Ladies and Gentlemen, Thank you for gathering here this afternoon. I thought it might be useful if I gave you a briefing on the London Economic Summit which opens next Thursday, June 7th; I am looking forward to receiving Heads of State or Government of the six other countries represented and Gaston Thornthe President of the European Commission.
As you know, this is the tenth Economic Summit and my own personal sixth. In fact, the only newcomer to our Summit meetings will be Prime Minister Craxi. But just as London will be Mr. Craxi 's first Summit, so it will be Prime Minister Trudeau 's last—the last of the seven he has in fact attended.
It will not have escaped your notice that all the European participants are in the middle of an election—that of the European Assembly; and of course, President Reagan is seeking re-election in November.
I shall be meeting the Heads of State or Government at the Kensington Palace Gardens Orangery, the first arrival being President Reagan on Monday; and the rest of our guests will arrive there on Thursday afternoon.
The Summit Meetings of Heads of State and Government and also of Foreign and Finance Ministers will be held in Lancaster House. Heads in the Music Room—very appropriate; hope it is harmony—Foreign Ministers in the State Drawing Room; and Finance Ministers in the Long Gallery.
We plan, however, to introduce our guests and their delegations to our heritage in a variety of ways. After a reception at St James's Palace next Thursday evening, Heads of State and Government will be my guests for dinner at No 10 Downing Street, where Prime Ministers have been in residence since 1735.
On Friday evening, the Heads will join me at dinner in the magnificent Tudor Room of the National Portrait Gallery. Foreign Ministers will dine at the Royal Society of Arts and Finance Ministers—where would you think Finance Ministers will dine?—at the Bank of England. [end p1]
The Summit's business will conclude on Saturday afternoon at four o'clock with the reading of the Summit Communique, or a summing up, in our ancient Guildhall in the City of London.
On Saturday evening, the Queen is to give a banquet for the participants at Buckingham Palace.
I thought you might just like to know all the details and those are they. It is, of course, a very full programme and in addition, I am arranging bilateral meetings with each Head of State or Government, either before, during or immediately after the Summit.
Can I now just turn to the likely pattern of business?
My aim is to have as relaxed and informal a Summit as possible (bearing in mind that there are some 3,000 journalists here in London) and I intend our discussions to be very workmanlike and, of course, they will range over a very wide range of subjects.
You know the usual drill here, or most of you will. We meet without any formal agenda, but I propose to follow the usual pattern of discussing major economic issues on the first day, which is the Friday; and for Heads, the political issues over meals. That pattern was changed last year. There were very good reasons for doing so, because there was, if you remember, a major security statement which came out the first day. But this year, we will revert to the usual pattern.
We bring together our conclusions on Saturday morning, preparatory to the Summit Declaration on Saturday afternoon.
As you know, Heads of State in the European Community keep in very close touch, but this Summit will be my first meeting with President Reagan since last September, when you will recall that I went over for a visit to the United States and I also saw Mr Trudeau then in Canada. It will be my first with Mr Nakasone since Williamsburg.
This gives you the clue to the real value of the Economic Summits, which is our meeting together in informal session of the major issues confronting the world. I want to stress that very strongly. I think that is the main value: the regular meetings; the ease of contact; the ease with which we discuss, and how it enables us very quickly to get into contact with one another should any rapid consultations be necessary, if events turn that way.
I know that there is always a tendency on the part of you, ladies and gentlemen, to assume and certainly to hope, that because seven or eight world leaders are gathered together, that something dramatic or some dramatic new initiative will emerge. I do not think there are any dramatic new initiatives and there certainly are not any miracles around, so, I think it is, blessed is he that expecteth nothing and he shall not be disappointed. At any rate, that is something which I tend to follow, because dramatic new initiatives are not the purpose of Summits. There are not, in any case, any magical solutions to our problems, whether they be unemployment, international indebtedness, the Gulf War or East-West relations. We discuss these things in other international fora frequently; we are in touch with the partners who are not in Europe, but who come to these Summits, through the diplomatic means and Geoffrey Howethe Foreign Secretary, of course, sees his counterparts more often that I see mine. But it is the regularity of these meetings, the informal discussions and the thoroughness of them which is the important thing. [end p2]
What we seek to achieve is this, I think I could perhaps best put it this way: reinforcing one another in carrying out policies which we believe to be right. I remember at one social occasion when a number of Heads of Government were present, saying “Now look, what do you think we do achieve from these?” and one of them said: “Look! I think that had we not met regularly together, there would have been by now a very much greater degree of protectionism in world trade than there is. That it has been held when it has is a tribute to the fact that we know that if we all did it in the long run it would be damaging to world trade and damaging to the recovery and expansion we all seek.” And I just give you that as an instance of one thing where on the whole we have done what we believe to be right, although there are always particular cases of protectionism I am afraid in the case of almost every country. But in general, it has been held where it has partly because we have meetings of this kind, and I think that the effects of the Summit over the last ten years has been for the Western countries to manage the great problems that have confronted us better and more effectively than we otherwise would have done had we not had the opportunity that Summits afford to get to know each other. And if you think of the massive problems that have faced us in the last ten years, just let me enumerate them: huge oil price increases. That I remember was my first Summit in Tokyo in 1979, where the great issue of the day then was for us all to agree on limited imports to try to reduce the pressure for raising the price of oil. The worst recession since the 1930s; terrible inflation; a great surge in unemployment; the acute indebtedness of the developing world; and all the social and political pressures that these problems give rise to.
Our major purpose next week will, I believe, be to nurture the economic recovery. Last time, when we met in Williamsburg, it had started. It is getting better and we need above all to see that we pursue policies which will sustain the economic recovery without having a rebirth of inflation, and that will be, I believe, our prime objective. We are determined both to sustain the recovery and to keep inflation down.
We are also very much aware of the need to promote technological and structural change, which we started at Versailles two years ago, and that we shall also continue now; and to ensure that the benefits of the recovery are spread as widely as possible; and we shall, of course, discuss relations with the developing world.
I think that the citizens we represent will draw some encouragement from those economic objectives and I hope you will have an interesting Summit and that the Connaught Rooms will be a good press centre. We will try to get you something to write about at frequent, small intervals.
Mrs. Thatcher, President Botha is coming to London this week-end for talks with you. Is this a coincidence that it is coming before the Summit Meeting, and if not, what do you expect to put to the Summit Meeting from your meetings with Premier Botha? [end p3]
No, it is not a coincidence. No, I do not expect to put any particular thing to the Summit Meeting arising from that particular meeting. That is a separate matter and, of course, was arranged in accordance with Prime Minister Botha 's visit to Europe.
Question (Gerry Lewis, PPA)
Prime Minister, international terrorism, I understand, is going to be on the agenda. Bearing in mind that considered opinion suggests that it is going to take far longer than a year or two to get the Vienna Convention changed, what proposals will you be discussing with your colleagues so that international terrorism can be reduced?
Can I also enquire whether you are going to put forward some ideas on trying to end the Gulf War, bearing in mind that United Nations activity in the past has not been very successful?
First, we shall try to build on the statement of Leon Brittanthe Home Secretary and the communique from the Council of Europe, getting as wide agreement as we possibly can on how best to tackle international terrorism which affects many of us. It will be discussed both by Foreign Ministers and by Heads of Government.
Second, with regard to the Iran-Iraq war, as you know, it has been continuing for four years now and, again, it is a case of having no miracle solution. I think at the moment the difficulties as far as the Gulf is concerned have been contained by the excellent consultation we have already had with the United States, with our friends in the Gulf Cooperation Council, that is all of them, and with the European Community. There has been, I think, more consultation on this, more practical consultation, than anything I ever remember and I think it has been very significant that we have all been quite determined to try to do everything we can through diplomatic channels and I am very satisfied with the way in which it has been conducted so far.
Prime Minister, there has been much speculation in Ireland recently about remarks by Ronald Reagan about the future of Northern Ireland. What will you be saying to him when you meet him next week in London about the Northern Ireland situation and the British response to the New Ireland Forum Report?
I do not expect that we will have extensive discussions about it. Obviously, I hope Ronald Reaganhe has a very interesting visit to the Republic of Ireland and obviously, one will ask him about it.
I also will take the opportunity to thank him for the very robust attitude which he and other prominent politicians in Congress have taken [end p4] as far as violence is concerned in Ireland; that they have totally and utterly condemned violence as a means of pursuing political objectives and that they have been very strong indeed in condemning contributions through Noraid, which often go to further violent objectives; and I would like to take the opportunity to thank him for that.
With regard to the New Ireland Forum, I have said in the House of Commons—I repeat it again—we would look at the ideas which it put forward and even discuss certain matters with the Government of the Republic of Ireland although, of course, it is not a Government Report, but a report of a different body. But anything constitutional, any constitutional change is of course a matter for the people of Northern Ireland and for the United Kingdom Parliament.
Question (Glyn Mathias, ITN)
You talked about the need for nurturing the economic recovery. What is your view of the current level of interest rates in the United States, and above all, what is your view on the upward pressure on interest rates in this country at the moment?
We all would like interest rates to be down—world interest rates—we think they are on the high side and that, of course, can have damaging consequences for recovery. You will notice that ours are not the highest by a long chalk in the Western World. They are lower than some other peoples'. Higher interest rates can damage economic recovery and they can make it extremely difficult for countries in heavy international debt, both for repaying … for paying interest on that debt and therefore indirectly for repaying the principal, and also because of the effect it has on their economies. So we are all in favour of taking action to try to get international interest rates down.
I have no comment to make on our interest rates beyond that which I have said, that our interest rates are lower than those in the United States and I hope they will continue that way. Indeed, I believe they will continue that way.
Question (Brazilian Television)
Yesterday it was Bolivia. Today, the question mark is Argentina. Tomorrow we may see Brazil or Argentina in your problems. You said that you do not expect any miracles, but is there any new ground the world leaders can try to explore to end the deadlock of the Latin-American crisis on the debt problem?
Yes, but neither of those problems which you mention were unknown and I would quarrel with you in suggesting they were new. They were not. Both the problems of Argentina and Bolivia have been known for some time. With regard to the way in which they are tackled, I think that where you have countries with a problem you have to secure the cooperation of each of them to adjust their policies with the IMF. That [end p5] is absolutely vital. I think that the international debt problem is manageable, provided you get the cooperation of the countries concerned to adjust their policies, provided we deal with it, I believe, on a case-by-case basis. Of course, many of us are involved with the IMF on dealing with it on a case-by-case basis, but I do not think that there is a universal solution. We have to tackle it in the way we have tackled it so far.
Prime Minister, how important are the personalities and their inter-play at a Summit? For instance, if due to the electoral process there is a different American President and not Mr Reagan at next year's Summit, what difference does it make to the process of continuity?
Well, we all have a first time and one has to remember that. I am quite an old hand now. Everyone has been there, you see, before, save Prime Minister Craxi. That really should make it an easy Summit in the sense that we all know one another and find it easier to discuss with one another and therefore, obviously we can easily take in Mr Craxi and he should have a very warm welcome.
I am fishing around for an answer to a question which I do not quite understand!
… different American President next year, being a leading player at these Summits, what difference would that make?
I would have thought it would have made an obvious difference to the continuity and, of course, I shall not be in the Chair; that would make a difference too!
Question (Mexican television)
Coming back to the question of the Latin-American debt, supposing that the interest rates keep going up and the problems squeeze all of the Latin-American countries into a more difficult situation than the one we are in now, what measures would your Government take to try and help?
I think that you will find that we are all very aware at the Summit of the need to do everything we can to try to keep interest rates down, to try to keep them from rising, to try to keep them down. I do not think you would expect me here to go over all the ground that we shall cover at the Summit, but I have indicated that I think the broad, general approach that we have taken is the correct one. We have to deal with it [end p6] on a case-by-case basis and I remember vividly when the Mexican problem arose, because it was the first day after I had just gone on holiday, and immediately there were problems, and I think, if I might say so, that Mexico and the international community, together, particularly Mexico, have tackled the Mexican situation very well, and Mexico is always held up as an example of how to try to come out of what was a very difficult situation.
Now last year, 1983, you had a very very healthy balance of trade surplus and so we are full of admiration for the way it has been tackled in Mexico.
Question (Suddeutsche Zeitung)
Prime Minister, someone with whom you were cooperating quite harmoniously in former times, Mr Helmut Schmidt, stated a few days ago at the Oxford Union and referring to the problems of this Summit said, “Europeans are timid, almost cowardly, in their behaviour towards the American friends!” Do you think he has a point there?
I have the greatest respect for Helmut Schmidt. I always enjoyed discussing with him both internal economic matters of both our countries and matters of international economics. I would not agree with him on the particular opinion which he expressed then. I do not think he would necessarily find any of us timid and he knows full well that one of the points of having this Summit is we can meet in a relaxed atmosphere privately and say things to one another in a friendly but frank atmosphere. You can say a lot in a friendly atmosphere, a lot that is frank in a friendly atmosphere, and on that I do not agree with Helmut Schmidt.
I must say this and he will understand why I say it. I never saw Helmut in a really optimistic mood!
Prime Minister, what steps can the Summit Leaders take in an election year to convince the markets that interest rates will be coming down?
I think you can make it perfectly clear that we are going to pursue sound financial policies and if I might just blow one's own trumpet for a moment—very unusual for a politician—might I just say that all the policies which I have believed in for a very long time and which we tried to adopt in this country have steadily been adopted in many other countries, first because their Heads of Government believed in them; second, because they found that reality demanded that they adopted them. They are to run sound financial policies. That is, policies to get and keep inflation down. That is number one. It has to be done. So far as we are concerned, our monetary aggregates on both the narrow and broad definition are about on line with what they were forecast to be at the time of the Budget. But sound finance is number one. [end p7]
Number two is keeping a firm control on public expenditure, with a view to having declining deficits. That also is recognized to be of great importance now the world over and you will notice that in the United States that is the purpose. The purpose of a down payment is to have a declining deficit and to me, a down payment by definition is the first instalment and there is a lot to come later. But it is again a recognised need: strict control of expenditure with a view to declining deficits. That is the second thing.
And the third thing, of course, is running your banking in a prudent way.
There are not any ways around these fundamental financial methods. Many people have tried to find a way round. They can get a bubble in the economy going for a time, but it does not work indefinitely and I remember the years of stop-go stop-go, and now we are trying to get sound financial conditions for a sustained expansion, and so, if you ask me what best we can do, I would say we pursue these policies: sound finance, strict control of public expenditure with a view to declining deficits; and prudent banking. That is the best way in which between us we shall be able to keep interest rates down.
Question (Murray, Liverpool Post)
Could you comment on President Reagan giving a signal to the Soviet Union saying that if they return to the negotiating table they would be met half-way? Would you comment on that and say whether this means that if they did return, the Americans would withdraw the Cruise and Pershings?
No, and you do not believe that either! It is put together for a question. It does not really require answering, because I do not think that what President Reagan 's remark means is anything more than is obvious from the face of the words: that we all would like to resume arms negotiations, disarmament negotiations, with the Soviet Union. We have said so many times and that although we both have very different political systems, and each of us would probably firmly defend in argument our own system and each of us believes our own system is best, we have one great interest in common at least, and that one particular interest which President Reagan has in mind, and the rest of us have in mind, is to try to ensure that conflict does not arise between us again, and to try to reduce the great expenditures which we are both making on armaments in order to keep our own security, and of course we are not likely to be able to reduce those expenditures unless we get back to the negotiating table. I do not believe it has any more significance than that, but that is sufficient significance.
Prime Minister, when you meet Mr Nakasone during and after the Summit, what will the topics for discussion be and how do you evaluate the Japanese Government's attempts at solving the existing trade or … problem? [end p8]
I think that the topics will be particularly trade and how to get more into Japan, and also wider opening up of Japanese capital markets, and the way in which Japan runs her economy which, as you know, keeps the Yen very low. I think perhaps we might discuss those things together. We shall have quite a lot about it I expect at the Summit.
Question (Italian Correspondent)
Prime Minister, are you determined to resist the charm of President Mitterrand when he is going to try to convince you to move quickly towards European political integration?
I have never yet seen a definition of “European political union” or “European political integration” . It is a phrase used quite frequently, like many other European Community phrases. People like me, who do not really rely on charm, or really rely on it as a method of cross-examination, would subject it to a pretty rigorous intellectual inspection which, in fact, is far more effective than any amount of charm on either side.
Question (Edwin Roth)
Prime Minister …
Ah, we could not have a press conference without you, could we!
I did not expect a compliment from you and you just said that you are not charming. Prime Minister, apart from the enormous significance of this Summit to the election campaign of President Reagan—and you might agree there should be a Republican elephant on that logo behind you—what do you think historians might find to say about this Summit, when they write about it in the future, if they find anything to say—and do you think there should be an elephant on that logo?
I do not really think I shall be here long enough in the next century, you know, to know. I think they will write about Summitry. Summitry has developed in my time. I am trying to answer your question seriously! They obviously will not put anything on one particular Summit—I would not expect that. But Summitry has developed and so has the whole interest in foreign affairs and in days of yore, very few politicians in this country would have discussed foreign affairs to the extent in election times or even on current affairs programmes, as frequently as they do. There is a general acceptance that foreign [end p9] affairs is inextricably intertwined with domestic affairs now; much more so than it used to be. So you have got that realization in public opinion, and at the same time, you have had this enormous development of Summitry, partly because of the speed of communications, partly because it is recognised that we have instant comment now; and we use diplomatic contacts directly between Heads of Government, between Foreign Secretaries, in a much more significant way than has ever happened before in history.
I think it will make a very good thesis or a very good chapter in a historian's book about the development of Summitry, both in Europe and in economic Summits—quite different kind of Summits from the Troikas we used to have with the Soviet Union, although that again is a different kind. And I hope that they will come to the conclusion first that on the economic side, as I indicated, that I think it has kept us doing more of the right things and I think on international events it has led to using diplomacy much more effectively to stop situations from escalating into very dangerous situations.
I remember very vividly the first week-end of the Iran-Iraq war, how all of us were very quickly in touch with one another really to stop it from, or to contain it to Iran-Iraq, because we realized the difficulty had it then gone down the Gulf. I have seen the close consultations we have had now over the Gulf situation. We always have very close consultations in the West about East-West and on any other matter which comes to the fore. Very close and swift consultations, for example. Let me give you a very classic example: when we had to go to the Falklands in 1982, my goodness me, the Community were very effective, immediately, in their support for our cause, and very swift to put on economic sanctions on the Argentine. Those are some of the things and now I talk about it, but maybe in ten or twenty years time perhaps I will write an article for one of you about it.
Question (Adam Raphael, “Observer” )
Prime Minister, in your introduction to what the Summit might achieve, indeed in your remarks so far, there has been no mention of unemployment. Does that in any way reflect your priorities, or perhaps it is your view, that this Summit can do very little to cure what is clearly a worldwide problem?
No. If one's objective is to get steady economic recovery, low inflation, then one is doing it because one believes that that is the way that will get more jobs and a higher standard of living. That is the main objective, and I do not think that you are necessarily successful in tackling unemployment by tackling unemployment for obvious reasons. Just as in medicine, you do not necessarily tackle the ill at the point where the symptom comes out. You go for the fundamental things, and by trying to have the fundamental financial policies for growth, and, I would add to the ones which I have indicated, the fact that you do need incentive policies to stimulate enterprise, whether it be personal enterprise or new small businesses or expansion in companies, that you do need that as well. This is the way, in fact, in which we are going to secure the answer to unemployment, which is the creation of more genuine jobs, not in a stop-go way, but in a steady way, which offers far better hope and prospect for the future. [end p10]
Yesterday, when the trade unionists came and talked to me, the aims were in common, which is the creation of more jobs and one of the methods of doing that we agreed is not to resist change, but to use change and technological change, because historically, technological change in the end has created more jobs as it has brought into possibility the production of objects which could not be produced without the technological change. So there is no difference. It is just a different way of tackling it.
I know one of my colleagues is always pointing out—and I think it is a very good way of looking at it but I did not, I must tell you, stress this yesterday with the trade unions, although I did mention the phrase to him when they were talking about the 35-hour week with which I do not agree—I think the desire for an increased standard of living still in Europe and, of course, the need for it even more in the under-developed countries of the world, is so great that one should really not talk about how to carve up the amount of work there is; one should talk about—which is what we shall do at the Summit—how to arrange our economies so that we can produce those goods that we sell to one another which contribute to a rising standard of living in our own countries and in theirs, and to face that mammoth demand for a rising standard of living which we saw a century ago in this country and which we have been able to fulfil; to face that by doing a carve up of existing work seems to me totally a wrong concept. It seems to me to have not large enough ideas and I believe that our approach is the better one. The Government doing the sound finance, the sound framework of law, the sound taxation system and trying to get an enterprise culture.
The most obvious place where you have an enterprise culture has been indicated in the last fifteen years, I think, where you find that the United States has created something like 30 million extra jobs at a time when Europe was losing jobs. They have a real enterprise culture there and one has to try to analyse what makes it that way.
Japan also has been much more successful in creating jobs. It is very interesting; the loss of jobs has to some extent gone across Europe to a much larger extent than it has in either the United States or Japan, and there has been very interesting work done on the reasons why. I will not go into it more deeply. I did do a speech about it some time ago.
Question (Europe Journal based in Paris)
I have two questions. First, last year about this time everybody in this country was worried about you going to attend an economic Summit in Williamsburg, thinking that it may effect the performance of the General Election … you won the election and under your administration Britain has tackled the big problem of inflation. How are you going to tackle the world economic recession with respect to British experience? Are you going to tell the world leaders attending the Conference, the Summit, that British experience is one of the best, to show them how to tackle the world economic recession?
I went to Williamsburg. I attended the dinner and then the whole of the first day and we got out a communique at the end of that first day, and then I left the other Ministers there and I came back because we did [end p11] have a General Election on. As it was, it happened to be a Bank Holiday, and it seemed a very good thing to go to Williamsburg and I really thought that we ought to be represented there and actually, if you will recall, it was said—I think by all political parties—that I ought to go. Whether they expected me to go or not, I did, and I think it was a good thing that I did.
Well now, let us get on to what I understand is the second part of your question.
We are this year about 3½%; up, just over 3%; up growth in GDP on last year. We are up about 11½%; on investment over last year. Inflation is being held. I believe we are on track for it to go down more by the end of the year. The monetary aggregates are about on track where we expected them at the time of the Budget. Public expenditure is the same as we fought the campaign on, the election campaign, and is being held. We have a good contingency reserve.
Yes, we are doing reasonably well. It is the three things. I say we are doing reasonably well. I never think we are doing well enough. But on the financial indicators, they are all right.
I indicated the rules which we follow: sound finance, public expenditure leading to a declining deficit and prudent banking. We have also tried very much in this Budget and in previous Budgets to get incentives into direct taxation. On personal taxation, the thresholds for tax are up 16%; in real terms on when we took them over and persons who pay taxation pay very much less now than they would have paid had the previous regime been in power. They would pay even less than that, had I not chosen to take off the National Insurance Surcharge—had Nigel Lawsonthe Chancellor not chosen with the backing of Cabinet to take off the National Insurance Surcharge—we could have put all that to reducing taxation. And we have had a very considerable revision in Corporation Tax, which has been underway. It is steady growth. I do stress again that very important to growth, particularly to the construction industry and to new business, is policies which keep interest rates down, and we shall be stressing that at the Summit.
Question (Sara Hogg “The Times” )
Prime Minister, you mentioned the importance of Summits in the struggle against protectionism. How, therefore, do you intend to respond to the American and Japanese Governments' call for a new round of trade negotiations under GATT?
Well it is not only their call. I think a number of us think that we ought to begin working for the next round of GATT. It is not wholly for the Summit Seven, as you know, to decide. We are only a small part of GATT, but if that is the way we feel, then I think perhaps we might try to encourage the other colleagues in GATT to work now for a new round in GATT and also to try to speed up some of the work programme that GATT has. You know, there are several things on which GATT embarked last time, several studies. Some, for example, about textiles; some about agriculture. Several studies upon which she embarked that I hope the [end p12] results are beginning to come in now, and we ought to be able to assess them in preparation for a new round of GATT. But the timing of it is, of course, one to be decided by the members of GATT itself, as well as whether we should have one. I think you will find that quite a lot of people at the Summit will take the view which you have just enunciated. It is not for me to say.
Prime Minister, Hassan, the Crown Prince of Jordan, was here in London this week and asked Britain to lead a new EEC initiative in the Middle East in order to solve the Israeli-Arab conflict. What will be your response to this call?
At the moment we have no new initiative to take in the Middle East. We are frequently asked for new initiatives I am afraid on almost anything. It is not easy to fashion the precise initiative that would be helpful, and that is the only one that one would wish to try to find.
Prime Minister, it seems that the West is reacting only when the Western interests have come under threat in the Gulf. Are the contacts you are conducting at the moment with world leaders to contain or prevent escalation or to put an end to the war and, if so, how serious are your contacts with the Soviet Union in this respect?
If I might say so, I think that there would have been a good deal of trouble had one attempted to interfere in the Gulf and we would have had no locus to do so. When you said that the West only acts when Western interests are threatened, first it is not quite true in the sense that we cooperate quite closely with the Gulf States in diplomatic contacts, in purchases of oil, in sales to them, and we have quite a number of loan service personnel in the Gulf. So in the sense that the ordinary day-to-day contacts continue, the contacts have been very good and I see no reason whatsoever to change that. I think the United States and ourselves have been absolutely right in saying that should military intervention be even considered, it would only be considered at the request of the Gulf States, but I see no need at the moment for military intervention at all, and I think the situation is being tackled through diplomatic channels. I am a little bit surprised at the question, because I think that it has really been tackled very well. One cannot, unfortunately, any of us, pull out a sudden miracle that will end the Iran-Iraq war. One would like to very much, but no-one has been able to. We shall continue to work for that end and shall continue also to work with the United Nations on the resolutions which come before them from time to time. But I had hoped that you would appreciate the way in which it is being tackled and think it the right way. [end p13]
Prime Minister, you mentioned here that you want to continue your policy of sound money as one of the major means of speedy recovery, but do you not think that this policy recently led to some quite substantial sharpening of social relations? I mean the wave of strikes which is going on here in England, miners, steelworkers in West Germany, and some other countries. Does this kind of development worry you, and do you propose to introduce any changes or maybe major or minor changes in this policy, taking into account this political development?
I just think you are tempted to put two things together in the question, which just do not go together. I might say that we had strikes when inflation was very high and rising.
The opposite to a sound financial policy is an unsound or dishonest financial policy, which deliberately sets out to rob the savings of people who hold their savings in monetary form. We really must try to restore money as a store of value as well as a means of exchange and the effect of what I understand you would like, unsound or dishonest monetary policy, has been to rob generations of pensioners of the value of their savings. I do not wish to help you in that quest.
Question (Dave Mason, Associated Press)
Prime Minister, what will be on your agenda for your bilateral with Mr Reagan on Tuesday? Will you, for instance, be devoting considerable time to Central America and what are your views on US policy in Central America?
We have not got an agenda but obviously we discuss what you expect us to discuss—the current economic issues of the day as they affect the United States and Britain, the main political problems which are East-West and the Gulf; and we would have every reason to discuss Central America.
As you give me the opportunity to do so, can I just point out that we have interests in Central America. We have forces and a Harrier force in Belize. It was, you will recall, a British colony. It is an independent territory. We still, at their request, have considerable troops and a small Harrier force stationed there. It is a stable democracy and I believe it contributes to the stability of that part of the world, and I just hope that some of our American friends will note that this is one thing where Britain is very actively contributing in trying to get stability in that part of the world and is actively helping, therefore, the United States. We also, of course, right at the beginning on the first elections in El Salvador, actually sent observers as well as on the second elections. So perhaps, if you will point out, not only are we very grateful to the United States for the amount she does for the freedom of Europe and determined to keep the unity of NATO, but in our own small way we do keep a force in Belize; it does contribute to the stability of Central America. [end p14]
Question (Sir Robin Day)
How are you?
Sir Robin Day
Very well, Prime Minister. Even better than yourself!
Sir Robin Day
Could I say this: listening to your remarks in this press conference, one would not immediately think it was going to be a Summit in any way out of the ordinary, but is this not a crisis Summit? Is this not a world threatened with financial crisis and the Gulf War escalating? Do you see it as a crisis Summit?
As a crisis Summit, no, because I think if you take it as a crisis Summit, you will be building up enormous expectations and I think, if you look, the two matters which undoubtedly are in your mind are, as you indicated, the Gulf war.
We have been in close consultations through diplomatic channels, through Foreign Secretaries, and Ministers—you will remember Richard Luce went over to the United States—with both the United States and with the members of the Gulf Cooperation Council and at the regular ministerial meetings in Europe, and that, if I might say so, I think has been one of the things which have led to absolute unanimity in the way in which it shall be handled and which I think have tackled the matter as well as it is possible to tackle it, short of being able to end the Iran-Iraq war.
So it is not as if nothing has been done and, of course, we meet to see if anything else has been done; of course all of us would like very much indeed to be able to bring forward some solution to which both Iran and Iraq could agree to end the war. But it is not as if nothing had been done. We have been tackling it in the way I have indicated, and also on international banking and on the problems, certainly they were aggravated by recent events, or their assessment was aggravated by recent events, banking events, in the United States. But we have been tackling this problem for two years. I indicated that I remember when Mexico first came up; then Brazil; then a number of other states—need hardly enumerate them all. But it is not as if nothing has been done about this. I think it has been the subject of two speeches, for example, at [end p15] the Guildhall, a few paragraphs in each. So I do not think “crisis” is quite the right word. Yes, there are very considerable problems. Yes, we get together and discuss them and we take them, obviously, extremely seriously.
But these are not the only meetings we have. We have the Summits in Europe; we have other bilateral meetings which continue. So it is not as if you do nothing between Summits. They are serious problems; we meet to discuss them, but not necessarily crisis. I take that word very seriously, although I am aware that people in this audience use it rather more frequently than I do.