Downing Street Years - Margaret Thatcher [337]
But a percentage of what? Everyone could agree that it would be a percentage of the gap between the sums we paid into the Community and the sums we received from it. The French proposed in calculating our contributions to take into account only those payments to the Community that Britain made under VAT. That formula, however, ignored the considerable sums we also contributed through tariffs and levies. All our previous proposals had been based on this larger sum, but in the end we had to accept the calculation based on VAT.
And, finally, how big a percentage would the rebate be? If we were to drop the threshold idea — and therefore any link between net contribution and prosperity — it would need to be pretty big. Indeed, I had in mind a figure of well over 70 per cent. But it seemed from the Foreign ministers’ meeting that we were now likely to be offered at most something between 50 and 60 per cent with a temporary two-year sweetener that would bring the refund up to 1000 million ecus a year for the first two years. How Geoffrey, who had been splendidly staunch in the negotiations so far, had allowed the Foreign ministers to reach such a conclusion I could not understand.
I was in despair. I told the heads of government that Britain had never been treated fairly from the beginning: I was not prepared to go back to talking about a temporary sum: if this was the best they had to offer the Fontainebleau Council would be a disaster.
Geoffrey, civil servants and I then met to discuss what should be done. Our officials — who, I knew, had the brains, experience and determination required to retrieve something from this débâcle — set to work with their opposite numbers all through the night and into the early morning. As a result of their efforts, the next day began a great deal better than the previous one had ended.
President Mitterrand’s and Chancellor Kohl’s breakfast the following morning probably cleared the way for a settlement. President Mitterrand opened the formal session by saying that we must try for an agreement on the budget, but if we had not succeeded by lunchtime we should go on to other things. I made it clear that I was now ready to negotiate on the basis of a percentage agreement, but I held my ground for a figure of over 70 per cent. Quite soon, and sensibly, President Mitterrand adjourned the main session so that bilateral meetings could take place.
How hard should I hold out on the figure? As I have said, there were good reasons for my wanting a settlement now. And with the Community running right up against the financial buffers of the 1 per cent VAT ceiling (on raising which they knew we had a veto) there were equally good reasons for other Community members to be cooperative. I saw President Mitterrand and Chancellor Kohl separately. At this stage the French President would not move above 60 per cent. Chancellor Kohl would go as far as 65 per cent. I carefully appraised the situation and came to the conclusion that I could obtain a deal on the basis of a two-thirds refund. But I was determined to get the full 66 per cent. It was only when the full session resumed that I managed to do so. I said that it would be absurd to deny me my 1 percentage point. The French President smiled and said: ‘Of course, Madame Prime Minister, you must have it.’ And so the agreement was reached.
Or almost. When the agreement was being drafted an attempt was made to exclude the costs of enlargement from this refund arrangement. I resisted this fiercely and won. The heads of government also agreed to release our 1983 refund.
Immediately, Chancellor Kohl raised his point about a special subsidy for his farmers. He said that as Germany had facilitated the budget settlement by providing the greater part of the money, he felt he was entitled to subsidize his own farmers, in effective contravention of the CAP. This did not please the Dutch because they would in practice have to subsidize their farmers to the same extent; but the Netherlands had neither the stomach nor the strength to oppose Germany. So Chancellor Kohl got