Chapter 65 Section 2 Towards Maastricht

As I leave Downing Street, one of the few things I regret is that leaving at this time leaves me with no time to deal with the rapid changes taking place in Europe. In the autumn of 1990, the groundwork was being laid for what would become the Maastricht Treaty, which aimed to provide the framework for a federal United States of Europe.There have been many struggles within the European Community since I became Prime Minister, but I have never encountered one of this magnitude and importance before. Of course, it is becoming increasingly clear to me that the European Commission and some heads of government have a very different view of the purpose and direction of the Community than I do.To warn against allowing centralism, protectionism, and federalism to continue, I delivered the Bruges speech in 1988.In Bruges, I argued against attempts to adapt countries "to a certain semblance of a European personality" and instead called for "voluntary and active cooperation among independent sovereign states as a means of building a productive European community's best approach".

Since then, I have felt even more compelled to elaborate on an alternative view and to enlist domestic and international support for it.It's not an impossible job, but it's a lot harder.There is a sizable but still small minority of staunch European enthusiasts within the Conservative Party who welcome almost everything that is decided in Brussels. The Single European Document, contrary to my intentions and at odds with my understanding of the promises formally offered at the time, provided a new frontier for the European Commission and the European Court of Justice to intensify centralization.For their own reasons, France and Germany—the Franco-German axis dominant—were eagerly moving in the same direction.In the United States, the administration made a big mistake in judging that America's interests were best served by promoting a unified Europe led by Germany - although the experience of the Gulf War will no doubt prompt President Bush to question such assumptions .

Nevertheless, I remain convinced that with a single-minded purpose and a strong will, the approach proposed by Bruges can be made successful, because three long-term effects work in its favor.First, the need to help the newly liberated Eastern European countries created difficulties for the narrow Europeanism of the Federalists, as their system of high taxes, constraints, and subsidies ultimately failed to meet this need.Second, global economic changes have significantly expanded the financial and commercial sphere, which would reduce the relative importance of the European Community itself.Third, not only in the United States, but increasingly in other European countries, the mood of the people is turning away from the bureaucratic politics they have alienated, and is restoring historically rooted local and national identities.It may take 10 years, but I feel this is a promising career.

In my last speech to the House of Commons as Prime Minister on Thursday 22 November 1990, I ridiculed the Labor Party's conscious ambiguity on major issues: They won't tell us where they stand.Do they need a single currency?Are they prepared to defend the rights of this United Kingdom Parliament?For them, it's all a compromise, to cover things up for later, in the hope that Americans won't notice what's happening to themselves, how power is gradually being lost. I did not know then, and indeed, there was no need to imagine, that others would soon say the same about my successor as a Conservative government.I know that John Major is likely to seek some kind of compromise from most heads of government who need political and economic union.This was clear from our exchanges when John was Chancellor of the Exchequer.And I can fully understand his desire to heal the wounds in the party after the heated debate on Europe that preceded my resignation.However, I did not expect to completely change the position I had taken so quickly.

In December, Foreign Secretary Douglas Hurd publicly advocated a special European defense role through the Western European Union, which I had always mistrusted, because I knew others, especially the French, wanted to use it to replace NATO, which was necessarily dominated by the United States.Then, in Bonn in March 1991, the prime minister declared Britain to be "the very center of Europe".To me, this is clearly impossible, not just in terms of geography, but our traditions and interests are very different from our continental neighbors in many areas.For example, when it comes to trade, especially in agriculture, the UK is more open and relies more on countries outside Europe than on our European partners.

I don't want it to appear as if I'm hurting my successor.I know his position is still fragile and I want him to succeed.Ted Heath has given me enough trouble, and I don't want to give anyone else the same trouble.So, paradoxically, I found that I was even more restrained in expressing my opinions after I resigned than I was before I resigned.But when it comes to the whole direction of the UK's future, and even its status as a sovereign nation, I can no longer in good conscience remain silent.So while I have my misgivings about the draft treaty reported to be being discussed by the heads of government, I would like to be constructive and openly state the kind of Europe I need, while keeping the government in place for as long as possible without evidence to the contrary The draft is considered to be feasible in time.

In March 1991, I gave my first major public speech since leaving office—it was in Washington, at a meeting arranged by members of several American conservative think tanks.I bypassed the more sensitive areas of British domestic politics and focused on the role of the European Community's geopolitics: A democratic Europe of nation-states can be a force for liberty, enterprise and open dealing.But if the established United States of Europe tramples on these goals, the new Europe will be a Europe of subsidies and protectionist trade. The European Community does have a political mandate.It is about making new, fragile democracies more securely rooted in liberty and the West.This was the case after the end of the dictatorships in Spain, Portugal and Greece.So once democracy and free markets take root in Eastern and Central Europe, they must be accepted as full members of the community.At the same time, we must strengthen trade, investment and cultural ties.

Of course, it is especially fitting to make these arguments in the US, which has been pushing the UK more or less consistently for years towards closer European integration.This attitude is based on a double delusion: first, it assumes that a politically united Europe would be friendly to the United States, which would relieve it of some of the burden of unloading, or relieve it altogether.In fact, most staunch European federalists are very conscious of breaking away from the United States and establishing another superpower on an equal footing with the United States, because it has different interests and will eventually become an opponent of the United States in world affairs.This has had real effects.Growing protectionism in Europe has sparked a series of trade conflicts on both sides of the Atlantic, even as the Cold War limited such confrontation.Trade spats, such as those between the U.S. and the European Union over the General Agreement on Tariffs and Trade, have intensified since the U.S. reduced its troop presence in Europe.From the Venetian Middle East Declaration in 1980 to the Community's early futile intervention in the Yugoslav War, almost every time the European Community's foreign policy aimed to separate Europe from the United States, sometimes quite sharply.Over time, such disputes are bound to erode the cultural and diplomatic sympathy that has long supported Atlantic defense cooperation.At the same time, these disputes were the inevitable outcome of a unified Europe along federalist lines.

A second false assumption made by U.S. policymakers is that, according to the U.S. sense of the word democracy (and according to the full meaning of the word), it may be "Democratic".I answered this point directly in my speech in Washington. The quixotic political task that some have set for the European Community is to turn it into a... United States of Europe: a Europe in which peoples with their own living democracies would be subservient to a necessarily bureaucratic, artificial federal structure.A community that lacks a common language cannot have public opinion for which officials are accountable.

Since the attitude of the British government at the time was (at least in rhetoric) equally hostile to the United States of Europe, in domestic political terms it was easier to make these arguments than to criticize the Economic and Monetary Union The attitude is far from clear.Indeed, facts speak louder than words. In 1991, obviously, the economic policy at that time was mainly determined by the exchange rate between the British pound and the Deutsche mark, rather than domestic monetary policy.At the same time, the exchange rate mechanism was being used as a tool towards Economic and Monetary Union.That's at least the exact opposite of what I intended when I joined the league.Nothing the authorities have had to say on the matter has done anything to lessen that impression.The possibility of a market capitalization adjustment is ruled out, and in fact, government policy is that the UK should adopt a small gap rate of 2.25% (plus or minus) rather than the current 6%.

However, I know that in criticizing what is happening now, I must expose myself to criticism.As defenders of the Maastricht Treaty say, I gave up my position when they signed the Single European Document, they just added a dot to the "I" and a cross to the "T" .So those who are now driving the British economy to the binding measure of a politically determined exchange rate claim that I have no right to criticize this issue because I brought the British currency into the exchange rate mechanism.I know I have good answers to both of these accusations.The Maastricht framework that now appears to be emerging - and indeed unsatisfactory - is fundamentally different from the arrangements agreed when the Single European Document was negotiated.Someone was using the exchange rate mechanism for something.Not only am I against it, but I have made it clear in the government that I will never implement this exchange rate mechanism.Likewise, their arguments are unlikely to deter critics from making criticisms. So, speaking to the Economic Club of New York on Tuesday, June 18, 1991, I expressed my opposition to the implementation of manipulated exchange rates for international reasons, and I also spoke of this in a candid acknowledgment of the mistakes my Administration made. With the Louvre and Plaza Accords in the mid-1980s, we sought to prioritize the goal of more stable international exchange rates over controlling inflation. We in the UK in 1987-1988 deepened this mistake by trying to make the pound exchange rate follow the Bundesmark.Yet another violation of monetary norms in the pursuit of a stable exchange rate target.These policies have driven interest rates down to artificial, unsustainable levels.This in turn fueled excessive growth of money and credit.This has created the inflation we are all so familiar with, which is the root cause of the current recession.Oscar Wilde once said, "Experience is the name we give to our mistakes." The lesson to be drawn from our lessons in the 1970s and 1980s is that governments should aim to stabilize prices - and this can only be done by reducing the Supply can only be realized - and leave it to companies and individuals in the market to calculate the various other risks that may be faced in wealth-creating transactions. Targeting exchange rates creates huge monetary consequences when central bank bankers "guess" the wrong exchange rate and make dramatic changes in inflation or deflation as fine-tuning by undervaluing or overvaluing the exchange rate Pressure, as is now being seen in East Germany.When this happens, the "stability" that makes fixed exchange rates ostensibly attractive to merchants has to be abandoned through a sharp devaluation, or through the more destructive instability of rapid inflation or higher interest rates. maintain this "stability".In the exchange rate mechanism, the UK fortunately has a 6% range to adjust the exchange rate fluctuations. In general, I recall the words of Karl-Otto Ball, president of the Bundesbank: "The interest rate should be fixed according to the domestic currency situation, and the exchange rate should be left to its own accord." To this, it is necessary to add: if you If the exchange rate is fixed, interest rates and domestic currency conditions will act on their own.And the finance ministers are like innocent bystanders at the scene of the accident. To be fair he said the government did not appreciate the analysis very much.But about 15 months later, it couldn't be more true.But the response to my intervention showed how difficult it was to walk on a rough path, while generally supporting the government while vigorously opposing what became an important aspect of government policy. One can take this tactic outside the UK Houses.But one of the strengths of the House of Commons is that speakers are required to say what they really think in debates.Beyond a certain point, I neither intend to hide my thoughts, nor even after so many years of expressing my views, Wednesday 20 November 1991, the House of Commons on the European Community The debate made me feel strongly that I had to speak.In fact, in my last speech in the House of Commons, I supported the government's motion to attack Labour's policy on the single currency.And refuted the criticisms of me for signing the Single European Document.But I also went on to ask: Considering that the Maastricht Treaty enjoined us to support the goal of a single currency, and to participate in the institutions established to pave the way for this, therefore, in practice, the decision to have the British currency withdrawn Is the single European currency worth it.I was repeating the idea put forward by the campaign leaders in interviews almost exactly a year ago, that if it was decided to give up the right to issue sterling, there should be a referendum.However, the government has refused to commit to doing so. Things are moving fast, and in my case, I think it's going in the wrong direction.While the full text of the Maastricht Treaty has been difficult for members of parliament, let alone the public, for some time, the terms of the treaty were agreed and the Prime Minister issued a statement on Wednesday 11 December.Those who know me well know that in the end I could not agree to the Maastricht Treaty.I will never sign this treaty.Some benevolently, others more and more desperately dissuade me that I can and should remain silent.I'd love to do that too. The day after the prime minister's statement, an embarrassing trifle showed just how far whimsical meetings could go.I was delighted to have John Major at my 40th Wedding Anniversary Dinner with Dennis at the Claridge's on Thursday evening.Apart from each other's concerns, we talked happily about other things.But as I walked out of the hotel to see the prime minister into his car, many cameras were on me and I was asked what I thought of his performance at the Maastricht council.I replied that I thought he was doing "very well."I do believe that in one of the political events where he best expressed his attitude, he showed great talent.However, my words are naturally taken to mean my agreement to the Maastricht Treaty.When I read the paper the next day, I decided that for all concerned, no matter how much pain it caused them, such misunderstandings could no longer arise.