The Downing Street Years (43 page)

In early November 1980 I chaired a meeting of the Overseas and Defence Committee of the Cabinet (OD) to consider a paper from Peter Carrington and Francis Pym which argued that Britain should take the initiative in proposing a wide-ranging review of NATO to make it more relevant to western defence requirements and more cost effective. In the longer term the members of the alliance should move towards greater specialization. Attractive as the idea was from our viewpoint, it quickly became clear that Chancellor Schmidt was opposed to it, on the grounds that he believed that it would weaken not strengthen NATO. Moreover, with the election of President Reagan, committed to radically different policies from his predecessor, my main emphasis came to be on keeping the alliance together, united behind American leadership. However, whether matched by international action or not, Britain was forced by pressures of circumstance to conduct its own and — as it turned out — highly controversial defence review.

I appointed John Nott to Defence in January 1981 with the remit of getting better value for money from the huge sums spent on defence. In February John, Peter Carrington and I had an initial discussion about what would be our 1981 Defence Review. John had already concluded that the defence budget was hopelessly overextended both in the short and long term. The real cost of ever more sophisticated weapons was remorselessly increasing the pressure. More sales of
defence equipment could help a little — particularly if we were able to produce equipment more suited to the needs of potential overseas customers. However, defence orders were running way ahead of budget and would have to be cut back if we were to keep within any kind of financial discipline. Some fundamental strategic issues also had to be faced. There was very little scope for reducing our commitment to West Germany. A policy of forward defence was crucial to the alliance’s strategy: moreover the political implications of cuts here for NATO as a whole could be very serious. Nor could savings be found in home defence: indeed the effort here would have to be increased, for example by strengthening the Territorial Army. There was no room for savings on the RAF: on the contrary, additional expenditure would probably be required. This left the navy. The navy needed more submarines and more minesweepers. But it is extremely expensive to keep up a large surface fleet and so that was plainly the area to look for cuts. None of us had any illusions about the sensitivities involved in the approach John proposed, but it was difficult to fault his analysis.

In early May I had another discussion with John about the options emerging clearly from his review. He believed that his proposals would provide the basis for a far more effective defence force for the needs of the future. But it was already clear that opposition within the armed forces and in the Conservative Party would be strong. I would have to see the Defence Chiefs of Staff to discuss with them their reactions to what was proposed. Moreover, many marginal seats would be involved, especially in dockyard closures. We would have to make every effort to explain our priorities both in the country and to our NATO allies, particularly the Americans.

What I had not expected was that the most public opposition would come from a Defence minister. On Friday 15 May Keith Speed, the Navy minister, made a speech which effectively disowned the whole strategy of the review. John Nott did not want him to resign at once and suggested that he should be moved to another department. I said that there was no question of this: if he was going to be disloyal to the Government in one department, he would in another. I saw him very late on the night of Monday 18 May and told him he must go.

In early June I met the Chiefs of the Defence Staff, at their request, with John and Peter Carrington. The press had been full of stories about my ‘fury’ at their lobbying against the review. But in fact I had found the behaviour of the Chiefs of Staff throughout impeccable, and I said so. No one at the meeting openly contested that the NATO central front was bound to be the decisive arena. Scenarios of conflict
in the Third World might be more likely: but only on the central front could the war be lost in an afternoon. It was argued that we should again press for a full-scale NATO review. But we could not afford to postpone decisions in the hope that a NATO review might help us: moreover such a review at this time could itself destabilize the alliance.

On the morning of Monday 8 June John Nott and I met Sir Henry Leach, the First Sea Lord, who argued vigorously the importance of the surface fleet. I have the greatest respect for his judgement. He could well argue that the Falklands War proved him right. He could certainly argue today that with the end of the Cold War and events in the Gulf there is now a need for mobile forces and a strong navy. At that time I had to disagree with him because I could see no other way of meeting our NATO obligations within the financial constraints.

John announced the conclusions of the Defence Review to the House of Commons on the afternoon of Thursday 25 June. The decisions — particularly to cut the number of ships and to close the base and dockyard in Chatham — ran into fierce opposition, not least from Members of Parliament whose constituencies were affected. The closure of the dockyard went ahead. But after the Falklands campaign the following year some of the decisions of the Defence Review were altered. Certainly no one who lived through that campaign could be in any doubt about the importance of a country such as Britain with far-flung interests being able to project its military power swiftly and effectively across the globe.

No matter how effectively Britain managed its defence effort it was on the unity, strength and credibility of NATO that our security ultimately depended. It was of the utmost importance that American public opinion remained committed to western Europe. So the tensions and divisions which arose in the alliance at this time were of great concern to me. My view was that ultimately we must support American leadership: but that did not mean that the Americans could pursue their interests regardless of the opinion of their European allies.

The need to decide how to react to the imposition of martial law by General Jaruzelski’s Government in Poland on 13 December 1981 highlighted problems which had been growing throughout 1981. Some European countries, most importantly the Germans, were hostile to President Reagan’s economic policy and mistrustful of his rhetoric on
defence and arms control. I, of course, did not share these attitudes, though I wanted tougher action to control the widening US budget deficit. What I found irritating and on occasion quite unjustified was the way in which the actions the Americans preferred inflicted a good deal more pain on their allies than on themselves and, one might argue, the communists in Poland and the Soviet Union. The first such issue was the Polish Government’s crackdown on Solidarity.

I was from the first acutely aware of the importance of the Polish question. Like most people in Britain, I have always liked and admired the Poles, many of whom settled in this country during and after the war. But there was more to it than that. On 9 December 1980 I talked quite frankly to the Polish Deputy Prime Minister who visited London. I said that I was conscious of witnessing a change in a socialist state of a kind that had not occurred in the last sixty years. A new group of people — the Solidarity movement — were challenging the communists’ monopoly on power on their own terms. I told him how closely we were watching events in Poland and how excited I was by what was happening. I said that the socialist system had succeeded in suppressing the human spirit for a surprisingly long time but that I had always been confident that there would be a breakthrough.

But these happy signs were not to last. The Soviets brought increasing pressure to bear on the Poles. From the end of 1980 the Americans became convinced that the Soviet Union was planning direct military intervention to crush the Polish reform movement, just as they had crushed the ‘Prague Spring’ of 1968.

From about the same time we began to draw up measures to punish the Soviet Union in such an eventuality. Peter Carrington and I agreed that we should respond in a measured, graduated way depending on the situation we faced. We foresaw four possibilities: a situation in which the use of force by the Polish Government against Polish workers was imminent, or had already taken place, or one in which Soviet intervention was imminent, or had already taken place. We agreed that ineffective sanctions would be worse than useless, but sanctions would have to hit the Soviets harder than they hit us. Meanwhile, we had to make a number of complex judgements about Soviet and the Polish Government’s intentions. Was the present ostentatious Warsaw Pact activity the prelude to armed intervention or a means of bringing political pressure to bear on the Polish Communist Party? If we continued to provide food aid and to proceed with plans for Polish debt relief would this benefit the Polish people or play into the hands of the hardliners in Poland who were struggling to survive the consequences
of their own misgovernment? These were not easy judgements to make.

Suddenly the situation changed. Martial law was declared in Poland from midnight on 12–13 December 1981 and a ‘Military Council for National Salvation’ consisting of military leaders was set up under the Prime Minister, General Jaruzelski. The borders were sealed, telex and telephone links severed, a curfew imposed, strikes and assemblies banned, the broadcasting system brought under tight control. There was no doubt in my mind that all of this was morally unacceptable but that did not make it easier to gauge the correct response. After all, in order to warn off Soviet intervention, we had consistently said that the Poles must be allowed to decide on their own internal affairs. Were the Soviets themselves behind it, intending to use the crackdown as a means of turning the clock back to hardline communism and subordination to Moscow? Or was this really a temporary decision, as the Jaruzelski Government claimed, forced upon them to bring some kind of order to Poland, with the implication that this would prevent a Soviet takeover? At this early stage there was a severe shortage of information not just to illuminate these questions but even as to the whereabouts and safety of leading Polish dissidents.

The more we learnt of the background to what had happened, however, the worse it appeared. President Reagan was personally outraged by what had occurred, believed that the Soviet Union was behind it and was determined to take swift action. I received a message from him on 19 December to this effect. Al Haig sent a parallel message to Peter Carrington pointing out that the Americans were not proposing that the West should now implement the far-reaching measures to meet Soviet military intervention that had already been agreed in NATO. What they wanted were some political and economic measures at once and others in reserve if the situation worsened. Without any further reference to us, the Americans would be announcing sanctions against the Soviet Union later that day. These, we were were glad to note, rightly did not include abandonment of the disarmament talks going on in Geneva. But they did include measures such as the cancellation of Aeroflot landing rights, a halt to negotiations on a new long-term grain agreement (though an existing agreement would remain in place) and a halt to the export of material for the construction of the planned natural gas pipelines on which work had already begun.

It was this last point which was to be the cause of great anger in Britain and other European countries. British, German and Italian firms had legally binding contracts to provide equipment for the West Siberian Gas Pipeline, which involved components made in the United
States or under United States licence. It was not clear at this stage whether the measures announced by President Reagan against the Soviet Union applied to existing contracts as well as new ones. If the ban extended to existing contracts this would deprive British firms of over £200 million of business with the Soviet Union. Worst affected would be a contract of John Brown Engineering for pump equipment for the pipeline project on which large numbers of jobs depended.

While pressing the Americans on this particular point, I ensured that we gave them the strongest possible backing both in NATO and the European Community for the general line they wanted to take. This was by no means easy. Initially, the Germans were reluctant to take any measures against the Polish Government, let alone against the Soviet Union. The French were pressing hard for continuing the sale of food at special subsidized prices by the European Community to the Soviet Union. But I still felt that if we could persuade the Americans to take a more reasonable line over the pipeline project we would be able to demonstrate a fairly impressive western unity. The trouble was that there were those in the American Administration whose opposition to the pipeline project had nothing much to do with events in Poland. These people believed that if it went ahead the Germans and the French would be dangerously dependent on Soviet energy supplies, which would have damaging strategic implications. There was some force in this argument; but it was exaggerated. Although Russia would be providing just over a quarter of Germany’s and just under a third of France’s gas, this would be no more than 5 per cent of either country’s total energy consumption. But in any case neither the Germans nor the French were going to accede to American pressure. Such pressure would therefore be counter-productive as well as irrelevant to the specific problem we faced in Poland. There was also American talk, which seriously worried the Bank of England, of forcing Poland to default on her international debts, which would have had severe effects on European banks.

At OD towards the end of January 1982 we discussed these possibilities. I said that there was a clear danger of the American Government’s present policy damaging western interests more than those of the East and provoking a major transatlantic quarrel of precisely the sort that it had long been the main objective of Soviet policy to bring about. Britain had already offered to do more to meet American wishes than our European partners were likely to accept. This was no longer a time for concessions but for some straight talking to our American friends. I decided to approach President Reagan. I also asked other ministers to try to influence their American counterparts. An urgent
invitation would be extended to Al Haig to visit London on the way back from his current visit to the Middle East.