Q1.
European Community: progress and agreements: some of the problems yet to be solved.
A1.
The Community has made a lot of progress in recent years in two main respects. First, in creating a genuine Single Market among the twelve member states, sweeping away unnecessary barriers, regulations and controls: and secondly, towards putting its own finances in order, which has been achieved above all by reforming the CAP to eliminate unnecessary surpluses.
Looking to the future, we have to ensure that the Community remains open to trade with the rest of the world including Latin America, and here a successful outcome to the Uruguay Round will be crucial. We also have to settle the more fundamental question of whether the Community should develop on the basis of willing and active cooperation between sovereign independent nations, or in the direction of more bureaucracy and centralisation. There is no doubt on which side Britain stands, and I believe our view of a free enterprise and outward looking Community will prevail.
Q2.
Is there any change in the position of the EC or of Great Britain in view of what is currently happening in Eastern Europe?
A2.
What is happening in Eastern Europe is of historic importance. For the first time, countries are emerging from communism, and trying to establish democracy and a free market economy. They deserve our help, and the response has been very good, both from the European community and other Western nations and Japan. Indeed, I believe the scale of the help which Eastern Europe will receive over the next two years is proportionately greater than the Marshall Aid which the United States gave to [end p1] Western Europe after World War Two. This reflects the vital political importance of ensuring that democracy succeeds in Eastern Europe.
Q3.
What is your policy regarding the reunification of Germany? What are its pros and cons?
A3.
The Western allies have consistently said for more than thirty-five years that the German nation should have the right to self-determination in freedom. It is of course up to the Germans themselves to decide whether they want to re-unite or not. But when the European Heads of Government met in Strasbourg last December, they agreed that this had to be seen as part of a wider process of ending the division of Europe, and that it must respect the obligations we all assumed under the Helsinki Final Act, as well as existing Treaties and Alliances. In short, German re-unification is not something which would take place in isolation, but in the context of wider changes in Europe. Chancellor Kohl has made quite clear that he accepts that.
Q4.
Do you think the countries of Eastern Europe could join the EC and, if so, under what circumstances and terms? What would be the advantages of an enlarged EC?
A4.
No, I don't think any of the East European countries could meet the obligations of Community membership at this stage. The first essential is to have a proper market economy and none of them are anywhere near that. Moreover, the Community has decided that further enlargement can only be considered after completion of the Single Market in 1992.
You know one of the most surprising features for me of the recent developments has been the very strong feeling of national identity in the East European countries, and I am sure they will want to preserve that while also cooperating with the Community.
But we do want to see a much broader association between the Community and the Eastern European countries as they achieve [end p2] democracy. In the long term, one can imagine a much wider, Pan-European association of countries, embracing not just the Community but the EFTA countries and democratic governments in Eastern Europe.
Q5.
What are the leading factors behind the Eastern European changes we have witnessed?
A5.
There are a lot of reasons: the total failure of communism to meet people's ambitions for a better life: the strength and resolve of the Western nations in refusing to be intimidated by Communism at the height of its power: Mr. Gorbachev's policies of greater openness, which have allowed East European countries to go their own way. But the single most important reason is people's unquenchable desire for freedom.
Q6.
Do you consider that Communism - Marxism-Leninism - is outdated?
A6.
It is not so much a question of being outdated: it was never in-dated. Marxism-Leninism is simply not capable of producing either political freedom or economic success, because it does not recognise the dignity of the individual or his desire to better himself.
Q7.
What is the way to reaching agreements with the countries of Eastern Europe?
A7.
The European Community is developing a network of agreements with the Eastern European countries tailored to the needs of the individual countries. As they move towards democracy and a market economy, so the scope for more substantial association agreements, going beyond trade and economic cooperation, will increase. There is also the possibility for the Eastern European countries of joining institutions like the Council of Europe, which brings together all the democratic nations of Europe. [end p3]
Q8.
Is economic liberalism irreversible? How would you, from an ideological perspective, envisage the leading system that is to prevail in the years ahead?
A8.
There is absolutely no doubt that democracy and free enterprise have demonstrated their success, and more and more countries are adopting them. It is our system which not only creates prosperity, but provides the best social services, health care, education and so on. You have to create the resources before you can spend them, and that is what socialism has so conspicuously failed to do.
Q9.
It seems to me rather surprising that while European countries with socialist regimes are moving forward and changing their political structures, in Great Britain your own party is losing ground. Do you think a change of course is necessary so as to remain in power?
A9.
Absolutely not. We shall continue to follow the policies which we set out in our Manifesto before the last election, and which have brought this country unprecedented prosperity and greater respect than ever in the world. People know that our policies are the right ones, especially when it comes to the General Election.
Q10.
Would your country seek closer relations with Eastern Europe? Would Britain be willing to provide credits for those nations?
A10.
Britain was the first to seek better relations with Eastern Europe. For instance, I went to Hungary in 1984, and we established very strong links with them: and to Poland in 1988.
Many of the countries are already very heavily in debt, in which case it would be counter-productive to give them yet more credit. But we are providing financial help as well as food aid and training. That is what they most need. [end p4]
Q11.
Do you think that cooperation and relations between the EC and Latin America can improve? If so, how should this come about? If not, why?
A11.
Yes, I think there is a lot of scope for improvement, and I would like to see it happen. We are very encouraged by two developments: first, the remarkable spread of democracy throughout Latin America over the last few years: and secondly, the increasingly widespread realisation that Governments cannot run an economy, and that the way to prosperity is to reduce the public sector, get rid of unnecessary regulations and burdens on business, and encourage enterprise. That will open up much greater opportunities for trade and investment.
Q12.
What would be in your view the best possible formula for bringing to an end the crisis taking place in Panama as a result of the United States intervention in that country, and what is your position regarding the overthrowing of General Noriega?
A12.
We supported the United States' action in Panama. I am surprised that others did not do so as well. People were unanimous in saying that Noriega was a corrupt dictator who had overturned the results of democratic elections and prevented the duly elected government from taking office. So what is the logic of complaining when the United States responds to the request of the elected government for help? Now Panama has the chance to develop peacefully under a democratic government, and to restore its prosperity.
Q13.
What is Mexico's image in the United Kingdom and, from your personal point of view, what is your assessment of the economic and political changes President Salinas has undertaken in the last twelve months?
A13.
I have of course visited Mexico, and remember it very well. There was even an earthquake while I was there! There is great respect and admiration in this country for what President [end p5] Salinas is doing to transform Mexico's economy, by reducing controls and privatising state-owned industries. He and I had a long talk about this when we were both in Paris for the Bicentenary of the French Revolution last July, and great progress has been made since then. I would also pay tribute to the achievements, in the face of great difficulties, of his predecessor, President de la Madrid. All in all, Mexico's image is a very positive one, and I believe this will be reflected in increased investment and trade with Britain. [end p6]
(2) Thatcher Archive: COI transcript begins:Interviewer
Is there any change in the position of the EC or of Great Britain in view of what is currently happening in Eastern Europe?
Prime Minister
It is difficult to see precisely what will emerge from Eastern Europe. Obviously times of great change are times of great uncertainty. We want to have some kind of relationship with each of the European countries and the agreements we have with then will have to be dealt with according to the country. It may be that Poland will require different things from, say, Czechoslovakia. [end p7]
At the moment, we are already dealing closely with both Poland and Hungary because one has already changed from a communist government and the other already has changed to a plural kind of democracy. So they have made their fundamental changes, they have got IMF programmes and so therefore they are in a position so that we can deal with them and be a very real practical help, each according to their needs.
We do not quite know what will happen yet because they have not had the election in the GDR or Czechoslovakia. Czechoslovakia has a democratic tradition and I imagine will recover very fast after she has got her democracy and she of course used to be one of the very high standard of living countries with a very high standard of living.
But I think that we have to reckon that we will have an association agreement with each of them but tailored to their particular needs. So we are not talking about those particular ones becoming full members of the European Community because they have not yet got all of the structures of democracy plus a market economy plus a proper independent rule of law in the way we understand it.
Interviewer
Has Mr. Gorbachev's policy influenced these changes in Eastern Europe? [end p8]
Prime Minister
I think the changes in East Europe would not have come about had Mr. Gorbachev not been the first to point out that communism was not working, it was producing neither prosperity nor personal freedom and responsibility and that they therefore needed fundamental changes in the policy, to have more personal initiative, more personal responsibility, more enterprise and much greater production and that everyone had to take responsibility for bringing that about and that people were not satisfied with the old ways of the communist regime and that had to change and it had therefore to change in two ways.
First, the greater freedom of speech because through discussion many answers emerge which are not always apparent at the beginning and then secondary structuring, their system, their political system and their commercial and industrial system so that it would yield up better agricultural results and better industrial and commercial results.
Now he started the ball rolling, as we would say, and without that I think the others would not have started at all. Poland of course had always had the Solidarity movement which was much more than a trade union movement, it was in fact a political opposition movement of really all of the people from young to old. I was amazed at the strength and feeling, real political feeling of it when I went there and of course backed by the Catholic Church, that was a tremendous strength. [end p9]
But once Mr. Gorbachev had had his glasnost and perestroika and had really rather rejected any possibility of going into other countries by force, then the way was open for all kinds of changes. Poland came first, then Hungary and then East Germany and Czechoslovakia and of course Romania and Bulgaria.
But once people saw what the influence of the views of the man in the street coming out into the street could do, the changes went very quickly.
Interviewer
What is your policy regarding the reunification of Germany and what are its pros and cons?
Prime Minister
I think we laid down the general rules at Strasbourg that if it is the wish of the German people through self-determination to be reunified, it must be done in conjunction with ending the divisions in Europe. And also bearing in mind other obligations such as the Helsinki Accord which was signed by thirty-five nations under which each of the thirty-five nations agreed they would not violate the borders of the other. But if there were to be any change, it could only be brought about by peaceful agreement and also bearing in mind that we would want such a change not to be destabilising but should be done in such a way that it does not undermine the security and stability of the area. [end p10]
Now that is quite a lot of words. But what we are saying is changes are best brought about against the background of stability and security and therefore it is best to make haste slowly and make certain that each move is one that will stick and be satisfactory to all concerned.
Interviewer
(Inaudible).
Prime Minister
Taking into account, I think, the other obligations, yes.
Interviewer
Do you think the countries of Eastern Europe could join the EC and if so under what circumstances and terms and what would be the advantages of an enlarged EC?
Prime Minister
Certainly they could not possibly even consider it until they have full democratic structures in place and working. And secondly, they must have a proper rule of law, you know by that I mean an independent judiciary and a rule of law, a system of justice that binds governments as well as people of the kind of independent system of justice we have in this country. [end p11]
And also until they had a market economy because that really is what we have in the rest of Europe and full competition, we are all trying to get rid of all subsidies and that they agree to all the rules that we have agreed to so far.
So it would not seem that they could join immediately, it would take quite a long time. But we can in the meantime have what we call association agreements with them, they are trading agreements and we can help with management, we can have cultural agreements, we can give financial help, we can set up the European Development Bank to help with development, we can give management help, we can give all kinds of help short of membership. For membership they would have to come up to the tests and pass the tests which I have indicated.
Interviewer
What are the leading factors behind the Eastern European changes we have witnessed?
Prime Minister
The people are fed up with socialism, they do not like it, they do not like being controlled from the centre, they want more liberty, they want more prosperity. But above all, they want more liberty and they do not like the way in which they have been oppressed - they want more liberty. [end p12]
It is not easy to build a market economy in a sophisticated society, particularly when they have not been used to making decisions on the shop floor, particularly when several of them have not got really very many facts and figures about what has been happening. They have not got the natural disciplines that you have in a market economy. In a market economy you have to know your costs, you have to be able to sell at a price people will pay and only then do you stay in business. So there are a lot of natural constraints.
In a centrally planned economy you are told what to produce and the raw materials come and the finished goods are taken away. There is no price mechanism, there is no cost mechanism. They often know what the inputs are and what the outputs are and there is no system of strict financial control.
So they have to start to get all the institutions of a market economy, all the structures going, and that takes a long time.
Interviewer
Do you consider that communism, Marxism and Leninism is out-dated? [end p13]
Prime Minister
Yes, but we never really thought it would work. A system which recognises no values beyond the state is wrong because most of the beliefs in human values really come from religious beliefs. Marxism and Leninism recognise no religious beliefs, all the values came from the state and the state was the final arbiter. It denied individual liberty, the citizen had to conform.
Now when you have that kind of system you can force people into doing the minimum. You cannot force them into being enterprising, dynamic, doing high quality original work. And in the end I think that on theoretical grounds it had to collapse, it took over seventy years to collapse, but it did.
We have a saying by one of our great authors on liberty: “A nation that dwarfs its citizens will find that with small men no great thing can be accomplished”. And that is what a communist system does, it dwarfs the importance of the system, makes them all subject to a central control and there is no-one who in fact can run it in that way and it took a long time to collapse, but collapse it did.
Interviewer
Is economic liberalism irreversible and how would you, from an ideological perspective, envisage the leading system that is to prevail in the years ahead? [end p14]
Prime Minister
I think that the increasing amount of freedom that they have now in the Soviet Union could not be entirely reversed. They have got used to that liberty, the freedom of speech and of worship, much more freedom of movement. They have not yet begun effectively to build a market economy in the Soviet Union, that is much much more difficult particularly with people who have always been instructed what to do.
On the second part of your question, it is a system based on freedom under a just law, impartially administered and with a free enterprise economy within the framework of rules which enables free enterprise to operate. That is to say, you have to have certain rules about health and safety at work, certain rules about the safety of your products, particularly at a time when so many things are so scientific, and certain international rules about such things as pollution and so on.
But it is basically getting the framework of laws and regulations right, and fairly light, not heavy, and letting people work within those provided always you have a just law impartially administered. [end p15]
Interviewer
It seems to me rather surprising that while European countries with Socialist regimes are moving forward and changing their political structures, in Great Britain your own party is losing ground. Do you think a change of course is necessary so as to remain in power?
Prime Minister
No. Between elections, I think you will find, if you look back, you often lose ground because there is some particular thing that you have to do in order to keep your financial policies very firm - and you must - but undoubtedly it causes problems for some people and so of course they say that they would be against you; but when it comes to an election, you consider what are the alternatives and which government you would like to go the way ahead [end p16] and I hope then that they will see that in the last ten or eleven years there has been really a transformation in Britain's prospects, in her prosperity and in her standing and that they would still give us another term of office.
Interviewer
Would Britain be prepared to give credit to the Eastern countries?
Prime Minister
We look at credit, again, on a case-by-case basis because some of them had so much credit that they are very heavily in debt and it is not credit they want - it is grants for particular purposes - and so we have given grants for particular purposes and we do give a certain amount of credit once they have got their IMF programmes, but we do not want them to have a bigger and bigger load of debt tied round their neck. Debt has caused far too many problems, as you know, in many countries.
Interviewer
Do you think that cooperation and relations between the EEC and Latin America can improve? If so, how should this come about? If not, why? [end p17]
Prime Minister
I see no reason why they should not come about. Indeed, I know that some countries in the EEC, particularly Spain and Portugal, have closer ties with Central and Latin America than we have, although Heaven knows, we had many ties in fighting for freedom in some of the Latin American states and in opening them up commercially, but I see no reason why they should not be good.
I think the important thing is for the European Community to stay open to goods from the rest of the world. I often have to explain that a single market should not be to keep other people's goods out; it should not be and must not be protectionist. It should be that we got down our barriers to trade within that single market as an example to other people to get them down and we to get them down through the GATT. So the battle there is to keep our markets open to other people's goods and, of course, there is a very great deal of trade between Latin America and Central America and the Community already.
Interviewer
What is Mexico's image in the UK and from your personal point of view, what is your assessment of the economic and political changes President Salinas has undertaken in the last twelve months? [end p18]
Prime Minister
It is a very important country geographically and because of the history of its people; it is a country which has had many problems, including some physical tragedies, whether it be earth-quakes or volcanoes, which we have heard about in detail. We know the debt problem and we know the problems that that entails.
We have great admiration for President Salinas. I saw him at the Bicentennial in Paris and we talked about the debt problems. I think he is tackling the problems of Mexico very courageously in moving much more towards a free market economy, in privatising industry, because believe you me, politicians do not know how to run industry. It is far better to leave those who work in industry - management and workforce together - to build an effective, efficient industry, and he is tackling the debt problem with very great courage and is getting cooperation because of his courage.
We are aware - I have only been to Mexico City once - that you have got this enormous increasing population and you really have great problems to tackle, but we think President Salinas is tackling them with a will.