Margaret Thatcher: Power and Personality (62 page)

Credit should also go to Sir Geoffrey Howe for his ability, in this rare instance of their harmonious teamwork, to keep the Prime Minister on side. On the day he came back from his final round of successful negotiations with Deng
Xiaoping, Margaret Thatcher sang the praises of her Foreign Secretary. ‘I congratulated Geoffrey in Cabinet on his return, and I meant every word.’
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In Ireland, Margaret Thatcher showed prescience, particularly in a period scarred by terrorist outrages, in allowing the secret Armstrong–Nally channel to lay the foundations for an agreement. Reducing her dependency on the Orange card, yet without yielding an inch of British sovereignty over Northern Ireland, was an achievement of considerable statesmanship. She was reluctant to move in this direction, resented the American pressure for it and appeared to be disavowing the whole endeavour in her retirement. But the undeniable result of the Anglo-Irish Agreement is that it gradually transformed the relationship between Dublin and London.

It took arduous work by two more prime ministers, John Major and Tony Blair, before peace came dropping slow. On her watch of the long war against IRA terrorism, Margaret Thatcher held the line courageously and opened the negotiating door constructively. She deserves credit for this twin-track approach.

Seen with the hindsight of history, it is now clear that the Anglo-Irish Agreement of 1985 paved the way for the Northern Ireland peace process initiated by John Major in 1994, followed by the Good Friday Agreement signed by Tony Blair in 1998, which culminated in the historic state visit of Queen Elizabeth II to Ireland in May 2011.

These were milestones of reconciliation made possible by the earlier acts of resolution and responsible diplomacy in the early 1980s. Margaret Thatcher is not always applauded as a peace-maker in Northern Ireland, but without her contribution the Troubles might still be with us.

Important though Hong Kong and Ireland were, they remained sideshows in comparison with her primary mission – to rebuild Britain’s economic and political confidence.

25

Batting for Britain in Saudi Arabia

THE DEAL OF THE CENTURY

Towards the end of a long dinner in Riyadh on the night of 16 April 1985 King Fahd bin Abdulaziz of Saudi Arabia turned towards Margaret Thatcher, sitting on his right, and said quietly but with the unquestioned authority of an absolute monarch: ‘Prime Minister, the deal is yours.’
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The deal, announced six months later on 26 September 26, was the largest export contract in the history of Britain. It was worth £5.2 billion at the time of signature, growing in value to over £90 billion during the next two decades. It ensured the survival of British Aerospace and many other companies in the sector, creating vital cash-flow and at least 50,000 new jobs. It inflicted a painful defeat on the French, compared by some to the commercial equivalent of a twentieth-century Waterloo, because before Margaret Thatcher’s intervention Dassault had received a letter of intent to award them the same contract. It was a game changer in terms of increasing Britain’s political influence and export performance across the Middle East.

The name of the deal was
Al Yamamah
. It would never have been struck without Margaret Thatcher. She achieved this triumph almost single-handedly as she deployed some of the most original, unorthodox and secretive aspects of her personality, particularly when co-operating closely with Prince Bandar bin Sultan of Saudi Arabia.

The secrecy was vital because the eventual contract touched some highly sensitive areas within the Saudi royal family, her own family, the RAF’s nuclear capabilities and Britain’s aerospace industry. To this day the detailed account of how the deal was won is almost unknown except to a handful of insiders. Intriguingly Margaret Thatcher did not mention the project in her memoirs,
which is mysterious since it was one of her greatest achievements. But her veil of secrecy can safely now be lifted, not least because the story is entirely to the Prime Minister’s credit.

FIGHTING THE FRENCH

A good starting point for the story is to be found in the tensions between the two most powerful men in Saudi Arabia – Defence Minister Prince Sultan and his elder brother King Fahd. Throughout the 1970s Prince Sultan was the sole decision-maker on all defence issues within the Kingdom. Although he respected British defence equipment suppliers, particularly British Aerospace who had since the 1950s supplied the Royal Saudi Air Force (RSAF) with Lightnings, Strikemasters and training for their pilots, Prince Sultan had become strongly pro-French. He was planning a massive re-equipment programme for the RSAF to give it both an offensive and defensive capability. This meant placing an export order for over a hundred new military aircraft. To insiders who knew about Prince Sultan’s Francophilia, Mirages made by Dassault were the favourites to win it.

The British, however, remained confident of securing at least a part of the potential order. Margaret Thatcher raised this export prospect when she made her first visit to Saudi Arabia in 1981. Subsequent reports by the defence sales department of the Ministry of Defence increased her expectations that an order for Hawk trainers would be given to British Aerospace. Michael Heseltine as Defence Secretary made a visit to Riyadh and came back full of optimism. By chance he reflected this in a conversation he had in my house in 1983 with a well-connected Saudi businessman, Wafic Saïd. Both of them were my guests at a dinner I gave in honour of former President Nixon. On discovering that Wafic Saïd had Saudi Arabian interests, Heseltine talked about his recent meeting with Prince Sultan and his confidence that a big Hawk order would be coming Britain’s way. ‘Nothing has been agreed’ said Wafic Saïd. ‘I wouldn’t count on anything yet.’ ‘Who are you?’ asked Heseltine sharply. ‘What do you know about it?’
²

Some weeks later Wafic Saïd was approached by James Blyth, the head of defence sales at MoD. Saïd had no business connection with British Aerospace and was not an arms dealer. But he was known to be a close confidant of and
business adviser to Prince Sultan and his family. For that reason James Blyth asked Saïd if he could find out what was happening to the Saudi aircraft order. Wafic Saïd, who was married to an English wife and was staunchly pro-British, immediately agreed to help. He raised the subject in Washington a few days later with his close friend Prince Bandar bin Sultan, the Saudi Ambassador to the United States.

After checking back with his father, Prince Bandar passed on bad news to Wafic Saïd, ‘I am afraid our British friends have lost the contract’, he reported. ‘My father has signed a letter of intent with the French.’
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When James Blyth was given this information he was astounded, but his checks proved it to be correct. Dassault had indeed received from Prince Sultan a letter appointing them the suppliers of Mirage aircraft to the RSAF.

The news shook both British Aerospace and the British government at the highest levels. Margaret Thatcher wanted to know why the MoD’s optimism had been so misplaced and what, if anything, could be done to win the contract back. She was advised that the only source of inside information available to the British government that had proved to be reliable was Wafic Saïd. So she asked to see him.

Wafic Saïd met the Prime Minister at No. 10 and was deeply impressed. He recalled:

‘She was extremely well briefed and absolutely furious. She ran through the history of how Britain alone had been willing to provide the RSAF with Lightnings back in 1959. She said ‘We trained their pilots. We taught them English. We built a close relationship with them. I will not accept that we should be kicked out by the French! This contract is vital to our aerospace industry! We must fight back.’
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The only advice Wafic Saïd felt able to offer was that she should have a face- to-face meeting with Prince Bandar as soon as possible. Margaret Thatcher immediately agreed to this.

Wafic Saïd gave her this good advice not just because Prince Bandar was the defence minister’s son, but because he too was staunchly pro-British in his personal and aviation loyalties. He had trained as a pilot at Cranwell, retaining close friendships from his days as a Flight Lieutenant in an RAF Lightning squadron. Despite having been given the politically incorrect nickname of
‘Woggie’ by his fellow pilots, Bandar enjoyed their camaraderie, their humour and their English way of life. He was knowledgeable about British politics and had become a great admirer of Margaret Thatcher in the aftermath of her Falklands victory.

It took no time for this admiration to become mutual. At their first meeting Prince Bandar was immediately recognised as ‘one of us’. Handsome in his looks, military in his bearing, expert in his briefing and talented in his geopolitical flair for deal making, he became an immediate and enthusiastic collaborator with the Prime Minister in her drive to win back the huge aircraft order for the RSAF from the French. To an outsider this looked like mission impossible as Dassault already had Prince Sultan’s letter of intent in their pocket. But Bandar was one of the few insiders who understood the tension that was growing between the King and his younger brother on defence issues. So Bandar advised Margaret Thatcher that with the right strategy she had a chance of persuading the King to reverse Saudi Arabia’s plan to purchase Dassault’s Mirage aircraft for the RSAF.

King Fahd was unhappy at the way his predecessor King Khaled had delegated all defence decision-making to Prince Sultan. Not only did the new king wish to reassert his monarchical authority, he also had doubts about the reliability of France as an ally.

At the prompting of Prince Bandar, Margaret Thatcher converted King Fahd to the idea that she would be rock solid as a loyal ally to Saudi Arabia. Throughout 1984 and early 1985 she sent the king a series of personal handwritten letters and secret messages. Some of them were on intelligence matters such as reports about the trouble-making intentions of the Shia leaders of Iran. Others were notes about her talks with President Reagan, Deng Xiaoping and other world leaders. King Fahd was flattered. He passed several oral messages to and from the Prime Minister using Prince Bandar as an intermediary. ‘It is better for these communications to go outside the system’, Bandar told Margaret Thatcher.
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THE DENIS BACK CHANNEL

In the age of recorded telephone calls and civil service procedures there is no normal method for Britain’s head of government to communicate privately with
a foreign head of state outside the system. But Margaret Thatcher liked listening to unofficial voices reaching out to her in unorthodox ways. She understood the Saudi royal family’s love of conspiratorial secrecy. So she created a uniquely secure back channel designed to beat the system. It was called Denis.

The battle to win the
Al Yamamah
deal was nurtured, facilitated and watered by the invisible hand of Denis Thatcher. He became a pivotal player for four reasons. His wife wanted him to do it. His business acumen enabled him to understand the magnitude of the opportunity and its complexities. His patriotism caused him to love the idea of beating the French or, as he called it, ‘stuffing the Frogs’.
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He built a crucial rapport with the key executive at British Aerospace, Dick Evans, a rugby-playing kindred spirit who acted as the link man to Bandar.

Dick Evans recalled:

I had completely open access to No. 10 through Denis who was bloody marvellous. I would ring him up, usually to say that I had a message from Bandar and could I come round? In those days there was a back entrance and I’d meet Denis there. He’d take me up the staff stairs to his flat, usually about six in the evening, and I’d wait having a drink with him until the Prime Minister came up from her study. Then I’d give her Bandar’s message and often take one back.
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These messages were partly about the positioning of the British bid for what became the
Al Yamamah
contract, but more about what King Fahd was thinking and how the Prime Minister might consider replying to him in her back-channel communications. There were also at least six unrecorded private meetings between Prince Bandar and the Prime Minister in the crucial 1984–1985 period. One of them was in Saltzburg in August 1985 when she broke her holiday in Switzerland to meet him.

Margaret Thatcher, well guided by Bandar, played the king brilliantly. She recognised that the battle for
Al Yamamah
was not really about aircraft capabilities or prices. It was a much more personal and strategic fight to convince the Saudi monarch that Prime Minister Margaret Thatcher of Britain would be a more reliable long-term ally than President François Mitterand of France.

At the time when these deliberations were taking place, Prince Bandar was becoming closer to his uncle, King Fahd, than he was to his father, Prince Sultan.
No Western observer can ever comprehend such shifts within the House of Saud which are emotional as well as political. But on the political front, Prince Bandar as the Saudi Ambassador to Washington was also handling another dimension of the Kingdom’s aircraft buying strategy.

The Saudis’ highest priority was to equip the RSAF with American F15E fighter jets. Ambassador Bandar not only reported that Congress would never allow the sale of F15E because of pressure from the Israeli lobby; he also orally conveyed a personal message to the king from President Reagan which in effect said, ‘Sorry about the Congress: if I were you I would buy the British Tornados.’
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Although the deal was now moving Britain’s way, inside the rival camps of companies, agents, promoters, fixers and commission takers in Saudi Arabia there was a fierce dogfight about the merits of Tornados versus Mirages. With more than a little help from the Bandar–Evans–Denis back channel the British Prime Minister gave the strongest of assurances about the continuity of Tornado spares, ammunition supplies and pilot training.

King Fahd was almost convinced to buy British but at a key moment in the debate he asked his now favourite nephew, Bandar, for his expert assessment of the two aircraft from the point of view of a former pilot. ‘Each aircraft has its pros and cons,’ said Prince Bandar, ‘but this is a strategic issue. The key question is: in times of difficulty who will stand behind Saudi Arabia, Thatcher or Mitterand?’
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At the moment when King Fahd was squaring up to this decision he was told that the following day Margaret Thatcher’s aircraft would be refuelling in Bahrain on its way back from a visit to Malaysia and India. The king suggested that the British Prime Minister should make her stopover in Riyadh, telling Bandar that he might be willing to agree the aircraft deal with her. Seizing the moment Bandar called Dick Evans who in turn called Michael Heseltine, Denis Thatcher and anyone else he could reach to achieve the miraculous feat of changing the flight plan for the Prime Minister’s homeward journey from India. The miracle was accomplished.

Margaret Thatcher, still riding high internationally on the crest of the wave created by her Falklands victory, won King Fahd’s political heart over dinner in Riyadh by the forthrightness and power of her personality. He was impressed by her mastery of the regional issues of Iran and Iraq. It also helped that he thought her a beautiful and charming woman. Around midnight the king quietly said the momentous words, ‘Prime Minister the deal is yours’.
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DIFFICULT HURDLES TO OVERCOME

In Saudi Arabia a deal with the Government is not done until it is formally and publicly announced. So for the next six months there were intense negotiations to solve four major problems. They were: how to deliver what the Saudis wanted on an impossibly tight schedule; how the contract should be paid for; how to solve what was known as the Tornado nuclear issue; and how to handle Mark Thatcher.

It was the last problem which worried Denis and motivated his continuing involvement as an invaluable channel of communication on the project. As a father he knew better than anyone else that ‘the boy Mark’ as he called his son was a loose cannon.