Prime Minister
It's a whirlwind visit. We've packed it full so far. We've enjoyed it, it's been a marvellously warm welcome and we now spend a day in New York. But I think I had better leave it to you for questions.
Q
You have had success here on Iran and the result of the Rhodesian talks. Were you disappointed that you didn't get more from the administration on Northern Ireland?
A
Well we have an order in for the next tranche of guns for the RUC. They are revolvers. I have seen the ones they are using now. They've got 3,000 and we want another 3,000. There is an order in for more. We don't know what will happen to the order. We have the first 3,000 all right.
Q
Did you discuss that with the Jimmy CarterPresident?
A
We did have a word or two about it, yes. We did not reach any final conclusion.
Q
Do you have the feeling that this might continue until after the election? Is it a political problem?
A
Well no, not until after the election. They will need some more revolvers before then.
Q
Why do they need American revolvers?
A
Because it so happens that they are best for the job. As a matter of fact most of the police forces in the United Kingdom insofar as they use guns, which is not very much, are equipped with American guns. We don't make a suitable one.
Q
Is there any stage at which you will need to think of getting them somewhere else?
A
Well in fact I think there is a British one in design and they could of course carry on with the ones they have got. But it is just that the particular one we want would be the best one for the job.
Q
Prime Minister: did the President explain why there has been this long delay? [end p1]
A
No, we did not dwell on it for very long.
Q
Did you discuss this subject with speaker O'Neill?
A
No, he was there when I spoke on the hill about Ireland at the joint meeting we had there yesterday. I regard it as my job to put over the facts about Ireland which aren't always known in the United States.
Q
You told Barbara Walters this morning that many people think you have not been tough enough with public spending cuts. How soon do you expect to have more?
A
Well that was in the news last week, when I said the same thing to the 1922 Committee. In fact what we have done is to cut public spending this year to the same level as last year, and will hold it next year to the same level. And it will leave us with too high a borrowing requirement, and because the borrowing requirement is too high the interest rates are too high. And the interest rate is devastating on people who are buying their own homes. If we had got public spending down further we would have needed to borrow less, and we would not have had quite such a high interest rate as 17 percent. If in fact there is a mild recession next year, and I think there is bound to be because once you are paying more for oil it means there is less to spend on other things, and therefore fewer other things are produced. If there is a mild recession next year and spending does not go down then you will have a rather high proportion of the national income going to public spending (inaudible).
Q
Prime Minister, were you able to discuss with the President the whole question of the replacement of polaris?
A
No, we had only a very preliminary discussion.
Q
Prime Minister, if the United Nations chose not to adopt a resolution on economic sanctions against Iran, are you planning any unilateral action?
A
No, as you know, our law would not allow us to block assets for political reasons. The point about the United Nations mandatory resolution is that it is then embodied in our law. If you are going to attempt to have sanctions of any kind you have got to have them on the part of everyone, otherwise they just don't work. It is wholly a matter for the Jimmy CarterPresident to decide if and when to go for a Chapter 7 Resolution. Chapter 7 is one that gives you powers and then you have to decide which powers you can get agreement on. It is not an easy decision to take, if I may very respectfully say so. Because he obviously has to look at it from the point of view of what is going to help the hostages. Is more pressure of that kind going to help to release them or is it going to be counter-productive. It is a very difficult decision to take. I think he has taken the right course to proceed by diplomatic means in every possible way, and I think it was right to wait to consider the possibility of [end p2] economic sanctions until after the decision of the international court at The Hague. Once that is pronounced you would expect some further steps, diplomatic steps, to be taken.
Q
Did he give you any indication that he was going to be asking the allies to take unilateral steps in case a Security Council resolution was not obtainable?
A
No, there are one or two further financial steps that I think they would like us to take and we are having a look at some of those.
Q
What has happened to British trade with Iran?
A
Oh: it is way down. We used to have a very thriving trade with Iran. We have sent virtually no arms since the hostages were taken. Trade is right down since the revolution.
Q
Prime Minister, on Rhodesia has there been any discussion of the earlier plan to compensate white farmers?
A
We have not got a special arrangement on that. We have been concentrating everything on the job in hand, which was to get an agreement on the constitution and independence. We did not know when we came whether they would agree to the last step. But as you know the Patriotic Front initialled the ceasefire agreement on Monday.
Q
Prime Minister, will it work?
A
You are a cynical lot.
We have spent 15 weeks securing a most remarkable agreement, if I may say so. For 15 years not to have one, and then in 15 weeks to get one. But I think the front line states really want it to work. This, I think, is a very significant factor. The Commonwealth obviously want it as they agreed at Lusaka. The effect of the war on the front line states is very adverse indeed. All of these people wanting it to work will indeed be conducive to its working. I don't think it will be trouble-free, nothing is in politics. There are always problems, but I do believe we shall get through to a solution and a fully democratic government in Rhodesia.
Q
Just to clarify if I may, you said the us had asked the allies to take certain financial steps in relation to Iran. Can you tell us what they are?
A
Lord CarringtonPeter, are they public yet or not?
Lord carrington
There was a discussion on economic steps in relation to Iran in Europe last week and we are considering what we can do (inaudible).
Q
Will they be unilateral?
Prime Minister
Well, we try to take collective action wherever possible. First, it is much, much more effective, secondly just to [word missing] it unilaterally tends not to have any effect at all.
Q
You cannot give us any detailed information on what the steps are?
A
I don't think we have made them public yet.
Q
I understand that one of the subjects you discussed yesterday with [end p3] the President was Belize. Can you tell us what the context was?
A
It has been time to give independence to Belize for quite some time. The problem does not lie with us being dilatory in any way in pursuing that objective. The problem is that whenever we have moved towards it Guatemala has been distinctly restive, and therefore we need some support for our objective to try to get independence for Belize.
Q
And did you get any sense that you would get that support?
A
Those talks were carried on mainly between the Lord CarringtonForeign secretary and cy vance.
Peter, can you say anything further about Belize?
Lord carrington
The problem is one of territorial integrity. After the granting of independence, the United States obviously has an interest in the stability of Guatemala. This is what I talked with Mr. Vance about and we are going on talking about it.
PM
It also came up at the Commonwealth conference. It usually does. Now that we are bringing Rhodesia to independence I think that Belize is perhaps one of the last countries to come to independence.
Q
Yesterday after your meeting with the President he came out and said something about certain negotiations having taken place and some agreement had been reached. Were there any specific agreements reached?
A
There were no specific agreements in the sense that we signed things chapter and verse. One tends to apply precision to sentences that are used orally. Precision rules really only apply to carefully drafted documents. I think that discussion would perhaps have been a more appropriate word.
Q
Can you give us some indication of what went on in your private talks with the President, the 10 minutes at the beginning of the session and the 15 minutes at the end?
A
We had coffee mainly and there were rather a large number of people I think.
Q
The latter period of the meeting was a restricted session though wasn't it?
A
Yes, always when you have a meeting with heads of government you have part of it tete-a-tete, part of it with the foreign secretary, and part of it in plenary.
Q
Did you have major talks on the world economic situation?
A
Did we have a hefty economic session? No, but everything is dominated as you know by the world energy situation, the price of oil and the uncertainty about supplies. At the moment, the fourth quarter of this year, the demand for oil is actually slightly down, [end p4] supply is actually slightly up, you might think therefore that the price mechanism would start to operate. Not a bit of it, because people are so worried about the prospect of not having supplies next year that they are trying to ensure security of supply and taking as much as they possibly can and driving around with their tanks full. That really is the thing that hangs over the economic situation and of course the thing which is almost bound to bring about some kind of recession next year. If you have got to pay that much more for oil you have obviously got less to pay for other things not only the third world but also the advanced industrial countries as well. And I think the price of oil is up by about 70 percent from the beginning of the year, an enormous amount.
Q
Did the President suggest that Britain contributed to this by putting up the price of its oil?
A
But we haven't you know, except in accordance with the grade of our oil and we followed Libya, Algeria and Nigeria, we moved about together. You know our grade is higher grade oil than the ordinary south Arabian market crude and the higher grade oil is of course considerably higher priced. In fact we are selling at 26 dollars a barrel, and I may say that some of the crude we are having to buy back for our refineries we are having to buy at a higher price. In fact those who are getting our oil at 26 dollars a barrel and are selling on the spot market. They are really getting a very good deal.
Q
Did he ask about the European Community question?
A
No, I think that is generally known. We did explain it at Congress. European matters did of course arise with the President but there is no question of our leaving the EEC, there is a question of sorting out our problems within the EEC.
Q
Did you discuss SALT II?
A
Well, I have said that I hope SALT II will be ratified, but I am told that it will take some time before it comes up in the Senate.
Q
Prime Minister, can you tell us when you are going to make a decision whether or not to join the EMS?
A
Not yet. If you look at the changes in the value of our currency, even over the last few weeks it has gone from about $2.34 to about $2.20 within a few weeks. That is because we are a petro currency and the weakness of the dollar tends to show itself in the strength of sterling. There was also the fact that we did abolish all exchange controls. It was not certain what the foreign exchange market would do after that. You can say it has been steady, but it has steadily gone up. We would have gone right off the top of the grid had we been in. Let me put it this way. When you intervene to keep your currency down it has the effect of increasing the money supply. This means you have to forego one of the levers of control over money supply. [end p5]
Q
As interest rates have come down, I wonder if you foresee the UK rate of interest coming down too?
A
We are always very circumspect about what we say in this area. As you know: we fixed the MLR and we fixed it with two things in mind. First the level necessary to get in the amount of gilts to finance the amount of borrowing we need, and secondly with regard to the amount of borrowing in the general system. In the last three years before the increase to 17 percent had really taken effect the figures were not good but quite a lot of it was not caused by internal supply and demand but by money coming in externally. One would hope that interest rates will come down but I could not possibly be more specific than that.
Q
Forgive me asking the question in this way but I do not know any other way to phrase it. Are you satisfied with your personal relationship with the President?
A
Wholly. I don't see why the question was difficult.
Q
How did you find him standing up the strain?
A
Standing up extremely well. Of course it is a strain. There would be something very wrong if it were not. It is an enormous human strain but Jimmy CarterHe is standing up extremely well.
Q
Do you have any fears that your very outspoken support of the Americans in the Iran crisis will lead to attacks in the British House of Commons?
A
Just suppose our Embassy had been attacked. We would expect the full support of America, of course we would. They are entitled to full support from us when they are under attack.