Downing Street Years - Margaret Thatcher [450]
So at our meeting on the evening of Thursday 31 May I tried to stiffen John’s resolve and widen his vision. He reiterated his concern that we would find ourselves ‘isolated’ in the run up to a general election. He argued that to avoid this we should agree to a treaty amendment establishing the aim of full EMU, but insist on an ‘opting-in’ provision which left it to individual member states whether and when to join. I rejected this. I said that it was psychologically wrong to put ourselves in a frame of mind in which we accepted the inevitability of moves towards EMU rather than attacking the whole concept. We had arguments which might persuade both the Germans — who would be worried about the weakening of anti-inflation policies — and the poorer countries — who must be told that they would not be bailed out of the consequences of a single currency, which would therefore devastate their inefficient economies. I said that I did not regard John’s proposed ‘opting-in’ mechanism as an adequate defence against being drawn into full EMU. The same reasoning which led him now to argue that we had no alternative but to accept the treaty objective of full EMU would be employed later to concede that we could not afford to be left out of the move to a single currency either. So accepting the opting-in mechanism now would be tantamount to joining eventually and I was not prepared to make that commitment.
We had to use the time between now and the IGC in December to try to undermine the will of the other states to move to Stage 3 of the Delors Report and to develop a wider vision of the way ahead. I rehearsed once again my objection to the establishment of tight blocs of countries which stood in the way of a wider internationalism. I said that we must build on the American proposals for strengthening the political aspects of NATO, by suggesting a trade dimension to the alliance which would join Europe to a North American (US and Canada) Free Trade Area. I saw this as a way of averting the dangerous prospect of a world divided into three protectionist trading blocs, based on the European Community, Japan and the United States, which over time could become seriously unstable. I also suggested that we look at an idea on which Alan Walters had been working — a system of linking currencies to an objective reference standard, such as a commodity index, which would work automatically, without the bureaucratic paraphernalia and the intrusive federalism of the Delors proposals. Such a system might include both the dollar and the yen. I said that we had to set out our ideas boldly at international summits, emphasizing that we were going beyond the narrow European goals and were much more in tune with wider political developments. I was aware that this was visionary stuff: but if there was ever a time for vision this was it. So I had the Treasury and the Foreign Office work up these ideas, which without noticeable enthusiasm they did.
I felt that, much as I liked John Major and valued his loyalty, we had to bring others who were more at ease with large ideas and strategies into the discussion. So — as well as Douglas Hurd, who as Foreign Secretary was necessarily involved, for EMU was by now at the centre of debate in the European Council — I brought in Nick Ridley. I asked Nick to prepare a paper on EMU and the alternatives and he attended my meeting with John and Douglas on the morning of Tuesday 19 June before the forthcoming Dublin European Council. Nick made two contributions of great importance to the concept of an alternative Europe, going in a direction different from that of the inward-looking, statist and protectionist Europe with which we were faced. The first was to stress that the Delors-style Europe with a single currency would obstruct the enlargement of the Community. Our own vision of a wider, freer, more flexible Europe would be much more accommodating to the countries of the post-communist world. The second