The Downing Street Years, 1979-1990

I have already described how during my second term of office as Prime Minister certain harmful features and tendencies in the European Community started to become evident. Against the notable gains constituted by the securing of Britain’s budget rebate and progress towards a real Common — or ‘Single’ — Market had to be set a more powerful Commission ambitious for power, an inclination towards bureaucratic rather than market solutions to economic problems and the re-emergence of a Franco-German axis with its own covert federalist and protectionist agenda. As yet, however, the full implications of all this were unclear — even to me, distrustful as I always was of that un-British combination of high-flown rhetoric and pork-barrel politics which passed for European statesmanship.

Indeed, the first three European Councils of my second term were very much of the traditional mould, dominated by finance and agriculture: and their outcome was equally traditional — a British victory on points. But from then on the Community environment in which I had to operate became increasingly alien and frequently poisonous. The disputes were no longer about tactical or temporary issues but about the whole future direction of the Community and its relations with the wider world changing so fast outside it. The Franco-German axis became more evident; and with the unification of Germany that relationship became still more lop-sided, with German dominance increasingly pronounced.

The Franco-German federalist project was wholeheartedly supported by a variety of different elements within the Community — by poorer southern countries who expected a substantial pay-off in exchange for its accomplishment; by northern businesses which hoped to foist their own high costs on to their competitors; by socialists because of the scope it offered for state intervention; by Christian Democrats whose political tradition was firmly corporatist; and, of course, by the Commission which saw itself as the nucleus of a supranational government. In the face of these powerful forces I sought for allies within the Community and sometimes found them; and so my strategic retreat in the face of majorities I could not block was also punctuated by tactical victories.

Ultimately, however, there was no option but to stake out a radically different position from the direction in which most of the Community seemed intent on going, to raise the flag of national sovereignty, free trade and free enterprise — and fight. Isolated I might be in the European Community — but taking the wider perspective, the federalists were the real isolationists, clinging grimly to a half-Europe when Europe as a whole was being liberated; toying with protectionism when truly global markets were emerging; obsessed with schemes of centralization when the greatest attempt at centralization — the Soviet Union — was on the point of collapse. If there was ever an idea whose time had come and gone it was surely that of the artificial mega-state. I was, therefore, convinced not just that I was right about the way forward for Europe, but confident that if the Government and Party I led kept their nerve we would be vindicated by intellectual developments and international events.

FINANCE AND FARMING

After the 1987 general election I was in just the mood to force the Community to live up to its previous protestations of virtue. For all the talk of financial rectitude at and since the Fontainebleau Council of 1984, there had still been no effective budget discipline and no binding limits on spending under the CAP. The rebate I had won had limited our net contribution from rising to a totally unacceptable level; but several of our Community partners now wanted to cut or eliminate it. There was a large Community budget deficit which was starting to concentrate minds. But from the Commission it had provoked the traditional answer to any financial problem — an increase in the Community’s ‘own resources’. They wanted to increase that sum not just to the 1.6 per cent of VAT which we had agreed at Fontainebleau might happen in 1988, but to 1.4 per cent of Community countries’ GNP (equivalent to 2.2 per cent of VAT receipts). There was also on the table a pretty blatantly protectionist proposal, strongly supported by the French, for an Oils and Fats tax. This was, it is true, to be matched by measures to control spending on agriculture where huge sums were going on storing and disposing of surpluses, and to improve budget discipline. But these were not tough enough. Moreover, the Commission was still trying to whittle away at what I had secured at Fontainebleau by proposing to change our rebate mechanism. And M. Delors also wanted to double the structural funds (that is, spending on Community regional and social policy). This last proposal was, naturally, more than welcome to the southern member states and Ireland which expected to gain most from it.

Who were my allies? However unreliable the French and Germans would be when it came to cutting agricultural spending on which their politically influential farmers depended, I knew that at least I could look to them for support in trying to resist the huge increase in structural funds. I also had in M. Chirac, the Gaullist French Prime Minister, an ally in resisting the large increase proposed in ‘own resources’. But my main allies — though inclined to be critical of our rebate — were the Dutch. Such then was the technically and politically complicated scene which I knew confronted me when I went to Brussels for the European Council meeting on Tuesday 29 and Wednesday 30 June 1987.

It was an intensely hot, humid day when I arrived. On the way from the airport, my car was pelted with water balloons by the less dangerous Euro-fanatics outside the Council. Inside, the possibilities of bad-tempered disagreement were maximized by the weak chairmanship of M. Martens, the Belgian Prime Minister and Council President. He allowed no less than four hours of discussion of the proposed Oils and Fats tax, which the Germans, the Dutch and I had not the slightest intention of accepting.

Generally, I was among the best briefed heads of government on these occasions — partly because I always did my homework and partly because I had a truly superb official team to help me. Perhaps the mainstay of this was David Williamson, who came from the Ministry of Agriculture to the key European policy role in the Cabinet Office and finally — and deservedly — became Secretary-General of the Commission. The intricacies of European Community policy, particularly finance, really test one’s intellectual ability and capacity for clear thinking. With the exception of those of the presidency, the different delegations’ officials were not present during the proceedings themselves; so the Foreign Secretary of the day wrote manuscript notes which were passed out to our people, against which the conclusions recorded by the presidency would be checked.

On this occasion (and at Copenhagen later) the complexity of some of the matters under discussion was absurd. They should have been dealt with by Agriculture or Finance or Foreign ministers: but there never seemed the will to take real decisions at this level and so heads of government would be left discussing matters which would boggle the mind of the City’s top accountants.

The general view was that this first Brussels Council was a ‘failure’ and that I was responsible for it. There was only a little truth in either proposition. It was in any case unreasonable to think that with such a large number of contentious and complicated matters on the agenda agreement would be reached on the first serious attempt. Moreover, a good deal of progress was made on the key questions of finance and agriculture. It was accepted that budget discipline should be ‘binding and effective’, that it should apply to ‘commitments’ (that is basically what the Agriculture ministers agreed to spend) as well as actual payments, and that additional regulations (that is Community ‘laws’) would be adopted to keep the level of spending within the budget. The worst aspect — unacceptable to me — was that they wanted to build into the ‘agricultural guideline’ — that is the total permitted spending on agriculture — the present level of overspending. The package as a whole was not sufficiently tight for me to agree to an increase in ‘own resources’. So the other heads of government left Brussels aware that I had lost none of my willingness to say no.

I met two of the key players in Berlin in September, where I was attending the IDU Conference. I had a working breakfast with M. Chirac at the British Ambassador’s residence. Not for nothing was he known by his compatriots as ‘le bulldozer’: and on more than one occasion I had to make it clear that the lady was not for bulldozing. He was a marked contrast to President Mitterrand. M. Chirac was blunt, direct, forceful, argumentative, had a sure grasp of detail and a profound interest in economics. The President was quieter, more urbane, a self-conscious French intellectual, fascinated by foreign policy, bored by detail, possibly contemptuous of economics. Oddly enough I liked both of them.

M. Chirac had apparently chastised me as a ‘housewife’ in Brussels in June 1987 and was to make an unprintable remark about me in a heated exchange at Brussels in February 1988. But I generally found him somewhat easier to deal with than President Mitterrand, because he said what he thought and because his public actions bore a greater similarity to his privately expressed views. I was, as M. Chirac knew, none too happy about the arrangements which led to the release of French hostages from the Lebanon and which were widely considered to have overstepped the mark as regards the principle of refusal to deal with terrorists. (M. Chirac furiously reproached me at a reception at the Copenhagen Council for allegedly leaking criticism of what the French had done: in fact I could lay my hand on my heart and assure him that we had done no such thing.) To be fair, the French had been of great assistance to us in the matter of intercepting the arms shipment from the Eksund[102] And of course M. Chirac and I were very much on the same wave-length politically. He had done much to make the Gaullists (the RPR — Rassemblement pour la République) into a modern right-of-centre party, committed to free enterprise. This was of great significance not just to France but in the long term to Europe and the western alliance. I was disappointed, though not very surprised, at the way in which the wily President Mitterrand managed to turn the process of ‘cohabitation’ against the Right. At this time, though, it was the imminence of the French elections rather than their likely outcome which was the problem. For it was clear to me that neither M. Chirac nor President Mitterrand would be anxious to be seen taking tough action on agriculture when French farmers’ votes would soon be needed.

Nor for that matter would Chancellor Kohl whom I saw for tea that afternoon in the German government guesthouse. He confessed to me that he too had had his domestic political difficulties. His farming supporters had stayed away from the polls in two recent Land elections which had led to bad results for the CDU. The small farmer was, he said, a great element of stability in Germany. He said he was prepared to make some sacrifices but it would take four or five years to ‘get over the hill’. I retorted that we did not have four or five years. We must act on agricultural overspending now. But I did not come away from the meeting any more optimistic about the likely outcome of the next Council.

It was too much to expect, when I landed at an icy Copenhagen on Thursday 4 December, that the papers would not be full of allusions to the famous battle of Copenhagen, when Nelson, ignoring signalled orders by the device of holding a telescope to his blind eye, attacked and blew the opposing fleet out of the water. In fact, as at Brussels earlier, it was a magnifying glass — or perhaps a pocket calculator — which were most in order on this occasion, such was the complexity of the matters under discussion. At least we had the amiable Poul Schluter, the Conservative Danish Prime Minister, in the chair. The Danes were anxious to continue receiving as much as possible from the CAP. But of all the other Community countries they were the most anti-federalist. So there was a basic sympathy between us, even if not always a meeting of minds.

Discussions of the ideas put forward at Brussels had been continuing in the Agriculture Council and between officials and the Commission. But since then the pressure had increased to cut back our rebate. The Danes had unhelpfully brought it back into the limelight in their ‘bidding letter’ inviting heads of government to the Council. There was also continuing discussion about what should constitute the Community’s ‘own resources’. But for me everything really hinged — everything that is apart from the maintenance of our rebate on which I would not compromise — on the measures to control agriculture spending. The position here was far from satisfactory. I was still unhappy about the ‘agricultural guideline’ being proposed. But even more important was the way in which the Commission’s idea of applying ‘stabilizers’ was to be put into effect. There were basically two possible ways of cutting agricultural subsidies. One was to tax overproduction by means of what — in another piece of Community jargon — was described as a ‘coresponsibility levy’. This might have a place, but it was not the best method. The other way was to apply automatic and cumulative price cuts once a certain level of production was breached. This was the ‘stabilizer’ mechanism. It then fell to be discussed what the ‘minimum quantity’ of any particular commodity would be before the mechanism began to operate — for different agricultural products would require different formulae according to the market in which they were being produced — and what the price cuts should be.

It is also worth adding, however, one other possibility which I never actually advanced as an alternative to either of these routes but which from time to time I considered. This was to revert to a national system of subsidy for agriculture, thus bypassing the whole cumbersome Community apparatus altogether. It would, of course, have required a complete rethink of the regime imposed by the Community and could only have been possible if other countries had wanted to pursue the same approach. The disadvantage would have been that individual countries would have been competing in subsidy and probably our farmers would have lost out in that race to the French and Germans. It would only have been desirable if agriculture had been brought effectively under the GATT — and the difficulty of doing that was to become increasingly evident. But I was definitely attracted to a scheme by which each nation took financial responsibility for writing off surplus agricultural stocks and proposed this, without much success. I also raised with Helmut Kohl, when I saw him just before the Copenhagen Council, whether it might not be better if Germany used nationally financed aids to assist her small farmers — though these must not be used to finance increased production. (I recalled, of course, how he had essentially adopted this approach at an earlier Council.)[103] But though he took the point nothing came of it. I realized that the only immediate way to rein in Community spending on agriculture was within a Community framework.

My pre-Council meeting with Chancellor Kohl also revealed him to be even more preoccupied than before with his farming vote. He wanted a Community-financed ‘set-aside’ scheme, by which farmers would essentially be paid not to farm efficiently — something which ultimately demonstrated the Mad Hatter economics of the CAP. I was prepared to agree to this, as I told him, as long as we got effective stabilizers as well. I was also very tough with him about the prospect of increases in the Community’s ‘own resources’, on which I knew Chancellor Kohl was willing to see a large increase (ultimately at the expense of the German taxpayer) in order to keep his farmers happy. So by the time the Council opened we knew where we stood.

Once it was clear that the French — principally for electoral reasons — were prepared to back the Germans on a formula for stabilizers which could not conceivably contain agriculture spending, it was evident that no satisfactory conclusion could be reached. Neither I nor Mr Lubbers of the Netherlands would agree to anything on these lines. The Commission added another split by pressing hard for a doubling of the structural funds, which pitted the northern against the southern Europeans. But it was not an acrimonious occasion. It was agreed that a special European Council would be held in Brussels the following February.

There were a number of long faces at the end of the Copenhagen Council. But mine was not among them. I knew that little by little I was winning the argument inside and outside the Council for the kind of solution I wanted. I told the other heads of government to cheer up and reminded them — with a little irony, for I suspected that some of them needed no reminding — of how difficult things had been at Brussels on the eve of the Fontainebleau summit and then how at the next moment what was insoluble suddenly seemed easy. Why should it not happen again in Brussels? President Mitterrand observed wryly that he was really not quite sure whether it was easier to deal with Madame Thatcher when she was difficult or when she was cheerful. Evidently he did remember.

But it was by no means certain that we would reach agreement at the forthcoming special European Council. I was prepared to make some compromises; after all, the question of precisely when and how agricultural stabilizers would bite was the sort of matter even people intent on checking agricultural spending could legitimately disagree about. But far more difficult to gauge was whether Messrs Mitterrand and Chirac and Herr Kohl would think it worth their while achieving a settlement on terms which some of their farmers would find unpalatable.

By now the French election campaigns were in full swing and the rivalry between President and Prime Minister was intense, with ‘cohabitation’ nothing more than a fiction. Accordingly, when they arrived in London for an Anglo-French summit on Friday 29 January 1988, the important discussions I had with President Mitterrand and Prime Minister Chirac had to be at separate meetings. The contrast between their respective styles was once again evident. President Mitterrand was not in good form and had a heavy cold, which I hoped he would not pass on to me: I seem to have an unfailing ability to attract any passing cold germ. Nor was he properly briefed about the difficult European Community matters on which I wanted to concentrate and he had to break off half way through to receive explanations from Jacques Attali, his adviser. He was obviously relieved when the conversation turned to defence and foreign affairs. I was not sure that I had got very far by the end of the discussion, though as always it had been agreeable enough.

The same could not, however, be said of my meeting with M. Chirac, who was in robust form. He began very frankly, saying that with the presidential elections just three months away he had a real political problem with the forthcoming Council. His own interest, he said, lay in a failure at Brussels. But for wider international reasons he was prepared to work for success. Lest I conclude that this meant he was going to be a push-over, he spelt out for me precisely what his strategy was. He said that we could either settle at Brussels or wait until the financial pressure built up on the Community because of its lack of money. But in that case we would be under the Greek presidency, which he was certainly right in describing as offering an ‘uncertain prospect’. If the British continued to block the settlement on agriculture at Brussels which the rest of the Community — by which he meant the French and the Germans — wanted we would be isolated and attention would focus on our rebate. I replied that this was evidently no time for diplomatic language. If he thought that ganging up with the Germans to ‘isolate Mrs T’ was going to work, he was sadly mistaken. I had no fear at all of being isolated because I was demanding that agricultural surpluses be brought under control. M. Chirac again insisted that if there was to be a row it would turn out not to be about surpluses but about Britain’s rebate. I advised him not to threaten me and promised that if there was no satisfactory solution on agricultural spending and our rebate, there would be no increase in ‘own resources’. But he continued to insist then and over lunch that the present German presidency’s proposals were the furthest France was prepared to go.

How much of this was Gallic bluff I could not know. But it certainly made it all the more important to gauge precisely what the German position was. The fact that the Germans had the presidency meant, as always, that they had less scope for openly advocating their own interests, but this was more than made up for by the extra influence it would give them behind the scenes.

On the morning of Tuesday 2 February I had three hours of talks with Chancellor Kohl at No. 10. This was a business-like and quite successful meeting. Both of us had come with detailed proposals on each of the main elements of the package which would be on the table at Brussels. There were still large differences between us on the agricultural guideline and the stabilizers. He was also minded to be more accommodating to the southerners and the Commission over the structural funds than I was. But I was glad to find that he did not press me at all hard on the British rebate. We ended by discussing what the French attitude would really turn out to be. With some prescience (or perhaps knowledge) Chancellor Kohl thought that though it would be very difficult they might prefer a reasonable settlement now to postponement.

I flew into Brussels some time after midnight on Wednesday 10 February after having spoken at a Conservative Party National Union dinner. My first appointment the next day was a breakfast meeting with Mr Lubbers to agree tactics for the Council. In my speech later that day I warned against any temptation to run away from the problem of food surpluses which we all knew had now to be tackled. The battle lines formed much as could have been predicted. The Dutch and we were up against the French and the Danes over the agricultural guideline. The German presidency put forward proposals for the new ‘own resources’ ceiling, which were attacked as too high by the Dutch, the French and us and as too low by everybody else. M. Chirac argued passionately for a higher threshold on cereals before the stabilizer started to work than I and others were prepared to accept. He also tried, as he had threatened in our earlier conversation, to link Britain’s budget rebate with the issue of stabilizers. But it was quickly apparent that this was not going to work. Throughout there was an odd, slightly theatrical air to his performance which was clearly designed to impress a domestic audience. President Mitterrand sat in complete silence throughout these proceedings, restricting himself to a lengthy speech at dinner about future European developments. Not much progress was made that day.

Overnight the Commission came up with a compromise package. But this was rejected by the Germans and the Council broke up for bilateral meetings without any paper as a basis for discussion. Chancellor Kohl was now the key, both as President of the Council and because if the Germans were prepared to do a deal on agricultural spending the French were unlikely to stand out against it. So late that afternoon Ruud Lubbers, Hans van den Broek, Jacques Delors, Geoffrey Howe and I went in to see Chancellor Kohl who was accompanied by Herr Genscher and several other officials. Chancellor Kohl’s style of diplomacy is even more direct than mine. He was never above banging the table and on this occasion he spoke in a parade-ground bellow throughout. He said that Germany was making sacrifices, particularly the German farmers. I replied that British farmers were facing sacrifices too and that I was being asked to accept too large an increase in structural funds and too high a ceiling — 1.3 per cent of GNP — for Community ‘own resources’. The argument went back and forth. M. Delors now proposed a 1.2 per cent ceiling. This prompted alarmed protests from Chancellor Kohl who thought that it might jeopardize his farmers’ set-aside scheme. But I said that I would think further about what had been proposed. I was aware that the Dutch were becoming restive and would probably not be prepared to stand out against what was now on offer. In any case, it was necessary to discuss with my officials precisely what the package would mean and I could only do this in private. What I did insist upon, however, was that it should all be set out clearly on paper. As it turned out this was one of my better decisions.

I had a long discussion with Geoffrey Howe and my officials. We argued through each element. It seemed to me that the discipline was going to prove tighter and more effective than I had earlier thought — and perhaps than others had really understood. So when the full Council reconvened I was able to join in giving broad support to the proposals in the paper which was now circulated.

Anyone who imagined that it would now all be plain sailing underrated the French. The agreement we had reached covered the main agricultural products at issue. But it assumed that the other products for which stabilizers had been agreed at Copenhagen would also be covered. To everyone’s surprise President Mitterrand and M. Chirac would not agree to this. A heated argument erupted which lasted more than four hours about their proposal to have the stabilizers for ‘other products’ referred to the Agriculture Council. In the end a Danish suggestion that it should go to a Foreign ministers’ meeting in ten days’ time was agreed. Ruud Lubbers and I insisted that our agreement to the overall package was conditional on the Foreign ministers not reopening the Copenhagen agreement on ‘other products’. In fact, the French had to concede the issue when the Foreign ministers met.

I was right to settle when I did. I had secured my basic aims: effective and legally binding controls on expenditure, measures to reduce agricultural surpluses in which automatic price cuts were the principal weapon, no Oils and Fats tax, and Britain’s rebate which had saved us some £3 billion in the past three years secure. I had had to concede a little on the threshold at which stabilizers began to work. I had had to compromise over the structural funds. I had reluctantly agreed a new 1.2 per cent of GNP ceiling for Community ‘own resources’. But it was much better than a draw. Agricultural surpluses started to fall quite sharply and the new measures to enforce budget discipline were successful. None of that, of course, changed the fundamental direction or defects of the Community. The CAP was still wasteful and costly. Britain was still making a financial contribution which I considered too high. The bureaucratic and centralizing tendencies remained. But within its limits the February 1988 Brussels Agreement was not at all bad.

FREE TRADE V. PROTECTION

It is fair to say that from about this point onwards — early 1988 — the agenda in Europe began to take an increasingly unwelcome shape. It also began to deviate sharply from that being pursued in the wider international community. That does not mean, however, that my own relations with other European heads of government worsened at a personal level; far from it. I was sorry — though not surprised — to see the Right beaten in the French presidential elections. But I sent a message of congratulations to President Mitterrand and went to see him in Paris that June to talk about the international scene in general and the forthcoming Toronto G7 summit and Hanover European Council in particular.

I found him in understandably good humour now that he had been freed from the domestic torment of ‘cohabitation’ with the Right. He was pressing a scheme — not dissimilar to one advanced by Nigel Lawson — to tackle the crippling level of Third World debt. I would have had more sympathy with his ideas if France had not been so determinedly protectionist, an approach which did far more harm to poorer countries than any amount of overseas aid did good. The French line was expressed — or rather concealed — in a splendid piece of Euro-jargon: the concept of ‘globality’. That is to say progress must be made on all the issues before the GATT at roughly the same pace, a transparent device for avoiding concentration on the thorniest issue — that of agricultural subsidies and protection. He was also keen to have a committee of ‘wise men’ set up to report on how to achieve economic and monetary union; he specifically hankered after a European Central Bank. I roundly rejected this. I said that the proposal for such a bank was motivated by political not technical considerations and that this was not an area for playing games. The President smiled and said that it was nice to be reminded that I knew how to say no. But I had no illusion that he was going to desist because of that.

I also met M. Rocard, the new Socialist Prime Minister. I had met him before but did not know him well. He spoke disarmingly and I felt sincerely about his affection for Britain and the special understanding — inherited from wartime — between the two countries. As French Socialists go, he was moderate, pragmatic and sensible and I warmed to him. I hoped that he might come to exercise some moderating influence on France’s flirtation with European federalism.

On Saturday 18 June 1988 I flew to Toronto for the G7 economic summit. President Mitterrand had suggested optimistically to me in Paris that this being President Reagan’s last summit there might be an inclination to put off difficult decisions. I had replied that I did not think this likely and, for my part, I was determined to ensure that we used this occasion to get to grips with agriculture and the GATT. By the time I reached Toronto I had done my homework on the subject. In particular, we had devised a mythical beast known informally as ‘Howe’s Cow’ or more precisely as a ‘Producer Subsidy Equivalent’. This was the calculation of how much agricultural support, whether in direct subsidy or from protection, each country provided, divided by the number of cows. The greediest cow turned out to be Japan’s — so not surprisingly, the Japanese, with some support from the Americans, disputed our statistical approach.

I was, therefore, well armed with useful facts and figures when Brian Mulroney, the summit chairman, asked me to open the economic discussion on the Sunday afternoon. I drew attention to the success of the current second cycle of summits, now ending, compared with the first. We had seen economic growth, low inflation and more jobs in the years since the Montebello summit in 1981, because we had stuck to getting the fundamentals right rather than concentrating on demand management. But there was more to do. Above all, we must fight down protectionism. I strongly urged — and repeated in a further intervention the following day — that all of us should honour the commitments made at the start of the GATT Uruguay round in September 1986 by coming up with firm proposals at the forthcoming ‘Medium Term Review’ meeting of the GATT.

As the dispute over measuring agricultural subsidies exemplified, free trade is something which almost everyone subscribes to in principle and finds politically painful in practice. Britain always had everything to gain from a global open trading system. The United States too traditionally believed in free trade. But Britain’s own trade policy was now in the hands of the Community, which contained a majority of countries with a tradition of cartels and corporatism and a politically influential agricultural sector. We were in a minority in Europe when it came to deciding trade policy. As for the United States, its huge trade deficit had given a protectionist turn to policy which President Reagan, a convinced free trader, found difficulty resisting. For its part, Japan not only subsidized and protected its agriculture more than anyone else; it also continued to place obstacles in the way of foreign imports of nonagricultural goods and services. Consequently, I increasingly had to look to the ‘Cairns Group’ of fourteen countries (which includes Canada, Australia, and Argentina) and to Third World countries, anxious to export their agriculture and textiles, to bring pressure on this wealthy western protection racket. I always regarded free trade as far more important than all the other ambitious and often counter-productive strategies of global economic policy — for example the policies of ‘co-ordinated growth’ which led principally to inflation. Free trade provided a means not only for poorer countries to earn foreign currency and increase their peoples’ standards of living. It was also a force for peace, freedom and political decentralization: peace, because economic links between nations reinforce mutual understanding with mutual interest; freedom, because trade between individuals bypasses the apparatus of the state and disperses power to customers not planners; political decentralization, because the size of the political unit is not dictated by the size of the market and vice versa.

After some two and a half hours of discussion on this subject at Toronto we achieved a broadly satisfactory communiqué. It reaffirmed the Uruguay round commitments and underlined the importance of its ‘Medium Term Meeting’, while avoiding inclusion of what seemed to me the unrealistic United States objective of no agricultural subsidies by the year 2000. What remained to be seen was how the GATT negotiations now actually evolved. Had I been an optimist I might have drawn comfort from the fact that Toronto was the first time that M. Delors praised one of my speeches. But I kept my optimism in check.

DISCUSSION OF EMU

At Toronto I had an hour’s meeting with Chancellor Kohl. Much of it focused on the forthcoming Hanover summit. Chancellor Kohl, supported by the German Finance Ministry and the Bundesbank, seemed ready now to plump for a committee of central bankers rather than academic experts — as the French and Hans-Dietrich Genscher wanted — to report on EMU. This I welcomed. But I restated my unbending hostility to setting up a European Central Bank. By now I was having to recognize that the chance of stopping the committee being set up at all was ebbing away; but I was determined to try to minimize the harm it would do. I also had to recognize that we were saddled with M. Delors as President of the Commission for another two years, since my own favoured candidate, Ruud Lubbers, was not going to stand and the French and Germans supported M. Delors. (In the end I bit the bullet and seconded M. Delors’s reappointment myself.)

The Hanover Council turned out to be a fairly good-humoured if disputatious affair. The most important discussion took place on the first evening over dinner. Jacques Delors introduced the discussion of EMU. Chancellor Kohl suggested that a committee of Central Bank governors with a few outsiders be set up under M. Delors’s chairmanship. In the ensuing discussion most of the heads of government wanted the report to centre on a European Central Bank. Poul Schlüter opposed this and I supported him strongly, quoting from an excellent article by Karl Otto Pöhl, the President of the Bundesbank, to illustrate all the difficulties in the way of such an institution. We succeeded in getting mention of the Central Bank removed. But otherwise there was nothing I could do to stop the committee being set up. The Delors Group was to report back to the June 1989 European Council — that is in a year’s time. I hoped that the Governor of the Bank of England and the sceptical Herr Pöhl would manage to put a spoke in the wheel of this particular vehicle of European integration; unfortunately, as I have already explained, that was not to be.

My problem throughout these discussions of EMU was twofold. First, of course, was the fact that I had so few allies; only Denmark, a small country with plenty of spirit but less weight, was with me. But I was fighting with one hand tied behind my back for another reason. As a ‘future member’ of the EEC, the UK had agreed a communiqué in Paris following a conference of heads of government in October 1972. This reaffirmed ‘the resolve of the member states of the enlarged Community to move irrevocably [towards] Economic and Monetary Union, by confirming all the details of the acts passed by the Council and by the member states’ representatives on 22 March 1971 and 21 March 1972’. Such language may have reflected Ted Heath’s wishes. It certainly did not reflect mine. But there was no point in picking a quarrel which we would have lost. So I preferred to let sleeping dogs lie.

Then, of course, they woke up and started barking in the course of the negotiation of the Single European Act of 1985–6.1 had not wanted any reference to EMU in at all. The Germans failed to support me and so the reference to EMU was inserted. But I had Article 20 of the Single European Act give my interpretation of what EMU meant; its title read: ‘Co-operation in Economic and Monetary Policy (Economic and Monetary Union)’. This enabled me to claim at subsequent forums that EMU now meant economic and monetary co-operation, not moving towards a single currency. There was a studied ambiguity about all this. Councils at Hanover in June 1988 and then at Madrid in 1989 referred back to the Single European Act’s ‘objective of progressive realization of economic and monetary union’. I was more or less happy with this, because it meant no more than co-operation. The rest of the European heads of government were equally happy, because they interpreted it as progress towards a European Central Bank and a single currency. But at some point, of course, these two interpretations would clash. And when they did I was bound to be fighting on ground not of my choosing.

For the fact was that the more I saw of how the Community operated the less I was attracted by any further steps on the road towards monetary integration. We advanced our proposals for a ‘hard ecu’. We issued Treasury bills denominated in ecu terms. And (though this was done because it was in our own interests, not in order to please our European partners) we had swept away exchange controls before anyone else. All this was very communautaire in its way, as I never ceased to point out when criticized for resisting entry into the ERM. But my own preference was always for open markets, floating exchange rates and strong political and economic transatlantic links. In arguing for that alternative approach I was bound to be handicapped by the formal commitment to European ‘economic and monetary union’ — or indeed that of ‘ever closer union’ contained in the preamble to the original Treaty of Rome. These phrases predetermined many decisions which we thought we had reserved for future consideration. This gave a psychological advantage to my opponents, who never let an opportunity go by of making use of it.

THE BRUGES SPEECH

Not the least of those opponents was Jacques Delors. By the summer of 1988 he had altogether slipped his leash as a fonctionnaire and become a fully fledged political spokesman for federalism. The blurring of the roles of civil servants and elected representatives was more in the continental tradition than in ours. It proceeded from the widespread distrust which their voters had for politicians in countries like France and Italy. That same distrust also fuelled the federalist express. If you have no real confidence in the political system or political leaders of your own country you are bound to be more tolerant of foreigners of manifest intelligence, ability and integrity like M. Delors telling you how to run your affairs. Or to put it more bluntly, if I were an Italian I might prefer rule from Brussels too. But the mood in Britain was different. I sensed it. More than that, I shared it and I decided that the time had come to strike out against what I saw as the erosion of democracy by centralization and bureaucracy, and to set out an alternative view of Europe’s future.

It was high time. It was clear that the momentum towards full blooded EMU, which I always recognized must mean political union too, was building. In July M. Delors told the European Parliament that ‘we are not going to manage to take all the decisions needed between now and 1995 unless we see the beginnings of European government in one form or another,’ and predicted that within ten years the Community would be the source of ‘80 per cent of our economic legislation and perhaps even our fiscal and social legislation as well’. In September he addressed the TUC in Bournemouth calling for measures to be taken on collective bargaining at the European level.

But there were also more subtle, less easily detectable, but perhaps even more important signs of the way things were going. That summer I commissioned a paper from officials which spelt out in precise detail how the Commission was pushing forward the frontiers of its ‘competence’ into new areas — culture, education, health and social security. It used a whole range of techniques. It set up ‘advisory committees’ whose membership was neither appointed by, nor answerable to, member states and which tended therefore to reach communautaire decisions. It carefully built up a library of declaratory language, largely drawn from the sort of vacuous nonsense which found its way into Council conclusions, in order to justify subsequent proposals. It used a special budgetary procedure, known as ‘actions ponctuelles’ which enabled it to finance new projects without a legal base for doing so. But, most seriously of all, it consistently misemployed treaty articles requiring only a qualified majority to issue directives which it could not pass under articles which required unanimity.

Often, as over the environment, or later on health and hours of work, it was difficult to explain to the general public precisely why we opposed the specific measure the Commission wanted. When commissioners issued directives outside their competence they were careful to choose popular causes which had support among pressure groups in member countries, thus presenting themselves as the true friends of the British worker, pensioner and environmentalist. This made it politically difficult to resist the creeping expansion of the Commission’s authority. In theory, it would have been possible to fight all this in the courts; for time after time the Commission were twisting the words and intentions of the European Council to its own ends. We did indeed fight, and won a number of cases on these grounds before the European Court of Justice (ECJ). But the advice from the lawyers was that in relation to questions of Community and Commission competence the ECJ would favour ‘dynamic and expansive’ interpretations of the treaty over restrictive ones. The dice were loaded against us.

The more I considered all this, the greater my frustration and the deeper my anger became. Were British democracy, parliamentary sovereignty, the common law, our traditional sense of fairness, our ability to run our own affairs in our own way to be subordinated to the demands of a remote European bureaucracy, resting on very different traditions? I had by now heard about as much of the European ‘ideal’ as I could take; I suspected that many others had too. In the name of this ideal, waste, corruption and abuse of power were reaching levels which no one who supported, as I had done, entry to the European Economic Community could have foreseen. Because Britain was the most stable and developed democracy in Europe we had perhaps most to lose from these developments. But Frenchmen who wanted to see France free to decide her own destiny would be losers too. So would Germans, who wished to retain their own currency, the deutschmark, which they had made the most credible in the world.

I was no less conscious of those millions of eastern Europeans living under communism. How could a tightly centralized, highly regulated, supra-national European Community meet their aspirations and needs? Arguably, it was the Czechs, Poles and Hungarians who were the real — indeed the last — European ‘idealists’; for to them Europe represented a precommunist past, an idea which symbolized the liberal values and national cultures that Marxism had sought unsuccessfully to snuff out.

This wider Europe, stretching perhaps to the Urals and certainly to include that New Europe across the Atlantic, was an entity which made at least historical and cultural sense. And in economic terms, only a truly global approach would do. This then was my thinking as I turned my mind to what would be the ‘Bruges Speech’.

The hall in which I made my speech was oddly arranged. The platform from which I spoke was placed in the middle of the long side so that the audience stretched far to my left and right, with only a few rows in front of me. But the message got across well enough. And it was not only my hosts at the College of Europe in Bruges who got more than they bargained for. The Foreign Office had been pressing me for several years to accept an invitation to speak there to set out our European credentials.

I began by doing what the Foreign Office wished. I pointed out just how much Britain had contributed to Europe over the centuries and how much we still contributed, with 70,000 British servicemen stationed there. But what was Europe? I went on to remind my audience that, contrary to the pretensions of the European Community, it was not the only manifestation of European identity. ‘We shall always look on Warsaw, Prague and Budapest as great European cities.’ Indeed I went on to argue that western Europe had something to learn from the admittedly dreadful experience of its eastern neighbours and their strong and principled reaction to it:

It is ironic that just when those countries, such as the Soviet Union, which have tried to run everything from the centre, are learning that success depends on dispersing power and decisions away from the centre, some in the Community seem to want to move in the opposite direction. We have not successfully rolled back the frontiers of the state in Britain only to see them reimposed at a European level, with a European super-state exercising a new dominance from Brussels.

There were, moreover, powerful non-economic reasons for the retention of sovereignty and, as far as possible, of power, by nation-states. Not only were such nations functioning democracies, but they also represented intractable political realities which it would be folly to seek to override or suppress in favour of a wider but as yet theoretical European nationhood. I pointed out:

Willing and active co-operation between independent sovereign states is the best way to build a successful European Community… Europe will be stronger precisely because it has France as France, Spain as Spain, Britain as Britain, each with its own customs, traditions and identity. It would be folly to try to fit them into some sort of identikit European personality.

I set out other guidelines for the future. Problems must be tackled practically: and there was plenty in the CAP which still needed tackling. We must have a European Single Market with the minimum of regulations — a Europe of enterprise. Europe must not be protectionist: and that must be reflected in our approach to the GATT. Finally, I stressed the great importance of NATO and warned against any development (as a result of Franco-German initiatives) of the Western European Union as an alternative to it.[104]

I ended on a high note, which was far from ‘anti-European’:

Not even I would have predicted the furore the Bruges speech unleashed. In Britain, to the horror of the Euro-enthusiasts who believed that principled opposition to federalism had been ridiculed or browbeaten into silence, there was a great wave of popular support for what I had said. It was to become noisily apparent when I addressed the Conservative Party Conference the following month in much the same vein.

But the reaction in polite European circles — or at least the official reaction — was one of stunned outrage. The evening of my speech I had a vigorous argument over dinner in Brussels with M. Martens, his Deputy Prime Minister and Foreign minister. But perhaps that was only to be expected from a small country which thought it could wield more power inside a federal Europe than outside it.

From Brussels I flew to Spain on an official visit — the first by a British Prime Minister — with the press in hot pursuit, as the story rumbled on. My host, Felipe Gonzalez, was as always the model of courtesy and charm. He prudently, if ambiguously, told me that ‘careful study’ of my Bruges speech ‘could lead to some useful conclusions’. But most of our conversations concentrated on defence and on Gibraltar. Though relations had much improved since the Brussels Agreement of 1984 which reopened the Spanish-Gibraltar border, there was tension over the use of the airport. Spain was, I knew, doing so well out of the Community that I would never get a Socialist Spanish Prime Minister to challenge the arrangements that his country found so lucrative. Equally, I had no doubt that in the long term a proud, ancient nation like Spain would baulk at continued loss of national self-determination in exchange for German-financed subsidies. But that time had not yet arrived.

VISIT TO DEIDESHEIM

The Rhodes European Council in early December of 1988 was something of a non-event in Community terms, though it was enlivened for the press by my forthright recriminations against the Belgians and the Irish for their shabby part in the Ryan affair.[105] The Community was — unusually — conscious that with the Delors Report on EMU in the making it had enough to be getting along with. Nor was the Greek presidency in a mood to press new initiatives: Mr Papandreou was in fragile health and his Government’s political prospects were highly uncertain as a result of financial scandals which had caught up with it.

Nonetheless something productive did come out of Rhodes. I had one of my bilaterals with Helmut Kohl who was more sensitive than I was to the stories which by now regularly appeared in the press about our bad personal relations. Indeed, he had acquired the habit of beginning our discussions by stressing the importance of giving the public impression of being on good terms. In fact, we did not get on at all badly. The problem was that on certain economic and social questions we thought along different lines. At Rhodes he pressed again the invitation he had first made at Chequers in July for me to meet him at his home near Ludwigshafen in the Rhineland-Palatinate in the spring: I accepted with the greatest pleasure

As always on these occasions, I was accompanied by Charles Powell. Charles was my private secretary on foreign affairs from 1984 until I left office. He worked tirelessly and fast; he was a uniquely gifted draftsman who invariably in his minutes got both flavour and substance precisely right; he managed always to be charming and diplomatic — yet recognized, as I did, that there was more to foreign policy than diplomacy. He was, in all respects, simply outstanding.

So it was that on Sunday 30 April we arrived in the charming village of Deidesheim to be met by a beaming Federal Chancellor on his home soil. In fact, there was not a great deal for him to beam about. He was in domestic political difficulties. West Germany had been rocked by the strange phenomenon of ‘Gorby-mania’ and, under intense pressure from an always instinctively neutralist German public opinion, the staunchly pro-NATO Chancellor Kohl had begun to shift his ground on the subject of short-range nuclear weapons (SNF). I took him to task on this, deploying all the arguments for a credible short-range nuclear deterrent and for sticking by previously agreed NATO decisions.[106] The discussion on this subject lasted two hours and became quite heated. Chancellor Kohl was, I thought, deeply uncomfortable, as any politician will be whose instincts and principles push him one way while his short-term political interests push him the other. But we both made an effort to live up to what our diplomats rather than the press — out as ever for a story of Anglo-German ‘hand-bagging’ — wanted.

And indeed the atmosphere at Deidesheim was otherwise amicable. It was jolly, quaint, sentimental and slightly overdone — gemütlich is, I think, the German word. Lunch consisted of potato soup, pig’s stomach (which the German Chancellor clearly enjoyed), sausage, liver dumplings and sauerkraut.

Then we drove to the great cathedral of Speyer nearby, in whose crypt are to be found the tombs of at least four Holy Roman Emperors. As we entered the cathedral the organ struck up a Bach fugue. Chancellor Kohl, knowing how much I love church music, had thoughtfully arranged this gesture. Outside, a large crowd had gathered which I understood was telling the Chancellor how right he was to get British and American tanks off German soil and stop the low-level flying.

Only afterwards did I learn that Helmut Kohl had taken Charles Powell aside behind a tomb in the cathedral crypt to say that now I had seen him on his home ground, on the borders of France, surely I would understand that he — Helmut Kohl — was as much European as German. I understood what Helmut meant and I rather liked him for it. But I had to doubt his reasoning.

This desire among modern German politicians to merge their national identity in a wider European one is understandable enough, but it presents great difficulties to self-conscious nation-states in Europe. In effect, the Germans, because they are nervous of governing themselves, want to establish a European system in which no nation will govern itself. Such a system could only be unstable in the long term and, because of Germany’s size and preponderance, is bound to be lop-sided. Obsession with a European Germany risks producing a German Europe. In fact this approach to the German problem is a delusion: it is also a distraction from the real task of German statesmanship, which must be to strengthen and deepen the post-1945 traditions of West German democracy under the new and admittedly challenging conditions of unification. That would both benefit Germany and reassure her neighbours.

EUROPEAN ELECTIONS

By now attention in British politics was turning to two issues which, much as I sought to disentangle them, became entwined: the elections to the European Parliament and the occasion of my tenth anniversary. On the second of these, I had given strict instructions to Central Office and the Party that it should be handled with as little fuss as possible. I gave one or two interviews; I received a commemorative vase from the National Union; and a rather attractive publication was issued by the Party, which was a modest success without being exactly a bestseller. But, of course, there were plenty of journalists anxious to write ‘reflective’ pieces on ten years of Thatcher and to conclude, as I knew they would, that a decade of this woman was quite enough.

In such an atmosphere it was natural that the Labour Party would claim that the 1989 European elections were a ‘referendum’ on Thatcherism in general and the Bruges approach in particular. I might have accepted that the European elections were a sort of judgement on Bruges if we had had European candidates who were Brugesist rather than federalist. With a few notable exceptions that was not the case.

As every advertising expert or political strategist will tell you, perhaps the most important requirement in any campaign is to have one clear message. But the Conservative Party now seemed to have two quite contradictory messages which Peter Brooke, as Party Chairman, and Christopher Prout, as leader of the European Democratic Group (EDG — the Conservative MEPs from Denmark, Spain and the UK) struggled to try to reconcile. Many leading members of the EDG had gone into the European Parliament because their views were out of sympathy with the rest of the party: they were a residue of Heathism. Their criticisms of the campaign strategy, of our general policy towards Europe and — whenever they thought they could get away with it — of me too rebounded directly on themselves. For, by undermining the Party’s credibility on European matters they destroyed their own political prospects.

I had put Geoffrey Howe in charge of preparing the manifesto. He tried to reach a consensus and consequently it was an unexciting document, although nicely written by Chris Patten. The advertising by contrast was sharp but not very good. I was shown the last proposed advertisement of the campaign when I was at Central Office after one of my few press conferences of the elections and was not at all happy with it. So, with various astonished creative experts standing around, I designed my own which read: ‘Conservatives have created a strong Britain. Vote Conservative today for a strong Europe.’ Uninspired, perhaps, but direct and a good deal more effective than the frivolous and obscure advertisements we had used earlier.

The overall strategy was simple. It was to bring Conservative voters — so many of whom were thoroughly disillusioned with the Community — out to vote. Perhaps it might have worked if the message had been got across with greater conviction and vigour by the candidates themselves and if we had been free of highly publicized attacks from Ted Heath and others. In fact, at the very last moment — as the regular polling information which I received subsequently confirmed — there was a late surge to the Green Party which undercut our vote. People had treated the European elections rather as they would a by-election, voting not to effect real changes in their lives but to make a protest against the sitting government. Labour were the beneficiaries and gained thirteen seats from us. For all the mitigating factors, I was not happy. The result would encourage all those who were out to undermine me and my approach to Europe.

THE MADRID EUROPEAN COUNCIL

This did not take long to occur. I have already described how Geoffrey Howe and Nigel Lawson tried to hustle me into setting a date for sterling’s entry into the ERM and how I avoided this at the Madrid Council in June 1989.[107] In fact, as I had expected, the ERM was something of an irrelevance at Madrid. The two real issues were the handling of the Delors Report on EMU and the question of whether the Community should have its own Social Charter.

I was, of course, opposed root and branch to the whole approach of the Delors Report. But I was not in a position to prevent some kind of action being taken upon it. Consequently, I decided to stress three points. First, the Delors Report must not be the only basis for further work on EMU. It must be possible to introduce other ideas, such as our own of a hard ecu and a European Monetary Fund. Second, there must be nothing automatic about the process of moving towards EMU either as regards timing or content. In particular, we would not be bound now to what might be in Stage 2 or when it would be implemented. Third, there should be no decision now to go ahead with an Inter-Governmental Conference on the Report. A fall-back position would be that any such IGC must receive proper — and as lengthy as possible — preparation.

As regards the Social Charter, the issue was simpler. I considered it quite inappropriate for rules and regulations about working practices or welfare benefits to be set at Community level. The Social Charter was quite simply a socialist charter — devised by socialists in the Commission and favoured predominantly by socialist member states. I had been prepared to go along (with some misgivings) with the assertion in Council communiqués of the importance of the ‘social dimension’ of the Single Market. But I always considered that this meant the advantages in terms of jobs and living standards which would flow from freer trade.

The Foreign Office would probably have liked me to soften my stance. They liked to remind me of how Keith Joseph in Opposition had written a pamphlet on ‘Why Britain Needs a Social Market Economy’. But the sort of ‘social market’ Keith and I advocated had precious little similarity with the way the term ‘Sozialmarktwirtschaft’ had come to be used in Germany. There it had become a kind of corporatist, highly collectivized, ‘consensus’-based economic system, which pushed up costs, suffered increasingly from market rigidities and relied on qualities of teutonic self-discipline to work at all. The extension of such a system throughout the Community would, of course, serve Germany well, in the short term at least, because it would impose German wage costs and overheads on poorer European countries which would otherwise have competed all too successfully with German goods and services. The fact that the cost of extending this system to the poorer countries would also be financed by huge transnational subsidies paid by the German taxpayer seemed to be overlooked by German politicians. But that is what happens when producer cartels rather than customer demands become dominant in any system, whether it is formally described as socialist or not.

When I went to Madrid I took with me a document setting out all the benefits enjoyed by British citizens — the Health Service, health and safety at work, pensions and benefits for the disabled, training provisions and so on. I also advanced the argument that the voluntary Council of Europe Social Charter was quite sufficient and that we did not need a Community document which would, I knew, be the basis of directives aimed at introducing the Delors brand of socialism by the back door.

Most of the first day’s discussions in Madrid were taken up with EMU. Late in the afternoon we turned to the Single Market and the ‘social dimension’. I have already described how I used my first speech to spell out my conditions for entering the ERM. But I also backed Poul Schlüter who challenged paragraph 39 of the Delors Report, which essentially spelt out the ‘in for a penny, in for a pound approach’ which the federalists favoured. The other extreme was represented by France. President Mitterrand insisted on setting deadlines for an IGC and for completion of Stages 2 and 3, which at one point he suggested should be 31 December 1992.

The argument then turned to the Social Charter. I was sitting next to Sr. Cavaco Silva, the rather sound Portugese Prime Minister who would doubtless have been sounder still if his country was not so poor and the Germans quite so rich.

‘Don’t you see’, I said, ‘that the Social Charter is intended to stop Portugal attracting investment from Germany because of your lower wage costs? This is German protectionism. There will be directives based on it and your jobs will be lost.’ But he seemed unconvinced that the charter would be anything other than a general declaration. And perhaps he thought that if the Germans were prepared to pay enough in ‘cohesion’ money the deal would not be too bad. So I was alone in opposing the charter.

Ironically, when — on the second day of the Council — it came to the drafting of the section of the communiqué which dealt with EMU it was France who was the odd man out. Insofar as there could be an acceptable text which advanced us towards an unacceptable objective I felt that I had got it. All my requirements were satisfied by it. We could not stop an IGC because all it needed was a simple majority vote, but its outcome had been left open and its timing was unclear. President Mitterrand’s attempt to have a deadline for Stages 2 and 3 inserted in the text was unsuccessful. To the irritation of Sr. Gonzalez, who had hoped to avoid more discussion, I made what I described as a ‘unilateral declaration’. It ran:

The phrasing was unpoetic but the meaning clear. This prompted President Mitterrand to make his own declaration to the effect that the IGC should meet as soon as possible after 1 July 1990. And so the Madrid Council came to an end not with a bang but two whimpers.

THE FRENCH REVOLUTION BICENTENNIAL

My disagreements with the French never led to ill-feeling. This was lucky for I was shortly to attend the G7 in Paris which had largely been overtaken by the hugely expensive — and for Parisians wildly inconvenient — celebrations of the Bicentennial of the French Revolution. The French Revolution is one of the few real watersheds in the history of political ideas. For most — though not all — Frenchmen it is nowadays accepted as the basis of the French state, so that even the most conservative Frenchman seems to sing ‘the Marseillaise’ with enthusiasm. For most other Europeans it is regarded with mixed feelings because it led to French armies devastating Europe, but it also stimulated movements which led eventually to national independence.

For me as a British Conservative, with Edmund Burke the father of Conservatism and first great perceptive critic of the Revolution as my ideological mentor, the events of 1789 represent a perennial illusion in politics. The French Revolution was a Utopian attempt to overthrow a traditional order — one with many imperfections, certainly — in the name of abstract ideas, formulated by vain intellectuals, which lapsed, not by chance but through weakness and wickedness, into purges, mass murder and war. In so many ways it anticipated the still more terrible Bolshevik Revolution of 1917. The English tradition of liberty, however, grew over the centuries: its most marked features are continuity, respect for law and a sense of balance, as demonstrated by the Glorious Revolution of 1688. When I was questioned about what the French Revolution had done for human rights by journalists from Le Monde on the eve of my visit I felt I ought to point out some of this. I said:

The headline over my remarks in Le Monde ran ‘“Les droits de l’homme n’ont pas commencé en France,” nous déclare Mme Thatcher.’

It was on this note that I arrived in Paris for the Bicentennial. I brought with me for President Mitterrand a first edition of Charles Dickens’s A Tale of Two Cities, which he, a connoisseur of such things, loved, but which also made somewhat more elegantly the same point as my interview. The celebrations themselves were on the scale which only a Hollywood studio — or France — could manage: an almost endless procession, a military parade, an opera with pride of place in the set being given to a huge guillotine.

The G7 summit itself definitely took second place to this pageantry. Indeed, this posed a potential problem. A large number of Third World heads of government had been invited to Paris to the celebrations and there seemed some prospect of President Mitterrand suddenly seeking to relaunch another ‘North-South’ dialogue of the sort we had thankfully left behind at Cancún.[108] I alerted President Bush — arriving for his first G7 — to this when I had a bilateral meeting with him at the US Embassy before the summit. He said that he thought there was a problem in blocking such a move without appearing a ‘parsimonious bunch of don’t cares’. I said that this did not seem to me to be much of a problem. Nor did it prove to be. The French in the end thought better of introducing this controversial idea, preferring to rest on the level of generalities.

George Bush and I made the familiar pleas for free trade under the GATT. President Mitterrand — with some help from me — got the text of his Declaration on Human Rights (with its obvious revolutionary symbolism) accepted almost word for word. There were discussions of the environment and drugs. In fact, everyone left happy and little of note was achieved. It was the sort of occasion which in earlier years had given international summitry a bad name. But President Mitterrand’s final dinner for heads of government held in the new pyramid in the forecourt of the Louvre was one of the best I have ever eaten. Some traditions are too important for even the French to overthrow.

CABINET RESHUFFLE

I returned to London conscious of unfinished business. The European election results had no particular significance in themselves. But they had revealed a groundswell of discontent which could not be ignored. That discontent was most in evidence in the Parliamentary Party. A minority of Conservative MPs were uneasy about the line I was taking on Europe. But more important was the fact that there was a widespread restlessness because avenues of promotion into the ranks of the Government seemed blocked. I too felt that changes were required. When a prime minister has been in power for ten years he or she must be that much more aware of the dangers of the government as a whole appearing to be tired or stale. Since I hardly ever felt seriously tired and never felt stale I had no intention of giving that impression. I decided to make some changes in the Cabinet to free up posts at every level and bring on some new faces.

I had also been thinking about my own future. I knew that I had a good few more years of active service left in me and I intended to see through to the end the restoration of our economic strength, the fulfilment of our radical social reforms and that remodelling of Europe on which I had embarked with the Bruges speech. I wanted to leave behind me when I went, perhaps halfway into the next Parliament, several candidates with proven character and experience from whom the choice of my successor could be made. For various reasons I did not believe that any of my own political generation were suitable. ‘Of course, she would say that, wouldn’t she,’ may be the obvious retort. But closer consideration will, I hope, show I had good reasons. If one considers the possibilities — first among those who were of my own way of thinking: Norman Tebbit was now concentrating on looking after Margaret and on his business interests; Nick Ridley who never suffered fools gladly would not have been acceptable to Tory MPs; Cecil Parkinson had been damaged in the eyes of the old guard. Geoffrey Howe I shall come to shortly. Nigel Lawson had no interest in the job — and I had no interest in encouraging him. Michael Heseltine was not a team player and certainly not a team captain. Anyway, I saw no reason to hand over to anyone of roughly my age while I was fit and active. In the next generation, by contrast, there was a variety of possible candidates who ought to be tested in high office: John Major, Douglas Hurd, Ken Baker, Ken Clarke, Chris Patten and perhaps Norman Lamont and Michael Howard. I felt it was not for me to select my successor. But I did have the obligation to see that there were several proven candidates from whom to choose.

I was, however, wrong on one important matter. Of course, I understood that some of my Cabinet colleagues and other ministers were more to the left, some more to the right. But I believed that they had generally become convinced of the Tightness of the basic principles as I had. Orthodox finance, low levels of regulation and taxation, a minimal bureaucracy, strong defence, a willingness to stand up for British interests wherever and whenever threatened — I did not believe that I had to open windows into men’s souls on these matters. The arguments for them seemed to me to have been won. I now know that such arguments are never finally won.

A little earlier I left aside Geoffrey Howe from my discussion of possible leadership candidates. Something had happened to Geoffrey. His enormous capacity for work remained, but his clarity of purpose and analysis had dimmed. I did not think he was any longer a possible leader. But worse than that, I could not have him as Foreign Secretary — at least while Nigel Lawson was Chancellor — after his behaviour on the eve of the Madrid Council. Perhaps if I had known that Nigel was about to resign I would have kept Geoffrey at the Foreign Office for at least a little longer. As it was, I was determined to move him aside for a younger man.

I decided that two ministers should leave the Cabinet altogether. Paul Channon was loyal and likeable. But Transport was becoming a very important department in which public presentation was at a premium — what with the appalling disasters which seemed to plague us at this time and in the light of the traffic congestion which Britain’s new prosperity brought with it. I asked Paul to leave and he did so with perfect good humour. I appointed Cecil Parkinson to his place. Deciding to ask John Moore to go was even more of a wrench. He was of my way of thinking. At Health it was he — rather than his successor Ken Clarke — who had really got the Health review under way. At Social Security, after I split the DHSS into two departments, he had been courageous and radical in his thinking about dependency and poverty. But, as I have explained, John had never fully recovered, at least psychologically, from the debilitating illness he suffered while Secretary of State at the old combined DHSS. So I asked him to make way and appointed Tony Newton, a stolid, left-inclining figure but one with a good command of the House and of his brief. I also brought into the Cabinet Peter Brooke who had been a much loved and utterly dependable Party Chairman. He wanted to be Ulster Secretary and I gave him the job, moving Tom King to the Defence Ministry, vacated by George Younger who wanted to leave the Government to concentrate on his business interests. George’s departure was something of a blow. I valued his common sense, trusted his judgement and relied on his loyalty. His career is proof of the fact that, contrary to myth, gentlemen still have a place in politics.

But there were three main changes which determined the shape of the reshuffle and the reception it received. In reverse order of importance: I moved Chris Patten to the Environment Department to succeed Nick Ridley, who went to the DTI (David Young left the Cabinet at his request and became Deputy Chairman of the Party); I moved Ken Baker to become Party Chairman from the Department of Education, where he was succeeded by John MacGregor. And John was succeeded by John Gummer who entered the Cabinet as Minister for Agriculture.

But first, and crucially, I called in Geoffrey Howe and said that I wanted him to leave the Foreign Office, where I intended to put John Major. It was predictable that Geoffrey would be displeased. He had come to enjoy the trappings of his office and his two houses, in Carlton Gardens in London and Chevening in Kent. I offered him the Leadership of the House of Commons at a time when the House was shortly to be televised for the first time. It was a big job and I hoped he would recognize the fact. But he just looked rather sullen and said that he would have to talk to Elspeth first. This, of course, held up the whole process. I could see no other ministers until this matter was decided. Geoffrey also, I believe, saw David Waddington, the Chief Whip, who had advised me to keep Geoffrey in the Cabinet in some capacity. David meant well by this advice, but perhaps I should have asked Geoffrey to go altogether, for he clearly never forgave me. Back and forth to Downing Street messages passed in the course of which I offered Geoffrey the Home Office — knowing in advance that he would almost certainly not accept — then, after conferring with Nigel Lawson, Dorneywood, the Chancellor’s country house which I rightly thought that he would accept, and finally, with some reluctance and at his insistence, the title of Deputy Prime Minister which I had held in reserve as a final sweetener. This is a title with no constitutional significance but which Willie Whitelaw (until his stroke in December 1987 and subsequent resignation the following month) had almost made his own because of his stature and seniority. But because Geoffrey had bargained for the job, it never conferred the status which he hoped. In practical terms it just meant that Geoffrey sat on my immediate left at Cabinet meetings — a position he may well have come to regret.

The delay in concluding the reshuffle was bound to prompt speculation. But it was, I am told, Geoffrey’s partisans who leaked the content of our discussions in a singularly inept attempt to damage me. As a result he received a very bad press about the houses, which was not unmerited, but which he doubtless blamed on me.

John Major was not at first very keen on becoming Foreign Secretary. A modest man, aware of his inexperience, he would probably have preferred a less grand appointment. But I knew that if he was to have a hope of becoming Party leader, it would be better if he had held one of the three great offices of state. I should add that I had not, contrary to much speculation, reached a firm decision that John was my preferred successor. I had simply concluded that he must be given wider public recognition and greater experience if he was to compete with the talented self-publicists who would be among his rivals. Unfortunately, because of Nigel Lawson’s resignation, he had no opportunity to show what he was made of at the Foreign Office before returning to the Treasury.

In moving Nick Ridley to the DTI I was generally seen to be responding to the criticisms of him by the environmental lobby. This was not so. I knew he wanted a change. I was, of course, quite aware of the fact that the romantics and cranks of the movement did not like it when he insisted on basing policy on science rather than prejudice. I also suspected that from Chris Patten they would get a more emollient approach. Certainly, I subsequently found myself repeatedly at odds with Chris, for with him presentation on environmental matters always seemed to be at the expense of substance. But I also wanted Nick in the second most important economic department because of the need to have his support on the key issues of industry and Europe.

Ken Baker’s appointment as Party Chairman was an attempt to improve the Government’s presentation. Ken — like Chris Patten — had started off on the left of the Party. But unlike Chris, Ken had genuinely moved to the centre. In any case his great skills were in publicity. And I never forgot that for every few Thatchers, Josephs and Ridleys you need at least one Ken Baker to concentrate on communicating the message. I was also happy now to appoint John MacGregor with his Scottish devotion to Education as the right person to deal with the nuts and bolts of making our education reforms work. My appointment of Ken Baker to the chairmanship was a success. He served me with vigour and enthusiasm right to the end, however hot the political kitchen became. We had never been close political allies, so I was doubly indebted to him for this.

The immediate impact of the reshuffle was much worse than I had expected because of the stories of what Geoffrey had or had not been offered and demanded. Once the initial reaction had passed, it was clear that we benefited from the new look the Government had acquired. More seriously, though, Geoffrey was still well placed to make trouble for me and the balance of the Cabinet had slipped slightly further to the left with the promotion of Chris Patten and John Gummer and the departure of John Moore more than compensating for the arrival of Norman Lamont, who was on the right. Of course, none of this mattered as long as crises which threatened my authority could be avoided.

THE FRANCO-GERMAN AXIS — AND ‘POLITICAL UNION’

In fact they came not in single spies but in battalions. The winter of 1989 saw those revolutionary changes which led to the collapse of communism in eastern Europe. In the longer term the emergence of free, independent and anti-socialist governments in the region would provide me with potential allies in my crusade for a wider, looser Europe. But the immediate effect, through the prospect and then the reality of German reunification, was to strengthen the hand of Chancellor Kohl and fuel the desire of President Mitterrand and M. Delors for a federal Europe which would ‘bind in’ the new Germany to a structure within which its preponderance would be checked. Although these matters are best dealt with later in the context of East-West relations, they formed the background to the ever more intense battles on monetary and political union in which I henceforth found myself engaged.

After Spain the European Community presidency passed to France. Partly in order to ensure that eastern Europe did not dominate the European Council scheduled for December at Strasbourg, President Mitterrand called a special Council in November in Paris specifically to discuss the consequences of events in the East and the fall of the Berlin Wall. He was also pressing hard for the creation of a European Bank of Reconstruction and Development (EBRD) in order to channel investment and assistance to the emerging democracies. I was sceptical about whether such an institution was really necessary. The case had not been made that aid of this dimension had to go through a European institution, as opposed to national or wider international ones. I conceded the point in Strasbourg; but my wishes were eventually met because the EBRD now sensibly involves the Americans and Japanese, not just the Europeans. President Mitterrand and I finally put together a deal in 1990: I agreed that his protégé Jacques Attali would be EBRD President and he agreed that the bank would be situated in London.

To some extent the French strategy of holding an ‘unofficial’ Paris Council on East-West relations worked because the Strasbourg Council concentrated — at least in its official sessions — heavily on the more narrowly European matters of EMU and the Social Charter. I was as strongly opposed to the holding of an IGC on economic and monetary union as ever. Equally, I had little hope of blocking it altogether. The French aim was to set a date for the IGC and this I still hoped to stave off. Until a few days before the start of the Council we were optimistic that the Germans would support us in calling for ‘further preparation’ before the IGC met. But in a classic demonstration of the way in which the Franco-German axis always seemed to re-form in time to dominate the proceedings, Chancellor Kohl went along with President Mitterrand’s wishes. By the time I arrived in Strasbourg I knew that I would be more or less on my own. I decided to be sweetly reasonable throughout, since there was no point in causing gratuitous offence when I could not secure what I really wanted. It was agreed that the IGC would meet under the Italian presidency before the end of 1990, but after the German elections. As for the Social Charter at which I had directed my fire at Madrid, I reaffirmed that I was not prepared to endorse the text, my determination having been if anything strengthened by the fact that the Commission was now proposing to bring forward no fewer than forty-three separate proposals, including seventeen legally binding directives, in the areas which the charter covered. That effectively ended the discussion of the charter from our point of view. On EMU I would return to the fray in Rome.

In the first half of 1990, however, there was the Irish presidency to contend with. The unwelcome habit of calling extra ‘informal’ Councils proved catching. Charles Haughey decided that another one was needed in order to consider events in eastern Europe and the implications for the Community of German unification. Perhaps that is what Mr Haughey really envisaged, but for others this was just an opportunity to keep up the federalist momentum.

‘Political union’ was now envisaged alongside ‘monetary union’. In a sense, of course, this was only logical. A single currency and a single economic policy ultimately imply a single government. But behind the concept of ‘political union’ there lay a special Franco-German agenda. The French wanted to curb German power. To this end, they envisaged a stronger European Council with more majority voting: but they did not want to see the powers of the Commission or the European Parliament increased. The French were federalists on grounds of tactics rather than conviction. The Germans wanted ‘political union’ for different reasons and by different means. For them it was partly the price of achieving quick reunification with East Germany on their own terms and with all the benefits which would come from Community membership, partly a demonstration that the new Germany would not behave like the old Germany from Bismarck to Hitler. In this cause, the Germans were prepared to see more powers for the Commission and they gave special importance to increasing the power and authority of the European Parliament. So the Germans were federalists by conviction. The French pushed harder for political union: but it was the agenda of the Germans, who were increasingly the senior partner of the Franco-German axis, which was dominant.

For my part I was opposed to political union of either kind. But the only way that I could hope to stop it was by getting away from the standard Community approach whereby a combination of high-flown statements of principle and various procedural devices prevented substantive discussion of what was at stake until it was too late. Within the Community I must aim to open up the divisions between the French and the Germans. At home I must point out in striking language just what ‘political union’ would and would not mean if it was taken at all seriously. Far too much of the Community’s history had consisted of including nebulous phrases in treaties and communiqués, then later clothing them with federal meaning which we had been assured they never possessed. Consequently, I decided that I would go to Dublin with a speech which would set out what political union was not and should never be. This seemed the best way of having all concerned define — and disagree about — what it was.

There was no doubt about how determined the French and Germans were in their federalist intentions. Shortly before the Council met in Dublin at the end of April President Mitterrand and Chancellor Kohl issued a joint public statement calling for the Dublin Council to ‘initiate preparations for an Inter-Governmental Conference on political union’. They also called on the Community to ‘define and implement a common foreign and security policy’. President Mitterrand and Chancellor Kohl chose at about the same time to send a joint letter to the President of Lithuania urging temporary suspension of that country’s declaration of independence in order to ease the way for talks with Moscow. As I took some pleasure in pointing out in my subsequent speech at the Council, this was done without any consultation with the rest of the Community, let alone NATO — it demonstrated that the likelihood of a common ‘foreign and security policy’ was somewhat remote.

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.

EMU AND THE GATT

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.

THE ROME EUROPEAN COUNCIL

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.[109] 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:

The United Kingdom, while ready to move beyond Stage 1 through the creation of a new monetary institution and a common Community currency, believes that decisions on the substance of that move should precede decisions on its timing.

They were not interested in compromise. My objections were heard in stony silence. I now had no support. I just had to say no.

In three years the European Community had gone from practical discussions about restoring order to the Community’s finances to grandiose schemes of monetary and political union with firm timetables but no agreed substance — all without open, principled public debate on these questions either nationally or in European fora. Now at Rome the ultimate battle for the future of the Community had been joined. But I would have to return to London to win another battle on which the outcome in Europe would depend — that for the soul of the Parliamentary Conservative Party.