Prime Minister
Ladies and Gentlemen, my purpose in visiting Washington this week is quite simply stated and familiar to you.
I have had three very pleasant tasks: first, to pay warm tribute to President Reagan on his many outstanding achievements to the United States, the West and the world during his very successful two terms of office; second, to take stock with President Reagan and the members of his Administration on current issues which will carry through to his successor; and third, to congratulate George Bush on a convincingly won election and to begin to establish a new working relationship to deal with the problems of the future.
It has been, as you know, a very moving and a rewarding visit and will be numbered very high among those which I shall never forget. [end p1]
Of course my meetings with President Reagan were tinged with sadness that this outstanding President, who has restored America's faith in herself and set freedom on the offensive the world over, will soon leave office.
But that sadness is touched with joy by two things. First, that President Reagan leaves office with the affection of the American people and the gratitude of millions who have come to see the world in the late 1980s as a safer, freer and more hopeful place in which to live; and second, he will be followed by a President in George Bush who believes in the same principles and policies, thus giving the continuity of purpose stretching well into the future.
This loads me to identify the one outstanding lesson which I believe all politicians could learn from the Reagan era, it is to define what you want to do, to set out your aims clearly and simply and, having staked out the ground, to persevere through to success.
In reviewing current issues which with George Bush represent early items on his agenda, we identified the following.
East-West relations: here President Reagan, George Bush and myself will soon be having meetings with Mr Gorbachev at this historic time of opportunity in East-West relations. Not surprisingly, on this and many other issues, Vice-President Bush and I broadly agree on the way forward. We are clear that we must encourage Mr Gorbachev in his bold reforms while remaining watchful and strong in defence. [end p2]
Arms Control: the agenda for negotiations to build on the INF Agreement is clear. It is really the one that we agreed at Camp David in November 1986, with 50 percent strategic arms reductions, deep asymmetrical cuts in conventional weapons, the elimination of chemical weapons, and the continuing modernisation of the nuclear deterrent so that it continues to deter.
The Middle East: here, as you know, we would like to raise the Arab/Israel problem in the order of international priorities. I believe we need a fresh effort to get negotiations started under the auspices of an international conference.
Afghanistan, Aran/Iraq, Angola, which I mention together because the prospect of an end to hostilities is good and we hope a happier chapter in their histories.
Those things mark the end of the Reagan era.
We must do all we can to help secure these various more localised opportunities for peace. And the economy, including the need to come together to restore a better balance to the world's life support system, our atmosphere.
All these things we have discussed over the last two days and I am sure that Vice-President Bush, in his own due time, will tackle the United States' budget deficit calmly and responsibly. [end p3]
I am privileged to have been able to come to the United States at a time of such hope in world affairs and I will be striving with all I have got to help George Bush and his friendly team to help us realise our aims in world affairs.
I am impressed by the steady and workmanlike approach of the transition. They give good grounds for quiet confidence in the future.
Ladies and Gentlemen, your questions. [end p4]
Question
Given the merits of the misgivings that you have expressed about the consequences of removal of all trade barriers in Europe by 1992, why should it not be appropriate for the Canadian people to share those misgivings with regard to the US-Canada free trade pact?
Prime Minister
In Europe we have embarked upon a great effort to get down the internal barriers to trade among the twelve Community countries. We are doing that not as a means of putting up extra barriers around Europe, but as an example to the rest of the world to try to get down their barriers.
It seems to me that the agreement between Canada and the United States was a similar agreement to what we are doing in Europe, namely to get down barriers between their two very important countries, and it gives a great opportunity for them both.
So each side of the Atlantic you have barriers being removed within a particular trading area. You then go to GATT to try to get down the barriers further.
Now I do not really see what the problem is. They have both the same objective, so what precisely was the point of your question? [end p5]
You have the same objective there and you have got the same objective there, now what is your problem?
Question
You are on record as having serious misgivings about the consequences of Europe of 1992 and the Liberal Party in Canada has actually used your comments to this effect in their opposition to the US-Canada trade links?
Prime Minister
If it is being used in that way, it is not correct. I have no misgivings about getting down restraints to trade within Europe. What I am careful about is that in getting down those restraints to trade and in setting certain standards in common, namely standards of safety for example which are absolutely vital, and particular technical standards, for computers you do not want four or five standards, you want one. In getting down those barriers that people do not try to attach to them needless regulations like, for example, a European company law embodying rules for worker participation. That is not necessary, it is not getting down a restraint, that would be adding to regulation. I do not think anything like that would arise between the Canada-American agreement. [end p6]
So that is a totally different factor which could apply to Europe which would not apply to the other. And if the true objective is followed, getting down the restraints to trade, they are the same. [end p7]
Question
Mrs. Thatcher, how urgent is the budget deficit problem in the United States for Great Britain and what is your opinion of the recent days of market jitters, if you will, in response to the Bush election?
Prime Minister
The budget deficit. I do think it is advisable, you know, to wait until a President has been inaugurated before expecting him necessarily to take all the policies and the actions.
The budget deficit has to be seen against the background of a very strong United States economy, very strong. Inflation is not re-emerging. You have not got wage inflation. You are growing steadily. It has performed very well indeed and the budget deficit is something like 3 percent of GDP. In many European countries, [end p8] that would be a small budget deficit as a percentage of GDP. The problem arises because the United States not savings ratio is also small.
I think it will be tackled because of the United States and you, it does have an effect on the world. I think the important thing is that you get the right policy and that has to be done with a very calm and responsible approach and must be done in measured time and not by trying to hurry some kind of policy statement.
With regard to the foreign exchange markets, this is not a matter for me. I do not join those people who make a comment about them daily or even hourly. You have got a strong underlying economy. That is very good.
Question
Prime Minister, the Anglo-Irish Agreement is up for review this month. I wonder if you had any discussions on that?
Prime Minister
The clause that comes up for review is the workings of the Intergovernmental Conference, which is part of the Anglo-Irish Agreement. It is the procedural workings of it which are up for review. [end p9]
Obviously, we shall take that review seriously on both sides but I think now the Anglo-Irish Agreement is generally accepted in the spirit in which we entered into it—that it gave guarantees to the Unionists that there would be no change without their consent and it also gave fresh hope for the Nationalist Republican tradition in Northern Ireland that their particular concerns would also be met. So there is a very well balanced Agreement really offering more opportunities for reconciliation in Northern Ireland at the same time as making the Unionists fully conscious that there would be no change without their consent.
So I think on the whole it is now coming to have a greater degree of acceptance on both parts of the community in Northern Ireland and I found that was very much so when I went to Lisburn on a recent visit to Northern Ireland and I found very very few people—I think only about five or six out of a crowd of something like, I should think four or five thousand—were demonstrating against it. So I think things are quite quietly hopeful if we can beat terrorism. Terrorism, of course, is people who do not want the result by the ballot box but by the bullet and by the bomb. [end p10] (THE FOLLOWING QUESTION IS NOT CLEAR AT THE BEGINNING)
Question
Mrs. Thatcher, you said in your introductory remarks … we would like to raise the Israel problem … . the “We” there referred mainly to the British Government or whether Mr. Bush also agrees with that assessment?
And my second question is: could you elaborate on your remarks last night about the PLO statement in Algiers? What is your view about whether it is a step forward and specifically, if it is a step forward, how would you follow it up and what would you say to those people in this town who hold that it is not a step forward, that it is just more equivocation, that no further action is required?
Prime Minister
First, I was using there, I am afraid, the “We” in the sense that we in Britain would like to raise it, but I do not think we shall find very much difference of approach on that. It is events that are moving it much higher in international priorities. Not only events, but the fact that under President Reagan 's Administration, a number of the other great international matters, as I indicated, are on the way to solution, including of course Iran-Iraq, which was really a triumph for the five Permanent Members of the Security Council acting in concert in the United Nations, so I do not think one will come up against any opposition to the fact that one wants to move it up—it is naturally moving itself up. [end p11]
Secondly, that communique—the Palestine National Council communique—is a very long one and very complicated and there are obviously a lot of things in it that none of us like. But also, I think, there has been some kind of attempt to give a little bit of hope.
I, for example, said quite a long time ago when there was a possibility of me seeing two of the PLO, that I would see them provided that they accepted United Nations Resolutions 242 and 338. Secondly, that they would recognise Israel's right to exist and thirdly, that they would renounce violence as a way of proceeding.
Now, it looks to me as if quite a number of them are trying to say that they will accept Resolutions 242 and 338. There is a lot of small print, but I think there is a move forward there.
They certainly have not gone far enough on the other two and they have done some things which I, for example, would never agree with. It seems to me not the time to say that you are having a Palestinian State with the capital Jerusalem. That, I think, is a retrograde step, but you know my views on that are very well known. That is a matter for negotiation when you get the negotiations started and not for pronouncing on results before you get them started. That does not help matters.
But if we find that they are agreeing with 242 and 338—and it looks to me as if that is what they are trying to say—that is a modest step forward and it is something on which we could build. [end p12]
There is just one other thing. You go on for years and years talking about problems and saying to people: “Please! You must come to accept these! You must do it as a condition!”
Now, when it looks as if they are trying to do it and may actually have done it, according to how you interpret the small print, if you do not encourage them when they look as if they are doing something going in the right direction, you will not get further moves.
I believe that we need to make a stenuous effort to get negotiations going in that area and that does mean we have to make strenuous efforts with both sides to get a negotiation started and that is when we see some signs of hope, although there are other things we do not like, we try to build on those signs of hope to get things moving further in the direction in which we would wish them to go to get the negotiations started. It is not headline-making stuff, but it may be the kind of progress that can lead somewhere.
Question
Mrs. Thatcher … . (inaudible) … . what are you doing to stop … . [end p13]
Prime Minister
I am not quite certain where you get the idea of worldwide recession from. I have just said the American economy is very strong. The British economy is very strong. Most European economies are strong.
I do think the world has profited very much from the view taken by the Economic Summit Seven countries, that in the first seven years they were not tackling problems in the right way—they were trying to do fine tuning and say: “Look! A little bit more demand here, never mind about a little bit more inflation! It might help with unemployment in the short term!” That led to enormous problems in the longer term.
In the second seven years, we tackled things very differently, by saying: “Let us get the fundamentals right! Let us have a policy which gives priority to getting and keeping inflation down! Priority to keeping public expenditure under control!” and, of course, you have to have tax incentives and that has led to a very much better world economy, with much longer growth than we had before and I think that that approach and the cooperation we are getting between the Economic Summit Seven now has led to much better results, so I would not agree with your premise underlying your first question. [end p14]
And the second question—takeovers. In our country, we refer to the Monopolies and Mergers Commission takeovers which could have a detrimental effect on competition. It is up to governments who believe in competition to ensure that competition continues and therefore, you do put a block in the place of monopolies or mergers which could substantially reduce competition and so anything that could do that comes up to the Department of Trade and Industry and a recommendation is made by the Director General of Fair Trading as to whether it should be referred, and it is then referred. It now will take something like two to three months for them to interview both the parties to the merger and decide whether they think that it would severely restrict competition, In which case the merger would not be allowed—or it could go ahead. So we do already have a built in mechanism in our country.
Not all mergers are bad, you know. I mean, there are times when a merger will arise because the underlying assets of one particular company are not really being sufficiently well deployed. In others, there may be other reasons, but we do have that protective mechanism in Great Britain. [end p15]
Question
Prime Minister, you and President Reagan have quite an exceptional political relationship, clearly based on shared goals and beliefs, but also you have shown a very special personal relationship. I wonder if you could talk about that for just a minute, the personal side of things, what is it between you and President Reagan that just seemed to click?
Prime Minister
Because for years we were both working for the same policies because we believed they were the right ones. Ronald ReaganHe was working for them when he was Governor of California. He was going round the world making speeches about them, during that time he came to Britain, I knew what he was saying. I met him before he was President and he met me before I was Prime Minister. [end p16]
It was because that as we all go round the world making speeches on our beliefs, because we had these similar beliefs and a similar determination to put them into action. So there is no great mystery about it and I think we both had the same approach, we were not going to compromise those beliefs.
However much criticism we might have faced, particularly in the short-term, we believed that they were right in the long-term and the success which President Reagan has had and any success I might have had have come really from the same source. This was the right way to go and we were going to stick to it until the policies had time to bear fruit.
So it was quite a coming together both of beliefs, of minds and of resolve. It was just very fortunate that we were both there at the same time and very fortunate, I think, that at the time we were both there, someone like Mr Gorbachev came to power in the Soviet Union with also a bold policy of reform based on more personal responsibility and initiative.
Sometimes these things happen that way.
Interviewer
Was there any discussion here on the changed role for Britain in the Gulf in the wake of its arms sale to Saudi Arabia and was there any discussion of bilateral defence trade? [end p17]
Prime Minister
I would not say a changed role for Britain in the Gulf. We were in the Gulf for decades and decades and decades. It was the Labour Party in 1970 who decided to come out of the Gulf, so I would not say it was a changed role, there was nothing unusual about our … . The Armilla Patrol has been in the Gulf since 1980, operating quietly, but we have natural connections with the Gulf countries so there is nothing surprising about the role we take at the moment.
Many of our oil companies of course were right in with many of the companies in the Gulf countries so there is nothing unusual about it, nothing unusual about our Navy going around the seas of the world, we still have a very considerable Navy. You did not hear a lot about the Armilla Patrol, it did its work very quietly and very effectively and called from time to time on the ports in the Gulf on friendship missions.
So when the question of minesweepers came up, it was just after the United Nations Resolution, we just waited a few days to see whether there was any possibility that Iran would also accept that, you remember at the beginning that Iraq accepted it. When it was clear that she would not and that they were going on laying the mines, around our minesweepers went, four of them, and I think they are the most effective minesweeping unit in the Gulf and we eventually were joined then, Holland said she would send one at the same time and Belgium and Italy. The Dutch and the Belgian ones we all operate together under the same command and we are still there [end p18] because we offered to sweep the international waters clear of mines. If we are given a particular area we will go and do that again because it is part of the British Navy's job, we do out-of-area work.
Germany does not do out of area work because of her history but we do. France does some, Italy does some and the others. So it was quite natural that we should get back there.
Interviewer
If I could clarify the question a bit … Saudi Arabia and it now appears that Britain is poised to take: over that role, is that in fact the case, are you willing to do that?
Prime Minister
We have been selling arms in the Gulf, again for quite some time and I do not think it is new for us to sell arms to Saudi Arabia. Perhaps it might be the size of the contract that may be new but the size of this particular contract came because of the immense satisfaction Saudi Arabia had because of the way the earlier contract on Tornado was carried out. They were very pleased not only with the Tornado but with the way in which the contract was handled, the cooperation we had between them and the way in which we met their requests and just the general efficiency.
That is a nice message for me to give to an American audience, we are good. [end p19]
Interviewer
Now that you have had the chance to meet with Mr Bush, did you come away with any impressions about how the Bush Administration might differ from the Reagan Administration? Do you see any policy changes at all?
Prime Minister
Can I just point out that George BushVice-President is no stranger to me. I have been Prime Minister for nearly ten years. He has been Vice-President for nearly eight years. Every time I have been to Washington I have met him, he has been to Europe many many times. He has carried out his missions there superbly, he came across and had a great role in trying to get the Cruise missiles deployed on time.
So he is no stranger. He has been to Chequers, been to Downing Street, he has stayed at Chequers with us so it is not a new relationship at all. I have known him and known the way in which he works, his very thorough briefing, his very very wide knowledge.
You are going to have a President who does not have to be briefed as President, for very obvious reasons. He knows all the briefing. He will develop, as you do when you come from being a number two to being a number one, he will develop his own style.
We all have our own style. Sometimes it is criticised. Now and then it is even complimented but it is our own style and you cannot be true to any other style. [end p20]
It will be a very calm, a very calm and measured approach but it will be based on what he firmly believes will be the right thing to do. One cannot tell but the style will be different because the person is different.
I do not suppose anyone could have told you quite what my style would be before I got there. They will tell you an awful lot about it now. But I am sure it will be all right, it will be good.
Interviewer
But people talk about our Vice President as being loyal, the loyal man and that in some sense he has not been his own man but now he is and we are looking to see if indeed there will be substantive changes from the way the Reagan Administration conducted its foreign policy. Have you seen anything to indicate that he will do things differently in any substantive way?
Prime Minister
Can I just say this about loyalty? Loyalty to your principles, loyalty to your country, loyalty to the President—those are three major plusses in the same way as loyalty to your newspaper and what it stands for, loyalty to your company, loyalty to your family. Loyalty is a very positive quality. [end p21]
If you cannot give it yourself, you should not be entitled to expect to receive it from others. Vice-President Bush has it in abundance and therefore will be entitled also to expect it in abundance and that kind of loyalty is necessary for a successful Presidency.
So please do not run loyalty down to me. I would like to see more of it.
Interviewer
When you took office you faced a fairly substantial budget deficit and you tackled those deficits by cutting spending and raising taxes. In your visit here you have met with Mr Greenspan on the same day that he urged or gave a stern warning that we should deal very directly with our deficits in the United States. When you met with Mr Bush this morning, did you convey your view that the United States should take on the deficit and perhaps raise taxes to do that and if so, do you think that is a necessary first step for the Vice-President who has said: “Read my lips” many times but in doing so perhaps after 20 January take that into consideration?
Prime Minister
Supposing I ask you one thing. I will not read your lips, I will ask you to read out the actual question which was put to Alan Greenspan and the actual reply which he gave and judge what he said [end p22] by what he said, not by what it is said be said.
Question
… . now new taxes. Do you think that this is a necessary step that he should consider to bring down the American budget deficit?
Prime Minister
That was a pretty quick retreat from what you said Alan Greenspan said, wasn't it? Look, of course we discussed the deficit and as I have indicated and, as I understand, Indeed I have same speeches here of George Bush 's, that he did indicate during the election campaign that he believed the deficit had to be dealt with.
It is not for me to tell him how to deal with it. He knows how we have dealt with ours. We are a slightly different country with different problems. What I am confident in is that he and his advisers and meetings with Congress will in fact deal in due time with the deficit in a measured and responsible way.
That is the result of our discussions and the result of what I believe will happen. We have a different political system. We have a good majority in our Parliament and we can therefore expect to get through reasonable measures on public expenditure and reasonable measures on taxation because I am Prime Minister in a government and because we actually have a majority in our Parliament. [end p23]
Now that is very different from the system in which you work and that difference may require a different approach. But I would think that people, whether it be in the new Presidency or whether it be in Congress, would realise the need to get down that deficit and there are several ways of doing it. They will have to choose the combination of ways to do it and they will choose.
Interviewer
You have talked about due time fraction on the deficit but in order to have that breathing space, will the Bank of England continue to be permitted to intervene in foreign exchange markets to prevent the dollar declining too much?
Prime Minister
Now that really is an invitation to make an ill judged comment isn't it? I shall not take that invitation. You know full well that there are many many people who want comments upon the foreign exchange market, I sometimes think it would be really rather nice to have a moratorium on comments and they would get on very well without them.