By SMF, NARA, Date 5/17/00
1. Confidential entire text.
2. There follows corrected copy of London 19618, dated September 14.
3. Prime Minister Thatcher’s visit to Washington will mark the effective start of her second term in office. The timing is intentional. The US link is central to her foreign policy, and the trip is designed in part to make that point as her second term begins. As her Cabinet Office Foreign Policy Adviser told us: to an extent, the trip itself is the message. [material after colon underlined in pen]
4. For US, the trip is an opportunity to thank the Prime Minister for her continuing support on a broad range of issues. But it also gives us a chance to ensure that she understands our interests on issues like Belize, the Falklands and East/West trade. She will speak plainly about British interests and will appreciate plain speaking from us.
5. As usual, the Thatcher agenda will contain a mixture of pressing issues and longer-term concerns. We discussed the visit separately September 14 with FCO Permanent Under-Secretary Acland and Cabinet Foreign Policy Advisor David Goodall. They mentioned the following issues, roughly in priority order:
The Middle East
6. Developments in Lebanon have made the Middle East center stage in Whitehall. One result is a Thatcher decision to upgrade the US/UK dialogue on Middle East issues. We are told she plans to raise:
-- Lebanon: She will stress the dangers of the MNF [Multi-National Force] becoming more deeply involved in the fighting and express her conviction that a political settlement must be based on the principle “no victor, no vanquished”.
-- Peace Process: She accepts that a durable solution of the Lebanon problem requires a wider Peace Process taking account of Syrian interests and Palestinian aims on the West Bank. She will want to know the President’s thoughts on his September 1 initiative.
-- Iran/Iraq: She shares our concern about the implications of Exocet for Iraq, and about freedom of navigation in the Gulf.
7. The KAL incident will be very much on her mind, but the PM also wants to look ahead. She will be particularly interested in the President’s thoughts on how we can preserve necessary links to the Soviets even as our political relationship worsens. In this context she will stress:
-- Arms control: Thatcher believes the battle with the British peace movement has been won, and doesn’t want Western INF concessions as a sop to public opinion. But she feels strongly that long-term efforts at arms control are essential to maintaining the political consensus on defense.
-- East/West trade: The British generally support us on technology transfer; but Thatcher will be skeptical about too severe trade restrictions.
8. There was a hint earlier this summer that Thatcher might be considering a trip to Moscow. We are now told she has no such plan. But she worries about lack of contact with Andropov and might favor contacts with him outside the Soviet Union. [Last sentence pen-marked in margin.]
9. Thatcher will be interested in following up on the Williamsburg Summit, and in plans for the summit next year. (She may suggest some forum for informal discussions among Heads of State.) She will raise:
-- Unitary taxation: British companies are pressuring Thatcher to seek Presidential support for legislation to block state use of the unitary appropriation method. [end p1] Both HMG and the private sector were disappointed to hear September 12 that the issue had been refererred back to the Cabinet Council on Economic Affairs for study, Thatcher will warn of Parliamentary pressures for retaliatory steps if nothing is done. [paragraph side marked with pen in margin]
-- Extraterritoriality: Pipeline sanctions, Justice’s investigation of Laker’s demise and the Administration’s approach to renewal of the Export Administration Act have heightened concern. On the last of these, Thatcher and [Sir Geoffey ] Howe will urge legislation to limit the use of export controls for foreign policy purposes. [last sentence underlined in pen; wavy line beside in margin]
-- EC CAP reform proposals: The UK supports the US in opposing EC Commission proposals on vegetable oil and non-grain feed. But they might cut a deal in return for a quid pro quo on the EC budget. We should urge them not to agree to a compromise that could trigger a a new US/EC trade war.
-- US Budget deficits: [underlined in pen] Thatcher and Howe are skeptical of Administration arguments that inflationary expectations – rather than deficits – are the major influence on interest rates. They will argue that US interest rates must come down or the fragile European recovery will lose momentum.
10. We expect Thatcher to tell the President that the British will remain in Belize for the time being. She will also repeat the reasons why a long-term commitment there is untenable. [paragraph side-marked with pen in margin]
11. At the same time, she reportedly will argue that she needs our understanding of the British position in the Falklands. The British are greatly pleased with the material help we have given and in our handling of key political issues – viz. arms sales certification for Argentina. There is no such sign that she will flinch on the key sovereignty issue.
12. Britain faces a budget crunch this autumn, and the Chancellor has already taken aim at the defense budget. Pressure for cuts will be severe. We should tell Thatcher that British adherence to 3 percent has been a key factor in maintaining Congressional support for NATO, and that in the present atmosphere cuts would be particularly unfortunate. [Last sentence underlined in pen.]
-- Zimbabwe: The British aren't pleased with Mugabe but won't cut off military aid unless the situation gets much more out of hand.
-- Hong Kong: Thatcher won't raise Hong Kong, but would be willing to describe the negotiations if the President is interested.