Europe pulls itself back from brink

Europe has pulled itself back from brink of both financial and political bankruptcy. Meeting here Tuesday in a sumptuous 16th-century chateau just south of Paris, the European Community's 10 heads of state finally resolved the contentious dispute over Britain's budget contribution.

British complaints that they were paying too much to subsidize continental agriculture had deadlocked the last three European summits - bringing the Community close to running out of money with which to pay for its programs.

The agreement ensures not only the Community's financial stability, but also its morale. Since entering 12 years ago, Britain has never felt comfortable within the European confines.

European unity is crucial for the entire Atlantic. Constant bickering over money, however, had fueled public dissatisfaction with the Common Market - feeding doubts here and in the United States about the Community's strength.

This point was underlined gently by a phone call during the summit from President Reagan to French President Francois Mitterrand, the present holder of the revolving Community leadership. French officials said Mr. Reagan had called to say how much he had appreciated Mr. Mitterrand's handling of talks with Soviet leaders in Moscow last week.

The other European leaders also expressed approval of Mr. Mitterrand's firmness on human rights and East-West issues.

''We can finally talk about these big questions about East-West relations,'' said an exultant French spokesman, Michel Vauzelle, in announcing the agreement.

''It was impossible to consider relaunching the Community while the contentious British issue (on their budget contribution) preoccupied us. Finally , the thing is over.''

The Fontainebleau summit showed that Europe's leaders could muster the political will to compromise when necessary. And they agreed on more than mere tough words for the Soviets, but on difficult, costly actions.

The nine continental members dug into their pockets to refund $800 million of Britain's contribution this year. They also agreed to shrink London's Community deficit in the future by about two-thirds.

In return, British Prime Minister Margaret Thatcher agreed to raise Community sales taxes from 1 to 1.4 percent.

This means that while considerable progress has been made in holding down agricultural subsidies - the main burden on the Community coffers - considerable farm spending remains.

The Community also recognized West Germany's special problems. German farmers were hurt most by the particular formula agreed on to cut farm spending, so Chancellor Helmut Kohl demanded (and was subsequently granted) permission to offer special subsidies to this constituency.

Moreover, Mr. Kohl was assured that he would not have to support the entire burden of paying for the British rebate. Bonn already spends the most to keep the Community afloat, and demanded a limit to its contribution. In general terms , such a limit was designed.

All this represents a huge success, but not total salvation. Public discontent with the Community is evident. Recent polls in Britain show that nearly half the population believes the EC is a failure.

Last week's elections for the European Parliament demonstrated that the rest of the Continent has similar doubts. An estimated 40 percent of the voters did not bother to participate in the elections. Moreover, when they did cast their ballots, they voted on domestic issues, not European ones.

The Fontainebleau meeting will not dissolve all these doubts. While Europe can once again talk about being a Common Market, its leaders realize that much more cooperation is needed for the Community to forge the greater political, economic, and social cooperation necessary in the future.

Before the summit opened, French President Francois Mitterrand had expressed the hope that the leaders would ''relaunch'' Europe by making progress on such large issues as Spanish and Portuguese membership in the EC, greater industrial cooperation and use of pan-European currency, and the construction of a European space station for defense.

The French President again advanced a proposal, made in a speech last month before the European Parliament in Strasbourg, for a conference to draft an ambitious new treaty on continental cooperation. But the leaders could not get much beyond discussing money - and even then, they were more agreed on wanting to limit spending than increasing it on new programs.

Negotiations on Portugal's entry were reported to be advancing well, but problems remain with Spain's application, mainly over the impact on northern European farmers of cheap Spanish fruits and vegetables.

Ambitious industrial and political ideas also made little progress. When Mitterrand tried, at first, to cut short discussion of the British budget problem, British spokesman Bernard Ingham remarked angrily, ''It's difficult to envision these grandiose ideas when the Community has no sound financial basis.''

The French are deadly serious to overcome this British reticence - and sense of humor. Until yesterday's agreement, they have been suggesting that a ''Europe of two speeds'' be created, pooling together those countries that want to integrate faster, and leaving those that would like to go slower. Essentially, this would have meant relegating Britain to the sidelines.

In the end, though, the French realized that they must take into account that British entry has been made.

Most of all, the recent bickering over the British contribution showed that London's consent is needed. As the dispute dragged on, the French and Germans lined up against Prime Minister Thatcher. But the British leader did not budge - and in the end, Paris and Bonn could not just dump her.

At the same time Mrs. Thatcher had to brave the anti-European British public, and place her country firmly in the European camp. She did this at Fontainebleau.

''This is a good deal for Britain,'' she concluded. ''It means that the way is now clear to press ahead with the development of the Community.''

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