WORLD

Pulling back from the brink

Marci McDonald July 9 1984
WORLD

Pulling back from the brink

Marci McDonald July 9 1984

Pulling back from the brink

WORLD

Marci McDonald

The headline in the Paris daily newspaper Libération reflected the relief that echoed from London to Athens last week. “Europe,” it read simply.“Whew!” After two days of bargaining in the gilded salons of the fabled Château de Fontainebleau, the European Community’s 10 leaders finally agreed to a budget compromise which pulled the EC back from the brink of bankruptcy and averted—for the moment—the prospect of political disintegration. By almost any standard, the compromise was a diplomatic triumph achieved at some political risk.

Each side in the bitter five-year battle over reducing Britain’s payments into the EC’s budget claimed a victory at Fontainebleau. But in the end, French spokesman Michel Vauzelle’s assessment that there had been no winners or losers proved apt. Indeed, the various leaders—including Britain’s prime minister, Margaret Thatcher—returned home to face tough questions from political opponents and press commentaries about what they had given away to

reach agreement on a financial package.

And, as European Commission president Gaston Thorn reminded his colleagues before the meeting ended on June 26, the leaders had failed to solve the community’s fundamental economic woes. Instead, he warned, they had succeeded only in postponing a further painful renegotiation for five more years, when the community’s budget is again expected to be inadequate.

For her part, Thatcher—before the meeting her colleagues blamed her for paralysing EC finances until she won a better deal for Britain—claimed a victory. But her defensiveness at a closing press conference suggested otherwise. So did the arithmetic. Thatcher did obtain the $600-million rebate on Britain’s 1983 budget contributions of almost $4 billion that her partners had blocked last spring when she created the impasse on the budget. But critics from Britain’s opposition Labour Party heaped scorn on Thatcher in the House of Commons later in the week. They argued that she had accepted a formula for future British rebates that was even less generous than the one she refused

at the deadlocked summit in Brussels last March. At the time, she insisted on a two-thirds reduction in Britain’s net contribution. In last week’s agreement Britain conceded an automatic twothirds rebate after 1986, but based on a much smaller overall sum. Moreover, contrary to Thatcher’s claim that the Fontainebleau solution would prove durable, other heads of government, including French President François Mitterrand, agreed with Thorn that it would have to be renegotiated within five years.

Even some members of her Conservative Party balked at another apparent capitulation by Thatcher. In a Commons Question Period, Tory MP Terence Higgins implied that Thatcher had agreed to a plan to increase the community’s income by hiking each country’s sales tax contributions to 1.4 from one per cent without securing any of the guarantees for cutbacks in farm spending on which she had been insisting. Said Labour’s European spokesman, Barbara Castle: “Thatcher has climbed down as we always said she would.”

In the wake of the elections for the

European Parliament, in which her Conservatives scored 45 seats, most analysts attributed Thatcher’s willingness to compromise to the fact that the Euroelection was over and, as a result, she no longer needed to justify her hardline campaign slogan, A Strong Voice for Europe. Thatcher also responded to increasing pressure from Mitterrand, who earlier had threatened to create a two-tier United States of Europe, in which Britain would have been in the second. In fact, Mitterrand recently took two steps toward making those threats good. He signed an agreement on May 29 with West German Chancellor Helmut Kohl to open the common border for customs purposes, starting this week. And he reconvened the long-dormant Western European Union in Paris last month. In part, the summoning of the union was a genuine attempt to forge a new forum for increasing the continent’s ability to ensure its own defence. But for Thatcher it also represented another attempt by France to seize the political initiative in Europe.

Hints that Thatcher would soften her position first emerged at last month’s seven-nation economic summit in London, where she secretly delivered an 18point letter to her European colleagues. The document called for reform of customs restrictions and improved defence co-operation—two proposals observers said were a clear indication that she had no intention of allowing Mitterrand to

set the agenda for the community.

Still, the outcome of the Fontainebleau summit was a major diplomatic achievement for the French president. It came just four days before the end of his six-month presidency of the EC’s governing Council of Ministers. It also helped enhance his diminished prestige at home. Mitterrand achieved his success with characteristic indirectness. During the first day of talks at Fontainebleau he cleverly did not bring up the subject on everyone’s mind—what Vauzelle termed the “paralysing obsession” of the British budget rebate. But after officials failed to make headway in an all-night negotiating session, Mitterrand and Kohl moved in on Thatcher in a series of urgent three-way consultations in the corners of the château’s ornate Henry iv ballroom. Kohl agreed to pick up the largest share of the cost of the British rebate in return for a concession to a five-per-cent sales tax subsidy to appease angry German farmers. Critics have since pointed out that the subsidy-declared illegal by the European Commission last month—sets a dangerous precedent. Already, Italy and the Netherlands have demanded the same concession.

For her part, Thatcher succeeded in winning recognition of the principle that each member country’s contributions to the community should be based upon its wealth—an agreement that may cost the French dearly if and when

their economy returns to prerecession performance levels. Still, whatever the final political and financial balance sheet, even the most jaundiced critics agreed that the EC had made a major advance at the summit: the restoration of a co-operative spirit at a time when the community is in the doldrums.

At a sumptuous farewell dinner Mitterrand fed his guests on lobster, foie gras and his heady dream of a citizen’s Europe, complete with its own flag, anthem, TV channel, sports teams and currency. With a theatrical flourish he even produced a sample European passport, scheduled to be introduced next Jan. 1. His partners agreed to set up a commission to study those proposals. But while dreams of a United States of Europe permeated the château, reality as represented by the United States of America abruptly intervened. Mitterrand accepted a phone call from President Ronald Reagan in Washington, who effectively quashed Mitterrand’s aspirations to carve out an overly independent foreign policy for Europe. Reagan interrupted the deliberations at Fontainebleau on the pretext of complimenting Mitterrand on the style and tone of the French president’s visit to Moscow the previous week. But the point that the White House still holds the keys to East-West relations, and therefore to Europe’s security, was not lost on Mitterrand, or the nine other leaders of the European Community.