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THE EUROPEAN COUNCIL

DUBLIN29-30 NOVEMBER 1979

Documents in the dossier include:

The European Council in DublinReproduced from the Bulletin of the European Communities, No. 11/1979

Conclusions of the European Council on November 29 and 30 in DublinEuropean Community News No. 43/1979European Community Information Service

Washington DC

1. European Council

in Dublin

1. The European Council met in Dublin(Ireland is in the chair for the second half ofthis year) on 29 and 30 November. It waspresided over by Mr Lynch, the Irish PrimeMinister, and attended by one Head of State(Mr Giscard d'Estaing) and the Heads ofGovernment of the eight other MemberStates; they were accompanied by the ForeignMinisters of the Nine. The Commission wasrepresented by Mr Jenkins and Mr Ortoli.

The main item on the agenda was 'converg-ence and budgetary questions , encompassingthe British demand for a cut in its net con-tribution to the Commupity budget and theItalian demand for greater balance betweenthe different Community policies. No sub-stantive agreement was reached on theBritisch demand, which dominated the dis-cussions, although attempts at conciliationwere made by certain Heads of Governmentand the Commission had made proposalsaimed at finding a middle way. But the meet-ing did finally close on a note of compromisewith all parties agreeing on a course ofaction.

The Commission was requested, to quotefrom the Conclusions of the Presidency, 'pursue the examination of proposals fordeveloping supplementary Community mea-sures within the United Kingdom which willalso lead to a greater participation by theUnited Kingdom in Community expenditure.The Commission is asked to make proposalswhich will enable the Council of Ministers topursue the search for appropriate solutions tobe reached at the next meeting of the Euro~

pean Council. The President of the Councilwill convene the European Council as soon asthe conditions for such a meeting have beenfulfilled. '2

The economic and social situation-with par-ticular reference to the outlook for the Com-unity economy, to unemployment, to the

Bull. EC 11- 1979

Dublin European Council

application of new computer technologies, totelecommunications (compunication) andtheir implications for the European economy-and the world energy crisis were onceagain high up on the agenda. Of particularnote in the Conclusions of the Presidency are

the passages on the establishment of the

European Monetary Fund and the formula-tion of Commission proposals for more inci-sive action to combat unemployment. Thepassage on energy, however, is vague and is apoor reflection of the far-reaching discussionon this subject by the Heads of Government.

Other items on the agenda included thereport of the Committee of Wise Men onadjustments to the machinery and proceduresof the Community institutions3 (to be looked

at in greater detail at the next EuropeanCouncil) and the reports on European Unionby the Foreign Ministers and the Commis-sion.4 The Commission s proposalss for tight-

ening up the regulation of agricultural mar-kets in general and the milk market in par-ticular were also discussed.

Two official statements, one on Iran and theother on Kampuchea, were published at theend of the meeting along with the traditionalConclusions of the Presidency.

The Commission had prepared the groundfor the European Council with the customaryset of communications on the main items onthe agenda-convergence and budgetaryquestions, energy, the economic situationadjustments to the common agricultural pol-icy designed to improve the balance betweel1

the different markets, data technology and

European Union.

I Point 3.

, Point 1.1.7.Points 1.5. 1 and 1.5.

4 Supplement 9/79 Bull. Ec., Points 1. 1 to 1.2. 10.


Outcome of the European Council

2. The main results of the discussionsby the Heads of State or of Government arerecorded in the now traditional Conclusionsof the Presidency released at the end of the

Dublin European Council.

Conclusions of the Presidency

1.3. The Conclusions of the Presidencyare reproduced below.

Economic and social situation

Prospects for the Community economy

1.4. 'The Heads of State or Government dis-cussed developments in the Community economyand prospects for 1980, particularly in the light ofthe deflationary effects of the oil price increases.

They recognized that despite the progress achievedby the coordinated economic approach agreed atthe European Council in Bremen ' the objectives

sought, particularly maintaining growth and com-bating inflation, had not been achieved in full.

In an effort to overcome the current economic dif-ficulties a common approach continues to beessential. PrioritY must be given to combating in-flation. This is, in the medium and long term, a

condition for solving the problems of growthstructural change and hence employment. Theexistence of the European Monetary System alsounderlines the necessitY for a coordinatedapproach in tackling the balance of paymentseffects of the new oil price rises. The fight againstinflation and unemployment should not be mademore difficult through attempting to compensateby increases in money incomes for the real transferof purchasing power which has taken place to theoil-producing countries.

Moreover, monetary policy should continue forthe time being to support efforts to counter infla-tion. Modernization of and investments in Com-


munitY industry must continue to enable it toadapt more quickly to new patterns of demand.

The present difficulties require an improvementcoordination of the economic and monetarypolicies of Member States. With this in mind, theEuropean Council confirms its intention to set upthe European Monetary Fund in accordance withthe timetable envisaged. To this end, the EuropeanCouncil invites the Commission to submit, for itsnext meeting in March 1980, a report setting out

the progress made in this field and the difficultiesencountered. Furthermore, the present difficultiesrequire that the CommunitY continue to pursue acommon approach in conjonction with otherindustrialized countries. The European Councilreaffirmed its determination to conduct economicpolicies in line with the principles and strategyagreed at the European Council in Strasbourg.

Even with the downturn in the internationaleconomy the Community is expected to achieve atleast a moderate rate of growth next year, andmay avert acceleration in the rate of inflation.

The employment problem

5. The European Council discussed the seri-ous unemployment situation in the CommunitY.They agreed that the continuation and intensifica-tion of national and CommunitY efforts toimprove economic structures, primarily throughincreased investment, was of fundamental import-ance.

A more coordinated approach to employmentproblems should be defined. The European Coun~cil accordingly requests the Commission to submitproposals on specific measures which could beframed to promote more incisive CommunitYaction to deal with the unemployment problem.

The European Council noted the .recent adoptionby the Council of Ministers of a Resolution on thereorganization of working time' and asked the

I The numbering at the beginning of each main headingof the Conclusions of the Presidency has been added bythe editorial staff of the Bulletin for ease of reference.

Bull. EC 6-1978 , point 1.5.3 Bull. EC 6-1979, point 1.1. 13.

Point 2. 1.41.

Bull. EC 11-1979


Commission to pursue their consultations with theSocial Partners.

Teleptatics

6. The European Council discussed the ques-tions raised in a Commission communicationdrawing attention to the importance of data tech-nologies both for European industry and societY.The European Council took note of the recom-mendations of the Commission and invited theCouncil (Foreign Ministers) to study a commonstrategy for the development of these technologiesin Europe.

Convergence and budgetary questions

7. The European Council held an exchangeof views on convergence and budgetary questions.They reaffirmed the conclusions reached at theirmeetings in Brussels' and Paris' that achievementof the convergence of economic performancesrequires measures for which the Member Statesconcerned are primarily responsible, that Com-munitY policies can and must playa supportingrole within the framework of increased solidaritYand that steps must be taken to strengthen theeconomic potential of the less prosperous coun-tries of the CommunitY.

To these ends the European Council expressed itsdetermination to promote the adoption of mea-

sures to improve the working of CommunitYpolicies, the reinforce those policies most likely tofavour the harmonious growth of the economies ofthe Member States and to reduce the disparitiesbetween these economies. They further declaredthe need, particularly with a view to the enlarge-ment of the CommunitY and necessary provisionsfor Mediterranean agriculture, to strengthen Com-munitY action in the structural field.

The European Council has carried out a thoroughexamination of the problem of the British con-tribution to the CommunitY budget.

It was agreed that the Commission s proposals

concerning the adaptation of the financial mechan-ism could constitute a useful basis for a solutionwhich would respect CommunitY achievement and

Bull. EC 11- 1979


solidarity. This solution should not result in rais-ing the 1% VAT ceiling.

In addition, the Commission is requested to pursuethe examination of proposals for developing sup-plementary CommunitY measures within theUnited Kingdom which will contribute to greatereconomic convergence; and which will also lead toa greater participation by the United Kingdom inCommunitY expenditure.

The Commission is asked to make proposalswhich will enable the Council of Ministers to pur-sue the search for appropriate solutions to be

reached at the next meeting of the EuropeanCouncil. The President of the Council will convenethe European Council as soon as the conditionsfor such a meeting have been fulfilled.

8. The European Council recognized theneed to reach rapid CommunitY solutions to theproblems of fisheries, energy and organization ofthe market in sheepmeat within the framework ofthe principles laid down in the TreatY.

Energy

9. The European Council discussed the worldenergy situation, which remains very serious. Inview of renewed price increases, continuing uncer-tainties about supply and production, and thechanging structure of the world oil market, the

European Council considers that efforts must bemade both by producing and consuming countriesto create greater stabilitY. In the light of theseneeds the CommunitY for its part must nowdevelop a more effective energy policy.

The European Council requests the Council ofEnergy Ministers at its meeting on 4 December totake a final decision on national import objectivesfor 1980.'

The European confirmed its resolve to developindigenous energy resources, particularly coal

I Point 2.1.21.Bull. EC 12-1978, point 1.1.11 (B).

3 Bull. EC 3-1979, point 1.1.. Point 3.4.

, This has now been done.


nuclear and hydrocarbons and to promote theresearch and development programmes in theenergy field with particular regard to renewable

energy sources.The European Council concluded that, as energyproblems affect all countries in the world, no last-ing solution of these problems can be achievedwithout closer understanding and cooperation bet-ween the industrialized, the oil-producing and thenon-oil developing countries. Efforts should bemade to promote discussion with oil-producingcountries with the object of adopting policies inboth consumer and producer countries whichwould allow the transition to a better marketequilibrium without serious damage to theeconomy of the world as a whole. The EuropeanCouncil considers it most desirable that significantand rapid progress be made in all internationalforums where energy is discussed, i.e. the UnitedNations, QECD (lEA) and the Economic Commis-sion for Europe, with a view to establishing a con-sensus and cooperation the adjustments requiredby the changing situation in the world.

Reports on European Union

10. The European Council received andnoted the reports by the Foreign Ministers ' and theCommission on the progress achieved towardsEuropean Union in the past year. The EuropeanCouncil noted the importance of developments in

the past year towards the achievement of Euro-

pean Union and in particular:the signature of the Instruments of Accession

of the Hellenic Republic of the European Com-munities;

the establishment of the European MonetatYSystem;

the direct elections to the European Parlia-ment.

The European Council affirmed the importance ofthese concrete steps in demonstrating the Com-mities ' commitment to proceed towards and tocreate the conditions for further progress towardsan ever closer Union among the peoples of Europe.

The European Council decided that, as hasbeen done previously, these Reports shouldbe published in an appropriate form.


Report of the Committee.of Wise Men

1.11. The European Council warmly thankedthe Committee .of Wise Men for the timely presen-tation of its valuable report' on adjustments to themachinery and procedures of the CommunitYinstitutions, prepared in discharge of the mandategiven by the European Council in Brussels inDecember 1978.

The European Council asked the Foreign Ministersin the appropriate framework to examine . thereport with a view to preparing the discussion

the next meeting of the European Council.

The European Council decided to publish thereport and agreed that the President of the Councilwould transmit a copy of the report to the Presi-dents of the other institutions for information.'

Statements on Iran and Kampuchea

12. Two statements, one on Iran andone on Kampuchea (Cambodia), adopted bythe Heads of State and Government afterdebating the problems arising from the situa-tions in the two countries, were also pub-

lished at the close of the Dublin meeting.

13. The European Council also adopted thefollowing statements on Iran and Cambodia:

Iran

14. ' 1. The Heads of State or Governmentand the Foreign Ministers of the Nine, meeting inthe European Council, considered the grave situa~tion created by the occupation of the Embassy ofthe United States in Tehran and the holding of

I Point . 1 and Supplement 9/79 Bull. Ee., For a summary of the report, produced by the Com-mittee, see points 1.5. 1 and 1.5.2.

Bull. EC 12-1978 , point 2.

Bull. EC 11-1979


members of its staff as hostages in flagrant breachof international law.

2. The European Council strongly reaffirmed thestatement which was issued by the Foreign Minis-ters of the Nine at their meeting of 20 Novemberin Brussels. ' It is fundamental that diplomatic mis-sions should be protected. The failure to upholdthis principle and the taking of hostages to exertpressure on Governments are totally unacceptable.It is the dutY of all Governments to opposeenergetically such a breach of international law.

3. The Nine Member States of the EuropeanCommunitY fully respect the independence of Iranand the right of the Iranian people to determinetheir own future. They are conscious of theimportance which the Iranian peopleattac.:h to thechanges which have taken place in thei, country.But in the same measure as they respect the rightsof Iran they call on Iran to respect fully the rightsof others and to observe the established principlesthat govern relations between States. Respect forthese principles is essential to the effort to secure

order and justice in int'~rnational relations, whichis in the interest of all States including Iran.

4. The Governments of the Nine, supported bypublic opinion in their countries, expressed in par-ticular by the European Parliament, solemnlyappeal to Iran to respect these fundamental rightsand duties so long established in international law.They urge most strongly that the Iranianauthorities take action immediately to release thehostages in complete safetY and allow them return to their own country.

Cambodia

15. ' 1. The European Council expressed itsdeep concern at the tragic situation in Cambodia.

2. It recalled that the European CommunitY andits Member States are contributing substantially tointernational relief efforts now under way. Itemphasized the urgent need to ensure that interna-tional efforts to bring humanitarian relief to thosein need in Cambodia and to Cambodian refugeesin Thailand will be fully effective. It appeals to allthose in a position to help and in particular to theparties most directly concerned to ensure thathumanitarian relief will reach those in need.

Bull. EC 11- 1979


3. It expresses its particular concern regardingthe dangers confronting the refugee camps on theThai-Cambodian border as a result of the continu-ing hostilities.

4. In the view of the Governments of the Nine asolution of the wider problems which confrontCambodia should be .based on an independent andneutral Cambodia, with .a genuinely representativegovernment, free from any foreign military pre-sence and maintaining friendly relations with allthe countries of the region.

Statements and comments

16. The ups and downs of the DublinEuropean Council were recorded in the vari-ous statements and comments made by someof those present.

Community reactions

1.17. The Community position in theaftermath of the Dublin discussions wasdescribed by Mr Lynch, Irish Prime Ministerand President of the Council, and by Mr Jen-kins, President of the Commission.

Statement by Mr LynchPresident of the Council

18. At the post-Council press confer-ence held jointly with Mr Jenkins, Mr Lynchcommented on proceedings at the EuropeanCouncil on the basis of the Conclusions ofthe Presidency, stressing three points in par-ticular-the economic and social situationand the counter-inflationary measures neededto deal with it, the energy situation and, last

I Point 2. 59.


but not least, convergence and budgetaryquestions. Extracts from his statementfollow:

... The economic and social situation was the sub-ject dominated by the uncertainties and thefragilits of the relationship between the demandfor, and the supply of energy. Also by politicaluncertainties of the tYpe with which the world isnow becoming only too familiar, and the resurg-ence of inflation within the whole CommunitY.The necessitY for CommunitY solidaritY in dealingwith these problems was emphasized together withthe importance of avoiding decisions to deal withimmediate problems which would run counter tolonger-term trends. The Council agreed that thesolution of the current economic difficultiesdemands the implementation of counter-inflationmeasures, the maintenance of investment forindustrial adaptation, and modernization in orderto cope with the changing situation, and finally, animproved coordination of the economic andmonetary policies of the Member States. Counter-inflation measures must be given prioritY ...

On energy, consumption of oil this year is down incomparison with last year, and the supply ishigher. Nonwithstanding that the price increasesdo continue to be the order of the day. Speakers atthe Council emphasized the extent to which the

whole energy market is dominated by uncertaintY.Europe s dependence of external resources for itsenergy is of course already known. Equally wellknown is the relationship between economicgrowth and the consumption of energy. It isimportant for the future of the Community andfor each Member State that this link should bebroken. Some progress has in fact been made inthis direction. As a tangible contribution towardsintroducing an element of greater stabilitY by con-suming countries in general, and by the MemberStates of the CommunitY in particular, the Euro-pean Council have requested energy ministers totake a final decision on the breakdown of oili~port objectives for 1980 for each Member Stateas soon as possible. The Council also emphasizedfor a common energy policy in the CommunitY,based on (1) conservation, and (2) use of indigen-ous resources, particularly coal and nuclear powerpaying particular attention of course to safetY fac-tOrs...


... convergence and the budget took much of thetime of the Council over these last few days... TheTreaties establishing the CommunitY speak of thenecessitY to reduce the imbalance, the economicimbalance as between the different regions. Thisaim is reiterated in the Accession Treaties, andagain formed a prominent part of the EMSarrangements.

... associated with this issue was the question ofthe size of the British contribution to the Com-munitY budget. On this the Presidency spared noeffort to reach an accord. I think many persons atthe Council were disappointed that these effortsand those made by other Member States did nottoday come up with a definitive answer to theproblem. An answer which would satisfy all Mem-bers of the CommunitY. An essential part of thedifficultY lies in the way in which CommunitY ownresources are regarded. These are taxes and leviescollected by different Member States, on behalf ofthe CommunitY, in a strictly CommunitY sense;they are not national taxes, or revenues, butbelong totally and wholly to the CommunitY. Thenational government simply act as agents of theCommunitY in collecting these levies and taxes.That is a fundamental principle of the acquis com-munautaire...

There was more or less agreement on certain.essential principles which were underlined in theCommission communication at the meeting, andthese were: 1. Own resources must not be tem-pered with. 2. There must be no question of a ;usteretour in other words, to take out as much as isput in it. 3. Any solution must be financed fromthe CommunitY budget, and above all the acquiscommunautaire must be preserved intact. Therewas also considerable support for the view thatany solution must be for a limited period, andmust preserve existing CommunitY policies intactand above all that a solution must not operateagainst the objective of convergence.

Mr Jenkins, Presidentof the Commission

19. Mr Jenkins commentedmeeting in the following terms:

the

Bull. EC 11-1979


This was bound to be a most difficult EuropeanCouncil and has indeed been the mOst difficult the nine which I have attended. However, webroke up in a slightly better situation than webegan in. From a very early stage I was scepticalabout the likelihood of complete success or com-plete failure. During the last week, however, Icould not reject the possibilitY of complete failure.This we have avoided thanks to a very responsibleCommunitY attitude towards the menaces fromthe outside world, which undoubtedly played apart.

I will not disguise my feeling that it will be dif-ficult to make a success of the next EuropeanCouncil, and no one can predict a successful out-come of it. The Commission proposals at thisEuropean Council were given a general welcomeas a framework for the possibilitY of amending thefinancial mechanism and providing of furtherreceipts to the United Kingdom. This will be pur-sued at the next European Council, which may bebrought forward if the next Presidency considers itadvisable. Thus we have the possibilitY of a sig-nificantly earlier meeting than the date of lateMarch previously envisaged.

This European Council was inevitably dominatedby one central subject, which meant that otherswere relatively cursorily examined. However, I dotake encouragement from the clear reaffirmationof the timetable for setting up the EuropeanMonetary Fund. It is most important that wemake an earlier start on the preparations, whichthe Commission will now gladly do. On energy wehad a good discussion without, however, beingable to agree on much that is new in our conclu-sions. We had a somewhat cursory discussion ofagriculture but as a result the Commission paperon the need to curtail expenditure has been remit-

ted not only to the Agriculture Council but to the

Eco-fin Council also.'

Reactions by the Headsof State or Government

20. A number of the Heads of State orof Government commented on the outcomeof the Dublin Council, either immediately oron return to their respective capitals.

Bull. EC 11- 1979


The French President Mr Giscard d'Estaing,stated that the meeting had been near tobreakdown on a number of occasions. Hewent on:

It was clear from the discussions that a solutionon the question of Britain s payments to the Euro-pean budget was not impossible. But MrsThatcher wanted a lot more than this. Apparentlythe two points of view were irreconcilable. Franceagreed to discuss the matter again at the next

European Council once Mrs Thatcher had prom-ised that she would approach such a meeting in aspirit of compromise.

In her statement to the House of Commonsthe following Monday the British PrimeMinister Mrs Thatcher, claimed that she wasready to show willing in the search for agenuine compromise on Britain s contribu-

tion to the Community budget if the otherMember States would do the same. She con-tinued in the following terms:

I left our partners in no doubt that my room formanoeuvre was limited, but I did not feel it rightto refuse to make this further effort ...

The question is whethet we shall get far enough atthe next meeting ...

I believe that ... the free nations of Europe can livetogether equitably-and it is on that basis I amseeking a solution ...

In spite of North Sea oil we are still among theleast prosperous of the Member States, but arenevertheless expected to be one of the main con-tributOrs to the CommunitY budget.

Several countries, which had been helpful insearching for a possible solution, felt that moretime was needed.

We therefore agreed to another early meeting ofthe European Council. It is left to the next Presi~dent, the Italian Prime Minister, to judge whenthat meeting should be called.

But she emphasized: ' I cannot give any reassuranceabout the success of that further meeting ...


We were offered UKL 350 million in reduced con-tributions. When it came to increasing receiptsthere was considerable reluctance to do that.

We should get more, and it is worth while goingon negotiating to get more, particularly as anumber of countries in the Council of Ministerswere trying very hard to help us achieve a betterresult.'

Chancellor Schmidt reaffirmed his intentionof trying to find a compromise solution. Hiscomment to Mrs Thatcher during the discus-sions 'Help us to help you ' was borne out inhis post-Council statement;

'The Germans are ... more than ready to considerBritish demands favourably; but ... this does notmean that, in order to do so, we are willing tobreak the legal rules of the CommunitY game.'

The Italian Prime Minister Mr Cossigastressed the major difficulties inherent in thecircumstances surrounding the Dublin Euro-pean Council, particularly on the interna-tional front where Europe must playa role inkeeping with its political commitments.Hence Mrs Thatcher s reluctance to assumeresponsibility for forcing a breakdown.

Mr Martens the Belgian Prime Ministerstressed that the Benelux countries had cometo Dublin intent on finding a solution andwere well-disposed to the formulae put for-ward by the Commission. As it turned outthere was no way British demands could bemet, but he had done everything possible toavoid irreparable breakdown . The Luxem-bourg Premier Mr Werner was less pessimis-tic than many commentators;

In Dublin, we avoided the worst . Alongwith the Belgian and Dutch Prime Ministershe expressed willingness to increase his coun-try s financial contribution to the CommJInitybudget, thus lessening the load on the UnitedKingdom. He, too, was in favour of the prop-osals pur forward by the Commission.

Bull. EC 11- 1979

European Com m un

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, --

ill- lull

No. 43/1979

December 4, 1979

CONCLUS tONS OF THE EUROPEAN COUNC I L

NOVEMBER 29 AND 30 IN DUBL t N

The following is a summary of the European Council' s final communique,

together with some remarks by the European Commission President, Mr RoyJenkins, at his joint press conference with the Irish Premier, Mr Jack

Lynch:

Th i s was bound to be a most d i ffi cuI t European Counc i1 andhas indeed been the most difficult of the nine which I have

attended. However, we broke up in a slightly better situationthan we began in. From a very early stage I was sceptical aboutthe ikel ihood of complete success or complete failure. Durlngthe last week however I could not reject the possibility ofcomplete failure. This we have avoided thanks to a veryresponsible Community attitude towards the menaces from theouts ide worl d , wh i ch undoubted I y played a pa rt.

I will not disguise my feeLing that it will be difficultto make a success of the next European Counci 1 , and no one

can predict a successful outcome of it. The Commission proposalsat this European Counci 1 were given a general welcome as a frame-work for the possibil ity of amending the financial mechanismand providing. of further receipts to the United Kingdom.

Washington office: 2100 M Street NW Washington DC 20037/ telephone (202) 862-9500/ telex 89- 539 EURCOM

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-2-

Mr Jenkins made the fonowing points in answer to questions,which were almost entirely on the British budgetary problem.

- there was a general disposition to remove an three brakeson the operation of the financial mechanism not unconditionally,but as part of a general settlement. The Commission paper alsoheld out the possibility of other measures which would provideexpend i ture in the Un i ted Ki ngdom, and wou I d exp lore thepossibilities further.

- there was no questIon of a I inkage between fisheries, energyand sheep meat and the budgetary problem. The settlementof the latter was not conditional on agreement on theformer. However, the Commission did not dispute the needfor solutions to these problems.

Mr Jenkins would not characterize the European Council as afailure , simply as a meeting which showed a solution to the problemswas not yet agreed. A great deal remained to be achieved in the future.How quickly Community expenditure could take place to the benefitof the United Kingdom would depend on how quickly the Community decided.

Nor did he agree that the response of the European Counc i I wasn i gga rd I y .

There was a general recognition that the British problem didpose considerable dangers for Britain and for the Community as a whole.There was a deep fee ling that the Commun i ty needed to be cohes i vein the present international situation.

IRAN

I. The Heads of State or government and the foreign mi n i sters of theNine, meeting in the European Council , considered the grave situationcreated by the occupat i on of the Embassy of the Un i ted States in Tehranand the holding of members of its staff as hostages in flagrant breachof international law.

2. Th~ European Council strongly reaffirmed the statement whichwas issued by the foreign ministers of the Nine at their meetingof 20 November in Brussels. It is fundamental that diplomaticmissions should , be protected. The failure to uphold this principle

and the taking of hostages to exert pressure on governments aretotally unacceptable. I t is the duty of all governments to opposeenergetically such a breach of international law.

3. The nine member states of the European Community fully respectthe independence of I ran and the r i ght of the Iranian people todetermine thei r own future. They are conscious of the importancewh i ch the I ran i an people attach to the changes which have takenplace in their country. But in the same measure as they respectthe rights of I ran they call an I ran to respect fully the rightsof others and to observe the established principles that governrelations between states. Respect for these principles is essentialto the effort to secure order and justice in international relationswhich is in the interes'1: of all states including Iran.

4. The governments of the Nine , supported by publ ic opinion intheir countries , expressed in particular by the European Parliament,so 1 emn 1 y appea 1 to I ran to respect these fundamental rights andduties so long establ ished in international law. They urge moststrongly that the Iranian authorities take action immediately torelease the hostages in complete safety and allow them to returnto the i r own count ry.

ECONOMIC AND SOCIAL SITUATION

PROSPECTS FOR THE COMMUN try ECONOMY

The Heads of State or Government discussed developments in theCommunity economy and prospects for 1980 ? particularly in the lightof the deflationary effects of the oil price increases. They recognizedthat despite the progress ach i eved by the co-ord inated economi c approachagreed at the European Eouncil in Bremen , the objectives sought , particularlymaintaining growth and combatting inflation had not been achieved in full.

In an effort to overcome the current economic difficulties .a commonapproach continues to be essential. Priority must be given to combattinginflation. This is , in the medium and long term , a condition for solvingthe problems of growth , structural change and hence employment. The existenceof the European Monetary System also underlines the necessity for a co-ordinatedapproach in tackl ing the balance of payments effects of the new oil priceri ses.

The fight against inflation and unemployment should not be made moredifficult through attempting to compensate by increases in money incomesfor the real transfer of purchasing power which has taken place to the oilproducing countries. Moreover , monetary pol icy should continue for thetime being to support efforts to counter inflation. Modernization ofand investments in Community industry must continue to enable it to adaptmore quickly to new patterns of demand. The present difficulties require animproved co-ordination of the economic and monetary pol icies of Member States.

With this in mind , the European Council confirms its intention to

set up the European Monetary Fund in accordance with the timetable envisaged.

To this end, the European Counci I invites the Commisston to submit , for itsnext meeting in March 7 19807 a report setting out the progress made in thisfield and the difficulties encountered. Furthermore, the present difficultiesrequire that the Community continue to pursue a common approach in conjunction

with other industrial ised countries.

The European Council reaffirmed its determination to conduct economic

pol icies in 1 ine with the principles and strategy agreed at the EuropeanCouncil .in Strasbourg.

Even with the down-turn in the internationa1 economy, the Community expected to achieve at least a moderate rate of growth next year , and may avert

acceleration in the rate of inflation.

THE EMPLOYMENT PROBLEM

The European Council discussed the serious unemployment . Ituation in the

Community. They agreed that the continuation and intensification of nationaland Community efforts to improve economic structures, primari Iy through

increased investment, was of fundamental importance. A more co-ordinatedapproach to employment problems should be defined. The European Councilaccordingly requests the Commission to submit proposals on specific measureswhich could be framed to promote more incisive Community action to deal with

the unemp oymen t p rob 1 em.

TELEMAT I CS

The European Council discussed the questions raised in a Commission

communication drawing attention to the importance of data technologies , both

for European industry and society. The European Council took note of the

recommendations of the Commission and invited the Council (Foreign Ministers)to study a common strategy for the development of these technologies inEurope.

CONVERGENCE AND BUDGETARY QUEST! ONS

The European Council held an exchange of views on convergence andbudgetary questions. They re-affirmed the conclusions reached at theirmeetings in Brussels and Paris that achievement of the convergence ofeconomic performances requires measures for which the Member States concernedare primarily responsible, that Community pol icies can and must playasupporting role within the framework of increased solidarity and that stepsmust be taken to strengthen the economic potential of the less prosperous

countries of the Community.

To these end s , the European Counci 1 exp res sed its dete rmi na t ion to promotethe adoption of measures to improve the working of community policies , to

reinforce those pol icies most I ikely to favour the harmonious growth ofthe economies of the Member States and to reduce the disparities between theseeconomies. They further declared the need , particularly with a view to

the enlargement of the Community and necessary provisions for Mediterraneanagriculture, to strengthen Community action in the structural field.

~5~

The European Counci 1 ha$ carried out a thorough exami nat ion of theproblem of the British contribution to the Comrnun ity budget.

It was agreed that the Commission s proposals concerning theadaptation of the financial mechanism could constitute a useful basisfor a solution which would respect Community achlevement and sol idarity.This solution should not result in raising the 1 per cent VAT ceiling.

In addition, the Commission is requested to pursue the examinationof proposals for developing supplementary Community measures within theUnited Kingdom which wi11 contribute to greater economic convergence:and which wi11 also lead to a greater participation by the United Kingdomin Community expenditure.

ENERGY

The European Counci1 discussed the world energy situation whichremains very serious. In view of renewed price increases, continuinguncertainties about supply and production, and the changing structureof the world oil market, the European Council considers that efforts mustbe made both by producing and consuming countries to create greaterstab i 1 i ty. I n the ight of these needs, the Comrnun i ty for its pa rt mus tnow develop a more effective energy policy.

The European Counci 1 requests the Cound 1 of Energy Ministers atits meeting on December 4 to take a final decision on national importobj ect i ves for 1980.

The European Counc i 1 conf i rmed its resolve to develop i nd i genousenergy re.sources, particularly coal , nuclear and hydrocarbons and to

promote the research and development programmes in the energy field withparticular regard to renewable energy resources.

REPORTS ON EUROPEAN UN ION

The European Counci 1 received and noted the reports by the ForeignMinisters and the Commission on the progress achieved towards Europeanunion in the past year. The European Counci1 noted the importance ofdevelopments in the past year towards the achievement of European unionand in part i cul ar:

- The si gnature of the I nstruments of Access ion of the Helloni Republ i c to the European Commun i ti es;

- The estab 1 i shment of the European Monetary System;

- The direct elections to the European Parliament.

The European Counci 1 affi rmed the importance of these concretesteps in demons t ra ti ng the Communi ties I comm i tmen t to proceed toward and to create the conditions for further progress towards an ever closerunion among the peoples of Europe.