Europe waits on Schmidt, Thatcher, Giscard to get their act together

Britain's conflict with other members of the European Community (EC) over budget payments is beginning to highlight an important truth about the political condition of Europe in general: Unless and until Britain, West Germany, and France can act in a reasonably concerted way, they and the rest of the Community will pay dearly.

This harsh reality emerged from talks between British Prime Minister Margaret Thatcher and West German Chancellor Helmut Schmidt. Their talks at Mrs. Thatcher's country residence revealed that Germany can go only part of the way to heal the breach that has opened up between London and Paris about the objectives of the EC in the political and economic fields.

Mrs. Thatcher had hoped Mr. Schmidt could carry a vital message to French President Valery Giscard d'Estaing: that Britain finds it imperative that a formula be found to change the system whereby it is the largest net contributor to the Community's budget.

But the German leader from himself caught in the role of honest broker. Under the Franco-German agreement he must give primary importance to Bonn's relations with Paris.

For Mrs. Thatcher such an outcome could spell political disaster. Last week her Chancellor of the Exchequer Sir Geoffrey Howe presented a budget aimed at laying the basis for Britain's long-term economic recovery. But government insiders say Sir Geoffrey's calculations could be made irrelevant if tensions between Britain and its European partners are not resolved.

At their talks last week Mrs. Thatcher and Mr. Schmidt agreed that it was vital for the Community to end the lengthening dispute over Britain's budget payments. They also found common ground on the need for Britain and France to stop scrapping over the alleged British intention to undermine the common agricultural policy. by all accounts the British and West German leaders hit it off well together, whereas the French President is said to resent Mrs. Thatcher's political style.

Even if there is no personal animosity between Mrs. Thatcher and Mr. Giscard, the latter cannot allow himself to appear sympathetic to British demands lest his own Gaullist opponents attack him for weakness.

The result is a dual polarity in the overall relationship of the three countries. Germany gets on reasonably well with Britain and is on good terms with France. But France and Britain are at odds.

As Mrs. Thatcher and Mr. Schmidt talked, diplomats noted the penalty Europe is having to pay for the persisting tensions:

* Progress toward political and economic unity is impeded, with consequent doubts about the effect Greek accession to the Community next Jan. 1.

* Britain's potential as a strong European trading partner is curbed. The government's plan, highlighted by Sir Geoffrey's budget, to apply financial stringency while a basic economic retructuring takes place over the next four or five years is made to look dubious.

* The voice of Europe on international questions, such as the crises in Iran and Afghanistan, is muted, with unwelcome consequences for the United States.

At present Europe is awaiting a new date for the postponed EC summit meeting, which was to have considered Britain's budget demands. Chancellor Schmidt is thought to be trying to devise a package deal that would give Mrs. Thatcher a large part of what she is asking on the Brussels budget but at the same time protect essential French interests.

With general elections due in both France and West Germany later this year, Mr. Schmidt has little room for maneuvering. But he is said to be convinced that a longer term answer to Europe's current tensions is a solution that binds London, Paris, and Bonn together in an overall political accord.

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