Athens Summit

HC Deb 07 December 1983 vol 50 cc321-36 3.30 pm

The Prime Minister (Mrs. Margaret Thatcher)

With permission, Mr. Speaker, I shall make a statement on the European Council in Athens on 4 to 6 December at which my right hon. and learned Friend the Foreign Secretary and I represented the United Kingdom.

At its previous meeting in Stuttgart, the European Council had agreed that it was essential at this stage to consider the long-term future of the European Community and to tackle certain fundamental problems — in particular, agricultural surpluses, effective control of Community spending and a fairer distribution of the burden of financing the Community. We were all agreed that the Stuttgart package had to be taken as a whole and that decisions on each item depended on agreement on the rest. Unfortunately, the Community was not ready at Athens to take the necessary decisions. A number of member states wished to follow past practices and adopt a number of unsatisfactory compromises.

On agriculture, the main issues discussed at Athens were price policy and the limitation of open-ended guarantees, action to curb the milk surplus, import and export policy, the proposed oils and fats tax and monetary compensatory amounts.

There was a considerable difference of view on price policy, on the volume of milk that might be subject to quota and super-levy and on various requests and proposals from some countries for exemptions. The United Kingdom is among those member states that consider that a rigorous price policy is essential, that any other arrangements for milk such as a super-levy should be nondiscriminatory and that the surpluses of many other Community products need to be dealt with as well. Four member states, including the United Kingdom, made it clear that the proposal for an oils and fats tax was unacceptable. On monetary compensatory amounts, the differences between France and Germany were not resolved.

With regard to the unfair budgetary burden, there was some recognition that a lasting solution must be found that would put limits on the net contributions of member states—limits that are related to ability to pay. That would be implemented by correcting the VAT contribution of the member state concerned in the following year. The majority of countries wished to establish a lasting system on those lines, which would be part and parcel of any decision on new resources. Unfortunately, although preparatory negotiations on the matter had made considerable progress, not all member states agreed to this approach, and, accordingly, no decisions could be taken. Similarly, with the problem of Community expenditure, the will to control it effectively was just not present at the Athens meeting.

Even the ideas recently advanced by the French Government were not accepted by all countries as a basis for discussion. I made it clear that there must be strict guidelines for agricultural spending, which must be embodied in the budgetary procedures of the Community. Unless the agricultural and financial issues can be resolved, the resources for new policies such as cooperation in research and development are very limited indeed, although many of us recognise that in the long run they are very important and that room should be made for them.

International questions such as Cyprus and the Lebanon were not discussed in plenary session, but were, of course, much discussed outside it. No official statements were issued on these or any other matters.

It is regrettable that the European Council was not able on this occasion to make the necessary progress for the next stage of the Community's development. I had made it clear that I would not consider an increase in own resources unless there was agreement on a fair sharing of the budgetary burden and an effective control of agricultural and other expenditure. There was no such agreement and, therefore, for the United Kingdom, the question of an increase of the Community's resources did not arise.

Mr. Neil Kinnock (Islwyn)

May I first ask the Prime Minister about the things that are almost absent from her statement and, apparently, were almost absent from the discussions in Athens? I understand that her wish was to prevent Heads of State from discussing anything until they had resolved the internal issues of the Community. Is that why no significant attention was given to subjects such as Cyprus, the world recession and, particularly, the Lebanon?

Is the Prime Minister aware that yesterday we were given what we interpreted as an undertaking—I think a genuine undertaking—that as part of the review that the Government are undertaking of the British presence in Beirut, we could look forward to a statement on the Prime Minister's return? No such statement has been forthcoming. Therefore, will the Prime Minister give some time to that matter in her reply to me or to other hon. Members, because there is great concern at the moment, especially in the light of reports that a British Land-Rover has been knocked out and that British positions have been under fire?

I have some questions about specific issues discussed in Athens. It appears from press reports that the Prime Minister has tried to lay the blame for the unmitigated failure of the Athens summit on everyone but herself. Of course, we are used to that from the banana skin Prime Minister. Will she tell us whether she remembers that, on her return from the Stuttgart summit in late June, she said that she expected great success in Athens on budgetary discipline, equitable sharing of burdens and control of expenditure? She is quoted in today's newspapers as saying that the deepening crisis will sharpen our partners' minds and her quoted statements strongly imply that our partners will be brought to order by the time of the Brussels meeting in March. What does the right hon. Lady think will change between Athens in December and Brussels in March?

Mr. Nicholas Winterton (Macclesfield)

The weather.

Mr. Kinnock

Why does the Prime Minister believe that the French will change their position during those months? Does she really think that fundametal reforms are more likely under a French Presidency of the Council than they have been under the six months of the Greek Presidency?

Thanks to the failure in Athens, we have no agreement on the 1984 rebate, and the European Parliament could decide not to release the rebate for 1983, which was agreed at Stuttgart. Consequently, who will suffer the most pressure in the build-up to Brussels — ourselves or countries whose Governments oppose significant reforms in the system of financing?

Will the Prime Minister tell the House what response she made in Athens to the positive proposals put to her for joint action by member Governments to raise falling investment and to reduce unemployment across the whole continent of Europe? Will she accept that, especially in the light of our own prolonged slump under her Government —[Interruption.]

Mr. Speaker

Order.

Mr. Kinnock

Certain hon. Members could not give any demonstrations of democracy to our partners in Europe.

In the light of the perpetuated slump in this country under her Government, does the Prime Minister not recognise that the continent must invest, trade and produce its way out of depression and thus avoid the waste and horror of 20 million unemployed in Europe by the 1990s? What constructive response has the Prime Minister given to those proposals? Few authorities in this country or among our partners could have thought that she was serious about advancing British interests in Athens, when, in his autumn statement, her own Chancellor budgeted for an increase of £420 million, or 50 per cent., in United Kingdom spending on agricultural intervention next year? Was not that a clear signal to everyone, including those with whom the right hon. Lady was negotiating, that the Government either had no clear intention of securing reform or had given up on it altogether? Was the Chancellor giving a signal? [Interruption.] Apparently the right hon. Gentleman does not understand what I mean. Was it deliberate, or was it just stupid? In either case, does the Prime Minister recognise that the publication of those figures undermined her negotiating posture at the summit? Do not all those considerations—[HON. MEMBERS: "Get on with it."] Hon. Members are going to get it. Our country has been let down again, and they are going to get more of it.

The fact that the right hon. Lady has fallen into the period of the French presidency, the failure of Athens itself, the rebate problem and the incompetence of her negotiating stature leave us even worse off now than when she went to Athens.

In a spirit of helpfulness and without resorting to any short-term expedients—[Interruption.]

Mr. Speaker

Order. A certain latitude is always allowed to the Leader of the Opposition, but I hope that he will come to his conclusion soon.

Mr. Kinnock

I shall seek earnestly to respond to your request, Mr. Speaker, but we have just heard one of the most superficial and inadequate statements — [HON. MEMBERS: "Yes—yours!"] If the right hon. Lady will not volunteer any matters of substance, we will get the answers out of her, even if it takes longer, by asking questions.

In a spirit of helpfulness and without resorting to any short-term expedients—which I abominate as much as the right hon. Lady does — I suggest that the Prime Minister could gain much greater progress by the time of Brussels, first, by assuring the House that there is no question now of asking us for any increase in our own resources VAT contributions to the EC. [HON. MEMBERS: "She said that."] Hon. Gentlemen were not listening. The choice of words in the Prime Minister's statement was a great deal more delicate than it had to be.

Secondly, will the Prime Minister insist at the farm price review next year, if no progress has been made. that there will be a reduction in British farm prices in order to reduce the cost to the common agricultural policy?

Finally, will the right hon. Lady now declare her determination to withhold all or part of our contributions until agreement is reached upon fundamental changes in the Common Market which remove the persistent disadvantages of British membership? Will she accept that, unless she is prepared to take such action, none of her tantrums or posturing will impress the British people in the slightest?

The Prime Minister

The right hon. Gentleman's first point was about Cyprus. I had discussions in the margins with the Greek Prime Minister. There is of course nothing new to report on Cyprus. We fully support the activities of the Secretary-General of the United Nations, who is using his good offices to try to bring the two communities together in a unitary Cyprus. We drafted the United Nations Security Council resolution and worked very hard to get it a very good vote. The right hon. Gentleman will be aware of its wording. The matter is in the hands of the Secretary-General and we support his activities.

As a guarantor power, we have twice contacted the other two guarantor powers in an attempt to set up talks. So far we have not succeeded, because the conditions set by the two parties for sitting down together are at present inconsistent. We shall persist in our efforts.

There were talks between the countries represented in the multinational force in the Lebanon. We are in the multinational force together and we believe that we must continue to consult each other and to make decisions together. [Interruption.] There is to be a meeting tomorrow of the Foreign Ministers of the four countries in the multinational force. It is clear that the services of the British contingent are much valued locally by, I believe, all parts of the Lebanon community——

Mr. Andrew Faulds (Warley, East)

The Dnuze and the Moslems?

The Prime Minister

—and I believe that they would be upset or even dismayed if our small but valuable force pulled out. It is a force of total integrity, in which we can take pride. It has two jobs: guarding the building where the security and truce talks are taking place, and engaging in reconnaissance in Beirut. I believe that there would be considerable repercussions not only among the communities in the Lebanon and the Arab and Jewish communities beyond it, but also within the Alliance, if there were any suggestion that we intended unilaterally to pull out or to lead a retreat. We do not. We are trying to carry out our duties well in the Lebanon.

The particular matter under consideration was the whole Stuttgart agenda. The right hon. Gentleman has no idea how difficult it is to reach agreement among 10 countries when what is under discussion is the whole matter under the purview of the European Community.

Mr. Gerald Kaufman (Manchester, Gorton)

You said you could.

The Prime Minister

Yes, of course, we always try, and many countries agreed. However, when fundamental changes are to be made, there has to be complete unanimity among all the partners. Their interests are very different. Some of the great beneficiaries of the Community wish to carry on as they are. The reason why they will not be able to do so indefinitely, and why things will change progressively during the year, is that the Common Market is gradually running out of money with which to carry out existing policies and, at the rate at which they are being produced, the agricultural surpluses will soon run up against a ceiling and the heads of Government will have to turn their minds to different matters.

Change will therefore be nearer by March. As I explained at a press conference after the summit, I doubt whether the Common Market will be in real financial difficulty until the autumn, but the present policies cannot be carried on indefinitely because there will be no money to finance them. That will be the point at which we are most likely to get reform. A number of us had hoped to bring about a change before that, but we were not successful in getting the agreement of 10 countries. If I had accepted some of the compromises that were suggested, the right hon. Gentleman would really have been able to criticise. They would have sold our farmers down the river and given us a substantial increase in contributions without any lasting solution on effective control of the budget or fairer sharing of the financial burden.

I turn to the 1983 rebate. The sum of 750 million ECUs agreed at Stuttgart is not yet in default [HON. MEMBERS: "Yet."] The right hon. Gentleman spoke as though the Common Market were in default with Britain. It is not. That contribution of 750 million ECUs is due by the last day in March and there is no default unless it is not paid by that time.

With regard to the right hon. Gentleman's next point — [Interruption.] — shall we assume, the Common Market not having been in default? If it does default, we shall have to consider matters then. I believe that the right hon. Gentleman would like it to default just to be able to make an issue of it. I believe that it would be far better if the right hon. Gentleman were able to agree. I believe that this country gets a great many jobs bacause we are members of the Community. If we were to follow the right hon. Gentleman's policy of pulling out of the Common Market, a great deal of investment and a great many jobs would be lost—not least in Wales. If that is what he wants, let him say so.

Mr. Kinnock

indicated dissent.

The Prime Minister

If we were not members of the Common Market and were to return to the trading conditions that prevailed in the 1930s, with trade barriers going up, there would be absolute chaos, and unless we were participants in the common agricultural policy, farming and the food industry in this country would not be anything like as healthy as they are, and we should not be as self-sufficient as we are. All those matters are great plus points, which would be lost under the right hon. Gentleman's policies.

With regard to raising investment, as I pointed out to the right hon. Gentleman, there is a great deal of investment in this country because we are members of the Common Market. We shall not be able to raise the investment due under the economic and social policies unless we can constrain agricultural surpluses more effectively. A number of us are willing to go down that path. We have not yet achieved the full agreement of all the members. A number of us wanted to cut next year's milk production to 97.2 million tonnes, which would have been 1983 minus 6 per cent. Although most of us were prepared to go along with that, a number of countries wanted to opt out and be allowed to produce the amount that they are producing this year. If there are to be changes to reduce the surpluses, and if we are to have a super-levy, they must apply to everyone without discrimination. We were not able to achieve that.

With regard to the suggestion that we withhold our contributions, I have told the right hon. Gentleman that the Common Market is not in default with Britain yet and we are not in default with it. Let us try to keep matters on a legal and honourable basis and hope that that 750 million ECUs will be forthcoming by the end of March.

Mr. Geoffrey Rippon (Hexham)

Does the Prime Minister accept that it is those who most desire the success of the European Community who most welcome her firm stand and her insistence that we cannot, although some of us would wish to do so, increase the Community's resources until there is agreement not just on the size, but on the shape of the budget? While agreeing that it is probably better to have an open failure at Athens than a pretended success, does she agree that it might be better not to have another meeting of Heads of State or Heads of Government until a firmer basis for agreement is achieved at a lower level?

The Prime Minister

I am grateful to my right hon. and learned Friend. I took the view that a patched-up compromise, which would have been unsatisfactory in every direction and would have involved having returns of our contributions for three or four years, in return for a permanent increase in own resources, should be completely rejected. We should still persist with trying to achieve the necessary fundamental changes in the European Community's policies.

The next regular scheduled meeting is in March. I agree that there is no point in accelerating a meeting until we are much further forward and much more preparatory work has been done on the details.

As my right hon. and learned Friend will know, some of the details that we were discussing are not suitable for discussion by Heads of State and should be agreed at the meeting of Ministers.

Mr. D. N. Campbell-Savours (Workington)

The right hon. Lady is not a Head of State.

The Prime Minister

I am sorry, Head of Government. There were of course Heads of State—[HON. MEMBERS: "Queen Maggie."] — and as hon. Members know —[Interruption.]

Mr. Speaker

Order. The Prime Minister must be allowed to finish.

The Prime Minister

Heads of State and Heads of Government were represented. The President of France is, of course, a Head of State. Some of the subjects were not suitable for detailed discussions by Heads of State or Government and should be completed by the other preparatory committees.

I believe that we shall meet in March. Whether we shall concentrate on this or on the normal subjects that we discuss has yet to be seen.

Dr. David Owen (Plymouth, Devonport)

The stand adopted at Athens by Her Majesty's principal Minister has, I believe, the support of the vast majority of the British people, and, what is more, is in the interests of the European Community. It deserves and will therefore receive our support.

On the Lebanon, the right hon. Lady has rightly rejected the unilateral cutting and running of the peacekeeping force as suggested in the House on Monday. I believe that she is right to do so. Will she assure the House that we shall take a diplomatic initiative with our two European partners to establish the independence of the peacekeeping force in the restoration of peace in the Lebanon, and specifically urge on our United States allies the need to study the Lebanese-Israeli agreement again, and to take account of the feelings of the Moslem population in Lebanon and the Syrian Government's position?

The Prime Minister

I am grateful to the right hon. Gentleman for his support on European Community matters. As I said, the four Foreign Secretaries will be meeting on Thursday when there is a NATO meeting. They will also be having separate meetings. I am sure that the points made by the right hon. Gentleman will be pursued vigorously at that meeting. We are very much aware of them.

Sir Peter Blaker (Blackpool, South)

With regard to the Lebanon, is not closer consultation between the Governments who contribute to the multinational force the one objective that we should seek to achieve? If we were to withdraw our contribution to that force unilaterally, would it not defeat that objective?

The Prime Minister

Yes. We have no intention of withdrawing unilaterally, for the reasons that I have given. Our force is valued. If we want to exert maximum influence on Lebanese affairs, we must continue to be part of that multinational force. I agree with my right hon. Friend, that we need closer consultations with the United States. We meet frequently with our European partners, but not so frequently with the United States. That will be one of the valuable assets of the NATO meeting and the meeting of Foreign Secretaries, including Mr. Shultz, to which it will give rise.

Mr. Jack Ashley (Stoke-on-Trent, South)

Is the Prime Minister aware that she deserves the support of both sides of the House for the efforts that she has made to defend British interests in the EC? Our support should be expressed clearly and unambiguously. Having said that, will the Prime Minister consider two matters—first, the withdrawal of British payments to the EC and, secondly, making contingency arrangements for its break-up? That will show that she means business when she fights for British interests in Europe.

The Prime Minister

With regard to the part of the right hon. Gentleman's question about contingency arrangements, it would not be right to prepare for an event that I believe will not occur.

We are at present negotiating for enlargement of the EC to include Spain and Portugal, and those negotiations must continue. It is in the interests of Europe, and of democracy everywhere, that they succeed and we have an enlarged European Community.

With regard to the right hon. Gentleman's question about withholding, the European Community is not in default with us on its obligations. Were it to default on its obligations, then we would have to take steps to safeguard our position.

Mr. Robert Jackson (Wantage)

Since the Community's failure at Athens is clearly not the fault of the British Government, would my right hon. Friend make it clear that when the European Parliament votes on the budget next week it would be wrong and mistaken for it to take any action that would discriminate against Britain?

The Prime Minister

Yes, I wholly agree with my hon. Friend. It would be wrong for the European Parliament to discriminate against Britain. It would not be helpful. We are as usual taking a very positive position on the Community and a very positive position on solving our problems, but we do insist on solving the long-tern problems. Judging by the position so far taken up by the Parliament, it also desires the solution of that problem on a long-term basis.

Mr. Roy Jenkins (Glasgow, Hillhead)

Will the Prime Minister accept that, while I thought she threw away a good solution three years ago in Brussels, there was nothing on which she should have settled at Athens? There was no serious resolve to get hold of agricultural expenditure and she was right in the circumstances to play for time. Will she accept that the stakes are very high for March or June 1984, particularly at a time when there is increasing distrust across the Atlantic? If the Community were to begin to disintegrate, the dangers in terms of money and security in Europe would far exceed even the issues that she was discussing at Athens.

The Prime Minister

I noted the right hon. Gentleman's preliminary statement. He will remember that, when he thought I threw away the chance of a good solution, I actually went on a got a better one. I remember the occasion very well.

With regard to what he said about the stakes being high in March of June, yes, they are high, but that is an extra reason why the Community should be prepared to have strict financial guidelines, to have a fair sharing of the burden and to key that new system into a possible agreement to extend own resources. We cannot have an agreement to increase own resources unless we simultaneously get an agreement on a fairer sharing of the burden. Then we shall get a lasting solution and not otherwise.

Mr. Teddy Taylor (Southend, East)

As the common agricultural policy has been a constant source of conflict between the nations of Europe and will continue to be so even if the proposed modifications succeed, would it not be wiser for the Government to try to discuss informally with the other leaders of Europe the possibility of a looser association that would ensure the continuance of the Common Market and of unity without having a policy that surely is contrary to all the excellent economic policies pursued by Her Majesty's Government?

The Prime Minister

Obviously there are some conflicts among the 10 members, and many of them were discussed during the past two or three days. I think there would be infinitely more conflicts if we were not members of the European Community, and I think it would be a mistake to assume that there would then be a common market, including Britain, if we came out of the Community as such. We should then face extensive problems and we should lose a great deal of investment, jobs and future prospects if there were to be any question of Britain coming out of the Community. However, I believe we settled that question once and for all at the last election.

Mr. Ron Leighton (Newham, North-East)

Does the Prime Minister recall the Government publishing 18 months ago an excellent pamphlet entitled "The Budget problem" the last sentence of which says: A lasting solution to the budget Problem must be found. This is the task for the autumn of 1982."? As 1982 and 1983 have gone by, will she cut the cackle and take some action to carry out the resolution of the House that British contributions should not exceed our receipts? Will she do that by withholding the contributions that do exceed our receipts?

The Prime Minister

No, Mr. Speaker. I will uphold, or try at all times to uphold, the agreements that successive Prime Ministers have honourably reached with the European Community. At the moment we are trying to change those agreements because we think that in some aspects they ceased to be operating fairly. If one wants to get a better agreement one does not just go about breaching an old one.

Mr. Dave Nellist (Coventry, South-East)

Tell that to Eddie Shah.

The Prime Minister

If we break our own agreement within the Common Market, how can we ever expect the Common Market to honour an agreement with us? We are trying to change the budget system on to a lasting system on a totally different basis from that which has ever been held before. The advantage we have now that we did not have three years, two years or one year ago, or certainly the advantage we will have some time within the next one to two years, is that the 1 per cent. VAT ceiling will probably be reached during the coming year and therefore we are much more likely to get a change than we have been in the past.

Mr. Maurice Macmillan (Surrey, South-West)

Does the Prime Minister agree that there is no possible solution to this dilemma by seeking to develop a Community on the looser lines of a trading partnership between the nations and that it is the nature of the Community that is essential to its political and security aspects? Since this may take some time despite her efforts, can she give an indication that those areas of co-operation, notably industry and especially the aircraft industry and high technology, will not be adversely affected by the negotiations as they proceed, no matter how rancorous they may get?

The Prime Minister

I think that when we go to an even larger Community of 12 some relationships are bound to be slightly looser because it is not possible to agree everything when their are disparate views among 12 different people. On the latter part of the question, I share my right hon. Friend's views on the necessity to have more co-operation on high technoloy. I think it is one of those aspects where Europe has lost out to the Japanese and to the United States, although we are a larger market and every bit as healthy a market as the United States and much larger than Japan. I would like there to be some room made in the agricultural budget in order to get more industrial co-operation like Esprit and, of course, outside the Community we have matters to consider that we are now considering such as the airbus. We shall not have aircraft and high technology industries in Europe unless we are prepared to have much more co-operation than we have at present.

Mr. John Morris (Aberavon)

Since British agriculture is far from reaching self-sufficiency, were not the negotiations in Athens an attempt to mitigate a European scandal and an obscenity? In the course of any discussions, it would be British agriculture that would be sacrificed and any hope of expansion would be lost. Will the Prime Minister therefore answer a simple question? Given her concern for jobs uttered earlier, how many jobs would be lost in British agriculture and why should our milk producers be punished in this way?

The Prime Minister

British agriculture has done well during the time that we have belonged to the European Community. British agriculture, the right hon. and learned Gentleman remembers, was always subsidised. I do not know of any industrial country in the world that has not had to make special provision for its agriculture if it wishes to have a healthy agriculture.

Mr. Jack Straw (Blackburn)

Healthy?

The Prime Minister

Perhaps the hon. Gentleman who insists on interrupting from a sedentary position would wish it to go back to the condition it was in in the 1930s, when the policy was cheap food at the price of the British agricultural community.

The milk surplus is, of course, only one of the surpluses; milk is 25 per cent. in surplus in Europe. We are very nearly self-sufficient in the United Kingdom, but not quite. However, we are part of the common agricultural policy and we are trying to reduce the surpluses, though not by discriminating between one country to another.

Unfortunately, some countries included in the proposal asked to be made exceptions. Ireland wished not only not to reduce her output but actually to increase it, and Italy wanted to be an exception to the proposal that each of us would have to reduce the amount produced at present. It was not possible to go forward on that basis, because, instead of really tackling the surpluses, what was happening at Athens was that some countries wanted to raise extra taxes by increased co-responsibility levy and by an oils and fats tax to finance increased surpluses. It could have been a compromise but one that we totally and utterly rejected as going wholly in the wrong direction and abdicating from the Stuttgart decision.

Sir Anthony Meyer (Clwyd, North-West)

My right hon. Friend has universal support for her rigid defence of British interests. So also do the leaders of the other member countries, many of whom are in a weaker political position than she is. Is she content at this time of exceptional peril merely to allow time to operate on them to bring them round to our point of view in view of the need for the European Community to exercise a united moderating influence on the United States?

The Prime Minister

I am grateful to my hon. Friend for those remarks. Undoubtedly, some of the decisions that each of us were required to take at Athens would be very difficult politically. We shall not get a change in the practice of the Community in regard to surpluses—not only milk surpluses but, for example, olive oil and wine, and there are great intervention funds for rice and tobacco —without there being considerable difficulty in taking some of the decisions that we must take. Therefore, each country was bound to have to take some penalties and get some gains from the many decisions that we had to take. How far we shall get them in the next six months I do not know—the European elections come up in June—but I believe that it is to our advantage to go ahead and make difficult decisions. I have always taken the view that we must not run away from long-term decisions. However, that view is not at present universally shared. The coalition Governments are often those in most difficulty. It says a lot when one has a good majority from a good two-party system.

Mr. Dafydd Wigley (Caernarfon)

With the European elections coming in June, there may be pressure to delay an agreement. Is the right hon. Lady aware that many commentators fear that a financial crisis could come considerably earlier than the autumn? Will she give an assurance that the Government will bring forward contingency arrangements to ensure that those who are dependent for their cash flow on European funds will have their needs met and that there will not be a loss of confidence in the intervening period?

The Prime Minister

Some Heads of Government and some Heads of State may take the view that it would be more difficult, with the European elections coming up, to take the necessary steps required to carry out the Stuttgart decision. That may be right, in which case it would be delayed even longer.

As for a financial crisis, that will depend, of course, on the amount produced and on world prices. We could come into crisis earlier or later, and if we have any real difficulties on the budget, that would be the strongest factor that one could adduce to get agreement on reducing surplus production.

Mr. Richard Body (Holland with Boston)

Is there any hope that my right hon. Friend will come just a little closer to the view that has been expressed on these Benches that there will continue to be friction and discord in the Common Market so long as it remains a customs union instead of a free trade area and so long as it insists on being a supranational authority instead of a partnership of nation states, as some on these Benches wish it to be?

The Prime Minister

I do not think that we could change from the kind of Community that we are now to the kind of Community that my hon. Friend wishes to see. I am the first to admit that there are considerable arguments, conflicts and discords, as there are bound to be in a relationship of that kind. I do not believe that those would be reduced if we went to the other kind of community, and our influence throughout the world would be substantially reduced were we not a full partner in the Community.

Mr. Tam Dalyell (Linlithgow)

If, as in her answer to the Leader of the Opposition, the Prime Minister attaches so much importance to consultation with the United States, why does she think that Washington treated us so cavalierly over the Lebanon air strike? Could it possibly have been tit for tat for her disgraceful attitude towards Washington in not consulting them on sending the battle fleet or sinking the Belgrano?

The Prime Minister

The United States did not treat us in a cavalier fashion over the air strike. Decisions on self-defence must be taken on the spot, and co-operation between the commanders of the multinational force on the spot is excellent.

Mr. David Crouch (Canterbury)

I greatly valued my right hon. Friend's statement this afternoon about maintaining the British presence, our forces, in Lebanon at this critical time. It was not only a careful and considered statement by her but a courageous one, because uppermost in our minds must be the safety of those men in that dangerous situation. May I suggest that so long as their role as an interposition force — a peace-keeping role — is not changed, they should remain? When anarchy and lawlessness break out on the streets, that is not the time to remove the police force.

The Prime Minister

I thank my hon. Friend for those remarks. We are, of course, daily concerned with the safety of our forces. That is why some weeks ago we sent a force of Buccaneers to Cyprus—to be there should we need them—and a few days ago HMS Fearless arrived to help should her services be needed; and sometimes the forces can spend some time on Fearless. I am grateful to my hon. Friend for taking the view that he expressed. It is a genuine peacekeeping role. It is highly valued and believe that if the multinational force were to come out now, the consequences would be severe indeed. So far it has not proved possible to get a United Nations truce supervisory force to take its place. That in theory is technically possible and there is nothing to stop it, except that so far the Soviet Union has not given its agreement.

Mr. Peter Hardy (Wentworth)

As apparently it takes nearly 400 people on the Conservative Benches to effect the ruin of this country, is the right hon. Lady satisfied that less than one quarter of that number of young soldiers can be left in an exposed position to carry out a task which, I think, she described as "extremely valuable"?

As the right hon. Lady mentioned the European elections, is she prepared now wholeheartedly to endorse those Conservative Members of the European Assembly who have not only voted against the national interest in regard to the budgetary contributions but also appear to believe overwhelmingly in the principle of unlimited food surplus?

The Prime Minister

I do not accept the strictures of the hon. Gentleman on our membership of the European Assembly. It is working both for British interests and for the interests of the European Community as a whole.

Frequently, I am afraid, we put our soldiers in an exposed position, nowhere more so than in Northern Ireland, where—whether in the Lebanon or in Northern Ireland—they also carry out their role extremely well. I have given my views on the force in Lebanon; it is doing an excellent job and will continue to do so unless all four members of the multinational force come to some different arrangement, and there is no sign of that yet.

Mr. Peter Temple-Morris (Leominster)

While accepting utterly what my right hon. Friend said about the British peacekeeping force in the Lebanon, may I ask whether she appreciates that there are people both inside and outside the House who have increasing and reluctant reservations about the drift of United States policy in the middle east and who fear that, if that drift is allowed to continue unchecked, that fact alone could represent the greatest danger in the future—however much we may dislike that fact — to the British peacekeeping force? Will my right hon. Friend therefore confirm that she is in constant contact with Washington over these important matters?

The Prime Minister

We share my hon. Friend's concern at any increase in violence, first because of the violence itself, which is horrific, and secondly because it is not conducive to the reconciliation talks that the President of Lebanon must soon continue again in Geneva. Thus, I understand my hon. Friend's concern. We should also understand that if, by any terrible mishap, we had lost a large number of soldiers in the Lebanon in the same way as the United States has, we should rightly think that our first duty was reconnaissance——

Mr. J. Enoch Powell (Down, South)

When were we told about that?

The Prime Minister

—we should rightly tell the Syrians that we would be undertaking reconnaissance and we would expect our planes not to be shot at; but if they were, we might also rightly think to take certain action in self-defence. I am sure that my hon. Friend, while I understand his concern, would not want us ever to consider even pulling out unilaterally or leading a retreat from the Lebanon.

Several Hon. Members

rose——

Mr. Speaker

Order. This is a very important matter. Therefore, I propose to allow questions to run until half past four, which will mean that the House will have spent about an hour on this important statement.

Mr. Robert Kilroy-Silk (Knowsley, North)

Given the threat to British forces in the Lebanon, does the Prime Minister not accept that she has a clear responsibility either to reinforce that garrison or, preferably, to withdraw it?

The Prime Minister

I do not think there is anything I can usefully add to what I have already said. We have a small force there. When we were originally asked to join the force I said that we could put in only a very small force because we are stretched militarily around the world. That small force is valuable.

Mr. Kilroy-Silk

How can it protect itself?

The Prime Minister

If it needed to have more for its own protection, that would be made available. If one turns around the argument and says that they ought not be there—as I gather the hon. Gentleman thinks—then it would be unwise to put more there. I am not sure which case he is arguing.

Mr. Timothy Yeo (Suffolk, South)

Bearing in mind that it was the Labour Government who conducted a so-called renegotiation of the terms of British membership of the Common Market, may I ask if my right hon. Friend agrees that it is shameful for the Opposition now to be glorying in the difficulties with which the EC is faced and, indeed, ludicrous for them to direct criticism at those member states which are trying to resolve the difficulties? By doing those two things, are they not making even harder, the urgent task which we face in the first half of next year?

The Prime Minister

Yes. I think that even the Labour party would not seek to come out of the Common Market.

Mr. Paddy Ashdown (Yeovil)

The Prime Minister has mentioned the European Community running out of money in certain areas. While it is probably true that the funding of the EC is sufficient to last until August, does she not accept that there will be a considerable temptation for the Community to dip into the regional and social funds to fund the deficit in agriculture and other areas? Would she agree with us—would she agree with me—[HON. MEMBERS: "Ah!"]—would she agree with us—[HON. MEMBERS: "Which?"]— that the maintenance of the integrity of those two funds and their enlargement are in large measure essential for the future development of the Community? Will she give an undertaking that she will resist any attempts by the Community to dip into those two funds to fund profligacy in agriculture and other areas?

The Prime Minister

Community funds will have to act in accordance with the rules, but they will be in difficulty if the surpluses go on increasing. While we have tried to get limitations on those surpluses we have not so far been successful. As the hon. Gentleman knows, it takes time to achieve that. A lot depends on prices policy, too, during the next review. It will be difficult. I hope that the two funds will be kept separate.

I would not necessarily agree with the hon. Gentleman that we must have an enlargement of the funds at any price. I firmly set my face against enlargement except at a price. That price is strict guidelines on financial control, which are embodied in the budgetary procedure. It is no good having political guidelines. They must be in the budgetary procedure so that they are observed. Also, we are not prepared to pay more unless there is a fairer sharing of the burden. It seems intolerable for other countries to say to the two main contributors, Germany and ourselves, "We have not got enough. We know you are the main contributors. Now you have to pay some more." I am saying that, if there is to be more, there must be a fairer sharing and it must be based on ability to pay, n net contributions.

Mr. Dennis Walters (Westbury)

Did my right hon. Friend have an opportunity to discuss with her colleagues the recent accord between the United States and Israel which has opened a new and dangerous dimension in the situation in the Middle East? Would she exercise her influence on President Reagan to point out that he should be more even-handed and that in committing himself to supporting one of the parties in the dispute, which incidentally is still illegally occupying large tracts of Arab land, he cannot help to bring about a comprehensive peace settlement?

The Prime Minister

We are all naturally anxious, as is my hon. Friend, to bring about a comprehensive peace settlement and to secure conditions under which both Israel and Syria can withdraw from the Lebanon and the President of the Lebanon can go ahead with seeking a reconciliation between the many factions in the Lebanon, which is a difficult enough job on its own. We have to consider how best to go about that very delicate task.

Mr. Robert C. Brown (Newcastle upon Tyne, North)

Would the Prime Minister not agree that since the French are doing so well out of the CAP, to expect any French President to volunteer co-operation on reform of the CAP would be as unrealistic as to expect turkeys collectively to ask for Christmas to be brought forward by three months? Would the Prime Minister agree that the words "a deep renegotiation" have been used over and over again but that we have never actually seen that? Can we have an assurance from her that she is not prepared to allow the EC to founder on the rocks of the CAP, even if it means fundamental renegotiation of the treaty itself?

The Prime Minister

I feel that fundamental renegotiation of the treaty itself is unlikely. If the hon. Member looks at the clauses in the treaty relating to the common agricultural policy he will not find that the problems arise from the treaty clauses. At the beginning of the CAP it was thought that it would be more or less self-sufficient because the levies were to bring incoming goods up to the European price. It was expected that it would be self-sufficient, and it was until the big surpluses developed.

With regard to the surpluses, I think the hon. Gentleman is being unjust to the President of France in any suggestion that France was one of the most difficult countries on reform of the CAP. That is not so. There were other countries that wanted to be able to opt out of doing their part in cutting down the surpluses. The President of France was one who agreed that we had to take steps to cut down the surpluses. Each of us then tries to fight our own corner and to see that it is done in a way that is not too harmful to our farmers. For example, I am particularly anxious that we should not get both an increase in the co-responsibility levy and in the super-levy because we have to pay a lot of co-responsibility levy compared with milk production. All those are detailed things which I still hold Heads of Government should not be left to discuss at a European Council of that kind.

Mr. Nicholas Winterton

I welcome my right hon. Friend's robust and determined stance at the summit conference in Athens. Additional nations are about to join the European Community, which will cost existing members a great deal of money. Bearing in mind her last remarks, would she not agree that it is unfair for the British dairy producer, the most efficient in Europe, to bear the burden of any agreement that might be made within the European Community, particularly in relation to the co-responsibility levy and the super-levy which is proposed by the European Commission and which will prejudice and be to the tremendous disadvantage of the dairy sector an this country?

The Prime Minister

The enlargement to include Spain and Portugal would add extra cost to the budget, which is why both Germany and ourselves have had to insist that we could not bear the full burden of that increase. Therefore, we cannot take the enlargement on the present pattern of contributions. We have to have a changed pattern. That is precisely the point on which we are fighting. My hon. Friend will agree that in political terms it is, I believe, to everyone's advantage and also to the advantage of Spain and Portugal to have them politically within the Community.

With regard to the dairy problem, my hon. Friend has put his finger on one of the great problems which effect our farmers. We have 15 per cent. of the milk production of the Community and we pay 19 per cent. of the co-responsibility levy because of the way in which that levy is arranged across the Community. Therefore, when it comes to thinking about the super-levy, one of the points we are making strongly is that there must be no discrimination. Once one goes on that route there are so many exception and derogations, and they tend to be made in a way which is damaging to our farmers.

Rev. Martin Smyth (Belfast, South)

We welcome the robust presentation of the statement today, we share the Prime Minister's conviction about coalition government and we welcome the defence of agriculture within an industrial nation because it is precious to Northern Ireland. The Prime Minister referred to a conversation with the Greek Premier. I understand that she also spent some time with the premier of the Irish Republic and that her right hon. Friend the Secretary of State for Northern Ireland took the opportunity of an earlier European meeting to meet the Minister for Foreign Affairs of the Irish Republic. Was the prevention of terrorism in Northern Ireland discussed, or was that one of the subjects on which, to use the words of the statement, there were unsatisfactory compromises and "the will to control it effectively was just not present".

The Prime Minister

I had a brief discussion with the Taoiseach. What was said was confidential, but it would not cause the hon. Gentleman any concern. It was a routine meeting such as we usually have in the margins on these occasions. I also had quick conversations with the Prime Minister of Greece. Again, there is nothing further to report. This House is concerned, as he is and as the President of Cyprus is, that a unitary state of Cyprus be restored. We are taking all reasonable steps to that end.