Catalogue Reference:PREM/19/87

Image Reference:0001

SERIES
P R E M 19
VOLUME
87

START

Referred to

Date

Referred to

Date

Referred to

Date

Referred to

Date

Fit-*.

16 J u l y 1979

Many thnnkB f o r your l e t t e r o f 9 J u l y

about t h e d e l i v e r y o f M o r r i s " V e s t ' s two
books t o S l p n o r A n d r e o t t i , and f o r f o r w a r d i n p
Slpnor A n d r e o t t l ' s l e t t e r of thanks.
The Prime M i n i s t e r was VPTV <*lart t o know
t h a t t h e books had been p r e s e n t e d a s s h e asked
and h a s asked me t o send you h e r warm t h a n k s .

B. G. CARTLEDGE

A. C. Goodison, E s q . ,
B r i t i s h Embassy,
Rome.

BRITISH EMBASSY.

ROME

L/

9 July

1979

B G C a r t l e d g e Esq P r i v a t e SecretaryNo 10 Downing S t r e e t

PRESENTATION OP BOOKS BY THE PRIME MINISTER TO SIGNOR ANDREOTTI

1. D u r i n g Signor A n d r e o t t i ' s v i s i t t o London,the Prime M i n i s t e r p r o m i s e d t o send h i m two b o o k s , " D e v i l ' s A d v o c a t e " a n d " I n t h e Shoes o f t h e F i s h e r m a n " b y M o r r i s West. B o t h b o o k s , i n I t a l i a n , were p u r c h a s e d h e r e i n Rome and f o r w a r d e d t o S i g n o r A n d r e o t t i under a c o v e r i n g l e t t e r from S i r A l a n Campbell. 2. I now e n c l o s e S i g n o r A n d r e o t t i ' s l e t t e r o f t h a n k s , t o g e t h e r w i t h a n E n g l i s h t r a n s l a t i o n , w h i c h y o u may w i s h t o draw t o t h e Prime M i n i s t e r ' s a t t e n t i o n .

A C Goodison
Charge d ' A f f a i r e s

cc:
David Gladstone Esq V/ED FCO

T r a n s l a t i o n o f l e t t e r d a t e d 3 J u l y 1979 f r o m H.E. On. G i u l i o A n d r e o t t i , P r e s i d e n t o f t h e C o u n c i l o f M i n i s t e r s ,

t o H.E. S i r A l a n C a m p b e l l , B r i t i s h Ambassador i n Rome.

My d e a r

Ambassador,

t o Mrs T h a t c h e r solicitude f o r her very i n conveying kind

t o me t h e

I am most g r a t e f u l

t h o u g h t and t o y o u f o r y o u r two

books b y M o r r i s West, w h i c h

I s h a l l r e a d w i t h much p l e a s u r e .
t o renew t o Your

I a v a i l myself o f the o p p o r t u n i t y E x c e l l e n c y my warmest good wishes.

(signed)

Giulio

Andreotti

'7

3 luglio

'79

Caro A m b a s c i a t o r e ,

sono v i v a m e n t e g r a t o a l i a per con di la squisita l a quale

Signora

Thatcher

a t t e n z i o n e , ed a L e i per l a premura
t r a m i t e d e l dono d i due volentieri.
libri

si e fatto

M o r r i s West che l e g g e r o m o l t o Mi e grata l'occasione

per r i n n o v a r L e , E c

c e l l e n z a , i sensi derazione

del l a mi a p i u v i v a e c o r d i a l e consi_

Sua Eccel1enza 11 d o t t . A H Campbel 1 A m b a s c i a t o r e d i Gran B r e t a g n a in

- R o m a

G 650 R

UNCLASSIFIED O TM R M ! 1815402 JUN T PRIORITY '"CO O TELEGRAM N M E 217 O 13 JUNE 1979 UBR F .

INFO R CUT I M U REP BRUSSELS Af!D PARIS E K E INFO SAVJNQ TO ALL OTHER E C POSTS. SICNCR A'.'DREOTTI ' S VISIT T LONDON: ITALIAN PRESS REACTION O 1. THE ITALIAN PRESS O IS JUNE GIVES PROMINENT COVERAGE T F O SIGNOR ANDREOTTI'S MEETING WITH THE PRIME MINISTER O 15 JUNE. N THE GENERAL THEME OF REPORTS 13 THAT THE TALKS LED TO A CLARIFICATION 0 " C M O INTERESTS WITHIN THE COMMUNITY. OMN

2. THE CHRISTIAN DEMOCRAT DAILY, IL POPOLO, REPORTING THAT N TALKS CENTRED O BUDGETARY CONTRIBUTIONS A D THE CAP, STATES N O T:AT THE CONSERVATIVE GOVERNMENT REPROACHES ITS PREDECESSOR F R CUTTING LONDON O T OF A Y ATTEMPT T ELABORATE COMMUNITY POLICIES, U N O O A D DOES N T HIDE ITS INTENTION TO REPLACE THE PARIS-BONN AXIS N O EE WITH A PARIS-BONN-LONDON TRIANGLE. H W V R THE MANY SIMILARITIES N K A BETWEEN THE ECONOMIC SITUATIONS IN ITALY A D THE U H S LED LONDON S N HM TO REGARD I TAI.YV A A INTER LOCUTOR WITH W O TO UNDERTAKE JOINT O O ACTION T PRESS F R CHANGES IN COMMUNITY POLICIES. IL POPOLO REPORTS THAT THE TV/0 PRIME MINISTERS HAVE AGREED TO MEET -T LEAST F A TWICE A YEAR. THE ATMOSPHERE O THE TALK'S W S PARTICULARLY FRIENDLY A Y F A D SIGNOR ANDRECTTI W S IMPRESSED B THE TEMPERAMENT O N MRS. THATCHER WHO, IN HIS O N W R S " HAS S O N A DESIRE TO W OD HW STAMP H R PERSONALITY N T ONLY O THE BRITISH SCENE, BUT ALSO IN E O N FOREIGN RELATIONS, BEGINNING WITH THE COMMUNITY". 3. THE RIGHT O CENTRE R M DAILY , |L TEMPO, REPORTS THAT F O E N IN FOUR A D A HALF HOURS IN LONDON SIGNOR ANDREOTTI ACHIEVED A SOMETHING WHICH H D PROVED IMPOSSIBLE DURING THE LABOUR F O GOVERNMENT, THAT IS THE ESTABLISHMENT O A SOLID BASIS F R CCLLA-ORATICN BETWEEN THE T O COUNTRIES O E CHANGES TO COMMUNITY W VR R A . GN RULES MICH A E -1 NA"C I ALLY D M A I G TO BOTH COUNTRIES, E R IN OPENING H R TAL-'S WITH SIGNOR ANDRECTTI, M S THATCHER STATED R N THAT THE B ITISH -GOVERNMENT BELIEVES FIRMLY IN EUROPE A D IN COM"UNITY I DEALS, A D IS DETERMINED^ W R F R FURTHER CONSOL N OK O F IDATION O THESE IDEALS, IN THE CONVICTION THAT THE PROBLEMS T B CONFRONTED-WITHIN THE CCUNTRY CAN BE RESCL /ED IN THE O E EUROPEAN CONTEXT THE

k.

THE FIAT-OWNED DAILY, LA S A P A QUOTES SIGN 03 MJDREOTTI'S TM *

THE STUDY OF POSSIBLE SOLUTIONS
r

STATEMENT " I T IS UNACCEPTABLE THAT 70$ OF THE C M U I Y BUDGET OMNT

SHOULD G TO AGRICULTURE". O
WILL NEED TIME BUT M R A E THATCHER A'.'D ANDREOTTI HOPE THAT AGRT

THE STRASBOURG S M I WILL ALREADY PRODUCE "S KETH|NG CONCRETE' UMT A D CONSTRUCTIVE". THIS "SOMETHING" SHOULD CONSIST OF T 0 M ELEMENTS, FIRSTLY A M N A E TO THE COMMISSION TO PREPARE A SERIE3 ADT 0" PROPOSALS FOR THE AUTUMN, AND SECO"DLY A M R FLEXIBLE ATTITUDE OE
B FRAN'JE A D GERMANY. IT .'ILL BE A DIFFICULT TATTLE TU Y M : T MARGARET THATCHER SEEMS DETERMINED TO FIGHT IT TO THE END.

5. RENZO CIANFANELLI, LONDON CORRESPONDENT OF THE LEADING ^I LAN DAILY, CORRIERE DELLA SERA, V/ONDERS V'H ETHER THE PROFESSIONS OF f'UTUAL UNDERSTANDING ..'ILL DEVELOP "URTHER 5ETWESM THE CONSERVATIVE N E GOVERNMENT A D THE N W ITALIAN GOVERNMENT WHICH ILL ALMOST F CERTAINLY CONTAIN ELEMENTS O THE LEFT. H ALSO LINKS THE BRITISH GOVERNMENT'S DESIRE FOR CLOSER CO-OPERAT E O ION WITH ITALY WITH THE DECISION T SEEK A 5 ' DEVALUATION OF THE GREEN POUND WHICH IS LIKELY T 3E OPPOSED NOT ONLY 3Y FRANCE O Y N UH A D GERMANY BUT ALSO B DENMARK A D THE NETHERLANDS. IN S C N CIRCUMSTANCES ITALIAN SUPPORT W U D BE WELCOME. OL

O F O PLEASE PASS SAVING T ALL SAVING ADDRESSEES. C

CAMPBELL
[REPEATED AS REQUESTED]

FCO/WHITEHALL DISTRIBUTION
WED
EID

CONFIDENTIAL

lO DOWNING STREET
From the Private Secretary

15 June

1979

THE

PRIME MINISTER'S TALKS WITH SIGNOR ANDREOTTI

AT 10 DOWNING STREET ON 15 JUNE 1979

The P r i m e M i n i s t e r o f I t a l y , S i g n o r A n d r e o t t i , p a i d a s h o r t
v i s i t t o London t o d a y a t t h e P r i m e M i n i s t e r ' s i n v i t a t i o n i n o r d e r
t o d i s c u s s t h e f o r t h c o m i n g m e e t i n g o f t h e European C o u n c i l a t
S t r a s b o u r g , and r e l a t e d m a t t e r s . Signor A n d r e o t t i a r r i v e d at
No. 10 a t 1130, a c c o m p a n i e d by t h e I t a l i a n F o r e i g n M i n i s t e r ,
S i g n o r F o r l a n i , and h i s D e p u t y D i p l o m a t i c A d v i s e r , S i g n o r
C a t a l a n o , f o r t a l k s w h i c h l a s t e d f o r an h o u r - a n d - t h r e e - q u a r t e r s
and f o r w h i c h t h e F o r e i g n and Commonwealth S e c r e t a r y was p r e s e n t .
I e n c l o s e a copy o f my n o t e o f t h e d i s c u s s i o n . I should
be g r a t e f u l i f you and a l l t h e o t h e r r e c i p i e n t s o f t h i s l e t t e r
w o u l d e n s u r e t h a t i t i s g i v e n an a p p r o p r i a t e l y r e s t r i c t e d d i s t r i
b u t i o n , c o n f i n e d t o those s e n i o r o f f i c i a l s d i r e c t l y concerned
w i t h the issues discussed.
The c o n v e r s a t i o n o v e r l u n c h was o f a g e n e r a l n a t u r e and
t h e a t m o s p h e r e was n o t a b l y r e l a x e d and c o r d i a l . Our i n t e r p r e t e r , Mr. L a y d e n , may be a b l e t o s u p p l y a n o t e o f some o f t h e e x c h a n g e s
b e t w e e n t h e P r i m e M i n i s t e r , S i g n o r A n d r e o t t i and t h e L o r d P r i v y
Seal.

The P r i m e M i n i s t e r commented l a t e r t h a t , on t h e i s s u e o f
t h e Community B u d g e t , S i g n o r A n d r e o t t i ' s l i n e had been i n t e r e s t i n g
but d i s a p p o i n t i n g . The I t a l i a n P r i m e M i n i s t e r had been much
more i n t e r e s t e d i n t h e r e f o r m o f t h e CAP, and i n p a r t i c u l a r i n
the q u e s t i o n o f M e d i t e r r a n e a n a g r i c u l t u r a l p r o d u c t s , t h a n i n t h e
i s s u e o f t h e Budget i t s e l f . S i g n o r A n d r e o t t i had e v i d e n t l y been
p r e p a r e d t o c o n t e m p l a t e change i n t h e b u d g e t a r y a r r a n g e m e n t s
o n l y i f t h i s were t o l e a d t o a b o o s t f o r t h e R e g i o n a l Fund.
The P r i m e M i n i s t e r has a s k e d a b o u t t h e e x t e n t t o w h i c h t h e
UK can l e n d s u p p o r t t o t h e I t a l i a n p o s i t i o n on M e d i t e r r a n e a n
products; she has commented t h a t t h e I t a l i a n case seems t o be
a s t r o n g one on i t s m e r i t s . I s h o u l d be g r a t e f u l f o r e a r l y
advice.
/I am sending

CONFIDENTIAL

- 2

I am s e n d i n g c o p i e s o f t h i s l e t t e r , and e n c l o s u r e , t o
M a r t i n H a l l (HM T r e a s u r y ) , G a r t h W a t e r s (MAFF), Tom H a r r i s
( D e p a r t m e n t o f T r a d e ) and M a r t i n V i l e ( C a b i n e t O f f i c e ) .

P a u l L e v e r , Esq.,
F o r e i g n and Commonwealth

Office.

LIST OF GUESTS ATTENDING THE LUNCHEON TO BE GIVEN BY THE PRIME MINISTER

IN HONOUR OF HIS EXCELLENCY ON GIULIO ANDREOTTI, PRIME MINISTER OF THE
ITALIAN REPUBLIC ON FRIDAY, 15 JUNE 1979 AT 1.00 PM FOR 1.15 PM

The P r i m e

Minister Andreotti Minister f o r Foreign Affairs

H i s E x c e l l e n c y On G i u l i o

H i s E x c e l l e n c y On A r n a l d o F o r l a n i His Excellency t h e I t a l i a n Signor Antonio Catalano Ambassador

Deputy D i p l o m a t i c A d v i s e r t o t h e I t a l i a n Prime M i n i s t e r

The R t . Hon. S i r G e o f f r e y Howe, MP The R t . Hon. S i r I a n G i l m o u r , The R t . Hon. P e t e r W a l k e r , MP S i r A l a n Campbell Mr. M.D. Butler H.M. Ambassador, Rome MP

Mr. M.D.M. F r a n k l i n Mr. B r y a n Cartledge

Interpreters:

Signora C i v e l l i Mr. Tony Layden

DRAFT SEATING PLAN FOR LUNCH ON FRIDAY, 15 JUNE 1979

Mr.
M.D.

Butler

The

R t . Hon. P e t e r W a l k e r

HE The I t a l i a n
Ambassador

HE On A r n a l d o

Forlani

PRIME MINISTER
Interpreter
* HE On G i u l i o

The

R t . Hon. S i r G e o f f r e y
Howe

Andreotti

S i r Alan Campbell

The

R t . Hon. S i r I a n G i l m o u r

Mr.

M.D.M. F r a n k l i n

Signor Antonio

Catalano

Mr.

Bryan C a r t l e d g e

DOOR

ccr.'Rrrr.'Tf.v

NOTE OF THE PRIME MINISTER'S DISCUSSION WITH THE PRIME MINISTER

OF ITALY, SIGNOR ANDREOTTI, AT 10 DOWNING STREET ON 15 JUNE, 1 9 7 9 AT 1130

Present:
Prime Minister
Signor Andreotti

F o r e i g n and Commonwealth Secretary Mr. B.G. C a r t l e d g e

Signor F o r l a n i ( M i n i s t e r o f
Foreign A f f a i r s )
Signor Catalano (Deputy Diplomatic Adviser)
Signora Civelli

Mr. A n t o n y Leydon
(Interpreter)

* * * * * * *

Situation

i n Italy
Andreotti, t h e Prime M i n i s t e r said

Welcoming S i g n o r

t h a t she was v e r y g l a d t h a t he had been a b l e t o s p a r e t h e

t i m e t o come t o London f o r a d i s c u s s i o n o f t h e f o r t h c o m i n g
European C o u n c i l M e e t i n g b o t h hoped t o a c h i e v e a t Strasbourg, and o f what like they
from

there.

She w o u l d

t o hear

S i g n o r A n d r e o t t i what t h e n e x t s t e p s w o u l d be f o l l o w i n g h i s
g r e a t success i n t h e I t a l i a n E l e c t i o n a g a i n s t t h e Communists.

S i g n o r A n d r e o t t i s a i d t h a t he now had t o f o r m a c o a l i t i o n
government. at He hoped t h a t t h e two p a r t i e s i n t h e government

present would p r o v i d e t h e basis f o r c o n s t r u c t i n g a s t r o n g e r

The m a j o r d i f f i c u l t y a t p r e s e n t was t o s e c u r e
Even t h e t h r e e
20 v o t e s s h o r t o f

combination. the

cooperation of the S o c i a l i s t Party. i n combination would s t i l l fall

parties

an o v e r a l l m a j o r i t y ,

and he was t h e r e f o r e o b l i g e d t o seek

He a l s o faced

a g r e e m e n t s w i t h o t h e r p a r t i e s as w e l l . problems w i t h

t h e t r a d e u n i o n s , b u t hoped t h a t

t h e c u r r e n t

negotiations with the summer.

them w o u l d be c o m p l e t e b e f o r e t h e e n d o f

/The

Prime

Minister

CONFIDENTIAL

CONFIDENTIAL

2 -
The P r i m e M i n i s t e r asked S i g n o r A n d r e o t t i a b o u t Italian was t o make that the two

percentage of t r a d e u n i o n i s t s i n the p o i n t s on the trade unions. years the The

workforce.
during

S i g n o r A h d r e o t t i r e p l i e d t h a t he w o u l d l i k e first the past three t r a d e u n i o n s had the

worked q u i t e w e l l
difficult
w i t h the the IMF
Lira.
lost
the


of

w i t h t h e government d u r i n g moments, f o r example and I t was

t h e c o u n t r y ' s most negotiations against

during

a t t h e t i m e o f heavy s p e c u l a t i o n f a l l e n by

a l s o t r u e t h a t t h e number o f w o r k i n g h o u r s l a r g e l y because o f c o o p e r a t i o n on

t h r o u g h s t r i k e a c t i o n had same p e r i o d , the unions. due

two-thirds during

the p a r t partly

S i g n o r A n d r e o t t i s a i d t h a t t h i s was had depended on

t o t h e f a c t t h a t t h e government had t h e Communists.

been i n a m i n o r i t y
support



I t was noticeable Communists strike
attributed

i n P a r l i a m e n t , and that since had a c t i o n had

the Parliamentary

o f t h e S o c i a l i s t s and

December, when t h e S o c i a l i s t s and increased (although t h i s could be

withdrawn from the government, the l e v e l o f

i n p a r t , a l s o , t o t h e b e g i n n i n g o f t h e p e r i o d o f wage
negotiations). t o pay S e c o n d l y , t r a d e u n i o n membership had fallen s i g n i f i c a n t l y , m a i n l y because many w o r k e r s were u n w i l l i n g
their contributions.

Community Budget and The and say had

the

CAP

had

P r i m e M i n i s t e r t o l d S i g n o r A n d r e o t t i t h a t she the p r e v i o u s been e n c o u r a g e d She by the f a c t t h a t he was

seen r e p o r t s o f h i s p r e s s i n t e r v i e w on

day,

i n agreement
to

w i t h so much o f what t h e B r i t i s h Government w o u l d w i s h at Strasbourg. a great t h e r e was

w i s h e d S i g n o r A n d r e o t t i t o know t h a t
l a s t Government. The ideal:

d i f f e r e n c e between t h e p r e s e n t Government's
t h a t of the p o s i t i v e l y i n t h e European was the

a p p r o a c h t o Europe and t h e UK Europe. solution w o u l d n o t be

p r e s e n t Government b e l i e v e d

a b l e t o go and

ahead e x c e p t as a member o f
best
t h e b e s t f o r Europe as w e l l .

B r i t a i n ' s membership o f t h e EEC f o r t h i s country,

/The Prime Minister

CONFIDENTIAL

- 3 -

The

P r i m e M i n i s t e r s a i d t h a t she and h e r M i n i s t e r s were w h o l l y

would

d e v o t e d t o t h e cause o f E u r o p e , and f o r t h a t r e a s o n

do e v e r y t h i n g p o s s i b l e t o make t h e European i d e a l work and

t o c o o p e r a t e t o t h e g r e a t e s t p o s s i b l e e x t e n t on a l l i s s u e s .
T h i s w o u l d n o t , however, p r e v e n t t h e Government f r o m t h e i r c o r n e r on m a t t e r s w h i c h gave r i s e t o p r o b l e m s UK, such as Policy and F i s h e r i e s . fighting
for the

t h e Community B u d g e t , Common A g r i c u l t u r a l
The p r o b l e m l a y i n how t o make p r o g r e s s
The Prirr.e

on t h e s e i s s u e s w i t h o u t seeming t o be a n t i - E u r o p e a n . M i n i s t e r s a i d t h a t she w i s h e d t h e sooner ideal.

S i g n o r A n d r e o t t i t o know t h a t

p r o g r e s s c o u l d be made on t h e s e i s s u e s , t h e sooner
budgetary arrangements i s s u e t o dominate were u n j u s t ;
The Government d i d
t h e d i s c u s s i o n s a t

t h e Government c o u l d c o n v e r t t h e B r i t i s h p e o p l e t o t h e European
The D r e s e n t t h e y had t o be made j u s t and r e a s o n a b l e . n o t , however, w i s h t h i s Strasbourg;

what t h e y w a n t e d was p r o g r e s s so t h a t t h e
about o t h e r m a t t e r s .

Community c o u l d move on t o t a l k

Signor A n d r e o t t i said that h i s t o t a l experience o f f i v e

y e a r s as P r i m e M i n i s t e r had t a u g h t h i m t h a t to r a i s e problems The i t was p o s s i b l e
a t European C o u n c i l s b u t n o t t o a c h i e v e

s o l u t i o n s o f them w i t h o u t s l o w and g r a d u a l p r e p a r a t i o n .
a i m a t S t r a s b o u r g , t h e r e f o r e , s h o u l d be t o have t h e
set out clearly, and agreement r e a c h e d on t h e
perhaps
The P r i m e M i n i s t e r t o l d Signor
f o r s o l v i n g them, a p r o c e d u r e w h i c h c o u l d problems procedure

i n v o l v e t h e Commission.

A n d r e o t t i t h a t when t h e P r e s i d e n t o f t h e Commission had c a l l e d

on h e r t h r e e weeks ago, she had r a i s e d t h e problem o f t h e
arrangements
Community Budget w i t h h i m , and she now had f r o m t h e Commission
an a g r e e d s t a t e m e n t on t h e e f f e c t o f t h e b u d g e t a r y a t t r i b u t i n g t h e MCAs, and a l s o s h o w i n g w o u l d be i n 1980 when A r t i c l e The facts, 131 w o u l d on each member, a c c o r d i n g t o each o f t h e p o s s i b l e ways o f
what t h e p o s i t i o n
no l o n g e r a p p l y .
The P r i m e
ascertainable.

t h e r e f o r e , s h o u l d n o t be i n d i s p u t e . t h e f a c t s when t h e s e were r e a d i l y

M i n i s t e r s a i d t h a t she was a v e r s e t o a r g u i n g w i t h h e r
c o l l e a g u e s about

/Mr.

Jenkins

CONFIDENTIAL

CONFIDENTIAL

- 4 -
Mr. Jenkins had s u g g e s t e d to her t h a t when she met she could President his
agreement

Giscard, for on

as P r e s i d e n t

of the C o u n c i l ,

obtain

agreement to p u t t i n g S t r a s b o u r g , on the f a c t s and

the problem of the Budget on

the Agenda
Commission

the b a s i s of s e c u r i n g

the C o u n c i l ' s

g i v i n g f i r m i n s t r u c t i o n s to the During her she had

to come forward w i t h p o s s i b l e s o l u t i o n s to the problem at

the C o u n c i l ' s Giscard and UK's had next meeting. t a l k with President that the in P a r i s , therefore, r e c o g n i s e d , i n the be adopted t h i s The on UK had approach,
subsequently

l i g h t of the d i s c u s s i o n , in arranging

t a s k would not

an easy one.

e x p e r i e n c e d some d i f f i c u l t y The Prime M i n i s t e r

f o r the Budget

question

to be g i v e n a r e a s o n a b l y high p l a c e s a i d t h a t she was She d i d not to a c h i e v e the r e s u l t

the S t r a s b o u r g Agenda.
determined instructed
difficulties,


The fact

Community

nevertheless

t h a t the Commission would be a l l members of the system could

to produce s o l u t i o n s . because she was was,

u n d e r e s t i m a t e the

aware t h a t not

a c c e p t e d t h a t the p r e s e n t unjust in r e s u l t s , and

arrangements were u n j u s t . be

however, t h a t only an u n j u s t the UK

produce such
changed. share

the system must t h e r e f o r e to the Budget.

Both I t a l y and the p a r t n e r s t h a t the present up

were p a y i n g more than t h e i r f a i r Fairness e n t e r p r i s e which was s a i d t h a t he any worsening of

t h e i r net c o n t r i b u t i o n was

between
to have

the
believed

e s s e n t i a l i n any

a thriving future. first position.

Signor Andreotti to a v o i d

e s s e n t i a l was

In p a r t i c u l a r , a r i s e i n a g r i c u l t u r a l
s h a r e of the Community's Budget. increased, The

p r i c e s would i n c r e a s e e x p e n d i t u r e s i n c e a g r i c u l t u r e would take

an even g r e a t e r European C o u n c i l t u r e on had sometimes spent days a t a time d e b a t i n g
whereas e x p e n d i
difficulty.
amounting to f i v e or s i x t i m e s
surpluses.
selling
Soviet

whether the R e g i o n a l Fund s h o u l d be a g r i c u l t u r a l surpluses

more i n c o s t were passed through w i t h o u t any There were two The first was

further d i f f i c u l t i e s concerning

t h a t the Community u s u a l l y ended up by low p r i c e s to, f o r example, the

them at a r t i f i c i a l l y Union a f t e r f i r s t

i n c u r r i n g a l l the expense of s u p p o r t i n g them;

/the

surpluses

CONFIDENTIAL

CONFIDENTIAL

- 5 the of s u r p l u s e s s h o u l d be consumed i n t h e Community i t s e l f , which The second d i f f i c u l t y was t h a t u n d e r t h e p r e s e n t instead

system

t h e members o f t h e Community were p a y i n g t w i c e

over.

i n s t r u c t i o n s were g i v e n f r o m t i m e t o t i m e t o d e s t r o y f r u i t and
v e g e t a b l e s as a r e s u l t o f EEC r e g u l a t i o n s . s e r i o u s p s y c h o l o g i c a l problem were c o n c e r n e d , the r u l e s which particularly produced t h i s so much g r e a t e r c o n c e r n T h i s caused a
i n Italy
t o change
as f a r as p o o r p e o p l e I t a l y wished

s i n c e t h e s e p r o d u c t s were o f
result.
i n h i s view t h e

to Italians.

S i g n o r A n d r e o t t i went on t o s a y t h a t first e s s e n t i a l was t o f i n d

a way o f a v o i d i n g a g r i c u l t u r a l
He had some c o n f i d e n c e i n
and p r o b a b l y t h e
arrangements,

s u r p l u s e s , t h e r e b y r e d u c i n g t h e c o s t o f t h e CAP and t h e
b u r d e n on t h e Community Budget. the the ERG; q u a s i - l i b e r a l economic t h i n k i n g o f C h a n c e l l o r S c h m i d t i n
b u t he knew t h a t Denmark,Ireland, for Italy a l l o f whom b e n e f i t e d f r o m t h e p r e s e n t and t h e UK.

Netherlands, would

cause d i f f i c u l t i e s

Signor A n d r e o t t i s a i d t h a t t h e problem p r o d u c t s was n a t u r a l l y gave M e d i t e r r a n e a n He u n d e r s t o o d at had for this the o f p a r t i c u l a r concern order t o help countries l i k e

of Mediterranean
to Italy. In
frequently

C y p r u s , t h e Community

products less p r o t e c t i o n reasons f o r t h i s , i n t h e Tokyo r o u n d , b u t no m e n t i o n Italy

than o t h e r s .
b u t i t was a l w a y s

I t a l y ' s expense;

f o r example, t h e r e

been a g r e a t d e a l o f d i s c u s s i o n o f r e d u c t i o n s i n t a r i f f s
and t o m a t o e s , of similar reductions
meat and d a i r y p r o d u c e . issue. had been a b l e t o a c h i e v e
a g r i c u l

on f r u i t

some m i n o r

changes, b u t i n g e n e r a l she had a raw d e a l on

Signor A n d r e o t t i s a i d t h a t Mediterranean than the discrepancy
they

t u r e was f a r more i m p o r t a n t t o I t a l y g o t back i n r e t u r n ; true.

between what t h e y c o n t r i b u t e d t o t h e Budget and what But t h e s i t u a t i o n

f o r t h e UK, however, t h e o p p o s i t e was

f o r t h e t w o c o u n t r i e s was i n r e a l i t y
of securing

two s i d e s o f t h e same c o i n and o f t h e p r o b l e m

CONFIDENTIAL

/greater

justice

C^N Fin F T a f Mf
- 6 g r e a t e r j u s t i c e as between those who the system that I t a l y was and t h o s e who and were not. i f the UK were doing w e l l out of

;/

Signor Andreotti s a i d
s u p p o r t on the problem of

I t a l y were to have a common p l a t f o r m ,

o b l i g e d to seek the UK's products.

Mediterranean

The Prime M i n i s t e r s a i d t h a t on the q u e s t i o n of s u r p l u s e s ,

P r e s i d e n t G i s c a r d had suggested - and she was not s u r e to what
e x t e n t t h i s had a l r e a d y been d i s c u s s e d i n the Community - t h a t
s u r p l u s e s s h o u l d be f i n a n c e d by the c o u n t r i e s c r e a t i n g them
and not under the CAP. Lord C a r r i n g t o n p o i n t e d out that
was
P r e s i d e n t G i s c a r d was concerned, EEC.
i n f a c t r e f e r r i n g to f u t u r e s u r p l u s e s .
produce

He went on to say that, so f a r as M e d i t e r r a n e a n s h i f t when S p a i n and P o r t u g a l j o i n Greece

the b a l a n c e of power i n the Community c o u l d w e l l

i n the e n l a r g e d

S i g n o r A n d r e o t t i acknowledged t h a t i f each member country

had to a c c e p t r e s p o n s i b i l i t y Given f o r i t s own s u r p l u s , t h e r e would
CAP
achieve
rules


be no problem. operated because the mechanism under which the

a t p r e s e n t , however, t h i s simply d i d not happen,

Community i n t e r v e n t i o n to b r i d g e the gap the f i x e d p r i c e was between To automatic. The p r e s e n t

p r i c e s r e a l i s e d and f o r the CAP products

the r e s u l t P r e s i d e n t G i s c a r d had

i n mind, t h e r e f o r e , the

would have to be changed.

system to

s t i m u l a t e d the i n c r e a s e d p r o d u c t i o n of, f o r example, i n the FRG by the payments which i t p r o v i d e d German f a r m e r s . account P r o d u c t i o n p l a n s were needed,

dairy

although but

t h e r e would have to be a degree of e l a s t i c i t y

i n them to t a k e
the
of

of y e a r s of bad weather and o t h e r f a c t o r s :

o b j e c t i v e s h o u l d be to a v o i d s t i m u l a t i n g the p r o d u c t i o n Budget.

s u r p l u s e s which c r e a t e d an i n c r e a s i n g burden on the Community

R e v e r t i n g to the q u e s t i o n of M e d i t e r r a n e a n

products,

S i g n o r A n d r e o t t i s a i d t h a t the EEC had agreements w i t h

the

/count r i e s

CONFIDENTIAL

- 7

c o u n t r i e s o f N o r t h A f r i c a and w i t h consequences f o r I t a l y . was consumed i n I t a l y was d i f f i c u l t . of This imbalance t i o n would the

I s r a e l which fruits;

had

adverse

The Community a b s o r b e d o n l y 7 p e r
t h e remainder
which
consumption
recognised

cent o f I t a l y ' s p r o d u c t i o n o f c i t r u s

i t s e l f o r exported elsewhere,

By c o n t r a s t , 80 p e r c e n t o f I t a l y ' s had t o be c o r r e c t e d . o f Spain

meat and d a i r y p r o d u c e was i m p o r t e d f r o m w i t h i n t h e EEC.

Signor A n d r e o t t i i n p r o s p e c t , y e a r s o f p r e p a r a
adjustments. Italy

t h a t , w i t h the accession

be needed t o s e c u r e

t h e necessary

T h e r e was no need f o r I t a l y enlargement on p o l i t i c a l grounds.

t o s u f f e r damage as a r e s u l t o f
indeed, supported

o f t h e Community w h i c h ,

The had it

P r i m e M i n i s t e r asked S i g n o r A n d r e o t t i how l o n g he
f o rMediterranean products;
unlikely t h a t r e s u l t s c o u l d be a c h i e v e d on t h i s
Italy had begun
achieved,
towards could

been s e e k i n g r e a d j u s t m e n t s was c l e a r l y

between t h e S t r a s b o u r g and D u b l i n M e e t i n g s o f t h e European

Council. the for the The Signor A n d r e o t t i r e p l i e d t h a t b a t t l e s e v e r a l y e a r s ago. conversion of c i t r u s f r u i t s EEC had a l s o Italy Some r e s u l t s had been i n t o f r u i t j u i c e , which

example i n w i n n i n g f r o m t h e Community a c o n t r i b u t i o n

be e x p o r t e d o v e r a l o n g e r p e r i o d and a t a h i g h e r Southern to and The - the s o - c a l l e d Mediterranean Signor A n d r e o t t i said that

profit.
These Italy

c o n t r i b u t e d t o a g r i c u l t u r a l p r o d u c t i o n i n
package.

were, however, modest a c h i e v e m e n t s and t h e y had t a k e n two y e a r s

secure. problem, he t h o u g h t t h a t t h e UK c o u l d work t o g e t h e r and t h e r e b y a c h i e v e had t o be done. results.

however, l a y i n c o n v i n c i n g t h e o t h e r members t h a t
The o t h e r members had t o r e a l i s e
A t t h e same t i m e , i t
i n t h e Community.
kind,
rigid
be n e c e s s a r y .

something

t h a t s a c r i f i c e s would was n e c e s s a r y A crisis

t o avoid creating a c r i s i s

c o u l d come about since

on q u e s t i o n s o f t h i s members
t o adopt f o r example,

i n v o l v i n g economic i n t e r e s t s , / w e r e i n c l i n e d attitudes; towards Conservative i n the Netherlands, governments.

attitudes

t h e CAP r e m a i n e d c o n s t a n t as between S o c i a l i s t and

A l o n g and d i f f i c u l t / would be negotiation

CCKFIDEN"

c ::;:DENTiAL

- 8 would be needed, but, S i g n o r A n d r e o t t i r e p e a t e d , c o u l d be s e c u r e d .

The Prime M i n i s t e r s a i d t h a t t h e UK would need arise. results
otherwise
results

very q u i c k l y , s i n c e d o m e s t i c p o l i t i c a l problems c o u l d would i n c r e a s e enormously: reached. The Government's t h e B r i t i s h Government

I n 1980, t h e UK's n e t c o n t r i b u t i o n t o t h e Budget

could not

a f f o r d t o w a i t u n t i l t h e 1 p e r cent maximum o f VAT was

opponents had c o n c e n t r a t e d so
much on the Budget a s the t e s t o f whether EEC membership was
b e n e f i c i a l t o the UK t h a t i t would be i m p o s s i b l e t o t o l e r a t e
the s t a t u s quo f o r a f u r t h e r two y e a r s or s o . had to s o l v e two problems: The Government
size.
t h e Budget i t s e l f and the CAP,which

was t o a l a r g e e x t e n t r e s p o n s i b l e f o r t h e Budget's would be i n grievous p o l i t i c a l and f i n a n c i a l

U n l e s s movement c o u l d be s e c u r e d v e r y soon, the Government

difficulty.
upset
Lord C a r r i n g t o n s a i d t h a t t h e p r e s e n t s i t u a t i o n c o u l d the Government's whole economic s t r a t e g y .

The UK could not

to a c h i e v e

hope to become a c o n s t r u c t i v e member of t h e EEC f o r so long

as h e r economy remained weak. I t was d i f f i c u l t economic r e c o v e r y w h i l e t h e enormous burden o f t h e UK's net
budgetary c o n t r i b u t i o n remained.

S i g n o r A n d r e o t t i s a i d t h a t t h e s i m p l e s o l u t i o n might be
to e s t a b l i s h t h e p r i n c i p l e t h a t o n l y t h o s e c o u n t r i e s w i t h
GNPslower repayment than the EEC average would q u a l i f y a system whereby f o r a net
n e t repayments,
to t h e
from the Budget. P s y c h o l o g i c a l l y , however, i t

might be e a s i e r to a r r a n g e

or a p r o p o r t i o n o f them, were not g i v e n back d i r e c t l y

n a t i o n a l budgets o f below-average GNP c o u n t r i e s but to the

R e g i o n a l Fund o r t o t h e f i n a n c i n g o f l a r g e - s c a l e p r o j e c t s
in t h e country readily concerned, thus a c h i e v i n g a s a v i n g f o r t h e
A s o l u t i o n on t h e s e l i n e s might be more
by t h e EEC members. Signor Andreotti t h e more d i r e c t said
a r r a n g e
n a t i o n a l budget. accepted

t h a t he d i d not by any means e x c l u d e

ment but thought t h a t something on t h e s e l i n e s would be more

/ acceptable.

CONFIDENTIAL

- 9 acceptable. The Prime M i n i s t e r commented t h a t a l t h o u g h the

figures,
the

r e s u l t might be the same i n terms of budgetary

the d e s t i n a t i o n of the repayments would be d i f f e r e n t : p a r t i c u l a r p o o r e r country.

t o t a l repayments would not n e c e s s a r i l y come back t o any

S i g n o r A n d r e o t t i agreed t h a t i t
would be s i m p l e r to e s t a b l i s h a system of p r o g r e s s i v e budgetary
c o n t r i b u t i o n s , analagous t o n a t i o n a l income t a x ; but because
of the EEC m e n t a l i t y , i t would be more d i f f i c u l t a c c e p t a n c e f o r such a n o v e l t y over a s h o r t t o win
period.

The Prime M i n i s t e r s a i d t h a t a s y s t e m such a s S i g n o r

A n d r e o t t i had proposed would c r e a t e some d i f f i c u l t i e s UK, s i n c e the degree o f the UK's over-payment c o u l d not cope w i t h i t . government repayment in Europe. was about t o become so g r e a t t h a t a s o l u t i o n on t h e s e s h o u l d have some d i r e c t f o r the
lines
t o t h e Budget

I t was a l s o e s s e n t i a l t h a t a
c o n t r o l over the net r e f u n d .

The B r i t i s h Government, f o r example, would w i s h to u s e any

i n o r d e r t o s t i m u l a t e the UK economy, r a t h e r than
Lord C a r r i n g t o n s a i d t h a t the c u r r e n t s c a l e of
a c q u i e s c i n g i n t h e use of the money t o prop up d y i n g i n d u s t r i e s
the budgetary imbalance was such t h a t , a l t h o u g h he e n t i r e l y
a c c e p t e d S i g n o r A n d r e o t t i ' s view t h a t the problem of the
CAP had to be r e s o l v e d by an adjustment i n e x p e n d i t u r e , t h e
budgetary problem demanded a more r a d i c a l s o l u t i o n . f o r example, The
d i f f i c u l t y was t h a t , i f the UK were t o pay l e s s , o t h e r s t h e FRG - would have t o pay s i g n i f i c a n t l y more.

The Prime M i n i s t e r t o l d S i g n o r A n d r e o t t i t h a t t h e problem

was t o s e c u r e some movement. She was l e s s p a t i e n t than he
was and d i d not w i s h to d i s c u s s the problem t h r e e t i m e s a
y e a r w i t h o u t a c h i e v i n g any a c t i o n . the next European C o u n c i l : A c t i o n was needed a t
the problem was, how t o s e c u r e i t ?

S i g n o r A n d r e o t t i remarked t h a t t h e n o v e l t y of t h e Prime
M i n i s t e r ' s p r e s e n c e i n the European C o u n c i l might g i v e a j o l t
to the C o u n c i l ' s methodology, Conservatism". o r what he would c a l l "European
I t was important t h a t t h e r e s h o u l d be adequate

/ p r e p a r a t ion

CONFIDENTIAL

CONFIDENTIAL

- 10 p r e p a r a t i o n and t h a t t h e European Commission s h o u l d be

instructed i n s u c h a way as t o pave t h e way f o r d e c i s i o n s a t
I t was a l s o necessary
the f o l l o w i n g meeting o f t h e Council. systematic b i l a t e r a l discussion.

to w o r k r o u n d t h e f l a n k s , i n o t h e r words t o engage i n
European C o u n c i l meetings
decisions.
were n o t a l w a y s t h e b e s t o c c a s i o n s f o r a c t u a l EMS
Signor A n d r e o t t i r e c a l l e d d e c i d e d i n December t o j o i n down as a r e s u l t . it right to join t h a t t h e I t a l i a n Government had
thought

t h e EMS and had n e a r l y been b r o u g h t

H i s Government had, n e v e r t h e l e s s ,

i n o r d e r t o d e m o n s t r a t e i t s European w i l l
i n t e r n a l and m o n e t a r y p o l i c i e s .
Signor Andreotti

and a l s o because membership o f t h e s y s t e m had o b l i g e d t h e

Government t o adopt more r i g i d The r e s u l t s so f a r had been f a v o u r a b l e . t h e EMS. The P r i m e M i n i s t e r s a i d t h a t

asked what t h e B r i t i s h Government's a t t i t u d e now was t o w a r d s

t h e Government was
r e v i e w i n g t h e q u e s t i o n o f t h e UK's r e l a t i o n s h i p w i t h t h e EMS
and w o u l d be p r e p a r e d t o announce t h e r e s u l t s o f t h e i r
preliminary EMS. r e v i e w b e f o r e September. The Government w o u l d
above
p r o b a b l y w i s h t o a l l o c a t e some o f t h e UK's r e s e r v e s t o t h e
A t p r e s e n t , however, s t e r l i n g was a t a l e v e l w e l l p a r t l y because N o r t h Sea o i l by t h e UK's
increase
t h e EMS c e i l i n g , was k e e p i n g t h e

exchange r a t e above what w o u l d be j u s t i f i e d i n t h e MLR t o 14 p e r c e n t . in i n t h e UK's i n t e n t i o n to join

economic p e r f o r m a n c e , and a l s o because o f t h e r e c e n t

The d e p o s i t o f some UK r e s e r v e s
t h e system. The P r i m e M i n i s t e r

t h e EMS w o u l d , however, s e r v e as a d e c l a r a t i o n o f f a i t h

a s k e d S i g n o r A n d r e o t t i w h e t h e r membership o f t h e EMS had

o b l i g e d t h e I t a l i a n Government t o a d o p t t o u g h e r p o l i c i e s on
money s u p p l y and i n f l a t i o n done. p l a n n e d an a u s t e r i t y t h a n t h e y w o u l d o t h e r w i s e have
b u t membership
effect
S i g n o r A n d r e o t t i s a i d t h a t h i s Government had a l r e a d y
programme b e f o r e j o i n i n g :

o f t h e EMS made i t e a s i e r t o p u t t h i s programme i n t o result of Italy's participation i n t h e scheme.

s i n c e e v e r y b o d y knew t h a t s u c h measures had t o be t a k e n as a

/ The P r i m e M i n i s t e r

CONFIDENTIAL

- 11 -

The was

Prime M i n i s t e r s a i d t h a t the B r i t i s h Government, to be v e r y tough on T h i s was one way inflation. r e l a x e d , i n order to r e l e a s e UK

too,

prepared

Some exchange
investment UK

c o n t r o l s were being to Europe. r a t e down:

of g r a d u a l l y b r i n g i n g the exchange
l e a v e the

money would be a b l e to e n t e r and before.

on more e q u a l terms than

Signor over, The

A n d r e o t t i s a i d t h a t , when h i s Government had stood at 23 per got i t down to 13.4 per cent and was

taken

I t a l y ' s r a t e of i n f l a t i o n had

cent.

Government had

determined to keep i t t h e r e .
Energy
Signor had was A n d r e o t t i s a i d t h a t energy would be high on Each member c o u n t r y the
It

Agenda a t S t r a s b o u r g . the UK had Strasbourg. it o i l , the FRG I t was

of the Community
concerned: nothing.

a d i f f e r e n t s i t u a t i o n so f a r as energy was c o a l , w h i l e I t a l y had

e s s e n t i a l to t r y to produce some c o n c r e t e d e c i s i o n s at
no use simply d e c l a r i n g t h a t energy
then leave

consumption s h o u l d be reduced by 5 per c e n t , and to c a r r y out stations this prescription. agree,

to member c o u n t r i e s , w i t h a l l t h e i r d i f f e r e n c e s i n r e s o u r c e s ,
I t would be much b e t t e r i f
f o r example, t h a t a l l p e t r o l
and Sundays.

the European C o u n c i l c o u l d

i n the EEC s h o u l d be c l o s e d on S a t u r d a y s country to a c c e p t it. The

I f a l l members were to s u b s c r i b e to such a d e c i s i o n , i t would

be e a s i e r f o r each Community basis.
problems of
t a c k l e d on a
n u c l e a r energy, as w e l l , c o u l d be more e a s i l y

The

Prime M i n i s t e r s a i d t h a t she was

not

i n favour

of

the weekend c l o s i n g of p e t r o l s t a t i o n s s i n c e t h i s would

d i s c r i m i n a t e a g a i n s t those who Saturdays said but and Sundays. Each were o b l i g e d to work on
country would develop a d i f f e r e n t
The Prime M i n i s t e r
issue:

means of a c h i e v i n g the common o b j e c t i v e . t h a t she was t h e r e had

more concerned by the n u c l e a r energy

Europe would have to r e p l a c e i t s c o a l and o i l by n u c l e a r power

been i n s u f f i c i e n t p r e p a r a t i o n of the p u b l i c c a s e

/for

this.

CONFIDENTIAL

- 12 for this. P e o p l e had t o be r e m i n d e d t h a t u r a n i u m was j u s t as

I f Europe c o u l d
round t o f a v o u r n u c l e a r power, t h e w h o l e

much G o d - g i v e n as t h e s u n and t h e waves. n o t be b r o u g h t Italy, The be

economic f u t u r e o f t h e Community w o u l d be i n j e o p a r d y .
l i k e F r a n c e , had t a k e n some v e r y f a r - s i g h t e d d e c i s i o n s .
A n d r e o t t i agreed t h a t Chancellor and s h o u l d

on n u c l e a r s a f e t y were h e l p f u l P r i m e M i n i s t e r and S i g n o r pursued. The

Schmidt's proposals

d i s c u s s i o n ended a t 1315.

15 June 1979

CONFIDENTIAL

PRIME MINISTER
Your T a l k s w i t h S i g n o r A n d r e o t t i on 15 June
I a t t a c h below b r i e f s f o r tomorrow's He w i l l t a l k s with Signor Andreotti.

a r r i v e a t No. 10 a t 1130, accompanied o n l y by h i s F o r e i g n

(who i s e x c e l l e n t ) . You w i l l

M i n i s t e r , S i g n o r F o r l a n i , and h i s J u n i o r D i p l o m a t i c A d v i s e r ,
S i g n o r C a t a l a n o , p l u s an i n t e r p r e t e r in the F r o n t Hall.
wish t o meet him a t t h e F r o n t Door and t h e r e w i l l be a p h o t o c a l l

The group i s s m a l l enough (on our s i d e t h e r e w i l l be

Lord C a r r i n g t o n , our own i n t e r p r e t e r - Mr. Antony Layden - and
myself a s n o t e t a k e r ) f o r t h e t a l k s t o t a k e p l a c e i n t h e White
a r r a n g e f o r d r i n k s to be s e r v e d a t 1215.
s i t b e h i n d you and S i g n o r A n d r e o t t i t r a n s l a t e what you s a y i n t o Italian into

Drawing Room and I s h a l l The two i n t e r p r e t e r s w i l l the I t a l i a n English.
I a t t a c h a c a r d s u g g e s t i n g t h e o r d e r i n which you might the v a r i o u s t o p i c s f o r d i s c u s s i o n w i t h S i g n o r A n d r e o t t i .
S h o r t l y b e f o r e 1300, you w i l l wish t o round o f f t h e t a l k s
and take S i g n o r A n d r e o t t i through t o t h e P i l l a r e d Room t o meet
the e n l a r g e d group f o r l u n c h . plan. I a t t a c h t h e guest list and s e a t i n g
i n Rome,
being
You agreed t h a t Mr. A r c u l u s , our next Ambassador raise
and Mr. Layden w i l l

interpreter w i l l

t r a n s l a t e what S i g n o r A n d r e o t t i s a y s

c o u l d come i n f o r the p r e - l u n c h d r i n k s ( t h e lunch t a b l e already f u l l ) Signor A n d r e o t t i . i

i n o r d e r t o meet you and t o be i n t r o d u c e d t o

14 June 1979

V I S I T BY THE PRIME MINISTER OF ITALY

15 JUNE 1979

INDEX OF BRIEFS
1. 2. 3. 4. 5. 6. 7. 8. Steering Brief
Affairs

European Community

P r o s p e c t s f o r the Tokyo Summit

International Energy Q u e s t i o n s

Refugees from Indo-China

African Questions

B i l a t e r a l Questions
Italian Internal Scene

CONFIDENTIAL
"HIS D C u E T IS THE PR0PE57Y Or iiER BRITANNIC MAJESTY'S GOVERNMENT C'MC BRIEF N 1 O 13 June 1179 VISIT SY TIE PRIME MINISTER OF ITALY 15 JUNE 1979 C?? N O'' O j

STEERING BRIEF

B r i e f by Foreign and Commonwealth O f f i c e

1.

Signor Andreotti l a s t v i s i t e d London on 22 November 1 7 S before the 9' The reason f o r i n v i t i n g him now i s that B r i t i s h objectives w i l l be

4 December European Council.

we vva.nt to keep the I t a l i a n s w i t h us a t the 21-22 June European Council, p a r t i c u l a r l y on the Community Budget issue. to concept t a c t i c s f o r the European Council and beyond on: a) b) inequitable net budget c o n t r i b u t i o n s by the UK and I t a l y ; Tokyo Economic Summit and Energy.
and

Signor Andreotti himself w i l l remain i n charge while a now government

i s being formed and w i l l , i n any case, lead the I t a l i a n teams a t
Strasbourg and Tokyo.
2. The members o f the I t a l i a n Delegation ire l i s t e d a t Annex A.

The

meeting, which w i l l l a s t f o r one and a h a l f hours, w i l l be attended by the two Prime Ministers, the two ForeiRn Ministers, one senior o f f i c i a l

/will
CONFIDENTIAL

CONFIDENTIAL

w i l l bo followed by a .small working lunch.

On the I t a l i a n side the

attendance at this w i l l be the same as that f o r the t a l k s excepb that

the I t a l i a n Ambassador i n London, Signor Ducci, w i l l also be present-
On the B r i t i s h side, the Lord Privy Seal w i l l s u b s t i t u t e f o r Lord
Carrington and the Chancellor of the Exchequer and the M i n i s t e r of
A g r i c u l t u r e w i l l also attend. at Annex B. A complete guest l i s t f o r the lunch i s
I t i s expected that Signor A n d r c o t t i w i l l r e t u r n d i r e c t l y

to Rome a f t e r the working lunch.

3. Signor G i u l i o A n d r e o t t i , who i s 60,

can be shy and withdrawn, but Through a succession

warms on acquaintance. done.

He speaks no English.

of I t a l i a n p o l i t i c a l crises he has made h i s mark as a man who gets things His main objectives i n the t a l k s are l i k e l y to be:

a)

to a l i g n B r i t i s h and I t a l i a n EEC p o l i c i e s f o r the European Council,

p a r t i c u l a r l y on the Budget;

b)

to get on good terms with Mrs Thatcher and to explore the p o l i c i e s

of the new B r i t i s h Government;

c) h.

to strengthen h i s domestic p o l i t i c a l p o s i t i o n .
The I t a l i a n Government are p a r t i c u l a r l y s e n s i t i v e about anything
They have r e g u l a r l y attended the Seven Power

which suggests the establishment' o f a ' d i r e c t o r a t e ' of major powers from

which they are excluded. Economic Summits, and w i l l be present at Tokyo, but they viewed with deep
suspicion and complained b i t t e r l y about t h e i r exclusion from the Guadeloupe
Four Power Summit meeting i n January t h i s year. r o l e i n the Community.
They resent, without much
i l l u s i o n , any tendency by B r i t a i n , France and Germany to take a dominant

f>.

The Prime Minister might begin by asking Signor A n d r e o t t i f o r h i s

She might:

comments on the outcome of the I t a l i a n domestic elections (see B r i e f No 8

on I t a l i a n i n t e r n a l scene). a}

say that tho C h r i s t i a n Democrat vote seems to have held up wcJLl

(down only O.'t'J i n terms of tho popular vote for tho Chnmbor of

CONFIDENTIAL

CONFIDENTIAL

b)

express g r a t i f i c n t i o n that the Communist vote has declined f o r

the f i r s t time I n recent year;; (down from jh.h to JO.^J);

c)

t e l l Signor A n d r e o t t i o f the very great importance that she

attaches t o r e l a t i o n s with I t a l y ; and

d)

express the hope that our r e l a t i o n s w i l l continue t o be as

warm and f r i e n d l y , both b i l a t e r a l l y and i n the Community
context, as they are a t present. She nay then wish t o proceed
s t r a i g h t to a discussion o f the Community budget, on which B r i t i s h
and I t a l i a n views are s i m i l a r , w i t h a view t o securing a j o i n t
approach t o the problem a t Strasbourg.

RESUME OF BRIEFS
ITEMS DEFINITELY FOR DISCUSSION
EUROPEAN COMMUNITY AFFAIRS'(BRIEF HO 2)
Community Budget
6. the This w i l l be an important opportunity to work f o r common ground with I t a l i a n s on the budget problem.. The s i m i l a r i t i e s between the Behind t h i s there are

I t a l i a n and B r i t i s h p o s i t i o n s are that we both s u f f e r net budgetary costs and have p a r t i c u l a r l y low r e c e i p t s from the CAP. major differences. spending. I n p a r t i c u l a r the I t a l i a n s have s p e c i a l i n t e r e s t s i n

Mediterranean a g r i c u l t u r e and favour massive increases i n Community These differences must be handled c a r e f u l l y i n seeking I t a l i a n support f o r our own s t r a t e g y .

y.

Accordingly,the Prime M i n i s t e r might t r y to focus Signor Andreotti's

Our aim a t the Strasbourg

a t t e n t i o n on what i s most l i k e l y to be negotiable w i t h our partners a t

the June and November European Councils. European Council should be t o get agreement on a mandate to the Commission
to propose s o l u t i o n s to the Budgetary imbalance i n time f o r decisions to
be taken a t the November Council (our d r a f t text could be given to
Signor Andreotti i f t h i s has not been done i n advance). 1UK and I t a l i a n

1i inr; i.n 'i'iiiiiiin which

CONFIDENTIAL

CONFIDENTIAL

would s u i t no both.

Each o f us could then use our influence with the

B>X. B \ A V \ ^

Commission to get them to put forward 6omething l i k e Other EEC Pointa

8.

On other EEC issues, we have less s p e c i f i c objectives with the

But the Prime Minister could encourage then

I t a l i a n s a t t h i s stage.

to stand f i r m on a CAP price freeze a t least f o r products i n surplus and

to work f o r a compromise on the Common Fisheries Policy on which we have
no serious c o n f l i c t o f i n t e r e s t with them. Signor A n d r e o t t i may wish to
hear about our p o s i t i o n on EMS, I t a l y ' s membership of which has been a
c o n t r o v e r s i a l issue domestically, and or. i n d u s t r i a l p o l i c i e s .
PROSPECTS FOR THE TOKYO SUMMIT (BRIEF N 3) O 9. A meeting o f the European Council immediately before the economic

summit t r a d i t i o n a l l y provides an opportunity f o r those members o f the

Community who are not summit p a r t i c i p a n t s to express a view on the world
economic s i t u a t i o n so that the representatives o f the Community (the
President o f the European Council and the President o f the Commission)
can express an agreed Community p o s i t i o n . There w i l l be general agree
ment that the energy s i t u a t i o n i s complicating an already uncertain i n t e r
n a t i o n a l economic s i t u a t i o n and that t h i s should be the main subject f o r
discussion and decision a t Tokyo. UNCTAD V having reached only a l i m i t e d
measure o f agreement - and w i t h the developing countries facing growing
balance o f payments problems because o f the o i l price r i s e s - the
Japanese may w e l l want the Tokyo Summit to address i t s e l f to the North/
South dialogue.

INTERNATIONAL ENERGY QUESTIONS (BRIEF NO 4)

10.

I n the present d i f f i c u l t o i l market s i t u a t i o n , energy w i l l be a

p r i o r i t y subject f o r both the European Council and the Tokyo Summit. The Community and the Summit p a r t i c i p a n t s w i l l need to f i n d a common approach t o the problems imposed by shortage o f supplies and high spot market price:;. We should welcome I t a l i a n views on the possible content For our:;clvea we believe Continuod nnd effective of such an approach*

CONFIDENTIAL

CONFIDENTIAL

demand r e s t r a i n t w i l l i n any Case be an essential element.

REFUGEES FROM DIDO-CHINA (BRIEF N 5) O 11. The Indo-Chinese refugee/ problem requires i n t e r n a t i o n a l action Lo The Prime

mobilise p r a c t i c a l support and maximum pressure on Vietnam.

Minister w i l l wish to ask Sgr Andreotti to support her c a l l f o r a special i n t e r n a t i o n a l conference under Dr Waldheim's auspices and t o consider what other p r a c t i c a l assistance I t a l y can give. i n Hong Kong i s extremely serious. ITEMS WHICH MAY C M UP
OE AFRICAN QUESTIONS (BRIEF NO 6) 12. W would not, ourselves, propose to r a i s e t h i s subject. e Italian However, officials The s i t u a t i o n

o f f i c i a l t a l k s were held w i t h the I t a l i a n s l a s t week.

then expressed anxiety about the Rhodesia s i t u a t i o n , and b r i e f i n g has been provided i n case Sgr A n d r e o t t i should r a i s e the matter. b r i e f i n g also covers recent developments i n Namibia. BILATERAL QUESTIONS (BRIEF N 7)
O 13B i l a t e r a l r e l a t i o n s are close and have been further strengthened i n
This

recent years by the assistance we have been able to give I t a l y i n dealing

with terrorism (short^n^te^jTrovLded). points f o r the Prime M i n i s t e r t o r a i s e . There are no s p e c i f i c b i l a t e r a l
The I t a l i a n s may, however, r e f e r

to the d i f f i c u l t i e s presently being experienced by the I t a l i a n charter

f l i g h t company, I t a v i a , i n o b t a i n i n g s u f f i c i e n t f u e l supplies from Mobil
at Catwick. This i s not a matter f o r HMG. A defensive b r i e f i s

included on t h i s p o i n t .
BACKGROUND BRIEFING
ITALIAN INTERNAL SCENE (BRIEF N 8) O A short assessment o f the current I t a l i a n p o l i t i c a l and economic
/cituat

CONFIDENTIAL

CONFIDENTIAL

situation has been provided. Personality 15.

This incorporates the results of the

recent General Election and of the Elections to the European Parliament.

Motes on Sgr Andreotti and Sgr Forlani are included.

Essential factual s t a t i s t i c s on I t a l y are set out at Annex C to this

Brief.

Foreign and Commonwealth Office 13 June 1979

CONFIDENTIAL

CONFIDENTIAL

ANNEX A

TilE ITALIAN DELEGATION

Sgr G i u l i o Andreotti
Sgr Arnaldo F o r l a n i
Sgr Catalano

Prime Minister
Foreign Minister
Deputy Diplomatic Adviser
Chief of Protocol, M i n i s t r y
of I n t e r i o r
Chef de Cabinet to
Foreign Minister
Foreign M i n i s t r y
Press Spokesman
Interpreter

Sgr B o t t i g l i e r i

Sgr B i a n c h i e r i

Sgr Berlinguer

Sgra C i v e l l i

CONFIDENTIAL

CONFIDENTIAL

ANNEX B

WORKING LUNCH
I t a l i a n Side

1. 2. 3. k.

Sgr Andreotti Sgr F o r l a n i Sgr Catalano Sgr Ducci

Prime Minister Foreign Minister Deputy Diplomatic Adviser I t a l i a n Ambassador

B r i t i s h Side
1. 2. 3.
h.

The Prime Minister

The Chancellor o f the Exchequer The Lord Privy Seal The Minister of A g r i c u l t u r e Fisheries and Food S i r Alan Campbell ( B r i t i s h Ambassador, Rome) Mr Franklin (Cabinet O f f i c e ) Mr Butler (FCO) Mr Cartledge

56. 7. 8.

I n t e r p r e t e r s w i l l be present but w i l l not be seated at t a b l e .

CONFIDENTIAL

CONFIDENTIAL

Annex C
ITALY - BASIC STATISTICS (1978 and EEC Commission Forecasts f o r 1979)

Italy
Population (millions)
1978
1979
56.7 57.0 21.7 21.8 7-0
6.5 186.9 208.6 3296
3659
+ 2.2 + 4.6

UK
55-9
55-8
26.4 26.6 5-7
5.7
240.0 264.9

Labour Force ( m i l l i o n s )
1978
1979
Unemployed (percent o f
c i v i l i a n labour force)
1978
1979

Gross Domestic Product

1978
( b i l l i o n European Units
1979
of Account)
Gross Domestic Product
per head (EUA)
Annual Rate of Growth
of Volume o f GDP
(Percent)
Annual Rate o f Growth
of I n d u s t r i a l
Production
1978
1979
1978
1979
1978
1979

4293
4747
4 3-4
+ 2.3 + 3-1
+ 2.1 + 8.4 + 9-7
+ 127

+ 483

+ 1-9
+ 7-1
+ 13.0 + 12.5 +5323 +3333

Consumer p r i c e s (changes
1978
over year e a r l i e r ) per
1979
cent
Balance of Payments on
Current Account
( m i l l i o n EUA)
Trade
B r i t i s h exports
to I t a l y
B r i t i s h imports
from I t a l y
Defence
Spending
T o t a l armed forces

= 2.8?J GNP

1978
1979

1977
1978
1977
1978

981 m i l l i o n 112*4 m i l l i o n 153'* m i l l i o n 1935 m i l l i o n

= 342,000 plus 80,000 C a r a b i n i e r i

CONFIDENTIAL

CONFIDENTIAL

T H I S DOCUMENT I S T H E 1'ROPERTY O F HER B R I T A N N I C

MAJESTY'S

GOVERNMENT

13 JUNE, 1 9 7 9
bdiEF NO. 2

COFFERS*,

A
A

VISITS

BY T H E P R I M E

M I N I S T E R OF I T A L Y :

1 5 JUNE, 1 9 7 9

EUROPEAN COMMUNITY AFFAIRS

B r i e f b y t h e F o r e i g n , a n d Commonwealth POINT3 TO MAEE
) 1. (a) COM "U'TTY ?UDg?L'/COir-/?,RC-2:TCE
UK and I t a l i a n Budget problems
the problem t h a t t h e EEC B u d g e t , a n d EEC
V e have w o r k e d t o g e t h e r
/ may n o t
Our v i e w s on s o l u t i o n s
r

Office

I t a l y a n d t h e UK s h a r e resource to g e t the problem

transfers, are inequitable. acknowledged.

always f u l l y c o i n c i d e .

B u t l e t u s go o n s u p p o r t i n g each o t h e r
and f o r q u i c k
f o r remedies.

a t t h e June C o u n c i l , i n p r e s s i n g f o r r e c o g n i t i o n , a c t i o n b y t h e Commission on p r o p o s a l s (b) O b s t a c l e s JO be overcome

j

I f we p a y l e s s o t h e r s w i l l have t o p a y more. I f r o m t h e CAP: (380 m i l l i o n ) . i n 197" I r i s h total

The I r i s h w i l l n o t
were 570.2 mEUA

w a n t t o see a n y d i m i n u t i o n o f t h e b e n e f i t t h e y r e c e i v e , m a i n l y
FEOGA r e c e i p t s The Germans a n d t h e F r e n c h do n o t w a n t t o i n c r e a s e t h e 1?S VAT c e i l i n g .

expenditure which would breach

(c) Tr-'-rentation

o f oui^ a r g u m e n t s

W e

do n o t sec m a s s i v e i n c r e a s e s i n ndn-CAP e x p e n d i t u r e a s a
t o the problem. T h i s Government w a n t s t o be p r u d e n t i n c l u d i n g Community e x p e n d i t u r e . about There

solution

a l l Government e x p e n d i t u r e s h o u l d be s a v i n g s products.

i n expenditure

on s u r p l u s e s i n n o r t h e r n a g r i c u l t u .
t o b e t t e r purposes. The UK

Those c a n t h e n be d i v e r t e d

(urban renewal,

i n d u s t r i a l obsolescence,

p h y s i c a l b a r r i e r s t o

t r a n s p o r t ) and I t a l y

( M e d i t e r r a n e a n a g r i c u l t u r e , m e z z o g i o r n o ) have

-1CONFIDENTIAL

CONFIDENTIAL

(d) This

Corrective

hanir.m

i s t h e o n l y Way we c a n hope t o g e t q u i c k a c t i o n o n t h e Y e have h a d some i n d i c a t i o n s t h a t t h e F r e n c h / this i s required.

Budget imbalances. and

Germans may t h e m s e l v e s t h i n k s o m e t h i n g l i k e considering various ideas. Proposals

V/e a r e s t i l l point from (e) The us

We s h a l l n o t r a i s e t h e better

a t Strasbourg. t h e Commission.

w o u l d i n a n y case come

F i n a n c i a1 Mechanism
f i n a n c i a l mechanism a s a t p r e s e n t ( o r t h e I t a l i a n s ) any r e a l good. c o n s t r u c t e d does n o t do
I t might be p o s s i b l e t o

amend i t t o g i v e t h e UK a s u b s t a n t i a l r e t u r n a n d d e a l w i t h a p a r t
of our problem. to But proposals t o r e c t i f y the i n e q u i t i e s w i l l have

d e a l w i t h t h e l o w l e v e l o f UK a n d I t a l i a n r e c e i p t s gross contribution.
Council

a s w e l l as

t h e UK i n e q u i t a b l e (f) Our

T a c t i c s a t trie E u r o p e a n aim a t the Strasbourg

Council should day,

be t o e n s u r e t h a t t h e r e i s

a d e q u a t e d i s c u s s i o n on t h e f i r s t

and t o g e t agreement on
i n time f o r

i n s t r u c t i o n s t o t h e Commission t o propose s o l u t i o n s d e c i s i o n s t o be t a k e n a t t h e November C o u n c i l . must be c l e a r l y s t a t e d i n the Council's

These i n s t r u c t i o n s
on t h e l i n e s o f

conclusions

t h e a t t a c h e d d r a f t (Annex A ) . willingness t o discuss this

[ T h e P r i m e M i n i s t e r w i l l n e e d t o shov;
Commentary a t

text with Andreotti:

Annex B . ] V e s h o u l d g i v e t h i s / a f e w days b e f o r e in (g) favour o f i t .

F o i l ow-ua t o t h e E u r o p e a n

t e x t t o t h e o t h e r member Governments

t h e E u r o p e a n C o u n c i l a n d l o b b y them i n t e n s i v e l y

Council
o u r s e l v e s , b u t s h o u l d use
ideas

V/e s h o u l d n o t p r o p o s e s p e c i f i c s o l u t i o n s our i n f l u e n c e with

t h e C o m m i s s i o n t o g e t them t o p u t f o r w a r d

on t h e l i n e s we f a v o u r .
2. OTHER COMMUNITY ISSUES
CAP
. . . .

(a)

surplus products continue

t h i s year.

Trust I t a l i a n

Government a l s o

will
should

t o support

Coinmis^^^^^^or.als.

Ultimate target

CONFIDENTIAL

be

CAP based on common p r i c e s

c u t a t a l e v e l where t h e r e i s no
f o r consumption,

incentive Italians

t o p r o d u c e more t h a n i s r e q u i r e d

unsu.bsidised e x p o r t s , f o o d a i d and n o r m a l s t o c k s . have s u p p o r t e d c o s t - e f f e c t i v e of mediterranean a g r i c u l t u r e . s u r p l u s e s o f I.Iediterranean (b) CFP

Agree

with
'Y .e

t o o much money s p e n t on N o r t h E u r o p e a n a g r i c u l t u r e .

measures t o i m p r o v e t h e s t r u c t u r e
B u t must a v o i d measures w h i c h l e a d t o
those o f n o r t h e r n goods.

products l i k e

Hope d i s c u s s i o n s i n Community c a n now be u n d e r t a k e n i n b e t t e r L e g i t i m a t e UK i n t e r e s t s . B u t we w a n t s e t t l e m e n t . 25 June C o u n c i l s h o u l d be l o w - k e y a n d a v o i d a c r i m o n y . l e a d i n p u r s u i n g s e t t l e m e n t d u r i n g summer. direct conflict of interest with for the any (c) a c c e p t a b l e a n d f a i r CFP. UK r e s e r v e on I t a l i a n Italy.

spirit.

Fisheries

Commission s h o u l d No

Then s u b s t a n t i v e

d i s c u s s i o n o f p r o b l e m s , p e r h a p s i n autumn F i s h e r i e s C o u n c i l . As s p e c i a l

Hope I t a l i a n s w i l l w o r k c o n c e s s i o n we have l i f t e d

f i s h i n g o f f A f r i c a d e s p i t e absence o f

p r o g r e s s on CFP i n t e r n a l r e g i m e . EMS
W i l l decide whether t o p a r t i c i p a t e i n
o f the

W w i s h t h e EL1S w e l l * e

exchange r a t e mechanism when a s p e c t s o f t h e f u n c t i o n i n g s y s t e m a r e r e v i e w e d i n September. o p e r a t i o n o f system? (d) What i s I t a l i a n

experience o f

We w i l l t h i n k a b o u t s w a p p i n g r e s e r v e f o r ECUs.
Policy
competition

I n d u s t r i a l and R e g i o n a l

Government's a p p r o a c h t o Community r o l e i n r e g i o n a l , and t o c u t down on f i n a n c i a l a i d t o i n d u s t r i e s viable but future. A c c e p t Co.'.omission's r o l e t h a t some i n d u s t r i e s inevitable

i n d u s t r i a l p o l i c i e s d i f f e r e n t f r o m Labour Government's. w h i c h have no i nmonitoring state

Intend aids steel

long-tern

v / i l l need t e m p o r a r y f i n a n c i a l
EEC f u n d s o u r a p p r o a c h
But s h a l l adopt

support. etc). to public positive

I t a l y a n d UK have s i m i l a r p r o b l e m s ( s h i p b u i l d i n g , and o t h e r n o n - a g r i c u l t u r a l s p e n d i n g r i g o r o u s i n EEC a s a t homo.

On r e g i o n a l

a t t i t u d e t o EEC p r o p o s a l s when l i k e l y t o be more e f f e c t i v e

I bilaterally of with I t a l i a n s c o n t r i b u t i o n ' t h e a c m i g h t make t o s o l u t i o n i n JoGONFlDEAJTIAL t h e Budget

problem

CONFIDENTIAL

FACTUAL BACKGROUND For Vrr.r. Use

1.

Community Hut! "-ot/"onver^onc c

( a ) UK Budget P o s i t i o n

The P r i m e M i n i s t e r i s aware o f t h e d e t a i l s o f t h e UK b u d g e t a r y
(agreed l i n e t o t a k e and t a b l e o f n e t b u d g e t a r y

position

t r a n s f e r s f o r 1978 a t t a c h e d a t Annex C).

(b) S i m i l a r i t i e s a n d d i s s i m i l a r i t i e s b e t w e e n UK a n d I t a l i a n Budget The problems similarity i n our Italian

f i g u r e s f o r 1978 show a c o n s i d e r a b l e

positions.

We b o t h do b a d l y o u t o f t h e CAP (UK t o t a l r e c e i p t s FEOGA e x p e n d i t u r e , I n the overall c o n t e x t o f t h e Budget o u r D e v e l o p m e n t Fund (59 mEUA small. Both t h e ofItaly at

e q u i v a l e n t t o a b o u t 5$ o f t o t a l r e c e i p t s about 9$). to are (c)

r e s p e c t i v e r e c e i p t s from t h e Regional

t h e UK, 79 mEUA t o I t a l y ) a r e e x t r e m e l y

UK n e t c o n t r i b u t i o n o f 942.5 mEUA a n d t h a t

752.3 mEUA

e q u i v a l e n t t o a b o u t 0.4;' o f o u r r e s p e c t i v e n a t i o n a l GDP. However t h e I t a l i a n b u d g e t a r y side. The UK's g r o s s problem i s e n t i r e l y on t h e

expenditure

c o n t r i b u t i o n t o t h e Community

B u d g e t i n 1979 i s 17.4;' ( c . 19.5# i n 1930) w h e r e a s o u r GNP s h a r e w o u l d be 15.4/S a n d o u r r e c e i p t s f r o m t h e Community B u d g e t a r e o n y 7.5/'.

1

The c o r r e s p o n d i n g

f i g u r e s f o r I t a l y a r e 11.58$,

12.2$ a n d

8%

Not (d)

f o r Use
The Commission t e n d t o p r o p a g a t e t h e v i e w t h a t t h e I t a l i a n
separate f r o m o u r own a n d t h a t i t s h o u l d bo
extent

problem i s e n t i r e l y
1

dea" 1 w i t h s e p a r a t e l y . this

I t i s u n c e r t a i n h o w e v e r t o what

i s b e c a u s e o f t h e v/ish o f v a r i o u s o f o u r p a r t n e r s ( r e f e c t e d

i n t h e C o m m i s s i o n ) t o i s o l a t e t h e UK p r o b l e m .

/(e)
CONFIDENTIAL

CONFIDENTIAL

(e)

I ti nn o t possible t o estimate t h e size o f other States' p o s i t i o n c o u l d improve over t h e n e x t two y e a r s . greas c o n t r i b u t i o n w i l l drop from

r e c e i p t s , b u t i t seems f r o m o t h e r f i g u r e s t h a t t h e I t a l i a n budgetary First, of t h e i r percentages

13756 i n 1978 t o 11.58# i n 1979 b e c a u s e o f t h e r e p l a c e m e n t t h e f o r m e r GNP e l e m e n t o f c o n t r i b u t i o n s b y one b a s e d o n VAT S e c o n d l y , new CAP r e g i m e s c o v e r i n g and v e g e t a b l e s a s w e l l , as a. new efficient olive as f r o m J a n u a r y 1979. o i l and processed f r u i t Mediterranean

s t r u c t u r a l package c o u l d b r i n g I t a l y a n a n n u a l advantage o f t h i s .

400 mEUA n e t , p r o v i d e d t h e i r a d m i n i s t r a t i o n p r o v e s enough t o t a k e f u l l

2.

CAP

For Free Use

(a) The of for in The e s t i m a t e d c o s t o f t h e CAP i n 1979 i s some 6,500 m i l l i o n . bulk o f t h i s w i l l t h etotal.. 1980 w i l l be s p e n t on t h r e e commodities - m i l k , rapidly. Preliminary figures expenditure estimated 14,500 mEUA w h i c h a c c o u n t r e s p e c t i v e l y f o r 37^, 199" and 1 Q6 9 even w i t h a farm p r i c e f r e e z e , reach

c e r e a l s and s u g a r ,

The c o s t i s g r o w i n g be some 12.57^ h i g h e r .

1980 i n d i c a t e t h a t

The Commission have

t h a t on present

t r e n d s t h e c o s t o f t h e CAP w i l l

( 9 , 3 0 0 m) b y 1 9 8 2 . (b) Italy i s e i g h t h i n o r d e r o f p r o s p e r i t y o n GDP p e r head i n She i s a n e t c o n t r i b u t o r t o t h e CAP; i n 1978 she s e c o n d o n l y t o t h e UK (590 m i l l i o n ) and ahead A l s o l i k e t h e UK, she i s a n e t f o o d

t h e Community. of

p a i d 327 m i l l i o n ,

t h e PRG (140 m i l l i o n ) .

importer, p a r t i c u l a r l y o f "northern" products. ( c ) Statistics

Net c o n t r i b u t i o n t o FKOGA, 1978

I t a l y 327m UK 590m
o f GDP,
1977

A g r i c u ' t u r e / F o r est ry/l-'inhin,r as Italy 9.0?6 UK 2.896

Italy

1 5 . 9 * cONFIDENrflAi: '' " 5

Community (9)

8.296

/A/.'.ri c u l t u r c

CONFIDENTIAL

-6~
Agricu tural Italy
1

s o l f - s u f f i c i oncy 1Q76
89/o UK 62?6 Community 91 $>

Not f o r Use (d) Italy has so f a r s t o o d b y t h e UK i n s u p p o r t i n g t h e

Commission's p r o p o s a l f o r a p r i c e f r e e z e f o r 1979/80, b u t h e r
i n x c r e s t i s l e s s i n a p r i c e f r e e z e n e r se t h a n i n a c h i e v i n g
a b e t t e r balance sugar, products (fruit, between those " n o r t h e r n " p r o d u c t s (milk,
c e r e a l s e t c ) which a r e i n m a j o r s u r p l u s and " s o u t h e r n "
T h e r e i s a s t r o n g r i s k o t h e r Member

vegetables, o l i v e o i l , e t c ) , i n order t o increase

h e r r e t u r n s f r o m t h e CAP. States w i l l the price-fixing.

t r y t o b u y h e r o f f i n o r d e r t o i s o l a t e t h e UK i n

3. (a)

CFP

Italy

I t a l y n o t much c o n c e r n e d b y m a i n CFP n e g o t i a t i o n s .

c l a i m s 12 m i l e f i s h e r y l i m i t s .

Most I t a l i a n f i s h i n g i s l o c a l ,

b u t d i s t a n t w a t e r f l e e t has i n t e r e s t s o f f A f r i c a and A m e r i c a . I n UK i n t e r e s t t o k e e p I t a l i a n s f r o m s e e k i n g a c c e s s t o N o r t h A t l a n t i c waters. useful For t h i s reason (and t o a v o i d a n t a g o n i s i n g l a s t week, cost t h e This w i l l a l l y o n o t h e r Community i s s u e s ) we l i f t e d ,

o u r r e s e r v e o n EEC/Senegal A g r e e m e n t . 50 I t a l i a n t u n a (b) of boats.

Community $12 m i l l i o n o v e r 2 y e a r s t o p r o v i d e a c c e s s f o r a b o u t

UK n a t i o n a l c o n s e r v a t i o n m e a s u r e s p l a n n e d Community a c t i o n .

1 J u l y i n absence

C o n s e r v a t i o n t o be d i s c u s s e d a t 25 June

Council.

I t a l i a n s n o t a f f e c t e d by UK c o n s e r v a t i o n m e a s u r e s .

4.
(a)

EMS S i g n o r A n d r e o t t i u n l i k e l y t o want t o d i s c u s s t h e a c t u a l , I t a l i a n experience I t a l y opted. has b e e n g e n e r a l l y

f u n c t i o n i n g o f t h e EMS. the

s a t i s f a c t o r y : t h e l i r a has b e e n b u o y a n t and t a k e n a d v a n t a g e o f w i d e r 6fo band f o r w h i c h The l i r a has i n f a c t Andreotti not r e m a i n e d c o n s i s t e n t l y above t h e 2.!^ m a r g i n .

l i k e l y t o wtuit t o d i s c u s s c u r r e n t D a n i s h and B e l g i a n probTemn

CONFIDENTIAL

/ ( t h e two

CONFIDENTIAL

( t h e two c u r r e n c i o o f o r w h i c h t h e r e minimum l e v e l p e r m i t t e d (b)

has been grid).

consistent

i n t e r v e n t i o n i n o r d e r t o p r e v e n t thorn f a l Ling b e l o w t h e by t h e p a r i t y

He may h o w e v e r r a i s e t h e q u e s t i o n o f t h e i n t e r e s t

rate

s u b s i d i e s w h i c h a r e c u r r e n t l y b l o c k e d by us p e n d i n g j o i n e d t h e exchange r a t e mechanism (thereby

recognition

t h a t t h e UK w o u l d be e l i g i b l e f o r such s u b s i d i e s i f i t c o n f i r m i n g "our p o s i t i o n as

one o f t h e l e a s t p r o s p e r o u s members o f t h e Community, a p o s i t i o n

which others e s p e c i a l l y t h e F r e n c h a r e i n c l i n e d t o c o n t e s t on
o f N o r t h Sea o i l ) . The
t h e g r o u n d s t h a t we have t h e b e n e f i t f a r have opposed any f o r m u l a t i o n p r o s p e r o u s Member S t a t e . per b e c a u s e o f t h e amounts i n v o l v e d

I t a l i a n s have g i v e n us some s u p p o r t on t h i s b u t t h e F r e n c h so
implying t h a t we a r e a l e s s
T h i s issue i s important t o us l e s s
( u n l i k e l y t o be more t h a n 50 m
t h e case we make o n t h e
Exclusion from
against

annum) t h a n b e c a u s e i t r e i n f o r c e s

n e e d f o r a c t i o n t o remedy o u r b u d g e t a r y p r o b l e m . eligibility us i n o t h e r (c) the contexts.

f o r i n t e r e s t r a t e s u b s i d i e s w o u l d be i n v o k e d

We have a r g u e d t h a t i f we j o i n e d t h e exchange r a t e

mechanism

we a g r e e t h a t new money s h o u l d be made a v a i l a b l e a proportional loss.

o v e r and above

200 mEUA a g r e e d so t h a t I t a l y and I r e l a n d w o u l d n o t s u f f e r

5.

I n d u s t r i a l and R e g i o n a l

Policy

c o m p a n i e s I B X , ENI e t c
a n d have resisted
that
Some I t a l i a n w o r r y great

I t a l i a n s through state holding have l a r g e they w i l l eg. regional and Commission c o n t r o l s on s t e e l fund aids. on s t a t e a i d s .

scale i n t e r v e n t i o n i n the industry,

be on t h e i r own i f UK a c c e p t s Commission m o n i t o r i n g
I t a l i a n s also attach importance t o
( t h e y g e t 3 9 . 4 ^ o f p r e s e n t f u n d o f 610 m i l l i o n
The n e t payments f r o m EEC B u d g e t t o OK
and o t h e r n o n - a g r i c u l t u r a l
1

compared w i t h UK 2'/^). I t a l y f r o m regional

funds can

make a p o s i t i v e c o n t r i b u t i o n t o overa" ' Bud/ret s i t u a t i o n o f

both countries. UK M i n i s t e r s s t u d y i n g p o s s i b i l i t i e s f o r i i h p m v i n
We w i l l have

some e x p e n d i t u r e from UK E x c h e q u e r to EEC Budget. CONFIDENTIAL

/interest
7

CONFIDENTIAL

interest

i n s e e i n g w h e t h e r we have common g r o u n d w i t h patterns.

Italians

i n p r e s s i n g f o r changes i n EEC s p e n d i n g

FOREIGN AND COMMONWEAIffH OFFICE 13 June 1979

CONFIDENTIAL

CONFIDENTIAL COMMUNITY BUDGET

ANNEX A

The financial

European C o u n c i l recognised that at p r e s e n t the

c o n s e q u e n c e s o f t h e Community budget c r e a t e
f o r two o f t h e t h r e e member S t a t e s w i t h
I n time, these difficulties

difficulties

b e l o w - a v e r a g e GNP p e r h e a d . s h o u l d become l e s s surpluses should itself will to serious.

Reductions

in agricultural
That i n

reduce

t h e c o s t o f t h e c.a.p.

l i g h t e n t h e budgetary to policies

b u r d e n and s h o u l d make i t e a s i e r
designed t o reduce regional

switch expenditure

disparities. that

Meanwhile s o l u t i o n s a r e u r g e n t l y r e q u i r e d t o ensure

t h e Community b u d g e t p r o d u c e s a f a i r b a l a n c e o f c o s t s
and, i n p a r t i c u l a r ,

and b e n e f i t s f o r a l l member s t a t e s does n o t c o n t i n u e

t o h i n d e r member S t a t e s , w i t h b e l o w - a v e r a g e
economic

GNP p e r h e a d i n t h e i r e f f o r t s t o improve t h e i r performance. to

T h e Euror-eas C o u n c i l i n v i t e d t h e C o m m i s s i o n

make p r o p o s a l s b e f o r e "the end o f September t o d e a l w i t h

d e c i s i o n s t o be t a k e n at the

t h i p problem i n o r d e r t o permit

.next E u r o p e a n C o u n c i l i n D u b l i n .

CONFIDENTIAL

CONFIDENTIAL

ANNEX B

TALKS WITH SI:MQR

Mummm.

COMMENTARY OH THE DRAFT CONCLUSIONS

ON THE COMMUNITY BUDGET
1. The f i r s t s e n t e n c e i s i m p o r t a n t b e c a u s e i t w o u l d s e c u r e
r e c o g n i t i o n b y o t h e r member Governments o f t h e UK and I t a l i a n
Budget p r o b l e m .
The s e c o n d , t h i r d a n d f o u r t h s e n t e n c e s go a s f a r as we c a n
2. t o meet t h e I t a l i a n t h e s i s t h a t t h e p r o b l e m c a n b e c u r e d b y more
e x p e n d i t u r e o f v a l u e t o them and t o u s . B u t t h e y w o u l d want t h e
Budget t o i n c r e a s e beyond t h e e x i s t i n g 1 % VAT t r a n c h e t o p e r m i t much
higher expenditure. Even i f we w a n t e d t h i s , t h e Germans a n d F r e n c h
would n o t agree.
These s e n t e n c e s ' a l s o l e a d i n t o t h e t h o u g h t t h a t t h e c o r r e c t i n g
mechanism now r e q u i r e d may become r e d u n d a n t i n t i m e . This w i l l
make i t e a s i e r f o r o t h e r member S t a t e s t o a c c e p t a n d s e l l t h e i d e a .
"Meanwhile" i n t h e n e x t sentence i s t h e k e y word.
3. The i d e a o f "a f a i r .balance o f c o s t s and b e n e f i t s " t o a l l
member S t a t e s i n t h e n e x t s e n t e n c e i s one w h i c h i s d i f f i c u l t t o
a r g u e a g a i n s t b u t w h i c h t h e Danes, D u t c h , B e l g i a n s and F r e n c h a t
least w i l l probably not l i k e . I t i s n o t e s s e n t i a l t o u s and c o u l d
be g i v e n up a t t h e C o u n c i l i f t h e r e s t o f t h e s e n t e n c e i s r e t a i n e d .
T h i s ( t h e i d e a t h a t t h e b u d g e t s h o u l d no l o n g e r h i n d e r member
S t a t e s w i t h b e l o w - a v e r a g e GDP per- h e a d i n t h e i r e f f o r t s t o i m p r o v e
t h e i r economic p e r f o r m a n c e ) i s t h e e s s e n t i a l i n g r e d i e n t s i n c e i t
p o i n t s t h e Commission t o w a r d s e l i m i n a t i n g o u r n e t c o n t r i b u t i o n .

CONFIDENTIAL

CONFIDENTIAL
ANNEX C

V
CONFIDENTIAL L I N E T O T A K E ON OUR B U D G E T A R Y 1. POSITION The

T h e a t t a c h e d t a b l e c o n t a i n s t h e C o m m i s s i o n ' a o w n f i g u r e s f o r 1978.

U n i t e d K i n g d o m i s s e v e n t h i n the l i s t o f m e m b e r s t a t e s i n t e r m s of G r o s s D o m e s t i c P r o d u c t p e r h e a d b u t t h e s e f i g u r e s s h o w ( c o l u m n 1) t h a t i n 1978 w e w e r e a l r e a d y t h e l a r g e s t n e t c o n t r i b u t o r to the C o m m u n i t y b u d g e t a t 943m E U A , or 625 m i l l i o n . 2. T h e f i g u r e s i n c o l u m n 3 h a v e been a d j u s t e d t o a t t r i b u t e M C A s t o t h e

i m p o r t i n g c o u n t r y and on t h i s b a s i s we b e c o m e f o u r t h l a r g e s t c o n t r i b u t o r . B u t M C A s c a n n o t be t r e a t e d a s b u d g e t r e c e i p t s b y i m p o r t i n g c o u n t r i e s l i k e the U K a n d I t a l y . They are not consumer subsidies because they serve only

as a p a r t i a l o f f s e t to the c o s t t o u s o f b u y i n g f o o d a t C A P p r i c e s a n d n o t world prices. T h e y a l l o w p r o d u c e r s i n h i g h c o s t c o u n t r i e s to s e l l to l o w

cost c o u n t r i e s w h i l e g e t t i n g the s a m e h i g h r e t u r n as i n t h e i r d o m e s t i c m a r k e t . 3. A s the t a b l e s h o w s , w e b e n e f i t e d i n 1978 f r o m the t r a n s i t i o n a l ( A r t i c l e 131). W i t h o u t t h e m w e s h o u l d h a v e b e e n the l a r g e s t

arrangements net 4.

c o n t r i b u t o r however M C A s are treated (column 6). In 1 9 8 0 , w h e n t h e t r a n s i t i o n a l p e r i o d h a s e n d e d , o u r n e t c o n t r i b u t i o n

w i l l be w e l l o v e r 1 0 0 0 ( 1 5 0 0 m E U A s ) a n d w e s h a l l be f a r a n d a w a y t h e biggest net c o n t r i b u t o r . 5. The p r o b l e m is t w o - f o l d . First, w e p r o v i d e 17^ p e r c e n t o f the wherea. we

Community's income this year,

a n d e x p e c t to p r o v i d e 2 0 p e r c e n t n e x t , Second,

o u r s h a r e o f the C o m m u n i t y ' s G N P i s o n l y a b o u t 15j: p e r c e n t . g e t b a c k i n r e c e i p t s o n l y a b o u t 7j p e r c e n t o f the B u d g e t . 6. T h e m a i n r e a s o n f o r o u r l o w r e c e i p t s is t h e C A P .

It persistently takes

m o r e than 7 0 p e r cent of a g r o w i n g B u d g e t . s m a l l and efficient, the U n i t e d K i n g d o m . Funds, 7.

Because our a g r i c u l t u r e is

less than 5 p e r cent of this e x p e n d i t u r e takes place i n W e do r a t h e r b e t t e r o u t o f the R e g i o n a l a n d S o c i a l

but t o g e t h e r t h e y a c c o u n t f o r o n l y l O p e r c e n t o f the B u d g e t . We and I t a l y

A s a r e s u l t t h e b u d g e t b e a r s n o r e l a t i o n to a b i l i t y t o p a y .

are large c o n t r i b u t o r s , whereas r i c h e r countries like D e n m a r k and B e l g i u m are substantial beneficiaries.

1
CONFIDENTIAL

CqNflDEIMTIAL
c A
CONFIDENTIAL 8. The U n i t e d K i n g d o m accepts that g r e a t e r convergence in e c o n o m i c The new But At

p e r f o r m a n c e i s p r i m a r i l y a m a t t e r of the r i g h t n a t i o n a l p o l i c i e s . G o v e r n m e n t i s d e t e r m i n e d to r e s t o r e t h e U n i t e d K i n g d o m e c o n o m y .

C o m m u n i t y p o l i c i e s should help those e f f o r t s r a t h e r than h i n d e r t h e m . p r e s e n t they d o n o t . 9. for T h e s e i n e q u i t i e s a r e a p r o b l e m f o r the w h o l e C o m m u n i t y , a s w e l l a s the U n i t e d K i n g d o m ; u n t i l they a r e r e m o v e d , the C o m m u n i t y w i l l

r e m a i n unbalanced,

a n d the c o m m i t m e n t s o f G o v e r n m e n t s to E u r o p e w i l l be

h a m p e r e d b y the e f f e c t s on p u b l i c o p i n i o n i n the c o u n t r i e s m o s t a d v e r s e l y affected. I n 1971 the o r i g i n a l S i x r e c o g n i s e d t h a t i f u n a c c e p t a b l e situations

o v e r the B u d g e t / * s h o u l d a r i s e ,

'the v e r y s u r v i v a l o f t h e C o m m u n i t y

w o u l d d e m a n d t h a t the i n s t i t u t i o n s f i n d e q u i t a b l e s o l u t i o n s ' ( C m n d 4 7 1 5 ) . 10. W e a r e n o t a r g u i n g f o r a j u s t e r e t o u r : EEC or p r e c i s e l y w h a t we put i n . ie t h a t w e s h o u l d g e t o u t o f the

N o r that m e m b e r s t a t e s ' net c o n t r i b u t i o n s

r e c e i p t s should p r e c i s e l y r e f l e c t t h e i r p o s i t i o n i n r e l a t i o n to a v e r a g e B u t w e do n o t c o n s i d e r t h a t i t i s r i g h t f o r

C o m m u n i t y G D P per head.

c o u n t r i e s v / i t h b e l o w a v e r a g e G D P p e r h e a d to be n e t c o n t r i b u t o r s to the Budget. 11. We w a n t a n e a r l y s o l u t i o n . I t i s f o r the C o m m i s s i o n to s u g g e s t w a y s The impetus w i l l h a v e to c o m e

i n w h i c h the i m b a l a n c e c a n be* c o r r e c t e d .

f r o m the E u r o p e a n C o u n c i l i n S t r a s b o u r g on 2 1 / 2 2 J u n e .

CONFIDENTIAL

NTT TRANSFHPBY

( T O ) MEMBER S T A T E S

IK 1 9 7 8 million cua

1978 Recorded transf ers

Ac t u a l
2

position MCAs Adjusted transfers

1978

Without A r t i c l c 5

151

adjustments Adjusted transfers

1 h
Recorded transfers
.

MCAs

BELGJ UM/ L u x e m b o u r g

+ + -

380.4 620.4 423.8

43.1

337.3

+ +

415.4 620.4

43.1
239.1 173-0

+ + -

372.3 381.3 336.6

DN AK EMR
F t d c : . . l R e p u b l i c of GENIIANY >
>

- 239.1 - 173.0

+ 381.3 596.8

- 213.6

France I r c l ;-.:id Italy Netherlands U n i t e d Kingdom Di r c c T a i d t o Third Countries CHANGE i n C o m m i s s ion's balances v i t h
national treasuries

+ + +

82.9 536.2 752.3 220.5 942.5 39.0

287.7

- 370. 6 + + + 325.8 333.8 40.7 227.9 39.0

47.4

_ 287.7
210.4

+ -

240.3 307.4 254.4

- 210.4 + 418.5

+ 517.8 + 672.9 265.4

O O Z 2 |

1
i i

+ 418.5
179.8

- 179.8 + 714.6

+ 85-6 + 709.3 39.0

-1425.9 + 39.0

+ 714.6

393-9

393.9

393-9

393-9

(2 ) (2)
D i f f e r e n c e s on *_ exchange r a t e s * ' + 11.1 + 11.1 + 11.1 + 11.1

I
(1) (2) A t the average exchange rates f o r the y e a r s i n question

'

THE n a t i o n a l t r e a s u r i e s m a i n t a i n a c c o u n t s i n t h e name o f t h e C o m m i s s i o n . A l t h o u g h t h e 1 9 7 6 and 1 9 7 7 b u d g e t s w e r e I N BALANCE and e x e c u t e d , t h e b a l a n c e s on t h e s e a c c o u u t s c h a n g e d d u r i n g t h e y e a r . T h e s e b a l a n c e s do n o t e a r n i n t e r e s t and t a n be u s e d by t h e C o m m i s s i o n o n l y to m e e t u p p r o v e d b u d g e t a r y e x p e n d i t u r e . These a r e accounting d i f f e r e n c e s which a r i s e because of the use of average exchange rates.

(3)

C T r I - . - 1(..' ~

i'^LLT-

RCnEi JUNE 14J REUTEE - ITALIAN PREMIER GIULIO RNvREOTTl TODAY CALLED FOR REFORMS Or 7rF. EUROPEAN COMMON HARKtT 5
AGRiC'-4^-'' ^ POLICY AND A FOOST IN FFV^F-.TS F T ' C- -F- E e l rv;.,:-;, < TO HELP BR ITfi1H F N D h:i> 0 ** C 0 u r - R v.
MF. RNDREOTTI* WHO W I L L DISCUSS TnESc MATTERS In LONuOK TOMORROW WITH RRir-F MINISTER MARGARE1 fHATCHER* R L S O m i O he BELIEVED THE ELECTION OF TFE NEU PRO-rEUROPEAN BRITISH LEADER WOULD FIVE BRITAIN R_F-F7TFR f;EG0TIfiTI_P0SIT IGf I N HEJEC. TFE OB-VEAR-GLD VETERAN I T A L I A N FfiLITICIAN WILL HAVE iriLKS WITH MRS 7KRTCKER I LONDON TOHORR.ON. f
L
7 T

' f i

- F

5 F- R C E 5

TO

r.QFI CLJLT-JF E..

T

MR

r'..>cb -
:

OLD REUTEKS.

tjr- < l <JftJ 'J 2 < PC V '.' * * C '- ' C , 5 0 CGrtPun I fuEL- T r F ~ I ~ ~ " - -'> . ": ], " " " BIGGE5" -'-FT CONTRIBUTORS TO TFE EEC BHILC SmNDING EiFnTr PLACE FOR FER CAPITA if.C0nE.

.' i

HE i ~ r"

,'

"'

k v c ^ T n ri?>>:

iTfiuV ft'wo BRITAIN WERE R L S O THE ONLV NET IMPORTERS O F FOOD/ Like NEAT* CEREALS R N D HIL-K PRODUGTSi I N THE EEC AND FOUND T H A T P R I C C J MCRC MUCH hIGncR F K A N HOSE OUTSIDE THE E E C . ' H E F D D E D . 50 BRj FA] H n pi j r RKC 3 R i - ' * - j L V Fcft'ALISED** H E DE CLAR ED ' ' - GOVERNMENTS H O P E - H A i r E ^ c PROBLEMS F V F F T n E E E C ' ' 5 CONiROVERSIfiL RGRICULTURRL POLICV (CAP) WOULD F E DEALT WITH IK F fCONCRETE RND CONSTRUCTIVE '^m^ A l Tr.E FORTHCOMING EUROPEAN I SUMMIT IN STRASBOURG. ASKED I F nc THOUGHT THE CFF SHOULD BE CHANGED OR_I.E.ITRLV
RND BRITAIN SHOULD INSTEAD BE 'COMPENSATED BV BIGGER JtAVKENTS
FROM EE-J SGCInL RND K'cGIOftriL FUNDS* M ANDREGTTI CALLED FOR
R c u m DfcYcLOrflENJS.
APART FROM REFORM OF THE CAP* +OTHER EEC POLICIES SHOULD Be' STRENGTHENED* FIRSTLY"THE REGIDNAR'fi'NlTSOCIAL"-POLICIES BUT ALSO OTHERS^INDiJSJRIAL AND EKERGV POLICIES FOR EXRHPLE. f
T

THESE OTHER POLICIES N W EXIST IN EMBRYONIC F.GRH T B U T THEY O ARE JUST AS IMPORTANT I F WE W ' T TO BUILD iiilRUE iCOHMUNITV* + nN THE PRIME MINISTER SHl!>. (THE ONLV MAJOR DIFFERENCE I N ITALIAN AND BRITISH EEC ROLICV IS THAT ITALY FfiVOURS AN INCREASE I N THE EEC BUDGET WHICH WOULD REDUCE THE PROPORTION SPENT ON THE CAP WHILE BRITAIN WANTS TO CUT CAR EXPENDITURE* RELIABLE SOURCES SAID). M RNDREOTTI RLSO SAID THAT MRS THATCHER''5 NEW CONSERVATIVE R GOVERNMENT MOULD GIVE BRITAIN A MORE AUTHORITATIVE VOICE IN
l

c O K u r c.

'

fine ct'f'OPcnN COKMITMEN1 OF THE NEW BRITISH GOVERNMENT I S BcVGND D."jDi AND FOR THIS I CAN ONLV REJOICE* + HE SAID. I < lb POSSIBLE infti tnlS SINCERE EUROPEAN COMMITMENT WILL OiVc 6REATER RUTHORITV AND'CREDIBILITY* AND ALSO NEGOTIATING STRENGTH* rO oRITISr REPRESENTATIVES. *
T

REU c

CONFIDENTIAL

THIS BRIEF 12

DOCUMENT NO 3 1979

IS

THE

PROPERTY

OF

HER

BRITANNIC

MAJESTY'S

GOVERNMENT

JUNE

COPY

NO

VISIT

BY

THE

PRIME

MINISTER

OF

ITALY,

15

JUNE

1979

PROSPECTS

FOR

THE

TOKYO

SUMMIT

Brief

by

the

Foreign

and

Commonwealth

Office

and

Treasury

The

brief in

prepared

for

discussion on 21/22

of

this is Mr

subject

at

the

European total to at

Council

Strasbourg on imported energy

June

attached. Andreotti point of

With is the

I t a l y ' s

dependence disagree Tokyo.

oil

supplies, be the

unlikely

that

should

focal

discussion

FOREIGN

AND

COMMONWEALTH

OFFICE

AND

TREASURY

12

JUNE

1979

CONFIDENTIAL

^,

CONFIDENTIAL

THIS

DOCUMENT

IS

THE

PROPERTY

OF

HER

BRITANNIC

MAJESTY'S

GOVERNMENT COPY NO

EGH(S)(79)10 12 June 1979 EUROPEAN COUNCIL, JUNE THE STRASBOURG

21/22 PROSPECTS Brief by Foreign

1979 TOKYO SUMMIT Office and Treasury

FOR and

Commonwealth

LINE

TO

TAKE APPROACH economic background. this are Inflation year. accelerating. should Specific focus on

GENERAL 1.

D i f f i c u l t targets

growth energy. ENERGY 2.

inappropriate

Discussion

Practical

conclusions

needed.

Energy

the

key by

area. to

Need f u l f i l

for

effective

oil

demand And

restraint in the longer

(particularly term

US) of

IEA/EEC to

commitments.

development

alternatives

o i l .

NORTH/SOUTH 3. After only modest progress at UNCTAD, developing countries will be

i
looking price and for something. The new Their British we problems will be exacerbated will an be by on the oil

rises.

Government's of course

emphasis maintain

trade Aid

investment,

though

shall

effective

Programme. TRADE A. With the for a bulk of the trade be MTNs our of are the the way and to the Trade Pledge prominently. change.

renewed But

year, well

issues on

unlikely need for

feature

there

may

emphasis

structural

MONETARY 5.

QUESTIONS monetary OPEC become situation and relatively funding of calm. their No i n i t i a t i v e s

International for. But will

called

surpluses a problem

counterpart

d e f i c i t s

again.

CONFIDENTIAL
/BACKGROUND

CONFIDENTIAL

BACKGROUND Reference COMMUNITY 6. only A: Main Economic Variables

ANGLE Summits are a are sensitive invited. was issue They in the Community much because rancour, allowing Commissioi

Economic some

member

states

have in the to

caused on a

particularly the to President attend for

before of the

agreement European of

reached and

1977

formula of the

Council

President Community their aware

discussion to

matters

related

competence. so that of all

Important Community member GENERAL 7. The

therefore

let

non-participants can claim to be

have

say of

representatives

fully

position

states. APPROACH orientations ie of demand growth p r i o r i t y of management in Germany to agreed and on at than Bonn in On s t i l l US appear

appropriate, needs to give

faster

Japan

which

greatest

reducing seems

i n f l a t i o n . to the at be

present for mos

forecasts of of 1979 at

desired least with -

pattern so

growth is

likely for seen

achieved of

there

l i t t l e

scope

kind Bonn.

realignment for US wi

policies, are less very in

specific 2.6% US

growth (WEP) as

targets, oil

Prospects and with

1980

good. weak. 1979 in In

prices to

work

through as

economy 2.7% 8.

growth

could

f a l l

1.2%

(WEP)

compared

(WEP)

(OECD main 12 to are:

3.1%). industrialised to countries 1978, The France US has begun to was 8.2%

Inflation

the the

accelerate. and for Vo in the 12

months April FRG

September 10.4%. 3.5%,

i n f l a t i o n

months

1978, 2.2 to

corresponding 9.2 to 10%,

figures Italy 12.2

other 14.3%,

countries UK 8.2 to

10.1%.

ENERGY 9. See Brief no 5. Without in any demand restraint to be by consumers 1.5-2 free

world

oil

supply Iranian

shortfall production in 1978

1979

likely

around to be

mbpd It EEC was

(3-4%). around

currently to the

believed

3.5-4 if

mbpd. IEA and

5.6

mbpd fully

prior

revolution.

Even to

countries

implement

demand

restraint

measures

reduce
/ u/ _

CONFIDENTIAL

,. J i n 11 i i o n

CONFIDENTIAL

onsumption NORTH/SOUTH 10. UNCTAD by 5% the

a useful consensus even if on some gap issues, such as


world oil market will remain tight.
DIALOGUE V reached and

protectionism fundamental demanded and we by

commodities, of the

the

remains and

wide.on monetary

the syst

reforms the

international countries. inconclusive and will

economic

developing take the

However result be

there too

was

no

acrimony But the

should of The

not

t r a g i c a l l y . by the the to be oil

problems rises. tional at a

the next

LDCs

remain

exacerbated will be

price

major

North/South for UN the

argument 1980s

over (due

Interna adopted LDCs w i l l in and

Development

Strategy of the

and

beyond in

Special specific of

Session targets NIEO.

General

Assembly from the

1980).

The

want

for We

concessions shall of

developed for

countries

pursuit the

the

emphasise both LDCs

the and

need

f l e x i b i l i t y countries.

shared

responsibilities

developed

TRADE 11. Current account but d e f i c i t may of US will in f a l l 1980 owing (216 to slower growth 29.7 decline rise 1980 and

increased b i l l i o n owing again WEP). the to in

exports

rise

again -

b i l l i o n surplus but

1978, w i l l to

1979, oil 1980

210.9 price

b i l l i o n increases b i l l i o n a

1980 and

WEP).

Japanese imports

emergency 23.4 of

likely 28.5

(216.7 will be

1978,

b i l l i o n

1979, and

b i l l i o n

There

better But

balance the and net

surpluses on

d e f i c i t s

among

major

0ECD

countries.

d e f i c i t will

non-Summit from 29.9

0ECD b i l l i o n countries from to

countries 215.3 w i l l (0ECD

(including (WEP), 225.6 231

Protugal and the

Turkey) for

rise

b i l l i o n rise from

d e f i c i t to 240 232.5

non-oil

developing 0ECD

b i l l i o n to

b i l l i o n

(WEP)

figures

figures

b i l l i o n

b i l l i o n ) .

MONETARY 12. IMF No on

QUESTIONS specific i n i t i a t i v e s are contemplated. and among an Bank Work is in on hand in the o

the

Substitution UNCTAD the V

Account forced

Governors

monitoring on

Euro-Markets. the reform of

through

unacceptable system. The

resolution UK voted

international

monetary

against.

FOREIGN 12 JUNE

AND 1979

COMMONWEALTH

OFFICE

AND

HM

TREASURY

CONFIDENTIAL

CONFIDENTIAL

TOKYO SUMMIT ANNEX A

TABLE 1 : GNP/GDP GROWTH 1977 United S t a t e s Canada Japan West Germany France Italy U n i t e d Kingdom Seven m a j o r s 1978 3.9 3.4 5.6 3.4 3.0 2.2 3.0 3.9

% change on p r e v i o u s yea>
1979 2.7 3.4 5.5 3.8 3.3 3.6 0.5 3.3

4.9
2.7 5.4 2.6 3.1 1.7 1.9

4.0

TABLE 2 : CONSUMER PRICES 1977 United Canada Japan West Germany France Italy U n i t e d Kingdom Seven majors States 1978 7-6 8.9 3.9 2.6 9.2 12.4 8.6 7.0

% change on p r e v i o u s y e a r 1979 9.6 9.4

6.5
8.0 8.0 3.9 9.3 19.3 16.0

4.2
3.4 9.8 13.7 12.6 8.4

8.1

CONFIDENTIAL

CONFIDENTIAL

TABLE 3 : BALANCES ON CURRENT ACCOUNT 1977 United S t a t e s Canada Japan West Germany France Italy U n i t e d Kingdom Seven m a j o r s Other OECD T o t a l OECD OPEC Non-oil LDCs -15.3 3.9 10.9 3.6 3.? 2.3 0.8 - 4.8 -20.1 -24.9 26.3 -14.8 1978 -16.0 4-5 16.7 8.8

(3 1979 9.7 5.3 5.4 6.0 3.1 5.1 1.3 1.3 -15.3 -14.0 19.8 -32.5

4.1
5-7 0.5 15.3 - 9.9 5.4 2.2

-25.6

TABLE 4 : UNEMPLOYMENT RATES* 1977 United S t a t e s Canada Japan '..'est Germany France Italy U n i t e d Kingdom 5.7 7.2 5.8 7.1 8.1 2.0 1978 6.0 8.4 2.2 4.3 6.2 7.2 5.7

% of l a b o u r f o r c e 1979 ( L a t e s t 5.8 ( A p r ) 7.9 ( M a r ) 2.1 ( M a r ) 3.8 ( A p r ) 7.1 ( A p r ) 7-8 (Mar-, n s a ) 5.5 ( A p r ) month)

Rates a r e not comparable between c o u n t r i e s owing t o d i f f e r e n c e s

of coverage and d e f i n i t i o n . Seasonally adjusted (except Italy).

CONFIDENTIAL

CONFIDENTIAL

THIS DOCUnENT I S T H E PROPERTY OF HER BRITANNIC MAJESTY'S GOVERNMENT

B R I E F NO. 4 COPY N O . 1

13

JUNE

1979

V I S I T BY PRIME MINISTER OF ITALY

15 JUNE 1979 INTERNATIONAL ENERGY QUESTIONS
B r i e f by the F o r e i g n and Commonwealth O f f i c e

P o i n t s t o make
OIL
1. and oil ( a ) We must make t h e most o f t h e f o r t h c o m i n g European C o u n c i l
Economic Summit t o f i n d a common a p p r o a c h Uo t h e p r e s e n t market s i t u a t i o n ( w h i c h t h e 26 June OP/iC meeting w i l l Italian views;
full

difficult

probably

make v;or:;o). (b) and

We w o u l d welcome step,

as a f i r s t

t h e European C o u n c i l must e n s u r e t h i s i n t o 1980.

rapid

i m p l e m e n t a t i o n Of t h e March C o u n c i l ' s d e c i s i o n on 5/
i n 1979 and e x t e n d We a r e

demand r e s t r a i n t

l o o k i n g a t ways c f making the March d e c i s i o n more e f f e c t i v e , b u t

have not y e r r e a c h e d f i r m conclusions:

/(c)

CONFIDENTIAL

CONFIDENTIAL

(c) ^

s o m e t h i n g must a l s o be done t o ease s p o t m a r k e t t h i s might simply drive

prices.
'

We a r e s t u d y i n g t h e F r e n c h p r o p o s a l ' R o t t e r d a m m a r k e t b u t t h i n k i elsewhere. e f f o r t by a l l

f o r p r i c e c o n t r o l s on t h e t h e market
concerted

a l t e r n a t i v e would be a s h o r t t e r m

Western consumers t o p e r s u a d e o i l companies t o keep

But h i g h p r i c e s o n l y r e f l e c t supply/ and v;e must t a c k l e t h e r o o t of t h e p r o b l e m ;

o u t of t h e s p o t m a r k e t . demand i m b a l a n c e s , (d) . wish and at

t h e Summit i s t h e r i g h t p l a c e t o i n d i c a t e o u r c o n t i n u e d
be a f u l l discussion of this planned question

f o r a more g e n e r a l d i a l o g u e on e n e r g y w i t h t h e p r o d u c e r s ,
I hope t h e r e w i l l The G i r a u d / Y a m a n i m e e t i n g f o r 28 June may

Tokyo.

result

i n u s e f u l and c o n t i n u i n g t e c h n i c a l c o n t a c t s B u t an E'^C/OPEC d i a l o g u e b y i t s e l f

between OPEC ana

w o u l d n o t be

EEC members. sufficient. some s t a g e ;

(e) to

The A m e r i c a n s and Japanese must be i n v o l v e d a t

i n Community e n e r g y p o l i c y t h e UK i n t e n d s t o p l a y a
on t h e i r m e r i t s and s e e k i n g
policies.
c o o r d i n a t i o n o f members'

p o s i t i v e r o l e , d e a l i n g with proposals promote t h e e f f e c t i v e

NUCLEAR MATTERS
? . ( a )Nuclear . power w i l l have a grov/ing r o l e t o p l a y i n meeting

our energy r e q u i r e m e n t s . reactors 5 (b) responsibility

But t h e development o f n u c l e a r ~"

power

c o u l d be hampered by f u r t h e r a n x i e t y a b o u t t h e s a f e t y of n u c l e a r

f o r nuclear safety rests p r i m a r i l y problem, However we s h o u l d

within
building

member s t a t e s b u t an i n t e r n a t i o n a l s t u d y o f t h i s on t h e IAEA w o u l d b e u s e f u l . that a i t does n o t e n a b l e

moratorium; (c) Nuclear m

take care t o ensure

o p p o n e n t s o f n u c l e a r power t o p r e s s f o r

we welcome t h e i d e a p u t f o r w a r d at t h e March European

Council

t h a t t h e r e s h o u l d be g r e a t e r c o n s u l t a t i o n on n o n - p r o l i f e r a t i o n

developments

i n the

Indian Sub-continent and t h e

i n r.he f r a m e w o r k o f

issue n a t u r e of

t o p i c s which

m i g h t be d i s c u s s e d

political

cooperation*

/Background

CONFIDENTIAL

CONFIDENTIAL

Background
5. of

[ I n f o r m a t i o n w h i c h c a n f r e e l y be u s e d ]
IEA assessment

The l a t e s t

suggests

that, with a

gradual b u i l d

up o f demand r e s t r a i n t b y c o n s u m e r s , t h e r e w i l l be a s h o r t f a l l 0.7 m i l l i o n b a r r e l s p e r day (mbd) ( o r 1%) i n f r e e - w o r l d o i l

A

s u p p l i e s i n 1979*

5$ demand r e d u c t i o n t h r o u g h o u t 1980 w o u l d o f stock r e b u i l d i n g next year. The p r e s e n t

a l l o w a modest d e g r e e

p r i c e p o s i t i o n i s u n s t a b l e , w i t h a l l OPEC p r o d u c e r s o t h e r t h a n S a u d i A r a b i a c h a r g i n g p r e m i a above t h e " o f f i c i a l " light Arabian crude. These p r e m i a a r e l i k e l y into theo f f i c i a l price for t o be i n c o r p o r a t e d

p r i c e a t t h e OPEC m e e t i n g i n June, a n d f u r t h e r Contract prices are I n t h e spot market (whic

increases l a t e r i n the year are probable. a l r e a d y o v e r 50$ above l a s t y e a r ' s l e v e l . twice the equivalent o f f i c i a l prices.

a c c o u n t s f o r o n l y 3-5% o f s a l e s ) p r i c e s have r i s e n t o a b o u t

4.

The March E u r o p e a n C o u n c i l a d o p t e d an o i l demand

restraint The

t a r g e t f o r 1979 a m o u n t i n g t o 5 o f e x p e c t e d c o n s u m p t i o n . % UK s h o u l d be a b l e t o meet t h i s t a r g e t . energy savings i n t h e p u b l i c 5. sector.

The measures we have

t a k e n i n c l u d e b u r n i n g c o a l i n p l a c e o f o i l i n power s t a t i o n s , and

The F r e n c h P r e s i d e n c y have p u t f o r w a r d p r o p o s a l s f o r g r e a t e r -High s p o t p r i c e s certainly f o r OPEC p r i c e hawks, but we and o t h e r s ,

c o n t r o l over t h e spot market p r o p o s a l s . p r o v i d e a u s e f u l argument the but (a)

e s p e c i a l l y t h e Germans, a r e s c e p t i c a l a b o u t t h e p o s s i b i l i t y ( o r v a l u e ) o f t r y i n g t o c o n t r o l t h e Rotterdam s p o t market i n O t h e r p o s s i b i l i t i e s w h i c h we a r e . s t u d y i n g t e r m e f f o r t by a l l Western urgently, on w h i c h we have n o t y e t r e c e i v e d c o n c l u s i o n s , i n c l u d e a concerted short consumers t o ave each country fully o i l companies t o s t a y o u t o r t h e s p o t m a r k e t and ( b ) isolation.

persuade the

some k i n d o f v o l u n t a r y a l l o c a t i o n s y s t e m w h i c h implemented t h e a g r e e d 5/>' c u t s .

l e v e l o f o i l i m p o r t s which would a p p l y i f c o u n t r i e s

G.

Recent

i n t e r e s t i n oYP'indod consumer/producer
i n order.to s t a b i l i s e CONFIDENTIAL

c o n t a c t s stems
called
The

initially for

f r o m a o . i u d i communique o f 28 F e b r u a r y , w h i c h the o i l market.

such c o n t a c t s

/European

CONFIDENTIAL

European term and

C o u n c i l i n March welcomed t h e

'-audi s t a t e m e n t .

d i a l o g u e w i t h p r o d u c e r s on e n e r g y m a t t e r s w o u l d be t o o u r l o n g

advantage, and t h a t o f o t h e r consumers, b u t we c a n n o t be s u r e

be on o f f e r , o r w h e t h e r i t w o u l d be on terms w h i c h we
The e x t e n t t o w h i c h o t h e r p r o d u c e r s
( a n d t h e r e have b e e n some s i g n s
The p r o d u c e r s ,
that

W e
toinsist our p a r t n e r s c o u l d a c c e p t .

that i t w i l l

support the Saudi c a l l o f second

i s doubtful

t h o u g h t s by t h e S a u d i s t h e m s e l v e s ) .

and p r o b a b l y t h e T h i r d W o r l d t o o , a r e l i k e l y on t h e New I n t e r n a t i o n a l Economic O r d e r .

d i s c u s s i o n o f e n e r g y s h o u l d be o n l y p a r t o f a w i d e r n e g o t i a t i o n
The A m e r i c a n s have c o n s i d e r a b l e r e s e r v a t i o n s about producer-consumer c o n t a c t s and

c o n t i n u e t o p i n t h e i r hopes on S a u d i i n f l u e n c e w i t h i n OPEC. chose it t o use i t f o l l o w i n g t h e I s r a e l - E g y p t peace t r e a t y .

b e l i e v e t h e y e x a g g e r a t e c u r r e n t S a u d i i n f l u e n c e even i f t h e S a u d i s
Nonetheless, i s important that the i n d u s t r i a l i s e d c o u n t r i e s s h o u l d show

t h e m s e l v e s r e a d y t o r e s p o n d t o any move t o w a r d s a d i a l o g u e b y t h e
producers. The F r e n c h P r e s i d e n c y have had c o n t a c t s w i t h t h e
t o a m e e t i n g on 28 June between
S a u d i s , w h i c h have l e d t o agreement

G i r a u d and B r u n n e r , r e p r e s e n t i n g t h e EEC, and Yamani f o r OPEC,

t o pave t h e v/ay f o r l o w - k e y , t e c h n i c a l d i s c u s s i o n s , w i t h t h e
minimum o f p u b l i c i t y , f o r energy. on f u t u r e w o r l d s u p p l y and demand f o r e c a s t s
b u t any s e n s i b l e
of o i l
and J a p a n e s e .
T h i s w o u l d be a ' u s e f u l b e g i n n i n g ;

d i s c u s s i o n o f w o r l d s u p p l y and demand ( a n d so i n d i r e c t l y , p r i c e s ) must a t some s t a g e i n v o l v e t h e A m e r i c a n s T h e i r v i e w s c a n be s o u g h t a t t h e Summit.

7-

The F r e n c h have a l s o g i v e n p u b l i c s u p p o r t t o M e x i c a n I t i s u s e f u l t h a t an o i l p r o d u c e r has

ideas f o r

a UN e n e r g y f o r u m .

proposed w i d e r d i s c u s s i o n s on e n e r g y p r o b l e m s , b u t we do n o t know what s p e c i f i c o b j e c t i v e s t h e M e x i c a n s OPEC members y e t r e a d y t o a c c e p t w o r l d have i n m i n d , n o r a r e energy d i s c u s s i o n s . initiative For f o r a meeting But i t

o u r p a r t we have e n c o u r a r e d t h e V e n e z u e l a n M e x i c o , Norway and

t h i s summer o f OPEC and non-OPEC o i l p r o d u c e r s i n c l u d i n g ourselver--.,

Canada, w i t h t h e UK a c t i n g as h o s t .
materialise.

remains t o be s e e n w h e t h e r t h i s w i l l

/8.

CONFIDENTIAL

CONFIDENTIAL

8. It

[ i n f o r m a t i o n which

should

n o t be d i s c l o s e d ]
have had much t i m e , b e f o r e o r
questions. They a r e
most o f i t f r o m t h e M i d d l e
East i n t e r e s t s i n mind, contacts they

i s d o u b t f u l whether t h e I t a l i a n s oil,

after their elections, East. will

t o consider these

h e a v i l y d e p e n d e n t on i m p o r t e d e f f e c t i v e as y e t . they a r e handled With

T h e i r demand r e s t r a i n t measures have n o t been v e r y

t h e i r Middle p r o b a b l y be i n f a v o u r o f p r o r i u c e r - c o n s u m e r c a u t i o u s l y and d i s c r e e t l y .
provided

NUCLEAR MATTERS
9. The I t a l i a n Government has embarked on a s u b s t a n t i a l a b o u t 1 0 % , t o a b o u t 55%. nuclear

programme

o f 12000 M c a p a c i t y d e s i g n e d W o i l by ^9S^hy

t o r e d u c e i t s dependence I t has a l s o for i t s delayed t o provide fuel

on i m p o r t e d reactors.

i n v e s t e d i n t h e F r e n c h E u r o d i ^ programme But i t s i m p l e m e n t a t i o n

has been s u b s t a n t i a l l y t h e Government

because o f p u b l i c o p i n i o n and t h e r e s i s t a n c e o f r e g i o n a l and l o c a l Government m a t t e r s . safety 10. aspects. Signor A n d r e o t t i may t h e r e f o r e s h a r e t h e view recently
E a r l i e r t h i s year appointed a c o m m i t t e e t o l o o k i n t o t h e p r o b l e m s o f t h e programme, and a l s o

expressed

b y Mr S c h m i d t t h a t t h e d e v e l o p m e n t o f n u c l e a r f o r an i n t e r n a t i o n a l t h e concern initiative that

power

c o u l d be hampered b y p u b l i c d o u b t s a b o u t r e a c t o r s a f e t y , a n d welcome
his recent proposal safety. on r e a c t o r
n o t lead
He may a l s o s h a r e t h i s should

t o demands f o r a m o r a t o r i u m 11.

while the study i s i n progress.

The D e p a r t m e n t o f Energy v / i l l be recommending t h a t t h e Prime

i n general terms Chancellor Board.
c f the non-proliferation
o f the o t h e r
Schmidt's
pending f u r t h e r d i s c u s s i o n , p e r h a p s a t t h e Summit and a t

M i n i s t e r s h o u l d welcome initiative t h e June m e e t i n g

o f t h e IAEA G o v e r n i n g Discussion

12. ' ( N o n - p r o l i f e r a t i o n ) . arrangements i s complicated members t o a n y t h i n g w h i c h

because o f t h e s e n s i t i v i t y

seems to c o n f e r an i n d u s t r i a l o r

/commercial
CONFIDENTIAL

CONFIDENTIAL

c o m m e r c i a l advantage on B r i t a i n states. who The most p r o m i s i n g

and France as n u c l e a r weapon

The I t a l i a n s ,
understanding

way forward may l i e i n e s t a p l i s h i n g

f r o m d i s c u s s i o n s may be
a better o f n o n - p r o l i f e r a t i o n we
concerns.

a d i a l o g u e among t h e N i n e on n o n - p r o l i f e r a t i o n . are anxious n o t t o be e x c l u d e d approach. and s e c u r i t y a t t r a c t e d by t h i s of the p o l i t i c a l By o b t a i n i n g importance

w o u l d hope t o r e d u c e t h e chances t h a t t h e Euratom T r e a t y w i l l be

used t o o v e r - r i d e o u r n o n - p r o l i f e r a t i o n

CONFIDENTIAL

CONFIDENTIAL

THIS DOCUMENT I S THE PROPERTY OF HER BRITANNIC MAJESTY'S

GOVERNMENT
B R I E F NO 5 13 JUNE 1979 V I S I T BY THE PRIME MINISTER OF ITALY, 15 JUNE 1979 COPY NO 1

REFUGEES FROM INDO-CHINA

B r i e f by t h e F o r e i g n and Commonwealth O f f i c e

POINTS TO MAKE
| HONG KONG
1. Hong Kong i s a t s a t u r a t i o n p o i n t . Can I t a l y do more t o h e l p

Hong Kong, from where s h e i s so f a r t a k i n g no r e f u g e e s ?

CONFERENCE
2. Dr Waldheim welcomes Mrs T h a t c h e r ' s c a l l for a special conference He may

but UNHCR's i d e a s o f p r e l i m i n a r y c o n s u l t a t i o n s l a c k v i s i o n . be c o n s t r a i n e d by h i s own mandate f o r r e f u g e e Dr Waldheim things moving.

r e l i e f and r e s e t t l e m e n t .

should be u s i n g t h e a u t h o r i t y o f h i s own p o s i t i o n t o g e t

3. I t a l y can h e l p by e m p h a s i s i n g t o Dr Waldheim ^ c o n f e r e n c e and by s a y i n g so p u b l i c l y .

VIETNAMESE POLICY
4.

i t supports a

U n l e s s V i e t n a m e s e p o l i c y changes, t h e problem w i l l g e t worse.

a S o v i e t Deputy

We have l e f t t h e Vietnamese i n no doubt o f what we t h i n k o f t h e i r

b e h a v i o u r and have a l s o spoken t o the R u s s i a n s ; F o r e i g n M i n i s t e r h a s j u s t been i n London. d i r e c t l y t h r o u g h i t s Embassy i n H a n o i ?
r e p r e s e n t a t i o n s a t a high l e v e l , both j o i n t l y Can I t a l y r e i n f o r c e t h e s e
i n t h e Nine, and

5. rest

Vietnam w i l l u s e i t s l i m i t e d agreement w i t h UNHCR ( a c o n t r o l l e d

f o r f a m i l y r e u n i f i c a t i o n ) a s a "con t r i c k " t o convince t h e
this.
o f the w o r l d t h a t i t i s now c o l l a b o r a t i n g f u l l y w i t h t h e
We must n o t l e t them g e t away w i t h /ASEAN
- 1 -
CONFIDENTIAL

emigration

i n t e r n a t i o n a l community.

CONFIDENTIAL

ASEAN
6. The T h a i s and M a l a y s i a n s a r e a t t h e i r w i t s ' end t o cope w i t h
The M a l a y s i a n s and I n d o n e s i a n s now r e f u s e t o
to land. The R e f u g e e s P r o c e s s i n g C e n t r e ,
though
the refugee f l o o d .

a l l o w more boat people

which may be s e t up on an I n d o n e s i a n i s l a n d i s o n l y a p a l l i a t i v e , every l i t t l e h e l p s .

THAI POLICY
7. I am h o r r i f i e d a t t h e T h a i s ' d e c i s i o n t o push thousands o f
death.

Cambodians back a c r o s s t h e f r o n t i e r t o m i s e r y and p r o b a b l y T h i s i s a s e p a r a t e problem but we cannot anything t o prevent i t ?

BACKGROUND
ITALIAN POLICY
ignore i t .

Can we do

8.

The I t a l i a n r e s p o n s e

t o t h e Prime M i n i s t e r ' s c a l l f o r a c o n f e r e n c e
they w i l l probably go a l o n g w i t h

has been g e n e r a l l y s y m p a t h e t i c ; the m a j o r i t y o f the Nine.

The m a t t e r i s on t h e agenda f o r t h e meeting i n P a r i s on 17-18 June.

M i n i s t e r i a l P o l i t i c a l Co-operation 9.

I t a l y ' s highest p r i o r i t y i n refugees i s as a reception centre

f o r J e w i s h r e f u g e e s from t h e S o v i e t Union, a t t h e r a t e o f 5,000 a month. They have agreed t o t a k e 100 r e f u g e e s from M a l a y s i a and T h a i l a n d

and have s a i d t h e y w i l l c o n s i d e r t a k i n g some from Hong Kong i n any f u r t h e r group. T h e i r c o n t r i b u t i o n s t o UNHCR funds a r e low, b u t

they a r e c o n s i d e r i n g a t o t a l o f about 0.4 m i l l i o n . NUMBER OF REFUGEES 10. About 350,000 a r e a w a i t i n g r e s e t t l e m e n t . The Americans and The

C h i n e s e have a l r e a d y t a k e n over 200,000 each f o r s e t t l e m e n t . F r e n c h have r e c e i v e d 50,000, t h e C a n a d i a n s 9,200. and

15,000 and Hong Kong

The UK had a l r e a d y a c c e p t e d 1,573 Vietnamese by 22 May, Over 51,000 r e f u g e e s a w a i t r e s e t t l e m e n t

350 o t h e r I n d o - C h i n e s e .

i n Hong Kong. CONFIDENTIAL /11.

- 2

CONFIDENTIAL
11. We have a c c e p t e d o v e r 1,000 from t h e M Sibonga ( t o be o f f s e t ,
V

a s f a r a s p o s s i b l e , a g a i n s t t h e unused p a r t o f a quota o f 1,500

agreed by t h e p r e v i o u s Government). I t h a s been made c l e a r t h a t

f u t u r e s h i p s ' c a s e s w i l l be c o n s i d e r e d on t h e i r m e r i t s , b u t r e f u g e e s
from t h e MV Roach Bank w i l l be a c c e p t e d , t a k e them.
VIETNAMESE POLICY
12. R e l a t i o n s w i t h C h i n a a r e u n l i k e l y t o improve. Discrimination The i f t h e Taiwanese w i l l n o t

a g a i n s t Vietnam's C h i n e s e m i n o r i t y i s u n l i k e l y t o s t o p . Vietnamese a r e r e s e n t f u l o f f o r e i g n a d v i c e . THE 13. UNHCR-VIETNAM AGREEMENT

The Vietnamese a u t h o r i t i e s a r e c l a i m i n g t h a t arrangements under

an agreement o f 30 May w i t h t h e UN Deputy High Commissioner t o a l l o w " r e f u g e e s " t o l e a v e Vietnam d i r e c t l y t o c o u n t r i e s o f f i n a l s e t t l e m e n t show t h e i r w i l l i n g n e s s t o c o - o p e r a t e w i t h the world community

T h i s p r o p o s a l o n l y c o v e r s t h o s e who a l r e a d y have o f f e r s o f s e t t l e m e n t p l a c e s , b e c a u s e o f l i n k s w i t h r e l a t i v e s a l r e a d y i n t h e USA e t c ; a t p r e s e n t l e v e l s o f o u t f l o w t h e 20,000 t o 30,000 who q u a l i f y about two weeks' flow o f boat THE 14. PRIME MINISTER'S PROPOSAL Dr Waldheim h a s r e a c t e d p o s i t i v e l y , b u t the UNHCR who i s
soundings w i t h i n t e r e s t e d governments, i s r e l u c t a n t t o
without r e c e i v i n g advance p l e d g e s o f
people. ^ equal

conducting

convene t h e c o n f e r e n c e

r e s e t t l e m e n t and f i n a n c i a l the UK.

c o n t r i b u t i o n s from major c o u n t r i e s l i k e

U n l e s s Dr Waldheim c a n be p e r s u a d e d t o t a k e t h e i n i t i a t i v e ,
w i l l be d e l a y e d , o r w i l l be o f i n s u f f i c i e n t scope.

a conference ASEAN

The Refugee P r o c e s s i n g C e n t r e , i f i t comes about, w i l l be f o r o n l y a maximum o f 10,000 people a l r e a d y a c c e p t e d T h a i l a n d i s h a r d put t o i t t o c o n t a i n t h e l a t e s t across i t s land f r o n t i e r . the Khmer Rouges may k i l l f o r settlement. f l o o d o f Cambodians although

The p o l i c y i s now t o t u r n them back, them. CONFIDENTIAL

3

CONFIDENTIAL

BRIEF NO 6

13 JUNE 1979

COPY NO

THE PRIME MINISTER'S MEETING WITH SIGNOR ANDREOTTI :

15 JUNE 1979
(DEFENSIVE)

AFRICAN QUESTIONS

P o i n t s t o Make
Rhodesia [Defensive]

Consultat ions/Timetable
1. to 2.

UK p o l i c y was e x p l a i n e d i n o f f i c i a l June. be e x p e c t e d

level bilateral [21/22

talks June].

on A f r i c a i n Rome o n 7 / 8

F u r t h e r s t e p s on R h o d e s i a n o t

by t i m e o f European C o u n c i l m e e t i n g

Government w i l l d e c i d e

on b e s t way f o r w a r d i n l i g h t o f Lord Harlech visiting Front Line t o meet P a t r i o t i c Front (returning

c o n s u l t a t i o n s now u n d e r way. S t a t e s and N i g e r i a a n d e x p e c t s 28 J u n e ) : may v i s i t Liberia Zaire. Importance

other countries l a t e r . o f Lusaka Commonwealth

Mr Luce t o v i s i t Coast, Meeting.

( h o s t t o OAU Summit i n J u l y ) ,

Senegal, I v o r y

U S Policy

3.

P r e s i d e n t i a l d e t e r m i n a t i o n showed d i f f e r e n c e o f emphasis But s i m i l a r

o v e r R h o d e s i a n e l e c t i o n s a n d Muzorewa Government. p r a c t i c a l a p p r o a c h t o common o b j e c t i v e . Sanctions

4.

E x p i r y o f UK l e g i s l a t i o n i n November. not t o follow

E a r l i e r l i f t i n g by

US w o u l d make i t d i f f i c u l t

suit. /Evacuation

CONFIDENTIAL

CONFIDENTIAL

E v a c u a t i o n o f UK and I t a l i a n 5. Rhodesia

Nationals
Each c o u n t r y s h o u l d plan

not about t o c o l l a p s e .

as n e c e s s a r y .
Namibia
6. to 7. Mr Luce r e p o r t e d t h a t a l l t h e p a r t i e s a r e s t i l l the o r i g i n a l P r o p o s a l . The r e m a i n i n g We must b u i l d on t h i s . committed

d i f f e r e n c e s c a n be overcome by n e g o t i a t i o n c a n be r e s t o r e d . instance

i f t h e r i g h t atmosphere o f c o n f i d e n c e 8.

The F i v e w i l l resume n e g o t i a t i o n s , i n t h e f i r s t

w i t h t h e South A f r i c a n s , i n t h e n e a r f u t u r e .
Background
Rhodesia [1. [Not f o r u s e ]
June, an British

I n t a l k s w i t h h i s I t a l i a n c o u n t e r p a r t s on 7 / 8 The I t a l i a n s Cooperation

FCO Under S e c r e t a r y gave a f u l l d e s c r i p t i o n o f p r e s e n t views on R h o d e s i a . through P o l i t i c a l m e e t i n g s o f t h e Nine.

a r e kept r e g u l a r l y up t o date There a r e

no s p e c i a l p o i n t s t o r a i s e w i t h S i g n o r A n d r e o t t i . 2. The I t a l i a n s have f a i r l y f r e q u e n t c o n t a c t w i t h Mr Mugabe.

(perhaps They

They a r e i n c l i n e d t o sympathise

with the P a t r i o t i c Front

i n p a r t t o a v o i d c l a s h i n g w i t h Communist o p i n i o n a t home). w i l l w i s h t h e UK t o c o n s u l t w i d e l y over R h o d e s i a , an accommodation between i n t e r n a l and e x t e r n a l p a r t i e s .

and t o promote

US P o l i c y
3. I t a l i a n o f f i c i a l s have s a i d t h e y hope t h e US Government w i l l

c o n t i n u e t o be c l o s e l y i n v o l v e d i n e f f o r t s t o f i n d a R h o d e s i a n
settlement.
/Sanctions

"^CONFIDENTIAL

CONFIDENTIAL

Sanctions
4. S p e c i a l laws were p a s s e d i n I t a l y t o e n f o r c e sanctions.

T h e i r r e p e a l might meet s t r o n g o p p o s i t i o n .

The I t a l i a n Govern

ment would need time t o p r e p a r e t h e ground.]

[For use as necessary]

Evacuation
5. T h e r e a r e about 2000 I t a l i a n n a t i o n a l s i n R h o d e s i a . We

have t o l d t h e I t a l i a n Government t h a t we do n o t have c o n t i n g e n c y plans to a s s i s t with t h e i r evacuation. l i k e l y t o be needed i n t h e s h o r t term. the UK's a b i l i t y t o a s s i s t would be l i m i t e d . A mass e v a c u a t i o n i s not Should t h e need arise,

200,000 o r more p o t e n t i a l e v a c u e e s

Present 6. His for

Situation
f e e l i n g h i s way, and h a s not y e t t a k e n

Muzorewa i s s t i l l

d e c i s i v e a c t i o n t o promote i n t e r n a l change, eg t o c o n s t i t u t i o n .
o f f e r s o f r e c o n c i l i a t i o n w i t h F r o n t L i n e S t a t e s and amnesty
g u e r i l l a s n o t t a k e n up. On t h e o t h e r hand ZANU and ZAPU a r e

t h e i r Addis Ababa "agreement" does not p r o v i d e
integration.

achieving l i t t l e ;

basis for effective

Namibia
7. the the The F o r e i g n M i n i s t e r s o f the F i v e d i s c u s s e d Namibia d u r i n g North A t l a n t i c new i n i t i a t i v e C o u n c i l i n The Hague l a s t month. is still I t was The l i k e The s u b s t a n c e o f

agreed t h a t n e g o t i a t i o n s s h o u l d be resumed.

(12 June) b e i n g d i s c u s s e d .

l i h o o d o f a S e c u r i t y C o u n c i l meeting on 18 June n e c e s s i t a t e s some e a r l y p u b l i c move t o demonstrate t h a t t h e UN p l a n c a n s t i l l be put into effect.

/8.

CONFIDENTIAL

-3

CONFIDENTIAL

8.

The

South A f r i c a n s and

the p o l i t i c a l groups i n Namibia

i n h i s R e p o r t of 26
was

have r e j e c t e d Dr Waldheim's p r o p o s a l s February no o u t s i d e and i n s i d e Namibia. Mr and

on the q u e s t i o n of UN m o n i t o r i n g o f SWAPO t r o o p s
Luce c o n c l u d e d t h a t t h e r e The F i v e should parties.
find alternatives

j u s t i f i c a t i o n f o r g i v i n g up. to r e s t o r e c o n f i d e n c e for Mr Use

to Dr Waldheim's p r o p o s a l s igned [Not 9.

promote a s e r i e s of measures d e s

among the

Luce recommended i n h i s r e p o r t t o the S e c r e t a r y of S t a t e

r e p r e
French Led

Apart from t h e

t h a t the n e g o t i a t i o n s be resumed by a s i n g l e n e g o t i a t o r s e n t i n g the F i v e w i t h a broad mandate. our p a r t n e r s i n the F i v e d i d not a g r e e to t h i s a p p r o a c h .

by the Americans, t h e y have argued f o r a c o n t i n u a t i o n of a They a r e r e l u c t a n t to extend d i s c u s s i o n beyond the two versial 10. i s s u e s i n Dr Waldheim's R e p o r t .
of

joint

n e g o t i a t i n g team i n c l u d i n g r e p r e s e n t a t i v e s from a l l f i v e c o u n t r i e s .
c o n t r o

I n view of the need to produce some evidence few days i f , t o g e t h e r w i t h the US and

progress we

i n the next

France,

a r e to be on good

ground i n opposing c a l l s f o r s a n c t i o n s i n have agreed to drop our i n s i s t e n c e on The substance f o r the moment.

the S e c u r i t y C o u n c i l we New York Contact

the appointment of a s i n g l e n e g o t i a t o r Group a r e now

(12 June) w o r k i n g on the

of the next round of n e g o t i a t i o n s . 11. South A f r i c a ' s d e s i r e to e s t a b l i s h c l o s e r r e l a t i o n s Conservative Lord a d m i n i s t r a t i o n , w i l l g i v e HMG with

the new

greater

i n f l u e n c e over the South A f r i c a n Government t h a n our i n the F i v e . Five i n launching the new

partners sees

C a r r i n g t o n w i l l p r o b a b l y speak f o r the
round o f n e g o t i a t i o n s when he June.]

the South A f r i c a n F o r e i g n M i n i s t e r i n London on 20

F o r e i g n and

Commonwealth O f f i c e

-4-

CONFIDENTIAL

CONFIDENTIAL

M I S DOCUMENT IS THE PROPERTY OF HER BRITANNIC MAJESTY'S GOVERNMENT

BRIEF N 7 O 13 JUNE 1979

COPY NO

VISIT BY THE PRIME MINISTER OF ITALY [ 1 |j JUNE 1979

BILATERAL QUESTIONS

B r i e f by the Foreign and Commonwealth O f f i c e

( )
3

Fuel supplies by Mobil (UK) to I t a l i a n Charter Company, I t a v i a , a t

G3twick A i r p o r t

(b)

Police Co-ooeration

(a) 1.

ITA"IA: POINTS TO MAKE (only i f raised)

Glad that ITAVIA has managed t o f i n d f u e l so f a r f o r i t s g r e a t l y expanded

1979 charter programme, and hope t h a t the f i r m w i l l continue t o do so. 2. HHG are leaving i t t o the o i l companies t o decide on a l l o c a t i o n and pricir>.< officially.

of the f u e l a v a i l a b l e . The Government cannot therefore intervene

ESSENTIA PACTS
(Parar. 3~5 can be used f r e e l y ) 3.. I n 1974 during the 3-day week the I t a l i a n s were the only ones to threaten retaliation against the B r i t i s h Government's r a t i o n i n g cystcm (which affected

<ui I t a l i a n charter i:cmpany particularly heavily) by stopping B r i t i s h c h a r t e r

CONFIDENTIAL

CONFIDENTIAL

f l i g h t s to I t a l y , although there was no fuel shortage there. they were given extra f u e l .
k.

An a r e s u l t

Now the I t a l i a n C i v i l A i r A u t h o r i t i e s have threatened to cut B r i t i s h A f t e r e a r l i e r d i f f i c u l t i e s i n May (when MOBIL,

charters' f u e l i f ITAVIA (a d i f f e r e n t I t a l i a n charter company t h i s time) runs short t h i s summer season. ITAVIA's supplier, were persuaded t o resolve by increasing t h e i r a l l o c a t i o n ) MOBIL t h i s month cut ITAVIA (along with a l l t h e i r other customers i n the UK and most other countries) to 90 percent o f t h e i r June 197^ supply. ITAVIA need twice as much again f o r t h e i r expanded 1979 programme. A f t e r o f f i c i a l s had made informal enquiries o f o i l companies i n t h i s country a t the request o f the I t a l i a n Embassy, BP have offered t o l e t ITAVIA have enough extra t o l a s t through June, but a t the spot rate o f 31.30 per US gallon, as compared with the contract rate o f about 65c. ITAVIA are unhappy a t t h i s . They have enough f u e l from

Mil
MOBIL to l a s t u n t i l early next week.
5The I t a l i a n s complain that UK charters are managing t o f l y over 3000 f l i g h t s And there i s plenty o f

to I t a l y t h i s summer i n s p i t e o f the f u e l shortage; ITAVIA with less than 300 f l i g h t s planned i s the only company with problems. I t a l i a n opinion. a v i a t i o n f u e l i n I t a l y , f o r the moment. This argument would sound plausible to R e t a l i a t i o n against B r i t i s h charter t r a f f i c , a t l e a s t against There those r e f u e l l i n g i n I t a l y on t h e i r way to Yugoslavia, cannot be ruled out. i s some r i s k t h a t r e t a l i a t i o n might go beyond t h i s , and lead to bad f e e l i n g s p i l l i n g over i n t o other f i e l d s . This would be unfortunate, given the advantages of making common cause w i t h I t a l y on some major EEC issues. 6.

(Hot f o r use with Andreotti)

ITAVIA has strong p o l i t i c a l backing from Forlan question.

the I t a l i a n Foreign M i n i s t e r , who i s powerful i n the C h r i s t i a n Democratic Party. This accounts f o r the fuss the I t a l i a n s are making over t h i s

(b) 1.

POLICE CO-OPERATION: Background Note

Co-operation has been developing i n the Nine i n the fight against t e r r o r i s m .

Hinistera o f the I n t e r i o r and o f f i c i a l s have r e g u l a r l y met to draw up plane

CONFIDENTIAL

CONFIDENTIAL

f o r c o l l a b o r a t i o n before, during and a f t e r t e r r o r i s t i n c i d e n t s . numerous b i l a t e r a l exchanges have taken place.

2.

I n addition,

A f t e r the Moro kidnapping, the SAS v i s i t e d I t a l y and provided a crash

I n consequence, the I t a l i a n s

t r a i n i n g course to t h e i r I t a l i a n counterparts.

now have a capable reaction force f o r dealing with t e r r o r i s t hostage-taking

incidents.
3. HMG has offered f u r t h e r assistance and advice t o the I t a l i a n s on command,

c o n t r o l and government coordination.

k. The I t a l i a n s have expressed g r a t i t u d e f o r our help.

CONFIDENTIAL

CONFIDENTIAL

THIS DOCUMENT IS TIE PROPERTY OF HER BRITANNIC MAJESTY'S GOVERNMENT

BRIEF NO 8
13 JUNE 1979

COPY NO

VISIT BY THE PRIME MINISTER OF ITALY 15 JUNE 1979

ITALIAN INTERNAL SCENE

B r i e f by Foreign and Commonwealth Office

INTRODUCTION
1.

The I t a l i a n p o l i t i c a l scene i s once again i n a state o f f l u x . Personality Notes on Sgr Andreotti

His domestic p o s i t i o n w i l l be much on Signor Andreotti's mind when he meets the Prime Minister on 15 June. and Sgr F o r l a n i are attached at Annex A. 2. From August 1976 to June t h i s year, Signor Andreotti presided ever

Christian Democratic governments supported by various groupings of smaller parties and. r e l y i n g on Communist support or abstention i n Parliament for s u r v i v a l . The breakdown o f the l a s t government i n January was brought about by the intransigence o f the Communist Farty (PCI) over the terms on which i t would continue to o f f e r that support. Since then the FCI l i n o , as exemplified at a recent p->rty congress, haa been that the party should e i t h e r a c t u a l l y p a r t i c i p a t e i n government or go i n t o opposition. A majority of C h r i s t i a n Democrats oppose any

/co'iit iion

CONFIDENTIAL

CONFIDENTIAL

coalition with the PCI.

J. The noct significant feature:; o f tho r e s u l t s o f the General E l e c t i o n or.

J-M June Were an follows:

a) The Communists f e l l bad; a few point:; as had been p r e d i c t e d .
This was the f i r s t time they have l o s t ground since the war.
But they s t i l l remain above the psychologically important
threshold o f J / *
O" b) the C h r i s t i a n Democrats held up w e l l , though less w e l l than they
expected. Their share o f the vote dropped h a l f a percent; they
nevertheless gained 3 seats i n the Senate but l o s t one i n the
Chamber of Deputies;
c) the S o c i a l i s t s gained several seats but d i d not s u b s t a n t i a l l y
improve t h e i r percentage o f the vote;
d) s i g n i f i c a n t gains i n terms o f seats were registered only by the smaller p a r t i e s . The Social Democrats, Republicans and L i b e r a l s The Radical ( l e f t - w i n g a n t i - E s t n b l i s l

a l l improved t h e i r p o s i t i o n . ment Party

J won about y,o o f the vote and w i l l now have 18

representatives i n the Chamber against k i n 1976; e) the turnout, a t 89.9/ s the lowest ever recorded i n a post
w

war I t a l i a n e l e c t i o n ( v o t i n g i s compulsory). h. These r e s u l t s arc inconclusive. On past form i t w i l l take k to 6

weeks f o r a new government to be formed and i t i s impossible to p r e d i c t i t s eventual form. A change i n the d i r e c t i o n o f I t a l i a n p o l i t i c s can The good showing o f the smaller only be produced i f e i t h e r the C h r i s t i a n Democrats or the Communists can be l e f t unambiguously i n opposition. centre parties, together with the decline i n the Communist vote, could make i t marginally easier t o form a stable c o a l i t i o n o f the centre ( i e i n c l u d i n g the C h r i s t i a n Democrats) l e a v i n g the Communists i n opposition. But such a government would lack a majority without S o c i a l i s t support. The S o c i a l i s t s have not yet declared t h e i r i n t e n t i o n s , but t h e i r leader C r i x i has implied t h i t a c o n d i t i o n o f hi:; support for such a c o a l i t i o n would be the replacement o f Aii'ir':otti as Primu Minister-. There are oth>

/candidate
CONFIDENTIAL

CONFIDENTIAL

candidates i n the C h r i s t i a n Democrat leadership who could f i l l Minister.

this

r o l e , including the Party President, P i c c o l i , and F o r l a n i , the Foreign

5.

Signor Andreotti i s expected

to bo the f i r s t to be i n v i t e d , i n duo
For the time being he continues i n

course, to form a new government. power on a caretaker basis.

6.

The Elections to the European Parliament took place i n I t a l y on 10 The detailed r e s u l t s are a t Annex C. At 85.9?i the turnout was The

June.

lower than that f o r the general e l e c t i o n the previous week.

r e s u l t s o f the Euro-Elections confirm the trends apparent i n the General E l e c t i o n , p a r t i c u l a r l y the drop i n the Communist vote and the swing towards the smaller p a r t i e s . The f a c t that the C h r i s t i a n Democrats d i d less w e l l than i n the General E l e c t i o n suggests that voters are less a f r a i d than i n the past that f a i l u r e to vote Christian Democrat v / i l l l e t the Communists i n t o government.

THE ECONOMY
7.

The continuing p o l i t i c a l u n c e r t a i n t y means that no serious decisions The economy

on economic p o l i c y are l i k e l y to be taken before the autumn. i n d u s t r i a l production are encouraging.

continues to perform w e l l on the'external f r o n t , and recent figures on But there i s s t i l l considerable unease about the rate o f i n f l a t i o n (now at nearly 14JJ), and the i n d u s t r i a l scene i s g e t t i n g tenser as negotiations on new wage c o n t r a c t s , most o f which s t i l l have to be completed, reach a c r i t i c a l stage. The v i s i t o f an IMF team for routine consultations i n early A p r i l was the occasion f o r some severe warnings about i n f l a t i o n a r y prospects, and there have recently been rumours that I t a l y i s t o seel: a 5US1 b i l l i o n IMF c r e d i t so that the Government can blaiiethe conditions which would be attached t o such a loan for the implementation o f r e s t r i c t i v e p o l i c i e s which i t knows are necessary The Government w i l l o f but which i t would i t s e l f be unable to introduce. n a t i o n a l o i l price increases.

course be p a r t i c u l a r l y worried about the economic impact o f recent i n t e r

Foreign and Coatoonwealth Office <

13 June 1979 CONFIDENTIAL

CONFIDENTIAL

ANNEX A

PERSONALITY NOTES ON SIGNOR ANDREOTTI AND SIGNOR FORLANI

Signor Andreotti
1. Signer G i u l i o A n d r e o t t i i s 60 and i s married with several c h i l d r e n . today.

He i s perhaps the cleverest and coolest p o l i t i c a l loader i n I t a l y he has held o f f i c e i n most governments since 19^7.

A man o f government rather than o f the C h r i s t i a n Democrat Party machine, He has been President of the Council (Prime M i n i s t e r ) f o r 2 long stretches (5 governments) and has presided over c e n t r e - r i g h t and c e n t r e - l e f t c o a l i t i o n s as w e l l as single party C h r i s t i a n Democrat governments. His l a t e s t tenure o f the Premier ship (1976 to present) has been notable f o r h i s s k i l f u l management o f parliamentary a l l i a n c e s , i n v o l v i n g the support o f the I t a l i a n Communist Party, without making serious concessions to the l a t t e r . 2. I n 1978 Sgr A n d r e o t t i won j u s t i f i a b l e praise f o r h i s calm and I n the recent

courageous handling o f the Moro kidnapping and murder.

e l e c t i o n s , he won more preference votes (whereby e l e c t o r s may express a personal preference on p a r t y l i s t s ) than any other parliamentary candidate. But despite these impressive achievements, h i s c r i t i c s , p a r t i c u l a r l y the I t a l i a n S o c i a l i s t Party, are now t r y i n g to unseat him on the grounds that a fresh, more dynamic leader i s required. His changes o f s u r v i v i n g as Prime M i n i s t e r i n the end cannot a t present be regarded as higher than 50/^. But he i s l i k e l y to remain i n o f f i c e a t l e a s t u n t i l a f t e r the Tokyo Summit. J. Sgr A n d r e o t t i has a dry humour and a concise s t y l e o f expression. He

has a huge capacity f o r hard work, but always appears relaxed and has found
the time to w r i t e several h i s t o r i c a l / m y s t e r y novels set i n Papal Rome. speaks no English but quite good French.
k. One o f the few f i x e d points i n h i s e s s e n t i a l l y pragmatic approach i s to the ideal o f European u n i t y . His r e p u t a t i o n as a He

his attachment

devoted supporter o f the Community was enhanced by his decision to adhere, i n d i f f i c u l t circumstance:;, and against Communist and S o c i a l i s t opposition, to the European monetary system (EMS). Within the Community he has b u i l t His

up h i s closest personal r e l a t i o n s h i p s w i t h Chuicollor Schmidt.

/Since
CONFIDENTIAL

CONFIDENTIAL

the I t a l i a n s began a year ago to make common cause with the UK i n

c r i t i c i s i n g the unjust pattern o f the Community Budget, Andreotti has
been a generally e f f e c t i v e a l l y . i n h i b i t e d by:
a) Apparent B r i t i s h lack of enthusiasm f o r the Community i d e a l ;
But he has so f a r undoubtedly been

b)

our r e l a t i v e lack o f enthusiasm f o r solutions to the Budget

problem i n v o l v i n g increased expenditure (eg to the Regional
Fund).

5.

Sgr Andreotti i s therefore l i k e l y strongly to welcome the accent

being placed on the European Community by the new B r i t i s h Government.

Sigr.or F o r i an i
6.

Signor F o r l a n i , the Foreign M i n i s t e r , who w i l l be accompanying married with 2 c h i l d r e n . He does

Sgr Andreotti to London, i s ^>h;

not make a great impression on the f o r e i g n a f f a i r s scene, but he i s a clever p o l i t i c i a n who has c u l t i v a t e d good l i n k s with the S o c i a l i s t s while remaining on the r i g h t o f the C h r i s t i a n Democrat Party.

CONFIDENTIAL

CONFIDENTIAL

5.

FOLLOWING ARE DETAILED RESULTS (1976 IN BRACKETS)

C A B R OF DEPUTIES HME

PERCENTAGES 33.3 ( 3 8 . 7 ) 30'.4 ( 3 4 . 4 ) 9.8 5.3 0.6 3.0 ' 3.0 1-9 1.4 3.4 0.6 (9.6) (6.1) (-) (3.4) (3.1) (1.3) (1.5) (1.1)
(0,5)

SEATS 262 (263)

201

GAIN/LOSS -1 -27 +5 -5

CHRISTIAN DEMOCRATS (DC) COMMUNISTS (PCI) SOCIALISTS (PSI) NEO-FASCISTS (MSI) NATIONAL DEMOCRATS (DN) SOCI/^DEMOCRATS (PSDI) REPUPLICANS (PRI) LIBERALS (PLI) ULTRA-LEFT (PDUP) RADICALS (PR) S. TYROL PARTIES

(223)

62 (57) 30 (35) (-)

+5 +2 +4

20 (15) 16 (14) 9 (5) 6 (6) 10 (4) 4 (3)

+1

( . '

CONFIDENTIAL

CONFIDENTIAL

VAL D'AOSTA PARTY

OTHERS

0.1 ( 0 . 1 ) 1.4 (0.2)

1 1

(") (-)

+1

+1

100

630

SENATE

PERCENTAGES D C PCI
KX

SEATS
138 (135)

GAIN/LOSS
+3

38.3 ( 3 8 . 9 )

31.5 10.4

(33.8) (10.2) (6.5) (-) (3.1) (2.7) (1.4) (0.8) (0.2)

109 (116) 32 (29) 13 (15)

(-)

-7 +3 -2

P I S MSI
DN

5-7 0.6 4.2 3.4 2.2 1.3 0.1

PSDI P I R PL I RADICALS
N W UNITED LEFT E

9 (6) 6 (6)
2 (2)
2 (-)
- (-)

+3

-2

CONFIDENTIAL

CONFIDENTIAL

S. TYROL PARTIES VAL D'AOSTA OTHERS

0.5 (0.5) 0.1 ( 0 . 1 ) 1.7 (1.7)

3 (2) 1 (l)

+1

100

315

CONFIDENTIAL

J T!-:r R1HAL RF.':ULTS J ITALY, WITH ALL VOTES C U T D EXCEPT WOSE M O NE C S M .'!'/.'//9? .'' IirtAilTS, W R A N U C D THIS -.l-u.'.'-U: v OE EE NONE AS FOLLOWS: P.V37SES ,1.0" VOTES' . LAST WEEK'S GENERAL ELECT IOJJ SEATS -

CHRISTIAN DEMOCRATS (DC) COMM'JN! c'l S (PCI) SOCIALISTS (PSI)

32.3 29.6 11.0

(3^.3) <3%4) ( 9.S)

3" .2* 9

SOCIAL D M C A S (PSDS) E ORT RSP.UfiLICA\S (PRI) ^ Li 2r:.-<ALS (PL!) RADICALS fPR) ULTRA-LEFT (PDUP) PRCtnlAtilAN

. 'r.3

' 3..3) ( 3.-) ( t.9) ( 3.4) ( 1.4) .

4 2 3 3 1

.2.6 3.6 3-7 1.1

DS>'OCftAYS l DP)

$.7

( ^;rO

81

CONFIDENTIAL D E S K 3 Y 111730Z FM R M 11160^2 JUN 79 OE

T IMMEDIATE F O O C

TELEGRAM N M E 204 O 11 JUNE U BR F INFO PRIORITY BONN, PARIS.

E TE INFO SAVING WASHINGTON, UKDEL NATO, UK R P BRUSSELS, ALL O H R

EEC POSTS.

M TELNO 19^1 SI6N0R ANDREOTTI'S VISIT TO L N O A D THE ITALIAN

Y OD N M POLITICAL SITUATION,
1. THE ITALIAN DOMESTIC SITUATION W I L L PE M C O U H N SlGNOR
HN E ANDREOTTI'S MIND W E H MEETS THE PRIME MINISTER ON 15 JUNE.
P. THE GENERAL ELECTION O 3 A D 4 JUNE HA? N T PROVIDED A Y N N O N OBVIOUS SOLUTION TO THE STALE-MATE WHICH B G N LAST JANUARY WHEN E A THE COMMUNISTS PROVOKED THE FALL O ANDREOTTI'S FOURTH F G V R M N B WITHDRAWING THEIR PARLIAMENTARY SUPPORT. OEN ET Y ANDREOTTI' S Fl ~TH G V R M N - A COALITION O CHRISTIAN OEN ET F DEMOCRATS, REPUBLICANS A D SCCIAL D M C A S - FAILED T OBTAIN A N E ORT O N INITIAL V T O CONFIDENCE AT THE E D O MARCH, A D SINCE THEN OE F N F M iZ HAS REGAINED IM C A G O A CARETAKER 'US IS. HR E N IT 13 EXPECTED
THAT HE WILL 3E THE FIRST TO R INVITED T FORM A N W E O E

I SUBSTANTIVE G V R M N (PR0BA3LY N T UNTIL AFTER THE EUROPEAN OEN ET O COUNCIL A D T E T K O SUM"IT) B T W E H R H WILL SUCCEED IN N H OY U HTE E DOING S I S STILL UNCERTAIN, O IN T E ELECTIONS O 3/4 JUNE THE CC"'-'H,N I 3TS LgSJ r.ffr,n-.n fZR H N ?. T E FIRST I ' I ' E IN A POST - A ITALIAN GENERAL ELECTION. H WR THE CHRISTIAN' D M C A S HELD U WELL (THOUGH THEY N.ID N T INCREASE E ORT P O
THEIR SHARE O THE VCTE AS EXPECTED) . F THE SOCIALISTS GAINED
3

V R SLIGHTLY SEMICOLON '3UT THE M S SUBSTANTIAL GAINS W R EY OT EE Y REGISTERED 3 THE SMALL PARTIES CF THE CENTRE (ES ECI ALLY THE SOCIAL DE: S R ATS AND LIBERALS) A D 3 THE RADICALS. C N Y THESE TRENDS WERE ALL SUBSTANTIALLY CONFIRMED 1" THE EUROPEAN ELECTIONS O 10 JUNE. N

'V. THE INCREASE I I THE N M E OF SEATS HELD B THE SMALLER U 3R Y U 3R F CENTRE PARTIES, TOGETHER WITH THE DECLINE IN THE M M E O COMMUNIST SEATS, S H O U L D III THEORY MAKE IT EASIER TO FORM A STA3LE COALITION OF THE CENTRE WITH THE CO'MUN 15TS IN OPPOSITION. BUT SUCH A COALITION WOULD STILL LAC!' A RESPECTA3LE MAJORITY THE SOCIALISTS HAVE NOT YET MADE WITHOUT SOCIALIST SUPPORT. CLEAR WHETHER THEY V.'OULD R PREPARED TO JO| N O SUPPORT SUCH A E R COALITION. THEIR PARTY LEADER, CRAXI, APPEARS TC BE MAKING IT A CONDITION OF HIS SUPPORT THAT AMDREOTTI SHOULD 3E REPLACED AS P I M MINISTER. R E IF CRAXI STICKS T THIS POSITION IT IS HARD O O E TO SEE H W ANDREOTT] CAN SUCCEED IN FORMING A N W GOVERNMENT, A A D THE MANTLE M Y '/ELL THEREFORE PASS IN DUE COURSE TO ANOTHER N ^CHRISTIAN DEMOCRAT LEADER (SEE ALSO PARA 3 OF Ml FT). A O EE 5. W E I S W AMDREOTTI THIS MORNING HE SPOKE H W V R OF HN TRYING TO COAX THE COMMUNISTS A D SOCIALISTS INTO A POSITION OF N "NON-BELLIGERENCE". H INDICATED THAT A F W WEEKS WOULD E E E B NEEDED TO ALLOW TEMPERS TO COOL (NO DOUBT H HAD IN MIND E M GAVE M AN E E CRAXI'3 DISAGREEABLE REMARKS ABOUT HIMSELF), IMPRESSI O O CONSIDERABLE SELF-CONFIDENCE FORTIFIED B HIS N F Y PERSONAL SUCCESS IN HIS CONSTITUENCY, I CONCLUDE THAT H HOPES E E F T FORM IN DUE COURSE A N W GOVERNMENT O CHRISTIAN DEMOCRATS, O M N REPUBLICANS A D SOCIAL DEMOCRATS A D POSSIBLY LIBERALS, WITH THE COMMUNISTS \ND SOCIALISTS AGREEING TO ABSTAIN IN PARLIAMENTARY ^ .OTES. 6. PLEASE SEE Ml FT F R A ASSESSMENT OF ANDREOTTI'S PERSONAL O N POSITION. 7. F 0 PLEASE PASS TO ALL SAVIN'S ADDRESSEES.

CAMPBELL

I l l ME MINISTER
Your l u n c h w i t h S i g n o r A n d r e o t t i on
15 June
I think i t w o u l d be v e r y u s e f u l i f you c o u l d
B u t l e r , t h e FCO EEC expert, who

A n d r e o t t i on 15 June.

i n c l u d e Mr. M i c h a e l

i n your lunch f o r Signor

He c o u l d t a k e t h e p l a c e o f Mr. A r c u l u s , Rome as o u r Ambassador b u t who t h o r o u g h l y b r i e f e d on EEC

would e v e n t u a l l y r e p l a c e S i r Alan Campbell i n

i s not yet

matters.

The o b j e c t o f i n c l u d i n g Mr. A r c u l u s was t o

e n a b l e him t o meet S i g n o r Andreotti. I f you
a g r e e , Mr. A r c u l u s c o u l d s i m p l y come t o t h e p r e l u n c h d r i n k s and meet you and S i g n o r A n d r e o t t i
then. Would t h i s be acceptable?

13 June 1979

CONFIDENTIAL

F o r e i g n and C o m m o n w e a l t h London SW1A 2 A H

Office

13 June 1979

Briefing

f o rAndreotti

Visit

I am now'sending you, a s agreed, f o u r c o p i e s of the B r i e f s

which have been p r e p a r e d by t h i s Department f o r S i g n o r
Andreotti's v i s i t .
C o p i e s go a l s o to the P r i v a t e O f f i c e s of t h e C h a n c e l l o r
of t h e Exchequer and t h e M i n i s t e r o f A g r i c u l t u r e (one copy e a c h )
and to the o f f i c e of the S e c r e t a r y to t h e C a b i n e t ( t h r e e c o p i e s )

Lever

B G Cartledge Esq
10 Downing S t r e e t

CONFIDENTIAL

IMMEDIATE

D:F m
LIC

219/11

394711

00 FCO
po BONN

P PARIS
P GRS800 CONFIDENTIAL F R M U1640Z JUN 79 M OE C T IMMEDIATE F O O TELEGRAM N M E 2V > O 11 JUNE U BR F INFO PRIORITY BONN, PARIS, INFO SAVING T WASHINGTON, U<DEL NATO, U REP BRUSSELS, ALL O H R O K TE E C POSTS. E
r

MlPTl Sin:0R ANDREOTTI'S VISIT TO LONDON,

1 SIGNOR GIULIO ANDRECTT1 I S PERHAPS THE CLEVEREST AND
I N ITALY TODAY. A MAN OF GOVERNMENT DEMOCRAT PARTY MACHINE, HE HAS HELD WHEN HE WAS THE UNDER HE HAS BEEN

COOLEST, P O L I T I C A L LEADER

RATHER THAN OF THE CHRISTIAN OFFICE

IN HOST GOVERNMENTS SINCE 1947

SECRETARY AMD FAVOURED PROTEGE OF DE GASPER I . PRESIDENT O THE COUNCIL ( P R I M E M I N I S T E R ) F (5 GOVERNMENTS)

FOR 2 LONG STRETCHES

AND HAS PRESIDED OVER'CENTRE-RIGHT AND CENTRE-LEFT DEMOCRAT GOVERNMENTS. HAS BEEN

COALITIONS AS V.'ELL AS SINGLE PARTY CHRISTIAN HIS LATEST TENURE OF THE PREMIERSHIP (1976
C

TO PRESENT)

NOTABLE FOR H I S S K I L F U L MANAGEMENT O INVOLVING THE SUPPORT OF THE I T A L I A '

1

PARLIAMENTARY

ALLIANCES,

COMMUNIST PARTY. WITHOUT

MAKING SERIOUS CONCESSIONS TO THE LATTER.

P.

IN

197-B

ANDREOTTI

WON J U S T I C I A B L E PRAISE FOR H I S CALM AND

COURAGEOUS HANDLING OF THE WI RECEMT E L E C T I O N , ,

M R KIDNAPPING OO
-

AND MURDER.

IN
THAN

HE WON MORE PREFERENCE VOTES (WHEREBY

ELECTORS MAY EXPRESS A PERSONAL PREFERENCE ON PARTY L I S T S ) ANY OTHER

PARLIAMENTARY CTNDTDATE.
HIS CRITICS,

BUT DESPITE THESE PARTICULARLY THE ITALIAN

IMPRESSIVE ACHIEVEMENTS,

SOCIALIST ''AMTY,

At: N W TRYING TO UNSEAT H I ' ON THE GROUNDS THAT O

ELECTORS M Y EXPRESS A PERSONAL PREFERENCE On PARTY LISTS) T A A HW O T DESPITE THESE U A Y O H R PARLIAMENTARY CANOI PATE. M TE IMPRCSSIVE ACHIEVEMENTS, MIS CRITICS, PARTICULARLY THE I T ' L I A N ^ S:CIALIST PARTY, A E M W TRYING T UNSEAT HIM O THE G O N S THAT R O O N RUD A FRESH, 'ORE DYNAMIC LEADER IS REQUIRED. THERE A E SEVERAL R iM S O POTENTIAL CHRISTIAN D M C A S C E S R WAITING IN" THE W. G T E ORT U CSO S SUPPLANT HIM. THUS, HIS CHANCES OF SURVIVING A PRIME MINISTER S UT IN THE E D C N O AT PRESENT ^E R G R E AS HIGHER THAN 50",1, N AN T E ADD H IS LI-ELY T REMAIN IN OFFICE AT LEAST UNTIL AFTER THE TOKYO E O SUMMIT, ' ~* 3. ANDREOTTI IIAS A D Y H M U A D A CONCISE STYLE O EXPRESSION, R U OR M F H HAS A H G CAPACITY F R H R W R , BUT AL/AYS APPEARS RELAXED E UE O_ A D O K TR A D HAS S M H W F U D THE TIME TO WRITE SEVERAL HI S O I CAL/MYSTERY N O EO ON NOVELS SET IN PAPAL RO"E. H SPEAKS N ENGLISH 3UT PUITE G O E O OD FRENCH. 4. O E O THE F W FIYED POI NTS If! HIS ESSENTIALLY PRAGMATIC N F E A P O C IS HIS ATTACHMENT TO THE IDEAL O E R P A UNITY. PR AH F UOEN HIS REPUTATION A A DEVOTED S P O T R O THE COMMUNITY W S E H N E S UP RE F A NACD B HIS DECISION TO ADHERE, IN DIFFICULT CIRCUMSTANCES, A D Y M AGAINST COMMUNIST A D SOCIALIST OPPOSITION, TO THE E R P A N UOEN M N T R S S E (EMS), O EA Y Y T M WITHIN THE COMMUNITY HE HAS BUILT U HIS P CLOSEST PERSONAL RELATIONSHIPS WITH CHANCELLOR SCHMIDT. HIS RELATIONS WITH GISCARD, W O HE TENDS TO MISTRUST, HAVE BEEN HM LESS CORDIAL. SINCE THE ITALIANS B G N A Y A A O TO M K E A ER G AE C M O CAUSE WITH THE U IN CRITICISING THE UNJUST PATTERN O THE OMN K F C M U I Y BUDGET, ANDREOTTI HAS D E A GENERALLY EFFECTIVE O M NT EM .ALLY. B T H HAS S F R UNDOUBTEDLY "EEM INHIBITED RY: U E O A A) APPARENT BRITISH LACK O ENTHUSIASM F R THE COMMUNITY IDEAL: F O B) O R RELATIVE LACK O ENTHUSIASM F R SOLUTIONS TO THE BUDGET
U F O P O L M INVOLVING INCREASED EXPENDITURE (EG T THE REGIONAL FUND).
R BE O

'

"

6*. I A'/ GLAD T K O THAT THE PRIME MI NI STER INTENDS T BEGIN

O NW O T E MEETING WITH A RESTRICTED SESSION. H THIS IS, I A" SURE,
T E BEST W Y O INFLUENCING ANDREOTTI, W O DESPITE A
H A F H N INITIALLY W R MANNER, R S O D T W R T A D TRUST. AY E P N S O A MH N THE M R
OE T E PRIME MINISTER C N TAKE HIM INTO H R CONFIDENCE ABOUT H R
H A E E O M O O ASPIRATIONS ' "QTH F R BRITAIN A D F R THE C M "UNITY THE SETTER,
AO W E H R H SURVI ,'ES A PRIME MINISTER O N T H w ILL BE A M J R
HTE E S R O E ACTOf O THE ITALIAN S E E F R M N YEARS T COME.
N CN O AY O
7.
A4TT

FRP' THE E R P A COMMUNITY, A ISSUE OF GREAT UOEN N

WETHER HE SORVI 'ES Ar, PRIME MINISTER O NOT HE ILL DE A MAJOR R /.CTOR O THE ITALIAN SCENE F R .''ANY YEARS T COME. N O O 7. APART FRO- THE EUROPEAN COMMUNITY, A ISSUE OF GREAT M SENSITIVITY F R ITALY IS HER EXCLUSION FROM .QUADR IPARTITE O MEET INO9 INVOLVING H R MAJOR WESTERN ALLIES. E ANDREOTTI W S A PARTICULARLY DISTRESSED THAT HIS EUROPEAN PARTNERS DID *'OT EVEN W R HIM IN ADVANCE OF THE PRESS ANNOUNCEMENT OF THE SUADALOUPE AN SUMMIT IN DECEMBER LAST. 0. SIGNOR FORLANI, THE FOREIGN MINISTER, W O .'I LI. BE H ACCOMPANYING SIGNOR ANDREOTTI T LONDON, IS O E OF THE SENIOR O N SUCCESSORS TO ANDREOTTI (OTHERS ARE SIGNOR PICCOLI, THE PARTY PRESIDENT, AND SIGNOR FANFANI, THE VETERAN PRESIDENT 0~ THE SENATE). AS YOU WILL 'NOW FROM Y U PREVIOUS MEETINGS WITH OR HIM, FORLANI DOES NOT MAKE A GREAT IMPRESSION O ' THE FOREIGN N AFFAIRS SCENE. PUT HE I S A CLEVER POLITICIAN W O HAS H CULTIVATED C O LINKS WITH THE SOCIALISTS HILE REMAINING O THE OD N RIGHT O THE CHRISTIAN DEMOCRAT PARTY. F 9. ANDREOTTI PAID OFFICIAL B|LATERAL VISITS T BRITAIN IN O -

M R H 1962 AND NOVEMBER 1978, AS WELL AS VISITS FOR THE AC EUROPEAN COUNCIL AND THE NATO SUMMIT IN JUNE ' 9 7 7 . 10. FCO PLEASE PASS TO ALL SAVING ADDRESSEES,

CAMP3ELL

NN
NN

^CONFIDENTIAL D E S K B Y 1U700Z
F R M irV/3'1 M OE JUN 19 .

T IMMEDIATE FCO O TELEGRAM N M E 204 O 11 JUNE U BR F INFO PRIORITY B N , P R IS* ON A INFO SAVING WASHINGTON, US'DEL N T , U R P BRUSSELS, ALL O H R AO KE TE

EEC POSTS.
M TELNO 1901 SIGNOR ANDREOTTI' S 71 SIT T L N O A D THE ITALIA;) Y O ODN M POLITICAL SITUATION. 1. T E ITALIAN DOMESTIC SITUATION WILL PE M C O SIGNOR
H UH N ANDREOTTI'S MIND W E H MEETS THE PRIME MINISTER O 15 JUNE.
HN E N P. THE GENERAL ELECTION Of! 3 A D 4 JUNE H S N T PROVIDED A Y N A O N OBVIOUS SOLUTION T THE STALE-MATE WHICH B G N LAST JANUARY W E O EA HN T E COMMUNISTS P O O E THE FALL O ANDREOTTI'S F U T H R V KD F O RH G V R M N 3 WITHDRAWING THEIR PARLIAMENTARY SUPPORT. OEN ET Y ANDREOTTI'S FIFTH G V R M N - A COALITION O CHRISTIAN OEN ET F DEMOCRATS, REPUBLICANS A D SOCIAL D M C A S - FAILED T OBTAIN A N E ORT O N INITIAL V T OF CONFIDENCE A THE E D O MARCH, A D SINCE THEN OE T N F N IC HAS REMAINED IN C A G O A CARETAKER IAS IS. HR E N IT IS EXPECTED THAT HE WILL BE THE FIRST TO B INVITED T F R A N W E O OM E SUBSTANTIVE G V R M N ( R03A3LY N T UNTIL AFTER THE E R P A OEN ET O UOEN COUNCIL A D THE T K O SUMMIT) BUT W E H R H WILL S C E D IN N OY HTE E UCE DOING S I S STILL UNCERTAIN. O
p

?. IN THE ELECTIONS O 3 A JUNE THE COMMUNISTS LOST G O N F R N RUD O T E H T E FIRST T I E IN A POST -WAR ITALIAN GENERAL ELECTION. H CHRISTIAN D M C A S HELD U WELL (THOUGH THEY D I D M T INCREASE E ORT P O T E SOCIALISTS GAINED H THEIR SHARE O THE V T A EXPECTED). F OE S V R SLIGHTLY SEMICOLON BUT THE M S SUBSTANTIAL GAINS W R EY OT EE Y F REGISTERED 3 THE SMALL PARTIES O THE CENTRE 'ESPECIALLY THE THESE SOCIAL D M C A S A D LIBERALS) A D B THE RADICALS, E ORT N N Y UOEN TRENDS WERE ALL SUBSTANTIALLY CONFIRMED IN THE E R P A ELECTIONS O 10 JUNE. N

CONFIDENTIAL

T E INCREASE I I THE N M E O SEATS HELD B THE S A L R J ) H U BR F Y M LE C N R PARTIES, T G T E WITH THE DECLINE IN THE N M E O ETE O EHR U BR F C M U I T SEATS, SHOULD IN THEORY MAKE IT EASIER TO FORM A O M NS F STABLE COALITION O THE CENTRE W1TH THE COMMUNISTS IN OPPOSITION. H T SUCH A COALITION W U D STILL L C A RESPECTABLE MAJORITY U OL A K WT O T SOCIALIST SUPPORT. IH U THE SOCIALISTS HAVE N T YET M D O AE CLEAR W E H R THEY WOULD BE PREPARED TO JOIN O S P O T S C A HTE R UP R UH COALITION. THEIR PARTY LEADER, CRAXI, APPEARS TC BE MAKING IT A CONDITION O HIS SUPPORT THAT ANDREOTTI SHOULD BE REPLACED AS F P I M MINISTER. R E IF CRAXI STICKS T THIS POSITION IT IS HARD O O/ A E T SEE H V ANDREOTTI C N SUCCEED IN FORMING A N W GOVERNMENT, O A D THE MANTLE M Y WELL THEREFORE PASS IN D E COURSE TO ANOTHER N A U CHRISTIAN DEMOCRAT LEADER (SEE ALSO PARA 3 OF Ml FT). A O EE 5. W E I S W ANDREOTTI THIS MORNING HE SPOr'E H W V R OF HN TRYING TO COA ' THE COMMUNISTS A D SOCIALISTS INTO A POSITION O N F ' ' NON-BEL LJ_GER.E^NC,E' ' . H INDICATED THAT A F W WEEKS W U D E E OL O E B N E E TO ALLO ' TEMPERS T COOL (f.'O DOUBT H HAD IN KIND E EDD !E GAVE M A E N CRAXI ' 3 DISAGREEABLE REMARKS ABOUT HIMSELF). IMPRESS I O O CONSIDERABLE SELF-CONFIDENCE FORTIFIED BY HIS N F PERSONAL SUCCESS IN HIS CONSTITUENCY. I CONCLUDE THAT H HOPES E E F T FORM IN DU: COURSE A N W GOVERNMENT O CHRISTIAN DEMOCRATS, O M N REPUBLICANS A D SOCIAL DEMOCRATS A D POSSIBLY LIBERALS, WITH THE O C M U I T M D SOCIALISTS AGREE INS T ABSTAIN IN PARLIAMENTARY O M NS S J OTES.
l

PLEASE SEE MIFT FOR AN ASSESSMENT OF ANDREOTTI'S POSJTI ON.

PERSONAL

7.

F 0

PLEASE PASS T ALL SAVINS O

ADDRESSEES.

CAMPBELL

CABINET

OFFICE

W i t h the c o m p l i m e n t s o f The P r i v a t e S e c r e t a r y to the Secretary of the Cabinet

B . G . Cartledge, Esq.

70 W h i t e h a l l , L o n d o n SW1A2AS Telephone

0-3 3 0 123 0 0

CABINET
70 Whitehall, London

OFFICE
Telephone
OI-233

SWIA ?AS

8 319

From the Secretary of theCabinet:

Sir John Hunt G C B

11th J u n e , Ref. A09747

1979

V i s i t of Signor A n d r e o t t i T h a n k you for y o u r l e t t e r of 7th June about the b r i e f s f o r t h e v i s i t o f S i g n o r A n d r e o t t i . I am e n t i r e l y content w i t h the l i s t of b r i e f s s u g g e s t e d i n y o u r p a r a g r a p h 3, a n d t h a t t h e y s H o u l d go d i r e c t to N o . 10 f r o m the F o r e i g n a n d C o m m o n w e a l t h O f f i c e . No d o u b t b r i e f n o . i v . w i l l be d o n e i n c l o s e c o n s u l t a t i o n w i t h the D e p a r t m e n t o f E n e r g y . N o . 10's d e a d l i n e f o r t h e s e b r i e f s i s 5 . 0 0 p m on W e d n e s d a y , 13th J u n e . I a m c o p y i n g t h i s l e t t e r to t h e r e c i p i e n t s o f yours.
1

Jfr J. V I L E

(M.J. R.A. Burns, Esq.

Vile)

PRIME MINISTER

SIGNOR ANDREOTTI'S V I S I T , 15 JUNE 1979

We have now heard 15 June.
(11.30-13.00)
t h a t S i g n o r A n d r e o t t i w i l l be

b r i n g i n g h i s F o r e i g n M i n i s t e r , S i g n o r F o r l a n i , w i t h him on

T h i s means t h a t those p r e s e n t f o r t h e t a l k s w i l l be:

Y o u r s e l f , S i g n o r A n d r e o t t i , Lord C a r r i n g t o n ,
S i g n o r F o r l a n i , S i g n o r Ruggiero and me ( a s n o t e t a k e r ) .

Would you l i k e the two Ambassadors t o t a k e p a r t i n the t a l k s as

well? S i g n o r D u c c i and S i r Alan Campbell would n a t u r a l l y very
much l i k e t o be t h e r e ; but a t o t a l p a r t i c i p a t i o n of e i g h t might
W>e a l i t t l e too many f o r the White Drawing Room and i f you wished Would you l i k e t o do t h i s ? .Ambassadors to be p r e s e n t i t might be b e t t e r t o have t h e t a l k s in t h e C a b i n e t Room i n s t e a d .

Lord C a r r i n g t o n i s a l r e a d y committed to g i v i n g a lunch

for for t h e A u s t r a l i a n F o r e i g n M i n i s t e r , Mr. Peacock, on 15 June.
lunch
Signor Andreotti: t h e Lord P r i v y S e a l w i l l of course be t h e r e ,
He hopes, t h e r e f o r e , t h a t you can e x c u s e him from your

11 June 1979

PRIME MINISTER
Signor A n d r e o t t i ' s v i s i t You last content to London - 15 June 1979 to
you be

approved the b r i e f o u t l i n e programme which I put Andreotti's v i s i t on 15 June. w i t h the f o l l o w i n g more d e t a i l e d arrangements?

night f o r Signor

Would you

F r i d a y 15 June
Signor Andreotti (accompanied by the I t a l i a n and S i g n o r Rjfuggf^ro) a r r i v e at No. 10

<

Ambassador

Photocall
T e t e - a - t e t e d i s c u s s i o n ( w h i t e drawing room) w i t h o n l y
n o t e - t a k e r s p r e s e n t , S i g n o r Rfuggt^_ro a c t i n g as i n t e r p r e t e r .
F o r e i g n and Commonwealth S e c r e t a r y , S i g n o r D u c c i S i r Alan Campbell j o i n the t a l k s . 1300 1315 for Lunch ( s m a l l d i n i n g room), to be a t t e n d e d by: and

Prime M i n i s t e r Signor Andreotti F o r e i g n and Commonwealth S e c r e t a r y C h a n c e l l o r of the Exchequer M i n i s t e r of A g r i c u l t u r e , F i s h e r i e s and Food Lord P r i v y S e a l S i g n o r Rtfuggi^ro HE The I t a l i a n Ambassador S i r Alan Campbell (HM Ambassador, Rome) Mr. M i c h a e l F r a n k l i n ( C a b i n e t O f f i c e ) Mr. Ronald A r c u l u s ( s h o r t l y to s u c c e e d S i r Alan Cartledge Mr. B.G. departs.

Campbell)

1445 Signor Andreotti (approx)

B r i e f i n g i s i n p r e p a r a t i o n and w i l l of Wednesday 13 June.

r e a c h you on the

evening

8 June

1979

10 D O W N I N G

STREET

D F G 133/07 W I . I C 540/07

00 FCO (DESKBY ?71in"Z)

C P5" R CONFIDENT IAL DESKBY 0711002 JUN F R M "73 0432 JUN M O E TO IMMEDIATE FCO

VMMEDJAJt ^ W V n l w L <**fc. -

TELE O Ax' N M E 194 O 7 JUNE 1979 R U BR F

INFO SAVING U DELNATO A D ALL O H R EEC POSTS K N TE

TELECON TERGUSSON/ADAMS: Y VISIT B THE ITALIAN PRIME MINISTER TO LONDON

1. AS INSTRUCTED ORALLY, I CALLED O RUGGIERO, DIPLOMATIC N ADVISER TO THE ITALIA!! PRIME MINISTER, AND CONVEYED A'-' ORAL INVITATION F O M S THATCHER F R SIGNCR ANDRF.OTTI TO VISIT R M R O LONDON O FRIDAY, 15 JUNE, F R TALI'S LASTING A H U AND A N O N OR HALF IN THE MORNING, FOLLOWED BY LUNCH. I STRESSED THE IMPORTANCE l-HICH THE PiMf'E MINISTER ATTACHED TO A EARLY MEETING WITH N SIGNOR ANDREOTTI IN THE CONTEXT N T ONLY O THE FORTHCOMING O F F U EUROPEAN CTU CIL BUT O O R BILATERAL RELATIONS. RUGSIERO SAID HE SUPPOSED THE TALKS V/CULD START ABOUT 11.3" A M A D I AGREED. SIGNOR ANDREOTTI HAS ACCENTED THIS INVITATION N WITH G I F T PLEASURE A D DID S WITHIN A HOUR. N O N
M

P. THE ITALIANS BELIEVED THAT THERE MIGHT HAVE BEEN S 0 * ' g POSSIBILITY O A VISIT B YOURSELF TO ROME IN THIS PERIOD. F Y I HAVE TOLD THE" THAT THIS IS NOT BEING PROPOSED. I SAID THAT IF SIGNOR ANDREOTTI WISHED TO TAI'E SIGNOR FORLANI WITH HIM TO LONDON I HAVE N DOUBT THAT H WOULD BE VERY WELCOME, O E BUT BOTH RUGGIERO AND SIGNOR FORLANI S PRIVATE SECRETARY HAVE M D IT CLEAR THAT THIS !S MOST UNLIKELY* AE
V

3. IN CONVEYING SIGNOR ANDREOTTI S ACCEPTANCE RUGGIERO ASKED THAT N INFORMATION SHOULD BE GIVEN TO THE PRESS ABOUT THE VISIT O A YET. I SHOULD BE GRATEFUL FOR INSTRUCTIONS IF POSSIBLE BY S LUNCHTIME ON -0 JUNE ABOUT THE FOR", AND DATE YOU PRO'OSE F R ANY O ANNOUNCEMENT, S THAT THESE CAN BE DISCUSSED WITH RUGGIERO. O

F O PSE PASS SAVING ADDRESSEES C

GO IS N OD O

NN
NN

F o r e i g n and C o m m o n w e a l t h London SWIA

Office

2AH

7 June 1979

M a r t i n V i l e , Esq
Cabinet O f f i c e

^ c r tfotL,
SIGNOR ANDREOTTI'S V I S I T TO LONDON: 15 JUNE 1 9 7 9
1. S i g n o r A n d r e o t t i has a c c e p t e d t h e P r i a e Minister's
i n v i t a t i o n t o v i s i t London f o r a s e s s i o n o f t a l k s followed
by l u n c h o n 15 J u n e . O u r Embassy i n Rome t h i n k t h a t he
w i l l o n l y b r i n g a f e w o f f i c i a l s w i t h h i e : i n p a r t i c u l a r ,
Sgr F o r l a n i , t h e p r e s e n t F o r e i g n M i n i s t e r , i s u n l i k e l y t o
be a b l e t o c o n e .
2. The p u r p o s e o f t h e v i s i t f r o m t h e B r i t i s h p o i n t o f v i e w
w i l t b e t o e s t a b l i s h c o n t a c t w i t h t h e I t a l i a n s a t t h e
h i g h e s t l e v e l i n advance o f t h e meeting o f t h e European
C o u n c i l o n 2 1 / 22 J u n e , a n d t o p u t a c r o s s t h e B r i t i s h
case on t h e m a j o r i s s u e s w h i c h w i l l a r i s e a t t h a t m e e t i n g .
But i t w i l l a l s o p r o v i d e a u s e f u l o p p o r t u n i t y t o t a k e
s t o c k o f t h e p r o s p e c t s f o r t h e T o k y o Summit a n d i n t h a t
context t o discuss i n p a r t i c u l a r t h e i n t e r n a t i o n a l energy
p r o b I em.
3. I n t h e s e c i r c u m s t a n c e s we t h i n k , a f t e r c o n s u l t i n g
the Embassy a t Rome, t h a t o n l y t h e f o l l o w i n g b r i e f s w i l l
be r e q u i r e d :
i. i i . Steering brief European Coaaunity A f f a i r * ( t u b - d i v i d e d brief provided f o r the Prlae Minister's ii. P r o s p e c t s f o r t h e Tokyo S u a a i t .
Iv. I n t e r n a t i o n a l Energy q u e s t i o n s
v. Refv;*es f r o a Indo China
vi African q u e s t i o n s (defensive)
v i i B i l a t e r a l quest ;ns (defensive)
v i i i I t a l i a n I n t e r n a l Scene

as i n t h e v i s i t t o Paris)

Given t h e shortage of time O f f i c e w i l l , i f you agree, d r a f t these w i t h o t h e r i n t e r e s t e d d e p a r t m e n t s . I should

t h . S T* u S " * b e

also

/grateful

CONFIDENTIAL

CONFIDENTIAL

g r a t e f u l 11 y o u w o u l d c o n f l r e a t s o o n a a p o s s i b l e the p r e c i s e d e a d l i n e f o r t h e s u b m i s s i o n o f the-w b r i e f s .

R A Burns PS/PUS ccs: PS/Sir Douglas HN T r e a s u r y Wass

P S / S i r J a c k Rasipton Dept o f E n e r g y PS/S1r P e t e r Carey Dept o f I n d u s t r y PS/Sir Kenneth Dept o f T r a d e Clucaa

N D N F r a n k l i n E s q CB Cabinet Office B G Cartledge, 10 Esq

CMC

No

CONFIDENTIAL

CONFIDENTIAL

F o r e i g n and C o m m o n w e a l t h London SW1A 2 A H

Office

6 June 1979

P o s s i b l e Meeting w i t h t h e I t a l i a n L e a d e r s Before European C o u n c i l

In t h e l i g h t o f your l e t t e r o f l^Jtfne, Lord C a r r i n g t o n
has been c o n s i d e r i n g t h e b e s t way o f p u t t i n g our c a s e on
the Community Budget over to t h e I t a l i a n s b e f o r e the meeting
of t h e European C o u n c i l .
U n f o r t u n a t e l y , a l t h o u g h he would have l i k e d to v i s i t
Rome h i m s e l f f o r t h i s purpose, i t i s now not p o s s i b l e f o r him
to do so. But i n view both o f t h e importance o f t h e I t a l i a n s
to us a s a l l i e s on t h e budgetary i s s u e and o f t h e i r p o s s i b l e
s e n s i t i v i t y a t being l e f t o u t of t h e Prime M i n i s t e r ' s f i r s t
round o f c o n t a c t s w i t h European l e a d e r s , he b e l i e v e s t h a t i t
would be v e r y h e l p f u l to t h e p r e p a r a t i o n of o u r c a s e i f t h e r e
c o u l d be an exchange of views a t t h e h i g h e s t l e v e l . He wonders,
t h e r e f o r e , whether t h e Prime M i n i s t e r , d e s p i t e h e r v e r y heavy
programme, c o u l d s p a r e time to i n v i t e S i g n o r A n d r e o t t i to v i s i t
London b r i e f l y between 11 and 21 June. On t h e model of t h e
Prime M i n i s t e r ' s v i s i t to P a r i s , such a v i s i t need o n l y comprise
say one and a h a l f hours' working s e s s i o n f o l l o w e d by a
working l u n c h . Although EEC i s s u e s would be the main t o p i c
of d i s c u s s i o n , i t would a l s o be an o p p o r t u n i t y to hear a t f i r s t
hand from S i g n o r A n d r e o t t i how he s e e s t h e p r o s p e c t s f o r I t a l y
in the l i g h t of the e l e c t i o n r e s u l t s .
The Embassy i n Rome t h i n k t h a t S i g n o r A n d r e o t t i would s h a r e
our view on t h e importance o f an exchange w i t h t h e Prime
M i n i s t e r b e f o r e t h e European C o u n c i l Meeting. Although he
might be a l i t t l e d i s a p p o i n t e d a t not being a b l e to welcome h e r
i n Rome, he would o b s e r v e t h a t o f t h e two major Community
l e a d e r s w i t h whom s h e had had meetings, one had a l r e a d y come
to London, and he i s not t h e s o r t o f man t o worry about who
f o r m a l l y s h o u l d go to whom next. Even i f , i n t h e d i f f i c u l t
p e r i o d f o l l o w i n g t h e I t a l i a n e l e c t i o n s , he i s i n t h e event unable
to g e t away, t h e Embassy t h i n k he would much p r e f e r t o r e c e i v e
an i n v i t a t i o n than not to do so a t a l l . I t might be p o s s i b l e ,
i f t h e Prime M i n i s t e r a g r e e s , t o i n d i c a t e t h a t Mrs T h a t c h e r would
hope l a t e r on t o pay a r a t h e r l o n g e r v i s i t to Rome, a s suggested
i n your l e t t e r o f 1 June.
F i n a l l y , i f a meeting between t h e two Prime M i n i s t e r s i s
not p o s s i b l e , Lord C a r r i n g t o n f i r m l y i n t e n d s to a r r a n g e f o r a
t a l k with the I t a l i a n Foreign M i n i s t e r himself.
I am sending a copy o f t h i s l e t t e r to M a r t i n V i l e (Cabinet O f f i c e ) .

B G Cartledge Esq 10 Downing S t r e e t

(P L e v e r )
Private Secretary
CONFIDENTIAL

rnw finFNTiAi

4
1 0 DOWNING STREET
From the Prixate Secretary

1 June 1979

Possible v i s i t

bv t h e Prime M i n i s t e r t o Rome

Thank you f o r your l e t t e r o f 22 May, i n which you conveyed

the F o r e i g n and Commonwealth S e c r e t a r y ' s recommendation t h a t t h e
Prime M i n i s t e r s h o u l d pay a s h o r t v i s i t t o Rome b e f o r e t h e m e e t i n g
of t h e European C o u n c i l a t S t r a s b o u r g on 21/22 J u n e .
The Prime M i n i s t e r h a s now c o n s i d e r e d your l e t t e r . She f i n d s
t h a t h e r v e r y heavy engagements between now and t h e E u r o p e a n
C o u n c i l m e e t i n g would p r e v e n t h e r from v i s i t i n g Rome f o r more than
and s h e c o n s i d e r s t h a t i t would be wrong
t h r e e or four hours; t o pay h e r f i r s t o f f i c i a l v i s i t t o Rome w i t h o u t h a v i n g s u f f i c i e n t
time t o c a l l on t h e Pope i n a d d i t i o n t o h a v i n g t a l k s w i t h t h e
I t a l i a n Prime M i n i s t e r and h i s c o l l e a g u e s . I n the circumstances,
t h e r e f o r e , t h e P r i m e M i n i s t e r h a s d e c i d e d t h a t s h e must d e f e r
I s h o u l d be g r a t e f u l
h e r v i s i t t o Rome u n t i l l a t e r i n t h e y e a r . i f you would l e t me know i f L o r d C a r r i n g t o n i s , i n t h e eve>;t, a b l e
t o v i s i t Rome h i m s e l f i n t h e n e a r f u t u r e , a s s u g g e s t e d i n t h e
l a s t p a r a g r a p h o f your l e t t e r .
I am s e n d i n g Office).
a copy o f t h i s l e t t e r to Martin Vile (Cabinet

B. G CARTLF.DGE .

Paul Lever, Esq.,

F o r e i g n and Commonwealth O f f i c e .

rAMCinCMTIAl

END