The Downing Street Years (29 page)

In my interventions during the conference, I acknowledged that conditions for the developing world were undoubtedly difficult. They had been hit hard both by the rise in the oil price and by the effects of the recession on the western markets on which they relied. However, I emphasized that wealth creation rather than international wealth redistribution still had to come first — indeed more so than ever. I also defended the British record on overseas aid, which was very good when you looked further than the narrowly defined aid programme and took into account both public and private sector loans and investment. With myself and the heads of government of six other Commonwealth countries due to attend the forthcoming international conference on ‘North-South’ issues in Cancún, I thought it would be well worth putting the facts on the record now.

While I was in Australia Ted Heath delivered a vitriolic speech in Manchester attacking my policies. Oddly, perhaps, in view of his record, Ted had become an advocate of the politics of ‘consensus’; or perhaps less oddly, since these policies seemed to come down to state intervention and corporatism. I was sent an advance copy of the speech and used my Sir Robert Menzies Lecture at Monash University to deliver a reply to him and to all the critics of my style of government. It was, unbeknown to him, President Forbes Burnham of Guyana who provided the inspiration for this in the course of the weekend retreat which the heads of government spent away from Melbourne in Canberra. In the course of this we were arguing about an issue to be reported in the final communiqué which we were drafting. At one point Forbes Burnham said that we must achieve a consensus. I asked him what he meant by ‘consensus’ — a word of which I had heard all too much — and he replied that ‘it is something you have if you cannot get agreement.’ This seemed to me an excellent definition. So in my lecture I inserted a passage which read:

On the return journey I took the opportunity to visit Pakistan. I flew to Islamabad to be met by President Zia. The war in Afghanistan was at its height and it was arranged that I should visit one of the
refugee camps set up in Pakistan for fleeing Afghans. We flew to the Nasir Bagh Afghan refugee camp by helicopter. It was large, but impeccably clean, orderly and obviously well run. I spoke under a huge tent, sheltered from the burning sun, while the refugees — men, women and children — sat cross-legged on the ground. I told them of my admiration for their refusal to ‘live under a godless communist system which [was] trying to destroy [their] religion and [their] independence’ and promised them my help. My speech was interrupted from time to time as people rose to their feet to express the words of approval, ‘Allah be praised’.

I had lunch in the garden of the beautiful old house of the Governor at Peshawar. There, in the grounds of the house, I addressed a very large meeting of tribal leaders from the surrounding areas. Then I went by helicopter up to the Khyber Pass. I had been warned in advance that, as an honoured guest, I would be presented with the traditional sheep: I patted it appreciatively on the head and asked them to keep it for me. From there I went up to the frontier with Afghanistan itself, always busy despite its new status as a kind of dividing line between communism and freedom. I gazed across into the Soviet dominated lands beyond. A line of lorries was waiting to come through from Afghanistan to Pakistan. Relations with the Russian border guards on the Afghan side at this time were friendly enough. They were taking a very close interest in everything that was happening on our side. I reflected that Pakistan’s was an unsung story of heroism, taking in hundreds of thousands of refugees and bordering the world’s greatest military power. Though it was not a rich country, as I later remarked to President Zia, all the Pakistani people I saw looked healthy and well dressed. He said ‘no one is short of clothes or food, thank God.’ Britain was already providing aid for the refugees. But if Pakistan was to stand as a bulwark against communism it would need still more help from the West.

I had successfully persuaded President Reagan in the course of our discussions in Washington of the importance of attending the Cancún summit which was held that October in Mexico. I felt that, whatever our misgivings about the occasion, we should be present, both to argue for our positions and to forestall criticism that we were uninterested in the developing world. The whole concept of ‘North-South’ dialogue,
which the Brandt Commission had made the fashionable talk of the international community, was in my view wrong-headed. Not only was it false to suggest that that there was a homogeneous rich North which confronted a homogeneous poor South: underlying the rhetoric was the idea that redistibution of world resources rather than the creation of wealth was the way to tackle poverty and hunger. Moreover, what the developing countries needed more than aid was trade: so our first responsibility was — and still is — to give them the freest possible access to our markets. Of course, ‘North-South’ dialogue also appealed to those socialists who wanted to play down the fundamental contrast between the free capitalist West and the unfree communist East.

The conference’s joint chairmen were President López-Portillo, our Mexican host, and Pierre Trudeau who had stepped in for the Chancellor of Austria, prevented by illness from attending. Twenty-two countries were represented. We were staying in one of those almost overluxurious hotels which you so often seem to find in countries where large numbers of people are living in appalling poverty. Cancün was built in the 1970s, on a site (it is said) chosen by computer as likely to have maximum appeal to foreign tourists. The city was badly damaged by Hurricane Gilbert in 1988. So much for information technology.

There is no immodesty in saying that Mrs Gandhi and I were the two conference media ‘personalities’. India had just received the largest loan yet given by the International Monetary Fund (IMF) at less than the market rate of interest. She and others naturally wanted more cheap loans in the future. This was what lay behind the pressure, which I was determined to resist, to place the IMF and the World Bank directly under United Nations control. At one point in the proceedings I engaged in a vigorous discussion with a group of heads of government who could not see why I felt so strongly that the integrity of the IMF and the World Bank would inevitably be compromised by such a move, which would do harm rather than good to those who were advocating it. In the end I put the point more bluntly: I said that there was no way in which I was going to put British deposits into a bank which was totally run by those on overdraft. They saw the point.

While I was at Cancün I also had a separate meeting with Julius Nyerere, who was, as ever, charmingly persuasive, but equally misguided and unrealistic about what was wrong with his own country and, by extension, with so much of black Africa. He told me how unfair the IMF conditions for extending credit to him were: they had
told him to bring Tanzania’s public finances into order, cut protection and devalue his currency to the much lower level the market reckoned it worth. Perhaps at this time the IMF’s demands were somewhat too rigorous: but he did not see that changes in this direction were necessary at all and in his own country’s long-term interests. He also complained of the effects of droughts and the collapse of his country’s agriculture — none of which he seemed to connect with the pursuit of misguided socialist policies, including collectivizing the farms.

The process of drafting the communiqué itself was more than usually fraught. An original Canadian draft was in effect rejected; and Pierre Trudeau left it largely to the rest of us, making clear that he thought our efforts rather less good than his own. I spent much of this time seeking to sort out drafting points with the Americans, who continued until almost the last moment to have reservations about the text.

The summit was a success — though not really for any of the reasons publicly given. At its conclusion there was, of course, the expected general — and largely meaningless — talk about ‘global negotiations’ on North-South issues. A special ‘energy affiliate’ to the World Bank was to be set up. But what mattered to me was that the independence of the IMF and the World Bank were maintained. Equally valuable, this was the last of such gatherings. The intractable problems of Third World poverty, hunger and debt would not be solved by misdirected international intervention, but rather by liberating enterprise, promoting trade — and defeating socialism in all its forms.

Before I left Mexico, I had one more item of business to transact. This was to sign an agreement for the building of a huge new steel plant by the British firm of Davy Loewy. Like other socialist countries, the Mexicans wrongly thought that large prestige manufacturing projects offered the best path to economic progress. However, if that was what they wanted, then I would at least try to see that British firms benefited. The ceremony required my going to Mexico City the night before. I stayed at the residence of the British Ambassador, Crispin Tickell. While I was there at dinner the chandeliers started swinging and the floor moved; there was nowhere you could put your feet. At first I thought that I must have been affected by the altitude, even though I had had no difficulty in my earlier days on skiing holidays. But I was reassured by our ambassador who was sitting beside me: ‘No’, he said, ‘it’s just an earthquake.’

Other earthquakes were sending out tremors that year. Before I left for the international visits chronicled in this chapter, I had been all too aware of the significance for the Cold War of the stationing of
Cruise and Pershing missiles in Europe. If it went ahead as planned, the Soviet Union would suffer a real defeat; if it was abandoned in response to the Soviet sponsored ‘peace offensive’, there was a real danger of a decoupling of Europe and America. My meetings with President Reagan had persuaded me that the new Administration was apprised of these dangers and determined to combat them. But a combination of exaggerated American rhetoric and the perennial nervousness of European opinion threatened to undermine the good transatlantic relationship that would be needed to guarantee that deployment went ahead. I saw it as Britain’s task to put the American case in Europe since we shared their analysis but tended to put it in less ideological language. And this we did in the next few years.

But there was a second front in the Cold War — that between the West and the Soviet-Third World axis. My visits to India, Pakistan, the Gulf, Mexico and Australia for the Commonwealth Conference brought home to me how badly the Soviets had been damaged by their invasion of Afghanistan. It had alienated the Islamic countries
en bloc
, and within that bloc strengthened conservative pro-western regimes against radical states like Iraq and Libya. Traditional Soviet friends like India, on the other hand, were embarrassed. Not only did this enable the West to forge its own alliance with Islamic countries against Soviet expansionism; it also divided the Third World and so weakened the pressure it could bring against the West on international economic issues. In these circumstances, countries which had long advocated their own local form of socialism, to be paid for by western aid, suddenly had to consider a more realistic approach of attracting western investment by pursuing free-market policies — a small earthquake as yet, but one that would transform the world economy over the next decade.

CHAPTER VII