The Downing Street Years (28 page)

On Wednesday 15 April 1981 I began a visit to India. I had visited the country twice and met Mrs Indira Gandhi, India’s Prime Minister, three times before. However, the strategic importance of India was now greater. India had been making economic progress, particularly in the crucial sector of agriculture. It was one of the leading countries in the non-aligned movement — still more so since the death of Marshal Tito. That group of nations was itself more important to us because of its attitude to the Soviet invasion of Afghanistan. India could be an even more powerful source of difficulty than benefit if she chose. Her traditionally closer relations with Russia and hostility to Pakistan, at a time when the latter was the main base for the Afghan anti-communist guerillas, meant that the West had to be sensitive to the Indian Government’s feelings and needs. As regards bilateral relations, there was also the thorny question of the new and much misrepresented British Nationality Bill, which was a part of our proposals to limit future large-scale immigration to Britain — not least immigration from the Indian sub-continent.

My talks with Mrs Gandhi were interesting, but largely inconclusive. Much of the time of the Indian Cabinet seemed to be spent in allocating contracts — not perhaps too surprising in a socialist country — whereas I was more concerned with international questions. I did not manage to persuade Mrs Gandhi to condemn the Soviet invasion of Afghanistan, as I would have liked. She put up the standard excuses, but she was clearly embarrassed by it. I never succeeded in drawing Mrs Gandhi or her successors away from India’s traditional alliance with the Soviet Union until the collapse of communism, or in drawing her closer to America. But we established a good Anglo-Indian working relationship in Commonwealth affairs, and on the practicalities of Third World aid, where she had a much more hard-headed grasp of what was required than most other Third World leaders. This good relationship was not soured for long by the dispute over the British Nationality Bill. She pressed strongly for amendments to it that would have permitted more Indian families to be admitted to Britain: I stood my ground in defence of the bill. My impression was that although the attack was pressed home privately and publicly — at the closing press conference I was faced with hostile questioning — Mrs Gandhi was herself largely responding to public pressure.

I liked and respected Mrs Gandhi. Her policies had been more than high-handed, but only a strong figure with a powerful personality could hope successfully to rule India. Mrs Gandhi was also — perhaps
it is not just myth to see this as a female trait — immensely practical. For example, she always insisted that what India required was basic — what to some seemed primitive — means of assistance to allow its peasants to produce more food. Like me, she understood the immense benefits which science could bring and indeed was already bringing in new varieties of grain and techniques of cultivation. Her weak spot was that she never grasped the importance of the free market.

Apart from my talks with Mrs Gandhi and others, I saw three different aspects of the new India. On Thursday I addressed the Indian Parliament. On Friday I visited an Indian village where the efficiency of peasant agriculture was being transformed. On Saturday I walked around the Bombay Atomic Research Centre. The Indian visit was, I felt, not only predictably fascinating; slightly less predictably, though without any dramatic developments, it had been a success. I was sorry to leave India so soon: each visit makes me want to return for an extended stay.

On Sunday I left for Saudi Arabia and the Gulf. I had to have clothes specially made for this visit because it was important to conform to the customs of these conservative Muslim societies. Contrary to what one might have thought, they were in no way disconcerted to meet their first western woman prime minister. Later I discovered how important the wives of leading Arab figures are. Indeed, many of these women are highly cultivated, very well educated and well informed. Their influence is greatly underrated in the West and an evening’s conversation with them is a highly stimulating occasion.

I was the first ever British prime minister to visit these states. But Britain’s links with the area were traditionally strong, dating back to the days when we provided the defence of some of the Gulf states, long before oil was discovered. I always regretted, even at the time, the decision of Ted Heath’s Government not to reverse the Wilson Government’s withdrawal of our forces and the severing of many of our responsibilities east of Suez. Repeatedly, events have demonstrated that the West cannot pursue a policy of total disengagement in this strategically vital area. Britain has, however, continued to supply equipment, training and advice.

In Saudi Arabia and the Gulf states I sought to reassure my hosts that whatever decisions were made about a Rapid Deployment Force (RDF) then being discussed, which some of them feared might pave the way for direct military intervention in the Middle East, nothing of the sort would occur without their knowledge and consent. The Iraq-Iran conflict was continuing, though at a lower level of activity. No one knew how serious the threat of Islamic fundamentalism might
become. Too overt a western presence might provide an excuse for it: too little support from the West might provide an opportunity. The Gulf Co-operation Council had been formed to bring together the states in the region to guarantee their mutual security: this was clearly a welcome development. It was also important that they should have the right military equipment and be trained to use it. In this our old defence links reinforced our commercial interest. Some British aeroplanes and tanks were eminently suitable for this area.

Abu Dhabi, where I arrived on Tuesday 21 April, is the largest of the members of the United Arab Emirates (UAE). Sheik Zaid, the Amir and President of the UAE, spoke for all the world like an Arab poet and was a man of great charm. He knew Pakistan well because like other Gulf Arabs he regularly went there to hunt with his hawks. The Gulf Arabs therefore learned much of interest about developments in Pakistan and Afghanistan. We supplied the UAE with a good deal of military equipment and advice, and we were keen to sell the excellent Hawk Trainer and Ground Attack aircraft throughout the Gulf.

The other main UAE state is Dubai, where I arrived on Wednesday. Its ruler was Sheik Rashid. When I arrived he was already on the airport tarmac to greet me, even though he had already seen me in Abu Dhabi. By this time he was elderly and unwell. But his powerful features, above all his eyes, still conveyed shrewdness and courage. There is a picture of the young Sheik on horseback, holding his sword aloft, marching in from the desert to claim his land: it struck me that the qualities of his generation would be difficult to repeat in the more comfortable conditions of today.

Dubai is enchanting. Like the other Gulf states that I visited, it is full of flowers, kept absolutely perfectly and tended every day. But it is also a thriving port. Like Bahrain, but unlike some other cities on the shores of the Gulf, it was established long before oil was discovered. From here Arab traders sailed to the Red Sea and to the Indian Ocean.

I also visited Muscat in Oman. Its leader, Sultan Qaboos, has always been one of Britain’s closest friends in the Gulf. Historic forts guard the entrance to the port of Muscat. As elsewhere in the Gulf, development has been very carefully controlled to blend in with the traditional style of buildings. I discussed with the Sultan Oman’s requirements for military equipment. Later when the price of oil fell and Oman’s finances were somewhat less healthy, we suggested that they should purchase the Ground Attack Hawk and Trainer rather than the more expensive Tornado. The Sultan and I discussed the situation in the Gulf and the Iran-Iraq War. He was always a source of valuable information about events in Iran. We too were concerned
that the war remained confined to those two states and to the northern end of the Gulf. We had stationed the three ships of the Armilla Patrol in the area in 1980 to keep the sea lanes open. My talks with the Sultan and other Gulf rulers laid the groundwork for later co-operation when the Iran-Iraq War threatened Gulf shipping and, subsequently, when Iraq invaded Kuwait.

My final visit on this occasion was to see Sheik Khalifa, the Emir of Qatar. Qatar has the biggest natural deposits of gas anywhere in the world and the country is very wealthy. I discussed the involvement of British firms in the development of these resources.

The pattern of the visit, combining diplomacy, commerce and private discussion would be repeated on many occasions in the years ahead. Even on this busy trip I had not been able to visit all the important players in the ‘great game’ of the Gulf. I would return in September to do so, visiting Bahrain and Kuwait on my way to the Commonwealth Conference in Melbourne.

My second G7 summit — President Reagan’s and President Mitterrand’s first — took place in Montebello, just outside Ottawa, where I arrived on the afternoon of Sunday 19 July to be met by Canada’s Prime Minister Pierre Trudeau. Montebello had been chosen as the site of the conference because the G7 heads of government were determined to try to avoid the relentless pressure from the media which increasingly disrupted proceedings. After each afternoon session Pierre Trudeau flew by helicopter back in to Ottawa to brief the journalists. We enjoyed a kind of splendid isolation at the Château Montebello, sometimes called the world’s biggest log cabin but in fact a very luxurious hotel. It had also been decided to try to inject rather more informality into discussions. Perhaps because of the presence of Ronald Reagan, with his effortless amiability, we all called one another by our Christian names. Something I liked less was the decision that everyone should dress informally. In my experience this kind of approach always presents more rather than fewer problems in choosing what to wear. The Japanese, for example, wore the smartest white ‘barbecue’ suits that I have ever seen — and looked all the more formal beside the westerners in open-neck shirts and slacks. For my part, like the Japanese, I made almost no concessions to informal dress. I believe that the public really likes its leaders to look businesslike and well
turned out. I was glad that in retrospect this degree of informality was not thought a success and so was not repeated.

President Reagan was subject to some criticism at Montebello about the level of US interest rates. He explained that he had inherited these from his predecessor. ‘Give me time’, he said; ‘I want them down too.’ He was as good as his word on this. He also hoped to control the US deficit by cuts in public spending, but that proved more intractable. The deficit continued to rise until about 1985. The US deficit was to be the one topic on which the President and I continued to be at odds, until the latter half of his second term when it entered a sharply declining path. My own experience of getting down deficits was that you had to keep a very firm hand on the purse strings and say ‘no’ to much public spending. If you are controlling public spending, you can temporarily put up taxes because in those circumstances the revenue will help to cut the deficit (and therefore interest rates). But if you are increasing spending, then a tax increase will only serve to encourage even more spending and thus may even increase the deficit. Given the separation of powers in the US Constitution, which enabled Congress to spend over and above the president’s wishes, holding taxes down may be the only effective tool a president has to hold spending down. So I came to have some sympathy with Ronald Reagan’s position. Where the President and I were at one was when he argued for the greatest possible international free trade. Trade also figured in others’ contributions. The Japanese were, as usual, sound on the principle of free trade, but, in spite of pressure, definitely less willing to take practical measures to open up their own markets.

Helmut Schmidt, who was known to be privately critical of the policies of the new US Administration, argued for sound and orthodox public finance and open trade, and I did the same in quite a long off-the-cuff speech. My contribution was, I suspect, the more convincing because, as a result of the cuts in government borrowing in our 1981 budget, British interest rates had fallen by this time — even while we were continuing to fight inflation.
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Perhaps my most useful discussion at Ottawa was at a private meeting with President Reagan. Since we had met in Washington he had survived injuries from an assassination attempt which would have crippled many a younger man. But he looked fine. I briefed him on
events in Britain, putting both our economic problems and the recent inner-city riots in perspective. As regards American relations with Europe, I was becoming increasingly worried about some of the Administration’s rhetoric: for example, I urged him to discourage talk about a ‘rising tide of neutralism’ in Europe: while I agreed with his underlying point, such warnings could all too easily prove self-fulfilling. I took this opportunity to thank him warmly for his tough stand against Irish terrorism and its NORAID supporters. It was good to know that, however powerful the Irish republican lobby in the USA might be, the Reagan Administration would not buckle before it.

Almost two months later the Commonwealth Heads of Government Meeting opened in Melbourne (on Wednesday 30 September).

The conference was overshadowed, as usual, by South African issues. Robert Mugabe, with whom I had a separate meeting, was there for the first time representing Zimbabwe. There was a good deal of hostility to the new American Administration’s attitude to the problem of Namibia. I was determined to hold the line so that the so-called ‘Contact Group’ of five nations, including the US, should continue to be the means by which pressure for a settlement was exerted. At one point Maurice Bishop, the Marxist Prime Minister of Grenada, delivered an eloquent plea that we should send a clear message of support to our brothers in Namibia, suffering under South African rule. One of the other heads of government later suggested to me that someone should ask Maurice Bishop about the number of his own people, especially his country’s professional and middle class, now held in Grenada’s prisons, put there by his Government. There was also one of those arguments, which so frequently afflicted the Commonwealth, about sporting ties with South Africa. The Springboks had played in New Zealand amid scenes of disorder and Robert Muldoon was bitterly condemned for his alleged breach of the Gleneagles Agreement, by which international sporting relations with South Africa were regulated. He put up a robust defence. At least with the Rhodesian issue now settled, Britain was less the focus of international criticism by the Commonwealth than on the previous occasion, and the serious pressure for sanctions against South Africa still lay in the future.