Kohl's Plea for EU Relief Puts Britain in a Tight Spot

Strategic Insights -

As Chancellor Helmut Kohl asks for relief from Germany's massive net payments into the European Union budget, Britain faces a dilemma. Kohl's plea is as serious and well-founded as Mrs Thatcher's demands almost 20 years ago. Britain must navigate two problems: the fear that any fundamental reassessment will put its special deal at risk, and the clash of interests with Germany over what Europe's money is spent on.

Key Takeaways:

  • Germany's proposed new payments system, which would scrap the current mix of VAT receipts and tariffs, would lead to Britain paying even less than it does now.
  • Britain's strategy to nudge apart the Franco-German axis faces severe tests, particularly with the upcoming election of a new German chancellor.
  • Issues such as the Common Agricultural Policy, the EU's Structural Funds, and Turkey's EU membership are looming where British and German interests are set to clash.
  • Britain is fighting to ensure Northern Ireland and the Highlands and Islands continue to receive full Objective One status.
  • Chancellor Kohl's support for the principle of "subsidiarity" is at odds with Britain's interest in strengthening pro-competition work by Brussels.
  • The likeliest outcome of the German elections is a grand coalition, which will keep the problem of German farmers and corporations alive.
  • A new Anglo-German entente will prove hard to achieve.

Statistics:

  • 40% of the EU budget goes on farming.
  • 30% of the EU budget is spent on Structural Funds.
  • 2 million Turks live in Germany.
  • 75% is the EU's poverty criterion for the per capita GDP.

Sources:

  • [The Financial Times, July 1, 1998]
  • [The Guardian, June 10, 1998]