Speeches, etc.

Margaret Thatcher

Speech to Citibank in Abu Dhabi

Document type: Speeches, interviews, etc.
Venue: Abu Dhabi
Source: Thatcher Archive
Editorial comments: Embargoed until 2230.
Importance ranking: Major
Word count: 4534
Themes: Conservative Party (history), Defence (general), Defence (arms control), Economic policy - theory and process, Energy, Trade, Foreign policy (Asia), Foreign policy (Central & Eastern Europe), Foreign policy (International organizations), Foreign policy (Middle East), Foreign policy (USA), Foreign policy (USSR & successor states)

INTRODUCTION

There is a well-known Latin tag which goes “sic monumentum requiris circumspice” or in English “if you wish for a monument, look about you” .

That could very well apply to Abu Dhabi, for as one looks around this spectacular panorama of modern mosques, schools, hospitals and clinics built upon what was once barren land, it is a great monument to the wisdom and statesmanship of His Highness Sheikh Zayed.

His vision has been to see the great natural wealth lying below Abu Dhabi's surface used for the benefit of all its people and those who work and do business here. His far-sightedness also led Abu Dhabi to join with its neighbours to form the United Arab Emirates and later to become part of the Gulf Cooperation Council. The result has been that Abu Dhabi and the United Arab Emirates have enjoyed a stability and a prosperity which must be the envy, not only of the Middle East, but much of the world.

Sheikh Zayed is part, too, of that great tradition of friendship between Britain and the Gulf which was first embodied in a Treaty over 170 years ago, and which was so important to all of us during the dangerous days of the Gulf War.

Many of us remember with particular affection his very successful State Visit to Britain in 1989, at a time when I was still Prime Minister, a visit which crowned a life-time of alliance and friendly relations with Britain. You know: qualities such as loyalty, honour, constancy and hospitality–true old-fashioned qualities–are more deeply ingrained in the harsh terrain and the ancient traditions of the Gulf than anywhere else in the world: and those qualities are personified in Sheikh Zayed.

THE ECONOMIC IMPORTANCE OF THE GULF

Few parts of the world have seen so much economic change in the past thirty years as the Gulf region, riding as it has on the roller-coaster of world oil prices.

The fluctuations in the price of oil are deeply etched in my mind. I remember very well papers being written in the early 1970s saying that an oil price of about $2.50-$2.75 a barrel was much too low, and it was bound to increase. As it happened, not much notice was taken at the time. But when a sudden, enormous increase in price occurs, it is not usually due to economic factors, but to political ones. And so the vast increase in price in 1973 came because of the Middle East War. Suddenly the oil exporting countries quadrupled the prices causing a massive withdrawal of purchasing power from the western economies. Or to put it another way a massive redistribution of wealth between the West and the oil rich countries.

With the fall of the Shah in Iran and the consequent turmoil, the price doubled again; and so within the ten year period up to 1984 there was an eightfold increase in the price of oil. I remember when as Prime Minister I attended my first G7 Economic Summit in Tokyo in 1979, the price of oil at the beginning of that conference was $14 a barrel, and when we left, two days later, it had risen to $17 a barrel. OPEC had been meeting at the same time. Subsequently it went up to $35 a barrel.

In 1984, I remember having to fight a coal strike which lasted a whole year. The price was then $30 a barrel–coming down, but at that time I could have done with it a lot lower!

Transforming the Desert

But that explosion in the price of oil made possible the tremendous development of the Gulf States, with all the superb infrastructure which one sees here. And because so much of the work was placed with Western companies, a lot of the money paid out for oil was re-cycled back into the world economy, to a very positive effect.

Wisely the UAE has not wanted to become too dependent on oil and gas, despite the immense benefits which they have brought. They therefore pursued three very sensible objectives.

The first has been to build the infrastructure of a modern nation, with such magnificent projects as the Al-Ain University in Abu Dhabi, the desalination plants, and the great Rashid Port which guarantees Dubai's pre-eminence in the Gulf and Indian Ocean trade.

Secondly there has been a deliberate policy of diversification out of oil and gas and into manufacturing industry, into financial services and into tourism. The Ruwais Industrial Zone, the Dubai Aluminum smelter and the Jebel Ali Free Zone are examples of this very successful policy. Indeed the Jebel Ali Free Zone now has over 500 companies from the United States, from Europe and from the Far East. The service sector has also expanded greatly, in particular financial markets and offshore banking, so that services now amount to over forty per cent of Dubai's non-oil economy. That too is a remarkable achievement.

And thirdly a part of the oil wealth has gone to investment overseas, which already provides an income almost as large as that from oil. We did just the same in Britain with the proceeds of North Sea Oil and I remember that we were criticised by some opposition politicians who claimed that it meant exporting British jobs. Of course it was nothing of the sort: it was an investment in the future, a huge asset, bringing regular income for future generations.

The UAE has not limited itself to investment overseas: it has also been generous with its direct financial assistance to less fortunate countries, in particular through the Abu Dhabi Fund for Arab Economic Development, which has helped a very large number of countries, and not just in the Middle East.

I also want to put on record the great gratitude felt by Western countries including Britain for the outstandingly generous help and support we received from the UAE during the Gulf War.

With all these developments, the UAE has become a very important market for western companies, thus doing a great service to us all. The understanding that the prosperity of the West and of the Gulf are closely linked and interdependent has been remarkable, as has the firm commitment to maintaining free trade and open markets and to unifying tariffs, while at the same time making the UAE one of the most hospitable places in the world for expatriate workers and all those who contribute to its economic success.

Indeed, the stability of the lower Gulf is vital to all our economic and strategic interests. We owe a special duty of friendship and support to its governments, which I hope will never be overlooked, amidst all the other changes which are taking place in the wider world.

THE MIDDLE EAST IN BRITISH HISTORY

The achievement of turning the UAE into an oasis of stability is all the more remarkable when one recalls that the Middle East region has in history–including all too recent history–been torn by conflict.

I was looking the other day at a book written by Barbara Tuchman called the Bible and the Sword. It's about the whole of the Middle Eastern region, and in her remarkable way she goes to the heart of the matter. “More blood has been shed over this region” she said, “than for any other spot on earth” . That of course is correct, because here is the heart of the three great religions based on belief in God–Islam, Christianity, Judaism. It is tragic that those religions should have given rise to so many hostilities rather than to the harmony which is their true spiritual message.

Some of the things which have been done in the name of the great religions of the past, are due to the extremists of those religions who distort their creed to something totally different from its fundamental message and they pursue their ambitions instead by terrorism and violence. As scholars point out, this action is totally without sanction from the true religion. The message of Islam, as of Christianity is one of peace, tolerance and charity in which extremism and fanaticism have no place.

To Britain, the Middle East has also been the geographical junction between east and west, the bridgehead between three continents and the focal point in the strategy of Empire, standing astride the route to India and the Far East.

The great strategic importance of the region was why we formed a treaty relationship with the Sheikdoms of the Gulf long before we knew oil was here. We never established a colony, nor a protectorate, ours was a treaty of friendship under which Britain was responsible for the foreign policy and defence of the area. It lasted a very long time, and is the foundation for today's fundamental friendships and the personal contacts which still stand us all in such good stead.

But the period of Empires left us with many problems. Some 70 years later Iraq invaded Kuwait without any legitimate claim. The state of Iraq was only created after World War One. Until the downfall of the Ottomans it did not exist, it was merely an administrative district of their Empire. Kuwait, on the other hand, had long-been an entity under its ruling al-Sabah family.

Throughout history there have always been ambitious dictators who have thought that they could take other people's territory by naked power. That is what motivated Saddam Hussain and he had to be defeated.

The Gulf War and its strategic implications brought renewed hope that a solution to the Arab-Israel conflict could at last be found. It has been a long time coming but the Palestinian administration in the Gaza Strip and in Jericho is a welcome first step to full autonomy for the Occupied Territories and the realisation of Palestinian rights as well as Israel's right to live in peace. Attention can now focus once again on the prospects for peace between Israel and Syria, despite the immensely difficult problems over the Golan Heights.

The defeat of communism and the end of the Cold War had a great deal to do with removing the obstacles to Middle East peace, because it removed from power the main paymasters of terrorism and has given new encouragement to those who believe in resolving problems peacefully. Moreover foreign policy issues no longer have to be viewed through the prism of East/West power politics.

Yet many dangers remain, particularly in the Gulf, and no one should give way to euphoria. Saddam Hussain continues to torment his own people which is why the international community must keep on the sanctions against Iraq and ensure that he can never again pose a threat to the Gulf countries.

These dangers all underline once again the vital importance of having strong defence forces and being prepared for any eventuality. The UAE's record is that respect is outstanding, both through its own forces and its contribution to the Peninsular Shield Force, now to be upgraded.

THE POLITICAL CHALLENGES

Across the Borders–the Question of Minorities

I have already touched upon the problems created by collapsing empires which continue to have an impact in the Middle East well into our own times. Today we are seeing similar results across the globe.

The end of the Cold War and the overthrow of communism, the ideological empire of this century, was an inspiring moment of history. But as one great victory over tyranny is won, so old hatreds emerge. Injustices which have been suppressed but not erased from the memory, lead to new conflicts. Such are the tensions we now see in some of the states of the former Soviet Union, which were made worse by the compulsory transportation of peoples at Stalin's diktat. Such are the tensions in the former Yugoslavia, an artificial state, created by diplomats at the end of World War One from the disparate peoples of the Balkans, some of whom had always looked East to Russia, while the others looked West, to the lands of Europe.

We are still trying to grapple with the consequences of large ethnic minorities displaced or separated from their homeland by the break-up of empire. These cannot be settled by conflict: there are so many, that the consequences would be devastating. Assuming understanding and good-will, of the kind we have seen in Czechoslovakia whose peoples divided amicably into two sovereign states, these problems can be resolved.

Contrast this with Yugoslavia where the ambitions of Serbia, its largest state, led to open aggression, first against the newly recognised sovereign state of Croatia, and then, similarly, against the sovereign state of Bosnia. As in the days of Hitler, the parent-state has used its minorities elsewhere as an excuse for its own expansion. The result in Bosnia has been two million people, mainly Muslims, driven from their homes and 200,000 massacred. NATO and the UN have exposed the West's utter failure to stop the aggression. That failure may tempt others to take advantage of our lack of resolve.

What is happening in Bosnia is not, repeat not, a civil war, as we are so often told. A sovereign state recognised by the international community is under attack planned and launched externally, though using forces within Bosnia as well as Serbs outside. Inevitably, hardline nationalists in Russia will ask themselves why they should conform to civilised norms when little Serbia–which does not possess Russia's inheritance of nuclear and conventional weapons–can treat Western pleas and idle threats with crushing contempt.

And all this just when I thought we had learned the lesson of this century that aggression must be stopped in its tracks.

Russia and China

One of the great challenges left over from the end of the Cold War is how to bring the former Communist states to liberty and prosperity under a rule of law. Russia has always been an important country, and always will be. There is a tendency to regard her only as European–but her borders extend from the Baltic to the Pacific, occupying 11 time zones. She is the largest country in the world. Her global status must be respected and the pride of her people taken into account.

The most difficult thing in politics is to manage the transition from a tyranny to a free and responsible society. It requires new institutions and new laws, independently adjudicated. It needs a stable currency, sound finance and an efficient economy run on free enterprise lines. All this takes time and will only be achieved by going steadily in the right direction.

We could, and should, have done far more to help though the International institutions to which all countries can apply for help. Ten years ago we would have given almost anything for the Cold War to end. When it did, we were too absorbed in our own problems to give sufficient help. The Russian people–and the Ukrainians–are good people who have suffered mightily–they deserved better than they have received from those who claim to be the guardians of liberty.

The Russians are struggling to achieve an enterprise economy. When President Gorbachev started the reform process he began by giving personal and political freedom. After 70 years of communism, where free entrerprise and initiative had been stifled, he did not know how to go about introducing successful market reform.

In China, Deng Xiaoping since 1978, although denying political liberty has steadily encouraged a market or enterprise economy. “I wish we had started that way “, the Russian leaders used to say to me–but historically, the Russians had little taste for enterprise and their brief experience of it was snuffed out by Lenin in 1917. Moreover, while China benefited from investment from Taiwan, Hong Kong and Singapore, Russia has had no such diaspora to help her.

Perhaps the greatest difference between the Russians and the Chinese is that the Chinese are born traders. Today, in world trade terms, the “Chinese Trio” of China, Taiwan and Hong Kong, is behind only the United States and Germany. The World Bank estimates that the East Asia region as a whole imports $800 billion of goods annually–more than all of the imports into the US and growing at a rate of 15 per cent per annum. Most of us are aware of the economic transformation which is taking place in provinces such as Guandong or in the Shanghai-Yangtse River Delta, but there are also strong pockets of growth elsewhere such as in Chengdu and Chongqing. However, at the same time, China has immense hurdles to overcome but they also present great opportunities: its railway system is equivalent to that of the US 150 years ago; the Yangtse River, ten times the size of the Rhine carries only 1 per cent of its tonnage; there are only two telephone lines for every 100 people; and per capita energy consumption is only 5 per cent of that in America.

Viewed from outside China appears to be a large but single market. This view encourages us to think of it in terms of a more populous Japan or South Korea. In fact China is a union of many, possibly as many as forty, economic entities. A good number of its cities are larger than many countries and the average sized province has a population of between 50 and 60 million people. Of course with a total population of 1.1 billion there are bound to be difficulties but with the willingness to devolve economic power I do not share the opinion of some commentators who see China breaking up. It has a cohesive political will which should hold it together through the turbulance ahead.

And may I say just a brief word about Hong Kong. In all of this development Hong Kong has a key role. She now represents almost one quarter of China's economy and accounts for two-thirds of China's foreign exchange. Like one of the great merchant cities of medieval Europe her expertise and wealth is being placed at the service of her much larger neighbour. Hong Kong's entreprenuers are acting as catalysts for change within China and increasingly as channels for Chinese contacts with the rest of the world. Hong Kong will continue to be a vital player in the global economy after 1997 because that role best suits China's interests and because each country has a large interest in the other's countinuing success.

Nuclear Proliferation–The Need for Strong Defence

The mention of China reminds us of the dangers of nuclear proliferation across the border in North Korea. In the months ahead the resolve of the international community will be tested once again. For years North Korea has made evident its total disregard for its international obligations.

This is the country, with the same leader, which 40 years ago invaded South Korea. In 1983 its agents carried out a bomb attack which assassinated most of the South Korean government. In 1987 it blew up a South Korean airliner carrying 150 workers back from the Middle East. As the rest of the communist world embraces reform North Korea stands in isolation, ever more unpredictable. Between 1985 and 1992 North Korea was one of the foremost suppliers of arms to countries such as Iran and Libya, a trade valued at over $2.5 billion, and only recently she has purchased 60 submarines from Russia. With such a record the international community has every right to view Pyongyang with suspicion.

That is why it is vital that we confront squarely North Korea's challenge to the non-proliferation treaty, and do not allow it to be fudged. It is not a time for vacillation or ambiguity but for bringing home to North Korea the civilised world's determination to uphold international agreements and to defend South Korea. It should be made chillingly clear to North Korea what will happen to it should it be so unwise as to use force in the region.

Nuclear weapons cannot be disinvented but it is in all of our interests to see that access to them remains restricted. No matter where we are in the world or what our governing political philosophy, nuclear proliferation poses a threat to us all.

It is not just a question of more advanced weapons in the world. What matters is who has them and what for.

What then? We need to have a more effective ballistic missile defence such as the SDI can provide. Nothing could give us more freedom of action in the 21st Century. If we have the means to prevent an aggressor from hitting his target we may well deter him; we may even diminish his desire to build up his missile stocks in the first place.

In all this, the role of an active, confident and outward-looking United States is vital. It is vital by virtue of America's technological base, her formidable military power, her economic strength and her tradition of being prepared to transcend considerations of national interest in support of those struggling to maintain or obtain freedom. But we must all shoulder our share.

There is no New World Order–and there never will be. As events in Bosnia have painfully shown there is no substitute for American leadership with the loyal support of her friends and allies, in the struggle against aggression. And let us never forget that it has been the Anglo-American Alliance which has been the most powerful force for liberty the world has ever known.

It is against this background that I remain concerned that the reduction of the armed forces in almost every Western country may be taken too far. Strong defences must not come to be regarded as an obsolete relic of a bygone age of ideological struggle. They are a permanent necessity, and any restructuring should take place in the context of a proper discussion about the demands we are likely to make on them. Otherwise either we will expose the members of our armed forces to unacceptable risks when we need them to defend vital interests, or those interests will go undefended as we remain impotent on the sidelines.

THE ECONOMIC CHALLENGES

The economic challenges of increasing prosperity for all peoples should be easier to respond to in the 21st Century than they were in the 20th Century because of the collapse of the centrally planned and controlled systems which covered much of the world.

The tendency in many countries for ever more demands to be made on the state must be resisted. As the power of the state increases, so the liberties of the citizen decrease. Taxation replaces incentive, dependency replaces responsibility; more people look to the Government for their standard of living than to their own efforts. That way lies social decay and economic weakness.

Democracy is not about giving in to every demand but about recognising the hard economic truth and sticking to it. It is only if you keep public expenditure under strict control that you can keep taxation down. That is why in my time as Prime Minister I found that the most useful word in politics was “NO! “.

The Choice Between Systems

For many peoples of the world the question is what system of political economy will not only raise their own standards of living but create enough wealth to help lift others out of poverty?

Countries are not rich in proportion to their natural resources; if that were so Russia would be the richest country in the world; she has everything, oil, gas, diamonds, platinum, gold, silver, the industrial metals, timber, and a rich soil. Countries are rich whose governments have policies which encourage the essential creativity of man who in order to succeed must work with others to produce goods and services which people choose to buy. So Japan, Switzerland, Hong Kong, Taiwan, Singapore and so on have no natural resources but are now among the most prosperous countries in the world.

The market is not a new- fangled invention of some academic economists. The freedom to buy and sell, to trade and barter, is one of the oldest practices known to man. The consumer decides what to buy, the factory decides what to produce and competition sets the price.

The task of government is to provide the framework of law within which the free market can operate–a law of contract, a law on private property, laws to safeguard the consumer and to protect health and safety.

Only a flourishing free enterprise economy can generate the higher living standards at every level and the jobs which people need if we can honestly say that they are enjoying the benefits of freedom.

But don't take my word for it: listen to the Pope John Paul IIPope, a man widely regarded by both Christians and those of other faiths. In his Encyclical, “Centesimus Annus” he talks of the collapse of Communism, stemming from its economic inefficiency as “not to be considered simply as a technical problem, but rather a consequence of the violation of the human rights to private initiative, to ownership of property and to freedom in the economic sector” .

Perhaps we in business have been too slow to point out that capitalism is therefore not only about material things, it is about the human spirit and its creativity. Freedom is a moral quality with which we use our God-given talents to further knowledge and its application for a better way of life. In seeking to liberate people from poverty and servitude it is the business ethic in action which is the cutting edge of progress.

The Case for Free Trade

Allied to this is the need for open trade. Every nation pulled itself up by the effort of its citizens. We should not through protectionism, now deny others the opportunity to do the same. The more they sell, the more resources they will have to buy from others.

That is the importance of the GATT Round which came so perilously close to failure. So long as the trade highways of the world are free, small businesses in small countries have the same opportunities to compete as those in large countries. With free trade you can have the large scale economic efficiency it provides and the small scale political identity so often preferred.

We are now at one of those watersheds in economic affairs which occur perhaps once in a lifetime. The pressures between open trade and protection are finely balanced. We still have to convince popular opinion in the West that opening markets to foreign goods and services raises living standards and generates jobs. We still have to win the argument that just as economic and political freedom go together, so too do open trade and international harmony.

THE RESPONSIBILITIES OF FREEDOM

Freedom solves many problems but unbridled it can also create others. As we look ahead some of the most acute problems will be as much within our societies as between them. The values and virtues which we prize are honesty, self-discipline, a sense of responsibility to one's family, a sense of loyalty to one's employer and staff, a pride in the quality of one's work. All these flourish in a climate of enlightened politics. But those qualities are threatened, in the West certainly, but I believe also more widely, by a lack of respect for the rights, freedom and property of others which manifests itself in rising crime and violence. The truth is that you cannot have freedom without order: and order requires both justice under a rule of law and moral and social responsibility.

We have to re-establish the balance between freedom and order, and strengthen the institutions–the family, the courts of law, democratic and traditional forms of government–which provide authority. It also means that people have to live up to and apply in daily life the standards and values which are the foundations of our civilisation.

CONCLUSION

Mr Chairman as I indicated earlier, these challenges will apply to us all whatever walk of life we are in. Businessmen and investors must be just as aware of the political and social tensions as they are of the economic ones. If international strains cannot be eased or conflicts contained then the twenty-first century may turn out to be even more unstable than the twentieth. Stability, prosperity and harmony go hand in hand. Each contibutes to the others. Remove one and the others are placed in jeopardy.

At the beginning of this century the advance of science and of democracy gave cause for optimism about the future.

No-one could have foreseen the events which happened.

Some would call it the Century of the two terrible wars, of concentration camps and the Gulag, of totalitarian enslavement.

Others would see it as the time when freedom fought back, when 100 more nations became independent and took their place in the United Nations, when former enemies began to build the structures of friendship.

Some would see it as a century where the drive for modernity eroded the traditions and institutions which had formed the cornerstones of society for generations.

Others would see it as a time when enterprise and initiative were unchained leading to growing wealth and increased opportunity for all.

As we approach the next century we must not assume that the danger of conflict is over or that freedom and prosperity are guarenteed. Just as in medicine, viruses develop new virulent strains which have to be overcome, so in politics and in economics new frictions await to test our resolve, and new problems arise to challenge our will.

Stay vigilant and resolute; we owe that to the future, and to the past heroes who gave their lives that we may enjoy ours today.