Michael Brunson, ITN
Prime Minister, today has been economics day, so may I start with a couple of economic issues?
The communique does seem, shall we say, very pointed, very new, and it does not, as far as we are able to discover, say anything about one of the big questions which is the Japanese trade imbalance which is obviously a very serious problem, not least for Britain. What have you done here to try and solve this problem?
A number of things. First, I am sorry if it does not seem to say much new. It does say some things new. But first, it reaffirms the fundamental economic policies. When I first came here seven years ago, we had great difficulty in getting some of those fundamental economic policies into the communique. Now, they are almost taken as read, so right are they, and it is recognised that they are so right. You know, keeping inflation down, keeping public expenditure under control, keeping borrowing under control, and so on.
What is new since we met last year was this tremendous agreement between some of the nations on cooperation in getting the yen up and the dollar down. That has made a tremendous difference and also that has led to reduction in interest rates. [end p1] So I think for the first time we have had more cooperation between the United States and the European countries and Japan on economic matters than we have ever had before. That is good. They are dealing with things on a global scale.
The third thing is this. This time we have concentrated on two things. Protectionism. Do you know, a half to a third of the world's goods are under some form of protection. We live on exports and protection is not good. If protectionism is going to increase in the world it is going to be highly damaging to our standard of living. So we are trying to get a new round of trade negotiations, because that is the place to deal with it, and we are particularly concerned with the level of protection in agriculture, which is leading to high surpluses.
We are also concerned—this is a problem which affects not just one country, but pretty nearly all of the countries assembled there—about the health of rural communities and the importance that agriculture plays in those. So what we have got to do is keep a healthy agriculture without having the surpluses, and we are going to tackle that together, not in an adversarial way, but together, and as you indicated, the Japanese imbalance—that is to say they have a colossal balance of trade, greater than anything we have ever seen and recently we saw figures about it. One of the things that will affect them greatly is the fact that the yen has gone up by about 40%; since we last met. That will make it, of itself, hard enough for them to export at the prices they have been exporting and also we do refer to structural imbalances, which is directed at Japan and they have had an internal report recently which indicates a number of things Following page missing
Michael Brunson, ITN
serious, one not so serious this morning. Does that not show that even as you discuss it and try to take measures to deal with it, you cannot really stop it?
I do not think you can totally eliminate some terrorist acts. Terrorism is a form of violent crime. I wish we could eradicate violent crime. There are some people so evil that they will resort to violent crime. That is as old as Cain and Abel. We cannot eradicate it. What we can do is to take measures against it. That is why at home we have increased the numbers of our police, bettered their equipment and are trying to involve the whole community in preventing crime. As we do at home, so we are trying to do on the international sphere and what we are really striking at is the kind of state which sponsors terrorism and tries to finance terrorism with money and with weapons as an item of policy, as an instrument of policy—to try to persuade nations such as ours and others to alter things which they would otherwise do.
You cannot eliminate everything unless you can eliminate evil. That you cannot do. You have to take measures against it.
Michael Brunson, ITN
One way, of course, to eliminate some of the terrorism would be to get that almost impossible dream of settlement in the Middle East? Would it not perhaps help if as much time and effort as went into this summit and goes into this kind of Following page missing [end p2]
I do not think there is something you can suddenly pull out of the hat. We have been talking about this, because I am very concerned indeed that the last initiative of King Hussein really has come to nothing and that is serious. We have not really got much on at the moment, except Mr. Peres came out with an idea for great economic aid to some of the countries, but you know, economics are not a substitute for political policies. Sometimes they can help to relieve poverty and that is worthwhile in itself, but where we have got a real political problem we have got to try to solve it politically. There is not an initiative on at the moment. We are obviously considering it because we believe there should be one and we will meet together and in bilaterals to see if we can further an initiative.