what about the other nations of the Soviet Union who might wish to leave it as well? At this point first Sr. Gonzalez, then President Mitterrand and finally Chancellor Kohl intervened on my side and this ill-judged initiative foundered.

But the atmosphere went from bad for worse. The others were determined to insert in the communiqué provisions on political union, none of which I was prepared to accept. I said that I would not pre-empt the debate in the IGC and had a unilateral observation to this effect incorporated in the text. They also insisted on following the German proposal that Stage 2 of monetary union should begin on 1 January 1994. I would not accept this either. I had inserted in the communiqué the sentence: