Bundesbank's regrets help to end 'war'

GERMANY'S Foreign Minister last night appealed for 'calm' in Anglo-German relations after a day in which the Bundesbank expressed regrets to the British government, the German Foreign Ministry stood by its ambassador and hinted the Bundesbank was lying, and the Foreign Office called in the ambassador to upbraid him over an action which the Bundesbank regretted but which the German Foreign Ministry defended.

John Major, opting for the Bundesbank 'regrets', declared last night that it was 'time to draw a line underneath this war of words with Germany' - which erupted after the German embassy in London gave some British newspapers copies of a Bundesbank statement on German support for sterling, prompting Britain to accuse Germany of a breach of confidentiality.

It began on Wednesday morning, when the Independent received a telephone call from the German embassy to offer a statement by Helmut Schlesinger, the President of the Bundesbank. The embassy said it was releasing it to the Independent, the Financial Times and the Times, adding that the release had been authorised by the chief press spokesman at the Bundesbank. The Independent checked with the Bundesbank in Frankfurt which confirmed the paper's release (although once the row erupted, the Bundesbank was to say it had never intended the statement for publication).

The faxed statement contained the startling extent of the German intervention to support the pound. In addition, Mr Schlesinger was extremely forthright in his rejection of British criticism of the Bundesbank. He also implied that Britain was less than committed to defending the pound's parity inside the system.

The Independent telephoned the Treasury and the Bank of England; both knew about the statement, and both provided frostily worded responses. Only then did they reveal that the statement had been delivered to them in confidence. It had been released to the three newspapers without their prior knowledge.

Douglas Hurd, the Foreign Secretary, was by then on his way to an important meeting in Bonn with his German counterpart, Klaus Kinkel, to mend fences following the earlier Anglo-German tension over currencies, and to map out a common strategy ahead of the EC summit in Birmingham later this month. London alerted the Foreign Secretary's party. A British official said: 'It comes to our attention in Bonn that some papers have been flashing this statement round. Hurd says to Kinkel, 'Giving this thing to the press is not helpful in the context of a rather important agenda which we are trying to move forward'.' Mr Kinkel appeared to have been already aware that the embassy had given the statement to the press. His reaction was simply to 'take note' of Mr Hurd's objections, the official said.

Yesterday, the Bundesbank sought to smooth over the row by saying it regretted any 'misunderstanding' caused by the release. It said the statement was an internal document intended only for use by the German embassy in London. But in Bonn, an unrepentant Foreign Ministry stood by its man and insisted 'the release of Schlesinger's statement was made in good faith and in accordance with the Bundesbank'. It added: 'In light of the discussion in Great Britain the embassy made contact with the Bundesbank and requested a paper outlining its arguments. The ambassador's actions were well-intended.'

At this point the well-intended ambassador, Baron Hermann von Richthofen, was 'asked to call' at the Foreign Office (Downing Street had prevaricated for hours before approving the move). Two days after Sir Teddy Taylor MP declared that the 'Germans were getting too big for their jackboots', the Red Baron's distant relative arrived at the office of Tristan Garel-Jones, the Minister for European Affairs. Mr Garel-Jones 'wanted to express concern at the decision to publicise Mr Schlesinger's letter,' a Foreign Office source said. Asked about the last time a German ambassador had thus been called in, the source said simply: 'Every time the Foreign Office wants to see an ambassador, it asks him to call.'

He added that it was 'for the Germans to sort out if they had acted on instructions from Chancellor (Helmut) Kohl or the guy in the registry or anybody else. It was clearly a deliberate decision by the German embassy. We're not going any further.'

The meeting lasted only 25 minutes. A source said: 'I don't think you'll find we, the British government, will do anything to fuel these particular flames.' Last night, the fact that somebody in Germany had said they were sorry was enough for Mr Major, who stated: 'Germany has made it clear they regret the publication of the document and I am happy to accept that expression of regret.'