Downing Street Years - Margaret Thatcher [474]
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