The Downing Street Years, 1979-1990

by Margaret Thatcher

  Accordingly, we arranged a day’s talks with Mr Lynch and his ministerial colleagues at No. 10 on the afternoon of Wednesday 5 September. The first session was a tête-à-tête between the two prime ministers; then at 4 p.m. we were joined by our respective ministers and officials.

  Mr Lynch had no positive suggestions of his own to make at all. When I stressed the importance of extradition of terrorists from the Republic, he said that the Irish constitution made it very difficult. Mr Lynch pointed out that under Irish law terrorists could be tried in the Republic for offences committed in the UK. So I asked that RUC officers — who would have to amass the evidence for such prosecutions — be able to attend interrogations of terrorist suspects in the south. He said they would ‘study’ it. I knew what that meant: nothing doing. I asked that we extend the existing arrangements by which our helicopters could overfly the border across which terrorists seemed able to come and go almost at will. He said they would study that as well. I sought more effective liaison both between the RUC and the Garda, and between the British and Irish armies. Same response. At one point I got so exasperated that I asked whether the Irish Government was willing to do anything at all. They agreed to a further meeting between ministers and officials, but there was a fatal absence of the political will to take tough measures. I was disappointed, though not altogether surprised. However, I was determined to keep up the pressure on the Republic. I could not forget that by the time of my visit to Northern Ireland 1,152 civilians and 543 members of the security forces had been killed as a result of terrorist action.

  We also lost no opportunity to use the revulsion the killings provoked in the US to inform public opinion there about the realities of life in Ulster. The emotions and loyalties of millions of decent Irish-Americans are manipulated by Irish Republican extremists, who have been able to give a romantic respectability to terrorism that its sordid reality belies. As a result, there has been a continuing flow of funds and arms which helps the IRA to continue its campaign, whereas in 1979 we were faced with the absurd situation that the purchase of 3,000 revolvers for the RUC was held up by a state department review under pressure from the Irish Republican lobby in Congress.

  I visited the province again on Christmas Eve. This time I met members of the Northern Ireland prison service as well as the security forces. For the prison officers, too, faced grave danger and worked often in appalling conditions. From March 1978 they had been dealing with the consequences of the so-called ‘dirty protest’[24] by over 350 terrorist prisoners, seeking ‘special category status’ and privileges. Seventeen prison officers had been murdered in the past four years, seven of them in the previous three months. It made the troubles of a political life seem very trivial.

  CHAPTER III

  Into the Whirlwind

  Foreign affairs during the first eighteen months in 1979–1980

  BRITAIN AND THE EUROPEAN COMMUNITY

  I had made a number of political visits abroad before I became Prime Minister, travelling on various occasions to the Soviet Union, the United States, Germany, Israel and Australia. I enjoyed these tours — as long as there was plenty to read, interesting people to meet and we were doing useful work. But it is certainly a very different experience going abroad as Prime Minister, accompanied everywhere by a highly professional team of advisers, on what is usually a hectic schedule, and meeting heads of government on equal terms.

  Familiarizing myself with this new role was not made easier by the fact that within weeks of coming into office I had to face the problem of Britain’s excessive contribution to the European Community (EC) budget — something which required tough bargaining from a difficult position, and the use of diplomatic tactics which many people thought less than diplomatic. Nor was our budget contribution the only source of contention within the EC, even in those early days. It became increasingly clear to me that there were real differences of vision about Europe’s future.

  Shortly after I took office the first direct elections to the European Parliament were held. (In those days the Parliament was formally known as ‘the European Assembly’, which perhaps gives a more accurate impression of its limited role.) In the course of the campaign I made a speech in which I emphasized my vision of the Community as a force for freedom:

  We believe in a free Europe, not in a standardized Europe. Diminish that variety within the member states, and you impoverish the whole Community…

  I went on:

  We insist that the institutions of the European Community are managed so that they increase the liberty of the individual throughout the continent. These institutions must not be permitted to dwindle into bureaucracy. Whenever they fail to enlarge freedom the institutions should be criticized and the balance restored.

  There has, however, always been a contrary tendency in the Community — interventionist, protectionist, and ultimately federalist. The sharpness of the contrast between these two views of Europe would only become fully apparent as the years went by. But it was never far beneath the surface of events and I was always aware of it.

  I was also very much aware of another feature of the EC, which had been apparent from its earliest days, continued to shape its development and diminished Britain’s capacity to influence events — namely, the close relationship between France and Germany. Although this relationship may have seemed to depend on personal rapport — between President Giscard and Chancellor Schmidt or President Mitterrand and Chancellor Kohl — the truth is that it was explicable more in terms of history and perceptions of long-term interest. France has long feared the power of Germany and has hoped that by superior Gallic intelligence power can be directed in ways favourable to French interests. Germany, for her part, knows that although she has contributed considerably more to the EC financially and economically than any other state, she has received an enormous return in the form of international respectability and influence. The Franco-German axis would remain a factor to be reckoned with, and I shall have more to say about it later.

  THE STRASBOURG EUROPEAN COUNCIL

  My first European Council took place in Strasbourg on 21 and 22 June 1979. France hosted the talks. Strasbourg had been chosen as the venue in acknowledgement of the new importance of the European Parliament (which holds two-thirds of its sessions there) following the elections, in which Conservatives had won 60 of the 78 British seats.

  I was confident that Chancellor Schmidt had taken away from our earlier discussions a clear impression of my determination to fight for large reductions in Britain’s net budget contribution. I was hoping he would pass the message on to President Giscard, who was to chair the summit; both men were former Finance ministers and should be well able to understand Britain’s point of view. (I could not help noticing too that they spoke to one another in English: but I was too tactful to remark on it.)

  The background to the British budget problem is quickly described, though the precise details were extremely complicated. At the time of the negotiations for Britain’s accession we had received an assurance (as I would continue to remind other member states) that:

  should an unacceptable situation arise within the present Community or an enlarged Community, the very survival of the Community would demand that the [Community] Institutions find equitable solutions, [my italics]

  The reason why such an assurance had been necessary was that Britain’s unique trading pattern made her a very large net contributor to the EC budget — so large that the situation was indeed unacceptable. We traditionally imported far more from non-EC countries than did other Community members, particularly of foodstuffs. This meant that we paid more into the Community budget in the form of tariffs than they did. By contrast, the Community budget itself is heavily biased towards supporting farmers through the Common Agricultural Policy (CAP): indeed when we came into office more than 70 per cent of the budget was spent in this way. The CAP was — and is — operated in a wasteful manner. The dumping of these surpluses outside the EC distorts the world market in foodst
uffs and threatens the survival of free trade between the major economies. The British economy is less dependent on agriculture than that of most other Community countries and our farms are generally larger and more efficient than those of France and Germany; consequently we receive less in subsidy than they do. Britain traditionally received a fairer share of the receipts of the Community’s non-agricultural programmes (such as the regional and social funds), but the growth of these programmes had been limited by the power of the farming lobby in Europe and by the international recession.

  The previous Labour government had made a great play of ‘renegotiating’ the terms of Britain’s original entry. In 1975 a Financial Mechanism to limit our contribution had been worked out in principle: but it had never been triggered, and never would be, unless the originally agreed conditions were changed. As a result, there was no solid agreement to which we could hold our Community partners.

  One other development had worsened the overall position: Britain’s prosperity, relative to that of our European neighbours, had steadily declined. In spite of North Sea oil, by 1979 Britain had become one of the least prosperous members of the Community, with only the seventh highest GDP per head of population among the member states. Yet we were expected shortly to become the largest net contributor.

  So from the first my policy was to seek to limit the damage and distortions caused by the CAP and to bring financial realities to bear on Community spending. But at the Council meeting in Strasbourg I also had two short-term objectives. First, I wanted to have the budget question raised now and to gain acceptance of the need for action, though without at this stage going into too much detail. Second, I wanted to secure a firm undertaking from other heads of government that at the next Council meeting in Dublin the Commission would bring forward proposals to deal with the problem.

  I sought at the start to strengthen our ‘European credentials’. We Conservatives were welcomed in Strasbourg because we were seen as more pro-European than Labour: I tried to emphasize this by indicating that although we were not then in a position to join the Exchange Rate Mechanism (ERM) of the European Monetary System (EMS), we were ‘minded’ — an expression used so as not to offend the House of Commons to which it had not yet been announced — to swap some of our own reserves in the Bank of England for ecus (the European Currency Unit). I knew that Chancellor Schmidt was keen that we should commit sterling to the ERM; but I already had doubts about the wisdom of this course, which subsequently were reinforced. In any case, as it happened, my announcement of our intentions as regards the ecu ‘swap’ did not receive much visible welcome from the others: like other such concessions to the ésprit communautaire, it appeared simply to be pocketed and then forgotten.

  If the budget issue was to concentrate minds as I wished, it had to be raised on the first day, because the communiqué is always drafted by officials overnight, ready for discussion the following morning. The draftsmen would therefore have to receive their instructions before the end of the first day. This did not prove easy. Over lunch I spoke to President Giscard about what I wanted and gained a strong impression that we would be able to deal with the budget early on. The whole group of us then set out to walk to the Hôtel de Ville through Strasbourg’s narrow and attractive streets. The bonhomie seemed tangible.

  But when we resumed, it quickly became clear that President Giscard was intent on following his previous agenda, whatever he had given me to understand. At least I was well briefed and took an active part in the discussion about energy and the world economy. I pointed out that Britain had not flinched from the hard decisions required to ride out these difficulties and that we were making large cuts in public spending. By twenty minutes to seven that evening, we had decided, if we could, to hold Community imports of oil between 1980 and 1985 at a level no higher than that of 1978. We had agreed to stress the importance of nuclear energy. We had committed ourselves to keep up the struggle against inflation. Inevitably, I suppose, we had agreed to say something about ‘convergence’ between the economic performance of member states (a classic piece of Euro-jargon). In fact, we had done almost everything except what I most wanted us to do — tackle the budget issue.

  Fortunately, I had been warned what might happen next. President Giscard proposed that as time was getting on and we needed to get ready for dinner, the matter of the budget should be discussed the following day. Did the Prime Minister of the United Kingdom not agree? And so at my very first European Council I had to say ‘no’. As it turned out the lateness of the hour probably worked in my favour: conclusions are often easier to reach when time presses and minds are turning to the prospect of French haute cuisine and grands crus. I spelt out the facts: and the facts were undoubtedly telling. It was agreed to include in the communiqué an instruction to the Commission to prepare proposals for the next Council to deal with the matter. So, a little late, we rose for dinner. Argument always gives one an appetite.

  At these gatherings, the custom was that heads of government and the President of the Commission dine together; foreign ministers formed a separate group. It was also customary to discuss foreign affairs. The plight of the Vietnamese ‘boat people’ was one topic which, of course, directly concerned Britain. Another was Rhodesia. It is interesting also to note that even then we were discussing the perennial problem of the Japanese trade balance.

  Strasbourg had one solid result: it had put the question of Britain’s unfair budget contribution squarely on the agenda. I felt that I had made an impression as someone who meant business, and afterwards I learned that this feeling was correct. It was at Strasbourg, too, that I overheard a foreign government official make a stray remark that pleased me as much as any I can remember: ‘Britain is back,’ he said.

  THE TOKYO G7 SUMMIT

  Many of the wider issues discussed at Strasbourg were raised again shortly afterwards in the still grander surroundings of the economic summit of the seven principal western industrial powers in Tokyo (the Group of Seven, or G7 for short). As soon as I had finished my report to the House of Commons on the Strasbourg Council, we drove out to Heathrow for the long flight to Japan. I knew that oil prices and their effect on the economy would again be top of the agenda. I was well briefed. Denis’s knowledge of the oil industry was at my disposal and I had also had a thorough briefing by oil experts over lunch at Chequers. They knew the oil business inside out; by contrast, I was to find at Tokyo that politicians who thought they could limit oil consumption by setting out plans and targets had little practical understanding of the market.

  I took the opportunity to discuss some other, equally important, matters en route to Tokyo. We had sought and were given permission from the Soviet Union to shorten the route to Japan by overflying Russia. In Moscow the plane landed to refuel and I was met by the Soviet Prime Minister, Alexei Kosygin, who broke off a meeting of communist prime ministers to come to the airport. To my surprise, an unscheduled dinner was laid out in the airport lounge. Hospitality in the Soviet Union was always generous for important visitors: there were two worlds, one for foreign dignitaries and the party élite, with luxuries of all kinds, and another for the ordinary people, with only the plainest of goods, and not many of them.

  The motive for the Soviets’ special attention was soon clear. They wanted to know more about the ‘Iron Lady’ — as their official news agency, Tass, had christened me following a speech I made in 1976 while Leader of the Opposition.

  In East-West relations this was the lull before a huge political storm. Under the guise of détente the Soviets and their communist surrogates had pursued for some years a policy of covert aggression, while the West had let slip its defences. At Tokyo I was to find further evidence of the Carter Administration’s overconfidence in the goodwill of the Soviet Union. The second Strategic Arms Limitation Treaty (SALT II) had been signed only days before. There was even talk of a SALT III. But the mood was about to change, for the Soviet invasion of Afghanistan was less than six months away.

 
; Although we discussed defence, the most sensitive matter I raised with Mr Kosygin was the plight of the ‘boat people’, who were leaving Vietnam in their hundreds of thousands. They were the victims of appalling persecution, terrible enough to make them sell all their belongings, leave their homes and risk their lives sailing in overcrowded and dangerous ships, with no certainty of escape. A large merchant fleet sailed under the British flag and naturally our ships were picking up these tragic refugees from communism to save them from the risk of shipwreck and piracy. The rule of the sea is that survivors from shipwreck can be landed at the next port of call. But it often happened that the next port of call — in Singapore, Malaysia or Taiwan — refused to take them unless we agreed that they should be allowed to come on to Britain. At home we were still experiencing all the social and economic pressures of past mass immigration and consequently this was something we were most reluctant to agree. At Taiwan, although they would be given medical attention and food on the ship, they were not being allowed to land. The boat people themselves refused to land in Canton: they had had enough of communism. So this meant that Hong Kong became their favoured immediate destination, from where they hoped to go on to the United States or elsewhere in the West. The communists, of course, knew perfectly well that this flood of emigration was a costly embarrassment to the West and doubtless they hoped it might destabilize other countries in the region.

  I put it to Mr Kosygin that Vietnam was a communist country and a close ally of the Soviet Union, and that he had considerable influence there. What was happening was a disgrace not only to the regime in Vietnam, but to communism as a whole. Could he do nothing to stop it? His words were translated to me: ‘W-e-ll’, he said (or the Russian equivalent), ‘they are all drug-takers or criminals…’ He got no further. ‘What?’, I asked. ‘One million of them? Is communism so bad that a million have to take drugs or steal to live?’ He immediately dropped the subject. But the point had been made and fully understood, as the nervous looks on the faces of his staff — and indeed some of mine — indicated. I could not stop the stream of persecuted refugees but I could and would always challenge the lies with which the communists sought to justify their persecution. After an hour and forty minutes we returned to the plane and resumed the flight to Tokyo. Later I referred the matter to the United Nations — it was too big for any one country to tackle.