You know that in Italy you have a lot of admirers?
It is always a nice thing to be told.
And all Corriere dela Sera readers and staff are among them. British-Italian relations are traditionally good. As the Cold War ends and the architecture of Europe is being re-shaped, the old uncertainties die. Do you think that our bilateral relations could be influenced by the recent upheavals in Germany and Eastern Europe?
I think certainly when we are together in conference in the European Community I keep very close to Prime Minister Andreotti [end p1] and go and consult him a great deal. I remember quite vividly that he was Prime Minister at my first Economic Summit in Tokyo in 1979 and in one capacity or another, therefore, I have known him and know the way he thinks, know his skill in negotiations.
So it is natural, and Italy being a very prominent country, that we do consult fairly closely and indeed we have the Anglo-Italian Summit coming up very soon, as you know.
So particularly, as you put it in the question, at a time of uncertainty, yes one consults the more closely, to stay together, to see that our thoughts are in tune with one another.
Britain and Italy have a different approach on the political and economic integration of Europe. How far away are the two governments on this particular issue?
I think we might be quite a long way away from one another but then our history is so different. Our Parliament is seven hundred years old, the institutions have developed but have remained there as the same institutions, the Parliament, our legal system have developed over a thousand years. So our institutions have remained unchanged and we have just gradually come more and more closely together as the United Kingdom. [end p2]
So we are a much older country than Italy and our institutions are much older and therefore our customs are more ingrained in our ways and the essence of our Parliament is, seven hundred years ago it was formed to keep control over the Executive, which was then the Monarch, over the amount he or she spent and how they raised the taxes.
Now that has been the fundamental purpose of our Parliament, along with many others that developed, for all of this time and so there is no question of giving it up, no question of giving it up. We are accountable to our Parliament for this and every time I am negotiating in Europe the thing in my mind is: “Now how can I get this through Parliament?” because, and again it may be a difference, every time I come back from a European conference, on my two days in Parliament when I answer questions - every Tuesday and every Thursday - I personally am answering questions, but on those two days, after a conference, I will have to make a statement to Parliament, about fifteen minutes, of precisely what has happened at the European Summit, precisely what has been agreed and the work that will go forward. Not only do I make a statement, but our custom is that I am then questioned on that statement and I will be answering questions on it for about an hour. So I have got to know that how I negotiate will be in keeping with what I can get through Parliament. [end p3]
Now I think that probably is very different from the Italian system and so, yes, our views are different because our traditions and our history is very different. That does not mean that we cannot come together on many things in the future about the European Community and on our bilateral relations because we both live in the same world and we are both democracies.
And also, I must not forget this, in Italy, of all countries in Europe, I think we are closest together in the kind of system of free enterprise we have, the number of small businesses you have, the number of small businesses we have, that this really is the heart of one's prosperity, in addition to the larger ones.
The external consequences of German unification will be examined in the restrictive form of a Two Plus Four Summit. This formula is considered by some governments, and Italy is among them, as potentially disruptive of the existing Alliance and the European Community. What are your comments on this?
They will be examined initially in the Four Plus Two, or the Two Plus Four, which of course has the advantage that it has both the United States and the Soviet Union and the other two powers in Berlin, which has kept Berlin free for a long time, and then the two. But it also will be discussed in NATO, it is bound to be. It also will be discussed in the forum that will become more and [end p4] more important, namely the Helsinki forum from 1975 and we have got the Conference later this year, and so we shall all of us, those who are in those four, keep very closely in touch with people, particularly Italy. Because as I indicated, Mr. Andreotti and I have been there quite a long time.
So that is only a part of the discussion. No-one will be suggesting that we get it all sorted out in that tight little group and then say to the rest: “Now take it or leave it.” Of course we would not. It is to get some of the differences ironed out and some of the things that would be acceptable both to the United States and to the Soviet Union and, as it is on the unification of Germany, to Germany and all of us.
Because between, as I call it, the five or six of us we will probably be able to erase all of the points that would concern others and we will be very much aware that in addition to Italy, with whom we will consult closely, we are also in close consultation with Poland because she will insist, and rightly so, on having a proper Treaty, a proper Peace Treaty, to guarantee her borders. An Accord is not enough, under German law it has to be a Peace Treaty, and we will want a Peace Treaty and registered with the United Nations. And then you will find other neighbouring states for example, like our Dutch friends and Belgian, also interested. [end p5]
So it is really to get some of the initial things ironed out first so that we know the broad shape which we think will be acceptable and then we will all be consulting. Because to go straight to the thirty five you know you just have to go with a proposition for discussion. So I do not think you ever need fear that Italy will not be consulted, because each of us would keep in touch with her. Her views are very important.
The United States and the NATO Alliance were ready to accept the inevitability of German unification. Many political commentators in Germany, above all, had the impression that you are not enthusiastic about German unity and would like to delay it for as long as possible. Is that impression correct?
We have a commitment to the unification of the two parts of Germany. Now I specify that - the unification of the two parts of Germany - nothing else, in the NATO Communique. It has been there for years, it was in the last one. We believe that it is inherent in that commitment, as we put it in the NATO Communique, that if that is to come about, and I believe it will and I believe it will soon, that they must do it having regard to the interests of NATO, having regard to the interests of the Helsinki Accord, having regard to the interests of the Four Powers in Berlin, having regard to its effect on the European Community. [end p6]
And it would be reasonable to expect that when they are thinking in that way, that they would be the first to wish the other consequences, both defence and European Community, to be worked out and to be being worked out now. And because that will take a long time, they would expect a reasonable transition period before the full effects of German unification were to be brought into play in relation to the European Community.
Now when you look at the enormity of the changes, for example on the European Community, on the Agricultural Policy, on the trading policy, on the subsidies that will be necessary to be paid to German industry, that must be worked out. And I think we were entitled to expect full understanding of that position, that you do not say: “Germany, unified, we will work everything out afterwards”. That you say: “Germany is entitled, if her people genuinely so wish, genuinely so wish, for the two parts to come together but that must be done,” and this was in the Strasbourg Communique and in other communiques, “bearing in mind the effect on NATO and other Alliances which have contributed to the stability of Europe and to all her other obligations,” which is Helsinki and the European Community.
We have lived in secure and stable conditions for the last forty years and your first question, you say we are going into a time of uncertainty, we would not like the unification of Germany to lead to uncertainty and instability. It is our task, and the task of all people in Germany, and all the rest of us to work it out so that it contributes to prosperity and stability and does not undermine it. And on that I am adamant. [end p7]
So it is not against it, it is saying: “Yes, you have a right to do it provided you want to do it genuinely. But equally we have a right to expect that it will be done having regard to all other obligations and the stability of Europe and the desire of other countries to go towards democracy and the desire of the Soviet Union to go towards democracy”.
So is that clear?
I think that the majority of Europeans think like you.
Oh, let me assure you, they do, let me assure you. I would say the majority are thinking like me. And beyond Europe's borders, Europe's present borders, and Poland, and the Soviet Union and NATO. And a lot of people in Germany as well who understand. [end p8]
There is the possibility of a revival of the old entente cordiale with France as a counter-weight to a united Germany in Europe and Italy could join this entente?
It is very interesting, is it not, that so many people are talking about a counter-weight to Germany, very interesting. That reveals their concerns, that reveals in itself their concerns. It would be a different Community with a very big Germany and bigger than anyone else. France and ourselves obviously are independent, nuclear powers and therefore have an interest in common, defence-wise, that we do not have elsewhere.
But I would put it this way. I would not agree to going to a federal Community. I never did because as I say, we have our own Parliament and institutions and I am prepared to cooperate, and we do cooperate. Our history has been tied up with Europe. But I am not prepared to submerge the sovereignty and the right of the British Parliament to something much much more amorphous, without roots.
Europe is bigger and older than the European Community. The European ideal was founded and taken the world over long before the European Community existed. I think that it is every bit as noble to work together as in cooperation as a Community with twelve different countries, as to try to give too many things over to a central authority. [end p9]
And I do not think that the answer to your counter-weight problem is to have a more closely integrated Community. Whichever way you look at it, a unified Germany will be the biggest factor in that Community and I think it will be best if we each of us keep our own identity and a certain freedom of our own action so that we can willingly cooperate, as we do now, and then say: “No, we keep certain things wholly to ourselves because our history, our language, our approach is different”.
Now does that answer your question? Yes we have to keep closely within the present Community to other countries because we are smaller, but together we are powerful and we want to see that the present cooperation goes in the traditional way of freedom and justice and a market economy. But I do not think the way to do that is through closer integration. I think that provides less balance than the freer way
And about the revival of the old entente cordiale with France?
Inevitably, as I indicated, on things like nuclear yes inevitably we must because that again is a tradition. But you know we were fairly close to Italy during the Risorgimento. Garibaldi used to go and stay at Lancaster House, just down the road. [end p10]
You have been the first Western leader to meet and appreciate Mr. Gorbachev and at the same time you have been the most cautious among the Western statesmen towards disarmament. Are you afraid that Gorbachev could lose control while the Soviet empire is disintegrating? [end p11]
I would put it very differently, I believe that Mr. Gorbachev will retain his Presidency and I believe that he will continue to be leader of the Soviet Union. I believe that his vision, the way he has been prepared to recognise contemporary problems, the way he has been able to understand that the greater freedom tends to allow some of the nationalities to express their views where previously they were hidden, the way he has handled it, and his dominance means that I think he is unrivalled at the moment. And I believe he will continue, I believe it is in the world's interest and in the Soviet people's interests that he does.
My feeling about defence is to some extent founded on my generation's experience. You never know where the next threat is going to come from. In the last twenty years we have only had five or six nuclear powers. In the next twenty it is possible that some thirteen or fourteen more will get access to nuclear weapons. Right now there are some fourteen countries, not all of them friendly either to Italy or to us, in [end p12] the Middle East who have missile technology, they have got missiles, they can send to other people, they could put chemical weapons, if they got hold of nuclear they could put nuclear weapons in the payload. Now with that world, together with the knowledge that it takes you about ten years to design a new weapon and another ten years to get it into production, you dare not let your defences go down.
I do not know where the threat would come from. What I do know is whenever and wherever it comes, and the world over because we have out-of-area duties, as you know, whenever and wherever it comes from we should have nuclear weapons, we should have an effective army, we should have a pretty big Navy, an effective Navy to secure our trade routes, and effective air cover.
Now can I just put it like this? In my time as Prime Minister, and much more so than Andreotti's time in government, since 1979 the first international crisis I remember was on the day after Christmas in 1979, Jimmy Carter rang me up and said: “The Russians have marched into Afghanistan”. Now that was the first one, we did not know, unexpected, we kind of mobilised the world to object and to protest and we supplied help to the people fighting and help to the refugees. That was the first thing. Now they came out eight years or nine years later.
The second thing was in 1980, the telephone went, also while I was down at Chequers, “Iraq has crossed the border into Iran.” You remember Iran, so many of her leading officers had been murdered by the new regime, clearly people had thought she was weak [end p13] and they crossed and it was thought at that time the whole thing would be over in five or six days or maybe three weeks. Not a bit of it, it went on and on. 1980 we sent what was called the Armilla Patrol, two warships round there, it would be outside the Gulf to see our oil tankers through and later in that war we had to increase it to three to join the United States patrolling up and down. And we had the minesweepers, no-one else had, so we sent round four minesweepers. So I had the three Naval ships and the four minesweepers up and down. Did not know, if we had not had them, we could not have sent them.
1982 - the invasion of the Falklands. We were able to mount within three days an Armada (I had better not say that in Europe, had we?), a whole fleet. Because we belong to NATO all our ships are equipped with anything they would need should there be a NATO emergency, they were all equipped, automatically. So we just had to mobilise them, “Come back, you sail in three days”, and they sailed. I did not know. If we had not had it we could not have done it.
What else has happened since? We have to send various forces all over the world - Zimbabwe, when we brought her up to independence we had to send both our Army out there and our policemen, to train their three armies to come together to make certain the elections. If I had not had it, we could not have sent it.
I do not know what is going to happen in the next ten years or in the next twenty. What I do know is that you should have an effective nuclear deterrent, you should have an effective Navy, you should have an effective Air Force, you should have an effective Army so that whatever happens, if anyone tackles British interests they may know that they would not have an easy time. [end p14]
And France would take the same view and that has been the purpose of NATO and that is why I am a passionate believer that we keep NATO together so that NATO is the defender of the free world and wherever it is attacked we agree that if anyone is attacked the other goes to her aid if her own territory is attacked. So I am adamant that we keep up our defences.
I also know that the Soviet Union has a mass of military equipment still, some of the best aircraft, some of the best tanks in the world, marvellous submarines, some of the most detailed nuclear. So never let your guard down if you value your freedom.
So you believe in the continued existence of NATO?
Most certainly. We should be able to do it with fewer, but we keep up our designs and we keep up the training of our pilots, our aircraft. There is not time to go back and get it. Equipment is much more sophisticated now than it was in the last War, much more. [end p15]
During the Reagan Presidency the relationship between Britain and the US was very special. With the Bush Administration, relations remain very friendly but some commentators perceive a change of attitude. It seems that the US government is concentrating on improving the relationship with Germany, is this perception correct?
I think they are bound to have regard to Germany, she is a very powerful nation and with unification in mind I think they are bound to try to do everything to improve their relationship. And they do not have to pay quite as much attention to us, because they can rely on us. It is one of the ironies of life that you sometimes pay less attention to your close friends than you do to your less close ones - they do not have to.
But when President Bush was in trouble about Panama, he rang me, he got support, Bang - just like that - “Of course we support you, what you are doing is right.” Where else did he get it from?
And so when he rings me up, and I went over for a day before the Malta Summit to say what we thought about it, etc. He has been here. Jim Baker comes across and sees me from time to time. No, it is still close, it always will be, it is bound to be. But it is the closeness of close friends who are close because anything else would be unthinkable and just because they are and will be. It does not stop you from making newer friends and giving attention to them. [end p16]
But do you not find in life that you often take some people for granted? The United States knows that it can take our support for granted on most things. We always give them, obviously, the benefit of our view on things. We owe all of our friends our judgment, and we give it. But when they want us to stand together, as they did on Panama, and when they were being very good on President Barco and then I too came and said: “Anything we can do too”. We are doing different things, but we are doing them.
Britain has decided to lift sanctions against South Africa after the announcement of Mr. Mandela's release.
Well now, steady the buffs - do you know what “steady the buffs” means? It means just go steady. That is not quite an accurate question. Britain has decided that she would like, after consultation with the Community, to lift the voluntary sanctions that she has. The mandatory ones on United Nations, on armaments and arms embargo, we keep. The ones that we have orders on, put through Parliament in conjunction with Europe on krugerrands and iron and steel, we keep.
We think, however, that President de Klerk has come a very long way, as Mr. Mandela said, he has come much further than any other leader, and we think that it is advisable and indeed that they are entitled to expect that as they come the right way and [end p17] make such fundamental steps as they have, that we should step-by-step reduce some of the sanctions, step-by-step.
If you do not, there will be people in South Africa who say: “Well it does not matter what you do, how far you go towards democracy, you are not getting any response from those who we expect to understand, not getting any response.” You know in life we may all need a bit of chastisement and criticism but we do also need some encouragement and it is the little encouragement that makes you feel it is worthwhile going further in the right direction and you have got some friends who are encouraging you.
So it is the voluntary sanctions. One, we have a voluntary ban on investment, I cannot enforce it but people observe it because they know our views. Now I must say that in a new South Africa, the only way to provide for more and a bigger and bigger population a higher standard of living is to get a higher standard of prosperity. South Africa already has the most prosperous economy in the entire Africa, no-one else can hold a candle to her. But she had got a bigger and bigger black population to provide for and she wants help with education and she wants new investment there. You do not provide jobs and skilled training for more people unless you get new investment.
I do not believe in sitting in a conference and pontificating how many black people shall be deprived of jobs, made to suffer unemployment and poverty, just because we say so. I believe in doing my level best to help. [end p18]
So yes, the voluntary sanctions I believe, after we have consulted, I hope to persuade them. It is a good case, a good case, that when people are moving in the right direction you encourage them.
And in the meantime we help with something like £40 million worth of education help to black South Africans, they come over here on scholarships, to train them. And then something called the Urban Foundation, black and white, came over to see us. The many black South Africans, there are more black South Africans who are qualified in their School Leaving Certificate than there are white, and they are taking managerial positions, small businesses, that they could not get loans to purchase their own houses. This is what the rest of the world has done to black South Africans.
So, right, we said: “Yes, we will give money for loans to black South Africans”. The people who are getting rid of apartheid in practice, even ahead of the government, are the big companies in South Africa who are staying there, who are training black South Africans, they have responsibility, they have mixed housing estates - those are the people who want to be encouraged. And we are doing it in two ways, by suggesting that we will relieve the voluntary sanctions and by actively giving education and housing help. And it is a much more constructive way than that taken by other people who, for reasons which escape me, feel good if they impose conditions on South Africa which deprive black people of jobs and a living. Is that clear? [end p19]
In the spring of 1979, Prime Minister, Le Monde predicted that Britain should become an under-developed country and all over the world was introduced the label “The British disease” to describe a mixture of industrial confrontation and strikes and low productivity. Even your political enemies admit that under your leadership the portrait of Britain has changed. What is the most fundamental change in Britain in your opinion in those eleven years?
It is difficult to say that there is one. I think it is turning round an attitude. The attitude was, “Well, we are in decline and we cannot do much about it.” With a new government we said: “Look, you can do something about it. We are going to restore incentives, we are going to take down taxation,” which we did, “we are going to take off some of the central controls that you have had,” so off came foreign exchange control, off came incomes control, off came prices control, “so that you will be free to manage, so you have got incentives, far fewer controls and we will take off some of the others”, like you could not expand your company where you wanted to, you had to get a Development Certificate, which was quite absurd. [end p20]
So we took those off and we also said: “There is no balance between the right of employers and employees as far as unions are concerned, the employers have no means of resisting a strike because the Trade Union bosses call their workers out without even having a proper ballot of their workers”. So we altered the whole balance of trade union law and for the first time the workers were free to refuse a strike and most of them did. Sometimes they have it, then we know that it is what they want.
So we altered the whole of that and we turned it round from an attitude of “Oh, we are in decline” to an attitude of “Come on, let us get up and go.” And they did.
We have created more jobs in the last five or six years than anywhere else in Europe. Our unemployment is down to 5.7 per cent. We have more jobs in Britain than we have ever had in our history before - 5.7 per cent - because of this enterprise. We have something like 80,000 new businesses being formed a year, it must be more than that now. More and more young people starting up for themselves, which was unthinkable because they got so demoralised.
We do not have a budget deficit. We have been very careful about national accounting. The last two years we have had a budget surplus and if we have spent money we have raised it honestly by taxation. But we have tried to cut the amount, we are cutting the proportion of Government spending so that we release more money for investment. And in the last two years we have had record investment in manufacturing, each year a record over the other. [end p21]
Productivity is coming up and investment. It has taken us quite a long time to catch up with France and Germany because we had this disease for so long. But we have got the cure. We have at the moment, I am afraid, a trade deficit and we have a little bit of returning inflation. Our inflation figure includes mortgages, if it did not it would be 6.1&pcnt;. We are one of the two countries in the world that includes mortgages in it. You do not. So our equivalent to yours is 6.1&pcnt;. It is too high and we are going to get it down.
But we have had this turn-around in attitude because we took off some of the central planning and control, we rebalanced the unions and the employers and we gave incentives. So if you do well, you keep the money.
We have knocked down our company tax to one of the lowest in the world on property, it is 35 per cent. If you are a small company it is less. So that is really how we have turned it round and they have seen that it works. And we have got a long way to go yet, a long way to go, but it is coming.
The latest opinion polls give Labour a strong lead. Do you think that Conservatives will recover in time for the next elections? [end p22]
Yes. I have had this in between elections almost every time. People voted for change, they had had enough in 1979, socialism was not for the British character. And then when we started to take the steps that were necessary for change of course they kick against it because sometimes it is painful.
But everything we have done including, if I might say so, not only creating more wealth but spreading it ever more widely among the population. In home ownership and in shares, one in every five people own shares in industry, 68 per cent in England own their own homes.
So yes we shall. This inflation, it is very interesting to me that our inflation at the moment is 7.7&pcnt; with the mortgage. It is too high for us but it is the level to which Labour only managed to get it down to for a few months. So it is good that people are rebelling against that. But as you know, the way to get over it, I am afraid, is to put up interest rates because it means that there is too much money about. If you have got too much money there is only one thing you can do, that is increase the price of money because they are not only spending. You have a big savings ratio, we do not.
Do you know what is happening now? Our people have become so confident of the future that they are spending not only what they earn but they are spending other people's savings, they are borrowing. So our savings ratio has gone down, that must come up. A 15 per cent interest rate will help to get it up again and again to balance. [end p23]
But yes it will come back. And of course every time Labour puts up a policy it is torn to ribbons because it just does not work. So yes, it will come back. And as I say, we have got more jobs than ever before, low unemployment, a far higher standard of living than ever before, a far higher standard of social services than ever before, more investment in manufacturing than ever before, which is good for the future, and once again we are back in no uncertain terms on the international scene, we have the reputation of being a staunch ally and a reputation I think of making our views heard and felt in the international forum - and listened to.