Study On British Problem With The European Community Budget

As an established nation in Europe, Britain always has an important say in terms of European affairs. However, being excluded from the initiators of European Integration Movement, Britain doesn't enjoy the duly status and interest according to its strength after its entry into the European Community (EC). Thus, conflicts between Britain and the rest of Europe have been created. Among them, the representative one is Britain's problem with EC budget. This thesis aims at expounding the interest relation between Britain and the rest of the EC through the analysis of the Britain budget.Because EC insisted that the basic principles be nonnegotiable, Britain on its entry had to accept the Common Agriculture Policy and Budget System which are unfavorable for its national interests, thus becoming a big contributor of EC. Under the impact of economic crisis, Britain didn't make the prospective profits, which highlighted the heavy burden put on Britain by the huge expense of contribution and led to the escalation of Britain's dissatisfaction for EC into a violent conflict during Prime Minister Thatcher's term of office. The balance of interest was finally achieved after the Chateau de Fontainebleau European Council through rounds of confrontations.In essence, the prolonged struggle between Britain and the rest of Europe is the inevitable consequence of the interest dispute among EC. France as a representative of the agrarian countries impedes the process of policy reform of EC in order to protect their vested interest. As a result, it was made difficult for Britain to seek for an ultimate solution for its budget problem. So budget bailout became the only form for the adjustment of their interest.The thesis is divided into five parts. Chapter one points out that the exclusion of Britain from the initiator position in the European Community prevented its participation into the EC's negotiation on various major political setups and thus impinging upon the realization of Britain's special interest. After WWII, Britain was once excluded from the European Integration Movement. However, Britain's decline in strength made EC a must. Although EC's basic structure was founded under integration notions different from the British ones, the Hiss government still accepted the terms without being entangled on details despite their deviation from Britain's demand. According to the regulations of EC's general agricultural policy and budget policy, Britain without a doubt will be put at the position with high contribution share and low earnings. The huge gap between income and expenditure made Britain a predictable major contributor.Chapter two illustrates that the British-European renegotiation mainly aims at quenching the questions within Britain about its entry into EC. Therefore, the amendment of the budget policy didn't meet the expected goal. A rectifying mechanism was put into effect for Britain by adding new terms through renegotiation. That is, Britain's budget inequality is compensated in a form of contribution refunding which is not only complicated to calculate but never put into effect, thus becoming a mere comfort for Britain.Chapter three outlines the background under which Britain called for the second amendment of the budget policy. Britain's transitional period ended in 1980 when Britain started to fully assume its share of EC's budget contribution. This means that Britain had to turn over more contribution without getting much of the fund of EC. After the Conservative Party won the election in 1979, in order to cope with the economic pinch in Britain Prime Minister Thatcher launched the drastic reform on the basis of monetarism comprehensively contracting the boundary of state interference. Contradictions occurred between Britain's huge expenditure in EC and its undergoing reformative policy of fiscal restraint, which requires that British government adjust its financial policy towards EC. In the mean time, Mrs. Thatcher was dissatisfied with the supranational mechanism in EC hoping that the EC policy could be reformed through the resolution of budget problem and Britain would"be conceived as a strong and active role within EC."Chapter four elaborates the process of seeking for the balance of interest between Thatcher government and EC. The British-European second amendment of British budget problem could be divided into three stages.From 1979 to 1981, a temporary compromise was reached between Britain and the rest of Europe. Mrs. Thatcher pointed out that Britain was at an unequal position in EC and therefore asked their"own money"calling for a reasonable arrangement of budget share while the other EC member states were discontented with Britain's overriding the common interest with its domestic interest and only agreed on offering Britain a short-term rebate. It resulted in the difference between the two sides on how to resolve the Britain's budget difficulty. Britain adopted the strategy to hold back the price raise of EC's agriculture products thus leading to a three-year plan of resolution.In 1982, Britain lost its veto power and was put into a disadvantageous position. During the outbreak of Falklands War, instead of repaying other EC member states'support, Britain continued to apply its veto power upon the price raise of agricultural products in order for its budget problem to be solved. This act of Britain irritates other member states; they virtually nullified Britain's veto power through majority voting. Britain therefore had to accept a one-year agreement lower than expectation.From 1983 to 1984, EC decided to restart the integration process under the boost of France and Germany. This time, Britain's budget problem, as the core and thorn of EC's fiscal problem, actually became the common problem. Britain was faced with both opportunities and pressure. The Solemn Declaration on European Union proclaims EC's aspiration and faith of progress. To achieve the new objective, EC must offer solutions to various accumulated economic problems, which brought about a favourable turn for Britain. But meanwhile, Britain, with its budget as the focus of EC's fiscal problem, blocked the way for EC to develop. If Britain didn't give any ground, it was most likely that Britain would be deserted by EC. Pushed by the common political will, Britain and EC both made some compromise after bouts of struggle. The final compromise was reached at the Chateau de Fontainebleau European Council and the balance of interest was achieved.The author points out in conclusion that the protracted dispute between Britain and EC is an inevitable outcome of their scramble for interest. Britain as a world power was reluctant that its special interests were not displayed while nations like France and Germany spared no effort to defend their vested interests, which resulted in various conflicts mainly reflected by the contention on the budget Britain's budget problem experienced stages from entry into negotiation and renegotiation to a generally satisfying result within Prime Minister Thatcher's term of office. However, this is no more than a dynamic balance of interest instead of a radical solution to Britain's problems in the EC budget.