Downing Street Years - Margaret Thatcher [192]
Had I had to argue my case on grounds of equity alone I would have been far from sanguine about the likely outcome. But by now the Community was on the edge of bankruptcy: the exhaustion of its ‘own resources’ was only months away and it was possible to increase them only by agreement of all the member states to raise the 1 per cent VAT ‘ceiling’. This had the effect attributed by Dr Johnson to the imminent prospect of the gallows: the minds of our European partners were beginning to concentrate wonderfully. The requirement of unanimity gave me a strong hand and they knew that I was not the person to underplay it. Of course, it would have been perfectly possible for the Community to live within the discipline imposed by the 1 per cent ceiling, if it had had the will to cut out the waste, inefficiency and plain corruption in its own programmes: after all, VAT revenues are remarkably buoyant. But I knew full well that the will was lacking and that profligacy and that particular degree of irresponsibility which is bred by unaccountable bureaucracy would continue for as long as difficult decisions could be postponed.
It was clear that West Germany’ attitude would be crucial. The Germans were the Community’ largest net contributors. Admittedly, West German farmers enjoyed the benefits of the extravagant Common Agricultural Policy, but at a certain point the interests of the West German taxpayer would become paramount. The Germans followed our lead in opposing an increase in ‘own resources’ until the Community’ finances had been put on a sounder footing. But we had some suspicions that they would waver when the pressure mounted. They also resented — and I do not blame them — having to contribute towards the funding of the British rebate which I had won. But my answer to that, of course, was to urge them to exercise leadership to sort out the fundamental imbalance of the Community’ finances once and for all. Chancellor Kohl was not usually the most energetic of Council participants unless some German domestic issue was directly involved, but I knew that he would want to make a success of the Stuttgart Council to crown his first European presidency. I hoped that this and the other circumstances I have described would work in favour of an outcome I could accept.
The Council decided to leave negotiations on the future financing of the Community to the Foreign and Finance ministers, initially at least; they would report to the next full Council in December. The Commission had already produced its own proposals, some of which we favoured and others we did not. A refund was agreed for Britain to cover the year 1983. But the real decisions were postponed for another six months — six months nearer the time when the Community would find itself broke.
I was not disappointed with this outcome and I subsequently took every opportunity to praise Chancellor Kohl’ handling of the Council. The results were rather better for Britain than they first appeared. The 1983 refund was less than we might have hoped. But when you took the four years to 1983 together we had obtained a refund of about two-thirds of our unadjusted net contribution, which was the goal we had publicly set ourselves. Considering the strong opposition we met from France, I felt that was a useful achievement. There was some speculation in the British newspapers that I had weakened the British position as regards the increase in the VAT ‘ceiling’, but this was only a negotiating ploy and a close reading of the communiqué — as well as any reading of my own mind — would demonstrate that I had done no such thing. (This was, indeed, to become very publicly apparent before the end of the year.)
There was one other aspect of the Stuttgart Council. The Council issued what was called — in the grandiloquent language which had been used about this subject since before we joined — a ‘Solemn Declaration on European Union’. I took the