France's £ of flesh
COMMON MARKET JOCK BRUCE-GARDYNE
Since he unexpectedly quit the sheltered calm of Printing House Square for ministerial office Lord Chalfont has proved himself a man of great resilience. He needed that quality badly as Minister for Disarmament: he is needing it even more in his new assignment as link-man for Europe. Thus on Monday he bravely assured Labour's Tea Set at Scarborough that, after the European Commission's report on our application for membership of the Common Market, 'Britain's entry is, I believe, a real and immediate possibility'—notwithstanding the report's 'rather severe' opinions on our eco- nomic predicament.
Mr Wilson must have heard his Lordship's verdict with approval. For back in May he baldly assured the House of Commons that 'all the Heads of Government with whom we talked [i.e. during the "high-level probe" of the Community last winter] were impressed with the robust strength of Britain's balance of pay- ments and of sterling. . . . I said in November that we should not seek to enter upon negotia- tions except on the basis of a strong balance of payments and a strong pound. These conditions are being fulfilled and this is fully recognised in Europe.' Somehow the recognition seems to have slipped since. For the commission now finds that we must take measures (my italics) to establish a fundamental equilibrium in our economy before we can join the Com- munity.
Everyone by now should know what a 'fun- damental disequilibrium' means. It means, of course, a condition calling for devaluation of the currency. So the commission has told the British government that if it wants to join the European Community it must devalue first. Which was not perhaps quite the message Mr Callaghan wanted to receive from Brussels. .The automatic response from Whitehall is already building up. Who wrote the section of the report dealing with sterling? Why, a Frenchman, of course : ergo, this is just another crude attempt by General de Gaulle at sabo- tage, and it can and should be treated as such —by us, and also by the 'faithful Five.'
Over the years the Foreign Office (and other departments to a lesser extent) have developed a worrying obsession over the manners and motivations of the French. It is worrying be- cause it leads our diplomats and negotiators, and hence successive governments, to divide the members of the European Community into 'good Europeans' who want us in, and the French, who want us out. The reality is not so simple.
It certainly used to be true, at the time of the previous Brussels negotiations, that the over- whelming majority of opinion in the European Community wanted us to join. Dr Adenauer and Professor Hallstein did not; General de Gaulle suspended judgment until he had what be regarded as proof positive at Nassau that we were too hopelessly tied to America's apron-strings to qualify for participation in Europe. Unfortunately for us attitudes have changed since then. Not General de Gaulle's: he still believes we are too dependent on Washington. The difference is that other governments now have doubts as well.
M Couve de Murville and his colleagues have tried to make their partners' flesh creep with dark warnings about the possible effect of British entry on the nature of the European Community and even on the prospects for détente with the east. Their words have fallen on deaf ears, and it comes as no surprise to find that the commission's report which was pre- sented to the Common Market Council of Ministers on Monday dismissed such fears as groundless. It went further: it included a wel- come acknowledgement that the present struc- . ture of the farm finance system would place a grossly unfair burden upon Britain, and gave a clear hint that this should be put right. But at one point it jibbed: on the French charge that we were in no fit state economically to assume the obligations of membership it pronounced a clear verdict of 'guilty.'
This cannot be dismissed as the biased judg- ment of a Gaullist civil servant. For the harsh truth is that the members of the European Community would have been astonished at any other finding. After all, they can read. They know the second quarter current account bal- ance of payments deficit was the worst we have ever recorded. They know that even when the Government has repaid the first tranche of the nor loan this winter by-cashing its remaining dollar securities it will still have another £500 million to repay and no visible means of doing so. Therefore they can see that we face the stark alternatives of devaluation, import controls, or deflation and stagnation for as far ahead as any- one can see. And since the British government itself appears to have ruled out devaluation, they are left with the prospect of either import controls, which would clearly be incompatible with membership of the Community, or years of stagnation in which, once the cross-Channel tariffs had gone, they would inevitably be im- plicated. We should not be surprised if they view that possibility- with something less than enthusiasm.
Admittedly the Five, left to their own devices, would probably still be willing to smother their doubts. Their confidence in the contribution which we would have to make to the political stability and maturity of the European Com- munity is undimmed, and they do not believe that the viable and independent Europe of which they dream can ever be built without us. But for Lord Chalfont's venture to succeed it is necessary that they should not only smother their own short-term doubts about he British economy, but that they should be willing to face a show-down with the French government over its insistence that the grounds for these doubts must first be eliminated. This is asking altogether too much—as the cautious approach of the German finance minister, Herr Schiller, on Monday made clear.
The immediate tactics are not difficult to predict. The French will argue that the major reservation exposed by the commission's report concerning the condition of the British eco- nomy should now be the subject of detailed study by the six governments. Lord Chalfont, by contrast, will point to the positive aspects of the report, and urge the Six to accept the commission's finding that these should now be the subject of negotiations with the -British government. No doubt he -will add for good measure that by the time these negotiations are complete any anxieties about sterling will be set at rest by the progress of the British economy.
It is, I suppose, just conceivable that Lord Chalfont's considerable charm and persuasive- ness will sway the Five. Even if it does, how- ever, the French can be relied upon to veto any such partial treatment of the commission report: and, as sometimes happened in 1962, they will have the backing of the commission. So that won't get us very far.
The opposite course of events has up to now seemed rather more likely: that the French would insist on further prolonged studies by the member governments of different aspects of the British application, and make it quite clear that if their partners insisted on opening direct negotiations they would take no part and would not be bound by the outcome. Under those cir- cumstances past experience would lead one to predict that the Five would, however reluc- tantly, give way, and Mr Wilson would be left crooking the knee in the antechamber.
But in the light of the terms of the commis- sion's report I would expect the French civil servants to urge a subtler course upon their master. 'Let us,' they will say, 'by all means dis- cuss this report with the British. But of course we must begin with the chapter on sterling. For clearly if the British are unable to dissipate our anxieties on this point, then there is no point in pursuing the matter any further for the present.' No wonder George Brown panicked on Monday.
If Mr Wilson for once were to lift his eyes beyond tomorrow's headlines he too would surely find this a far more frightening prospect than anything that happened at Scarborough this week. Just imagine it: weeks of earnest and semi-public discussion in Brussels about the pros and cons of devaluation; and since the British team could hardly tell their future part- ners in a customs union that they would escape the choice between devaluation and deflation by imposing import quotas or -reviving the sur. charge, they would presumably have to try and calm the foreign exchange markets by assuring everyone within hearing that they intended to maintain 'a pool of unemployment' till the cows came home or that elusive surplus materialised. And what would that do to output and in- vestment at home—let alone the morale of the parliamentary brethren? It hardly bears think- ing about.
One hates to have to say anything so cruel to :he amiable Lord Chalfont: but the truth is that the commission's report, far from making British entry into Europe 'a real and immediate possibility,' just about puts paid to the whole idea so long as the present government stays in power. Would it be churlish to offer a sugges- tion? There is always Radio Caroline: perhaps Lord Chalfont's considerable versatility could now be harnessed to the pressing task of bring- ing the Isle of Man to heel.
Previous page
