Speeches, etc.

Margaret Thatcher

Press Conference at Paris G7 Summit

Document type: Speeches, interviews, etc.
Venue: Arche de la Defense, Paris
Source: Thatcher Archive: COI transcript
Editorial comments: 1315-1420. Nigel Lawson also took part.
Importance ranking: Major
Word count: 3534
Themes: Executive (appointments), Civil liberties, Economic policy - theory and process, Monetary policy, Energy, Environment, Trade, Foreign policy - theory and process, Foreign policy (Americas excluding USA), Foreign policy (Asia), Foreign policy (Central & Eastern Europe), Foreign policy (development, aid, etc), Foreign policy (International organizations), Foreign policy (USSR & successor states), Foreign policy (Western Europe - non-EU), Law & order, Religion & morality, Terrorism, Famous statements by MT (discussions of)

Prime Minister

Ladies and Gentlemen, this has been a very friendly and worthwhile Summit at which all seven countries have worked very well together, with no significant disagreements, to reach important conclusions. Indeed I cannot recall a Summit at which the spirit has been better or the similarity of views closer and I congratulate President Mitterrand most warmly for his contribution as Chairman.

You will all have seen the conclusions and I do not need to go through them in any detail. I think I can say that all the hopes which we brought to this Summit have been fulfilled. I will pick out just a few of the most important points.

First, we confirmed the economic policies which have brought us an unprecedentedly long period of sustained economic growth. In that context we have asserted our absolute determination to bring inflation down and to continue to keep our market open and resist protectionism. [end p1]

We want to see the Uruguay round of multilateral trade negotiations brought to a successful conclusion by the end of next year and that will require further action to reduce agricultural protection and subsidies in all our countries.

Second, we have resolved to continue the case-by-case approach to debt problems and endorsed what is called the Brady Plan of debt reduction which is for middle income countries. You will recall that at the Toronto Summit we agreed on action to help the poorest countries and that has been successfully implemented. We agreed that the best way to deal with the problems of the developing countries is through the existing international financial institutions.

Third, our conclusions rightly give particular prominence to the problems of the global environment, with which we are all deeply concerned. This part of our statement is very far reaching, covering all aspects of the environment. In particular it endorses Britain's call for a framework convention on global climate change. It calls for existing international bodies to be strengthened rather than for the creation of new institutions. It underlines the important contribution which nuclear power makes to the protection of the environment and it underlines the need to make sure that our decisions on environmental protection are scientifically and economically sound. We believe that sustainable growth and environmental protection are compatible. [end p2]

Fourth, we signal our very strong determination to tackle the problem of drugs which has reached devastating proportions. There is a new sense of urgency in our determination to tackle this evil and those who profit from it. It can only be solved by cooperation. We are particularly concerned to get at the proceeds of drug trafficking. You will notice that there is endorsement for our intention to hold a conference in Britain next year on demand reduction.

Turning to the political text, there is little that I would want to add to what the Geoffrey HoweForeign Secretary said yesterday. We are very pleased by the determination expressed by the Summit to provide practical support for economic reform in East European countries, in particular Poland and Hungary. We were I think the first to call for that during my visit to Poland last November and the enormous progress made since then with political reform deserves our support.

I am also very pleased at the recognition that we all have an interest in a stable and prosperous future for Hong Kong. And I believe that the Summit's reference to this will help boost the confidence of Hong Kong's people which has been so badly shaken in recent times.

The Summit has also provided an opportunity for a large number of bilateral meetings with President Bush, Prime Minister Gandhi, a number of Latin American Heads of Government and indeed with about twenty Heads of Government in all. [end p3]

Finally, I would like to congratulate President Mitterrand and the French Government on the excellent arrangements made for the Summit and the bicentennial celebrations which we attended. All in all an excellent Summit with a tremendous willingness to work together on the problems of the world economy, the environment and drugs, which are of such great concern to all people.

Ladies and Gentlemen, your questions. [end p4]

Question (John Dickie, Daily Mail)

In view of the letter from President Gorbachev to President Mitterrand, do you think Mr Gorbachev is somebody the Group of Seven could do business with? And secondly, an unrelated problem, despite all your success at this conference, there have been critics who say that some of your comments may have spoiled the atmosphere and may have been more appropriate to the diplomacy of Alf Garnett?

Prime Minister

With regard to the letter, we have received several letters from Heads of Government. I think we were very pleased to receive a letter from Mr Gorbachev and to note his comments which we will study carefully. It came in during the middle of a discussion I believe on debt and President Mitterrand told us about it immediately. We discussed it over dinner and you will see that it was addressed to President Mitterrand and President Mitterrand will, on behalf of us all, be making a reply.

I cannot think what comments you refer to. The Summit has been very amicable indeed, very amicable, very constructive, I think a tremendous degree of agreement among all our nations. Perhaps because over the years we have come to know the way forward economically and to have the same priorities and know we must pursue sound economic policies. [end p5]

The environment has become a subject in the last two or three years because the scientific conclusions that we are noting and their observations will require action to be taken on a global basis and we cannot leave that. And however much we may have tried to tackle drugs, I think this year we have been faced with the new problem, that of crack, a derivative of cocaine, which is having particularly devastating results and we think the best way to tackle it is to get at the money and see that it does not get to those who deal in this terrible trade. Therefore we have stepped up our global activities as far as that is concerned.

Question (CNF)


I would like to follow on from the previous question. Cynics among us, and probably there are not many, might suggest that the amicability of this Summit could be attributed to the fact that there are political pressures at home in at least five of the Summit Seven nations which perhaps prevented the leaders of those five nations from making the kind of dramatic initiative that might have been made in the past. I am thinking particularly of the United States' initiative on terrorism a few years ago which generated a lot of controversy. My question to you is how would you challenge me on the conclusion that amicability was there because many of the leaders felt they were not in a position politically at home to make dramatic initiatives and gestures here at the Summit? [end p6]

Prime Minister

I am not a cynic and I note that you are not, but I do not think that there is any validity to your comment at all. The agreement came because we have dealt with economic problems many times and we now know the way forward consists of what I would call broadly sound economic policies led by keeping inflation down, not over-spending and keeping the money supply in check. We know those policies, we have repeated them and shall go on repeating them because they are the right ones.

The environment has become much much more imperative as a subject which requires action since we know more about the depletion of the ozone layer and since we know more about the carbon dioxide layer. We should not be here of course unless there were a greenhouse effect on this planet, but it would seem that the tendency of all peoples to use the atmosphere as a kind of dumping ground for all waste products, believing that equilibrium would always be maintained, that is not correct and the inter-action between man's activities and the global environment is such that if we are to pass on the heritage safe for our children's future we must take action now. That was the imperative and we cannot just leave it and there was no question of people being in difficulty at home. Whoever is in charge of politics, they must deal with the environment. [end p7]

And of course the drugs as I indicated, you know in the United States the problems of crack and that again requires action.

With regard to terrorism, I remember the first Summit which I attended where we dealt with terrorism was the one at Montebello. That was in 1981, it came from a hijacking that we had and we put out our first communique then. Since then I think we have had one on most occasions and we are getting steadily improving and increasing cooperation.

So really it was a very very constructive Summit and I hope people will be very satisfied and pleased with it.


Prime Minister, you came here wanting to make the defeat of inflation a central priority. Mr Wilson of Canada has said that Canada, Italy and the UK have an inflation problem, other countries do not. And the Japanese Deputy Finance Minister has said that Japan does not have an inflation problem, other countries do not. And the Japanese Deputy Finance Minister has said that Japan does not have an inflation problem, its top priority is to continue growth. Is it not actually the case that Britain has an inflation problem but not the rest of the G7 in its entirety?

Prime Minister

We have an inflation problem, so has Italy. Our RPI, as you know, includes mortgage rates which tends to take it slightly higher than the others whose inflation is the same. [end p8]

If you look at the G7 countries, inflation I think in pretty nearly all of them is going up, going up sufficiently to make them all concerned about it again because they know that unless we keep it down all of the other objectives are in jeopardy.

If you look at the communique, you will see that it points out that this year's world economic situation presents three main challenges and sets the first one, “Choice and implementation of measures needed to maintain growth, counter inflation, create jobs” . And then it goes on and says over the page that, when we deal with the economic situation, “Growth has been sustained. In the medium-term things have been good, investment has gone well” . And then it goes on to say, “The outlook however is not without risks” and the first one that it mentions is, “until now that threat of inflation in many countries has been contained but continued vigilance is required and inflation, where it has increased, will continue to receive a firm policy response so that it will be put on a downward path. Where inflation has not risen it is because those policies have been adhered to rigidly and inflation has not gone up. Where it has gone up we have to put it right.”

Now that is right at the beginning and in terms which no-one can quarrel with. Right at the beginning, right at the top. [end p9]

Charles Reiss

Have your views of the French Revolution changed as a result of your attendance at the celebrations and possibly as a result of the comments of M. Mitterrand?

Prime Minister

No. They would hardly change because they were founded on historic facts. The Magna Carta is a historic fact and the 1688/69 (sic) is a historic fact. The actual document, Constitution of Independence of the United States 1776, is a historic fact. So I cannot change history and neither can you and I think Mr. Mitterrand was very generous in accepting that there were other nations which had perhaps another way to human rights and that was a very ancient way.

I pointed out originally, you know, that the first way was really the Ten Commandments and the Sermon on the Mount—and those were really rather important. [end p10]

Question (The Wall Street Journal)

What do you hope to see come out the coming meeting on East-West coordination and on further help for Poland and Hungary?

Prime Minister

When President Bush went to Poland, he indicated precisely what he would do to help and indicated that, of course, we have to wait for some help until there is a programme with the International Monetary Fund.

We, when we had been previously, had also indicated that we were prepared to help when the politics changed and when General Jaruzelski came to see me the other day, again I gave a list of the help that we would give, some waiting for the International Monetary Fund and some before. Among that help, because we are a member of the Community, one said that we would be prominent in the Community in trying to get a better trading agreement for Poland with the Community, to remove some of the quantitative restrictions, which would enable Poland to export in order to pull up her standard of living. We had previously been prominent in securing just such an agreement with Hungary.

When other people from Poland—from Solidarity—have been to see me since, they indicated that further help would be very welcome and in particular help with the provision of food and I raised that at Madrid in one our dinner sessions where we discuss these things and it was raised much more directly here and, as you know, we have agreed to give it. [end p11]

But there are two parts: what we can do before, what we can do in any case—some rescheduling of debt in the Paris Club, some help with management training, interesting our manufacturers in joint ventures. Those can go ahead immediately and the food aid can go ahead immediately. Some of the others really must wait until there is a negotiated new economic reform with the International Monetary Fund and I think we are pretty well agreed on that approach—the same with Hungary.

Question (NBC)

Madam Prime Minister, did the seven leaders help draft the response that President Mitterrand will send to Mikhail Gorbachev? If so, what will it say? And do you ever foresee a time when the Soviets could become a participant in some manner in these Economic Summits?

Prime Minister

The letter is addressed obviously to President Mitterrand, as Chairman and Convenor of the Summit, and therefore President Mitterrand indicated that he would reply.

I think you probably have seen the letter. It is an interesting letter. It stresses the need for global cooperation on economic matters, with which we agree. We would also say you need global cooperation on the other matters. [end p12]

I do not—in answer to your second question—foresee the time yet when the Soviet Union would join the Economic Summit. One day, she might have a very much more successful and free market economy, and it will have to be a free market economy if it is to be much more successful, and then she might. I wish her well in those endeavours, but I do not quite foresee the time when she will join us because of her great free market economic success although I hope one day very much, for the sake of the Russian people and the future of the Soviet Union, that it will come about.

Question (Japan)

What do you think of the contribution to the Summit of the Japanese Prime Minister, who is a new participant and who was involved in … scandal over women?

Prime Minister

The Japanese Sosuke UnoPrime Minister has been here before of course as Foreign Minister so he is accustomed to the plenary sessions. He made a very full contribution to the Summit, a very full contribution on economics; he made a very generous contribution to helping countries in difficulties by announcing his 60 billion recycled money which will be available and they will have to decide how that is to be parcelled out; and he took part, obviously in all of the debates as you would expect the Japanese Prime Minister to do. [end p13]

Question (THE TIMES)

Prime Minister, you warned your fellow Summit leaders apparently not to become obsessed with graph paper economics but to watch for the political direction. What threats do you see on the political side to the future economic prosperity of the Seven?

Prime Minister

I think the point we made was the great economic upheavals that we have had have been due to political upheavals. Geoffrey Howe and I remember particularly because the first Economic Summit we went to was the Tokyo Summit in 1979. When we went there, the price of oil was fourteen dollars a barrel. It was the time of the Iran/Iraq War. When we left, it had gone up to seventeen dollars a barrel, because it was the time when because of the Iran/Iraq War the price of oil, which had already gone up fourfold, doubled once again and this was a cause of very great concern, of economic upheaval because of course it withdrew quite a large amount of money from spending on other things and put it into paying for oil. That was one example.

The original increase in the price of oil came from the Yom Kippur War and what we are saying is that it is not only necessary to get the economics right, but there are certain international political upheavals which we must have regard to and try to foresee them happening and therefore, we really must try to solve the regional political problems. [end p14]

There are other countries which have excellent natural resources, good agricultural soil. If I might put it this way: they seem to make a mess of their internal politics and their peoples therefore do not enjoy the standard of living they should. You can cite some of the Latin-American countries for that. Their resources are very high but their standard of living and the problems they have had with their politics have prevented their people from profiting from those excellent resources.

And then, there is another group of countries like the Lebanon, which had a very high level of prosperity, which in fact have completely ruined it, again by internal politics.

So I think the message is: you have not only got to get the economics right, you have also got to look at the politics internationally—that is why political cooperation is so important—and never cease your efforts to try to tackle some of these regional political problems, like the Middle East. And you also have to watch your internal politics so that you preserve and enhance the heritage of the children and always give people a chance of higher growth compatible with a good environment.

So that is really why it was a much more rounded Summit than usual because I think we took everything into account.

Philip Stephens (Financial Times)

Prime Minister! [end p15]

Prime Minister

I am so sorry! Your photographer did not get a chance to take a photograph this morning. He was hustled out along with a lot of other people and I tried to rescue him, did so once, but he was re-hustled again and please apologise! It was just that wave after wave came in and they did not all get the group, but he did try! (laughter)

Now your question!

Philip Stephens

Prime Minister, you mentioned inflation. There has been some suggestion that you expect our inflation rate to be down by half next year to about 4 percent by this time next year. Were you able to give the other Summit leaders that sort of assurance, that we would be back to about 4 percent by next year?

Secondly, a domestic question: are you planning to go back to reshuffle the Cabinet this week?

Prime Minister

First, with regard to inflation, we expect that inflation will now come down. We have taken, as you know, very vigorous steps. One of the problems is that it takes quite a time for the steps to work through and to be seen in inflation that comes down. We believe that it will be coming down in the fourth quarter of this year and will continue to do so and I am sure the Nigel LawsonChancellor is nodding vigorously. Yes! Good! [end p16]

Nigel LawsonChancellor of the Exchequer

I am also nodding because that is the “Financial Times” photographer over there who was hustled out!

Prime Minister

Right! He will give evidence that what I told you was correct.

With regard to your second question, if I have and when I have any news to give you, I shall give it but do not expect it too soon!

Ian Henderson (ABC, AUSTRALIA)

There seems a fair consensus in a lot of the press comments that you suffered a number of diplomatic slights over the past four days at the hands of the French. Do you feel that that has been the case and were you satisfied with the official courtesies extended to you? [end p17]

Prime Minister

I have not suffered any diplomatic slights of any kind whatsoever! I think I have sat at every Head of Government dinner on President Mitterrand 's right. President Bush, who was the other Head of State, sat opposite as you would expect and I sat on his right. We had an excellent relationship between President Mitterrand and myself. I have not had anything which could even remotely be termed a slight. Indeed, I have had every attention.

You look very disappointed! (laughter)