Setbacks on a Second Front

By Frederick Painton

A double whammy from Britain's European partners

"It was terrible timing," groaned one of Margaret Thatcher's advisers. Just as the beleaguered Prime Minister was considering when to launch a counterinvasion of the Falklands, her partners in the European Community last week gave Britain first a diplomatic slap and then subjected it to a humiliation that shook the ten-nation Community to its institutional roots. The crux of the problem, as French President Franc,ois Mitterrand put it, was not just "what role Great Britain intends to play" in the Community, but "the question of the presence or the nature of the presence of Great Britain in the Community."

The crisis arose, ironically, only one month after Britain's European partners had, in a dramatic show of solidarity, voted unanimously to impose sanctions against Argentina for one month. Last week's first rebuff came when foreign ministers meeting in Luxembourg reluctantly agreed to extend those sanctions for only seven more days instead of the additional month the British had sought. Italy and Ireland did not go along with even that limited measure. But a crueler blow fell the next day in Brussels, where Community agriculture ministers voted 7 to 1 (with Denmark and Greece abstaining) to override a British veto and push through a Community-wide farm price increase of 10.7%. In doing so, the member nations broke a 16-year tradition, known as the Luxembourg compromise, under which each nation has a veto over issues affecting its vital interests. Said a Thatcher aide in London: "They will rue the day they did this because they too will find the need sometime in the future to protect their national interests."

There were, however, few signs of any regrets in other capitals. "The British pushed too hard and had it coming to them," said a West German official in Bonn. A French diplomat in Paris grumped, "Crisis? It would be fair to say that the European Community has been in a crisis ever since the British joined it."

Ostensibly, the extension of economic sanctions against Argentina and the vexing issue of British budget contributions were not connected. But no one doubted that they would be linked when the bargaining began. As West German Agricultural Minister Josef Ertl said pointedly, "Solidarity is a two-way street."

European wavering, though, was not just a matter of a cash tradeoff. Now that Thatcher was moving militarily against the Argentines, her partners were becoming skittish. The Irish had already announced they could not support Britain in what Dublin saw as a colonial war by its former colonial masters. An important consideration for Italians was that nearly half of Argentina's population is of Italian origin, and 1.3 million Argentines still carry Italian passports.

The British were not in a conciliatory mood when the ministers turned next to the budget. For three years Thatcher had been negotiating for cash rebates to reduce Britain's contributions to the Community budget. One of the poorer members, Britain could end up putting about $1.5 billion more into the common coffer this year than it will get back. The Community had offered to compromise by granting Britain a rebate of at least $800 million. But British Foreign Minister Francis Pym brusquely told his colleagues he found "great difficulty" with that proposal.

The drama then switched to Brussels, where the agriculture ministers were to take up the matter of increasing farm prices. Resorting to a time-tested tactic, Britain's Peter Walker began by claiming the right of veto under the Luxembourg compromise on the ground that farm prices directly affect the size of Britain's budget. Belgian Agriculture Minister Paul de Keersmaecker, who was in the chair, ruled that Walker's declaration of national interest was invalid on the ground that farm prices, not Britain's budget contribution, were at issue. De Keersmaecker was supported by France and Italy. French Farm Minister Edith Cresson said that the Luxembourg compromise "does not permit a member nation to paralyze the normal functioning of the Community." She, along with the West Germans and others, insisted that the right of veto remain intact.

With that, Walker lunged forward in his chair. "That is a subterfuge that only serves to demonstrate to what extent you are stupid, hypocritical, insolent and ridiculous!" he yelled. Retorted West Germany's Ertl angrily: "I don't take lessons from anybody and, if I may say so, least of all from someone like you!"

Whatever the merits of the British case on the budget, there was little doubt that Thatcher and Pym had made a major diplomatic miscalculation. "Britain was rigid on all fronts," said a senior Community official. "It was rigid on sanctions. It was rigid on budgetary contributions, and it was rigid on farm prices. That simply is not the way the Community operates. In a compromise, everyone gives something and receives something."

Though Thatcher made it clear that she did not intend to pull Britain out of the Community, she is reserving her other options. She could, as urged by some angry members of her own Conservative Party, withhold part of Britain's future contributions to the budget, an act of defiance that ultimately would lead to Britain's political isolation from Europe. Assuming cooler heads prevail in London, Britain is likely to return to the bargaining table this week to assess the damage to its interests and those of its European partners. A showdown in the Falklands was enough for the moment.

--By Frederick Painton.

Reported by Lawrence Malkin/Brussels and James Shepherd/London, with other bureaus

With reporting by Lawrence Malkin, James Shepherd

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