Margaret Thatcher: The Autobiography (58 page)

At this point, however, President Reagan still had to face a largely sceptical audience at home and particularly among his allies. I was perhaps his principal cheerleader in NATO.

So I was delighted to learn that the new President wished me to be the first foreign head of government to visit the United States after he took office. When I arrived in Washington I was the centre of attention, not just because of my closeness to the new President but for another less flattering
reason. As I left for America, US readers were learning from a long article in
Time
entitled ‘Embattled but Unbowed’ that my Government was beset with difficulties. The US press and commentators suggested that given the similarity of economic approach of the British and US Governments, the economic problems we were now facing – above all high and rising unemployment – would soon be faced in the US too. This in turn prompted some members of the Administration and others close to it to explain that the alleged failures of the ‘Thatcher experiment’ stemmed from our failure to be sufficiently radical. I took every occasion to explain the facts of the case both to the press and to the Senators and Congressmen whom I met. Unlike the US, Britain had to cope with the poisonous legacy of socialism – nationalization, trade union power, a deeply rooted anti-enterprise culture.

At one meeting, Senator Jesse Helms said that some of the US media were playing a requiem for my Government. I was able to reassure him that news of a requiem for my policies was premature. There was always a period during an illness when the medicine was more unpleasant than the disease, but you should not stop taking the medicine. I said that I felt there was a deep recognition among the British people that my policies were right.

I had successfully persuaded President Reagan in the course of our discussions in Washington of the importance of attending the Cancún summit which was held that October in Mexico. I felt that we should be present, both to argue for our positions and to forestall criticism that we were uninterested in the developing world. The whole concept of ‘North-South’ dialogue, which the Brandt Commission had made the fashionable talk of the international community, was in my view wrong-headed. Not only was it false to suggest that there was a homogeneous rich North which confronted a homogeneous poor South: underlying the rhetoric was the idea that redistribution of world resources rather than the creation of wealth was the way to tackle poverty and hunger. Moreover, what the developing countries needed more than aid was trade, so our first responsibility was – and still is – to give them the freest possible access to our markets.

The conference’s joint chairmen were President López-Portillo, our Mexican host, and Pierre Trudeau who had stepped in for the Chancellor of Austria, prevented by illness from attending. Twenty-two countries were represented. We were staying in one of those almost over-luxurious
hotels which you so often seem to find in countries where large numbers of people are living in appalling poverty.

There is no immodesty in saying that Mrs Indira Gandhi and I were the two conference media ‘personalities’. India had just received the largest loan yet given by the International Monetary Fund at less than the market rate of interest. She and others naturally wanted more cheap loans in the future. This was what lay behind the pressure, which I was determined to resist, to place the IMF and the World Bank directly under United Nations control. I engaged in a vigorous discussion with a group of heads of government who could not see why I felt so strongly that the integrity of the IMF and the World Bank would inevitably be compromised by such a move, which would do harm rather than good to those who were advocating it. In the end I put the point bluntly: I said that there was no way in which I was going to put British deposits into a bank which was totally run by those on overdraft. They saw the point.

While I was at Cancún I also had a separate meeting with Julius Nyerere, who was, as ever, charmingly persuasive, but equally misguided and unrealistic about what was wrong with his own country and, by extension, with so much of black Africa. He told me how unfair the IMF conditions for extending credit to him were: they had told him to bring Tanzania’s public finances into order, cut protection and devalue his currency to the much lower level the market reckoned it worth. Perhaps at this time the IMF’s demands were somewhat too rigorous: but he did not see that changes in this direction were necessary at all and in his own country’s long-term interests. He also complained of the effects of droughts and the collapse of his country’s agriculture – none of which he seemed to connect with the pursuit of misguided socialist policies, including collectivizing the farms.

The process of drafting the communiqué itself was more than usually fraught. An original Canadian draft was in effect rejected; and Pierre Trudeau left it largely to the rest of us, making clear that he thought our efforts rather less good than his own.

The summit was a success – though not really for any of the reasons publicly given. What mattered to me was that the independence of the IMF and the World Bank were maintained. Equally valuable, this was the last of such gatherings. The intractable problems of Third World poverty, hunger and debt would not be solved by misdirected international intervention, but rather by liberating enterprise, promoting trade – and defeating socialism in all its forms.

Before I left Mexico, I had one more item of business to transact. This was to sign an agreement for the building of a huge new steel plant by the British firm of Davy Loewy. Like other socialist countries, the Mexicans wrongly thought that large prestige manufacturing projects offered the best path to economic progress. However, if that was what they wanted, then I would at least try to see that British firms benefited. The ceremony required my going to Mexico City. I stayed at the residence of the British Ambassador, Crispin Tickell. While I was there at dinner the chandeliers started swinging and the floor moved. At first I thought that I must have been affected by the altitude, but I was reassured by our ambassador: ‘No,’ he said, ‘it’s just an earthquake.’

Other earthquakes were sending out tremors that year. Before I left for my international visits, I had been all too aware of the significance for the Cold War of the stationing of Cruise and Pershing missiles in Europe. If it went ahead as planned the Soviet Union would suffer a real defeat; if it was abandoned in response to the Soviet-sponsored ‘peace offensive’, there was a real danger of a decoupling of Europe and America. I saw it as Britain’s task to put the American case in Europe since we shared their analysis but tended to put it in less ideological language. And this we did in the next few years.

But there was a second front in the Cold War – that between the West and the Soviet-Third World axis. My visits to India, Pakistan, the Gulf, Mexico and Australia for the Commonwealth Conference brought home to me how badly the Soviets had been damaged by their invasion of Afghanistan. It had alienated the Islamic countries
en bloc
, and within that bloc strengthened conservative pro-western regimes against radical states like Iraq and Libya. Traditional Soviet friends like India, on the other hand, were embarrassed. Not only did this enable the West to forge its own alliance with Islamic countries against Soviet expansionism; it also divided the Third World and so weakened the pressure it could bring against the West on international economic issues. In these circumstances, countries which had long advocated their own local form of socialism, to be paid for by western aid, suddenly had to consider a more realistic approach of attracting western investment by pursuing free market policies – a small earthquake as yet, but one that would transform the world economy over the next decade.

The attempts by diplomacy and the sending of the task force to regain the Falkland Islands – to the end of April 1982

N
OTHING REMAINS MORE VIVIDLY
in my mind, looking back on my years in No. 10, than the eleven weeks in the spring of 1982 when Britain fought and won the Falklands War. Much was at stake: what we were fighting for eight thousand miles away in the South Atlantic was not only the territory and the people of the Falklands, important though they were. We were defending our honour as a nation, and principles of fundamental importance to the whole world – above all that aggressors should never succeed and that international law should prevail over the use of force. When I became Prime Minister I never thought that I would have to order British troops into combat and I do not think I have ever lived so tensely or intensely as during the whole of that time.

The first recorded landing on the Falklands was made in 1690 by British sailors, who named the channel between the two principal islands ‘Falkland’s Sound’ in honour of the Treasurer of the Navy, Viscount Falkland. Britain, France and Spain each established settlements on the islands at various times during the eighteenth century. In 1770 a quarrel with Spain caused the British Government of the day to mobilize the fleet and a naval task force was prepared, though never sent: a diplomatic solution was found.

The islands had obvious strategic importance, possessing several good harbours within 500 miles of Cape Horn. In the event that the Panama Canal is ever closed their significance would be considerable. But the Falklands were an improbable cause for a twentieth-century war.

The Argentine invasion of the Falklands took place 149 years after the beginning of formal British rule there, and it seems that the imminence
of the 150th anniversary was an important factor in the plotting of the Argentine Junta. Since 1833 there has been a continuous and peaceful British presence on the islands. Britain’s legal claim in the present day rests on that fact, and on the desire of the settled population – entirely of British stock – to remain British. The principle of ‘self-determination’ has become a fundamental component of international law, and is enshrined in the UN Charter. British sovereignty has strong legal foundations, and the Argentinians know it.

Some 800 miles to the south-east of the Falklands lies South Georgia, and 460 miles further out, the South Sandwich Islands. Here the Argentine claim is even more dubious. These islands are dependencies of the United Kingdom, administered from the Falklands. Their climate is severe and they have no settled population. No state claimed them before British annexation in 1908 and there has been continuous British administration since that time.

My first involvement with the Falklands issue came very early in the life of the 1979 Parliament. It was clear that there were only two ways in which the prosperity of the Falkland Islanders could be achieved. The more obvious and attractive approach was by promoting the development of economic links with neighbouring Argentina. Yet this ran up against the Argentine claim that the Falklands and the dependencies were part of their sovereign territory. Ted Heath’s Government had signed an important Communications Agreement in 1971 establishing air and sea links between the islands and the mainland, but further progress had been blocked by the Argentinians unless sovereignty was also discussed. Consequently it was argued that some kind of accommodation with Argentina would have to be reached on the question of sovereignty. Arguments of this kind led Nick Ridley (the responsible minister) and his officials at the Foreign and Commonwealth Office (FCO) to advance the so-called ‘lease-back’ arrangement, under which sovereignty would pass to Argentina but the way of life of the islanders would be preserved by the continuation of British administration. I disliked this proposal, but Nick and I both agreed that it should be explored, subject always to the requirement that the islanders themselves should have the final word. Their wishes must be paramount.

There was, however, another option – far more costly. We could implement the recommendations of the long-term economic survey produced in 1976 by the former Labour minister, Lord Shackleton, and one recommendation in particular – the enlargement of the airport and lengthening
of the runway. Such a commitment would have been seen as evidence of the British Government’s determination to have no serious talks about sovereignty and it would have increased our capacity to defend the islands, since a longer runway would have allowed for rapid reinforcement by air. This in turn might have provoked a swift Argentine military response. Unsurprisingly, no government – Labour or Conservative – was prepared to act while there seemed any possibility of an acceptable solution and lease-back had become the favoured option.

However, as I rather expected, the islanders would have nothing to do with such proposals. They distrusted the Argentine dictatorship and more than that, they wanted to remain British. The House of Commons too was noisily determined that the islanders’ wishes should be respected.

However, what all this meant for the future of the Falklands in the longer term was less clear. We were keen, if we could, to keep talking to the Argentinians, but diplomacy was becoming increasingly difficult. In 1976 the Argentinians had established and had maintained since a military presence on Southern Thule in the South Sandwich Islands, which the Labour Government did nothing to remove and which ministers did not even reveal to the House of Commons until 1978.

Then, in December 1981, there was a change of government in Buenos Aires. A new three-man military Junta replaced the previous military government, with General Leopoldo Galtieri as President. Galtieri relied on the support of the Argentine Navy, whose Commander-in-Chief, Admiral Anaya, held particularly hardline views on the Argentine claim to the ‘Malvinas’.

There were talks in New York at the end of February 1982 which seemed to go well. But then the Argentinian line hardened abruptly. With hindsight this was a turning point. But it is important to remember how much aggressive rhetoric there had been in the past, none of it coming to anything. Moreover, based on past experience our view was that Argentina was likely to follow a policy of progressively escalating the dispute, starting with diplomatic and economic pressures. Contrary to what was said at the time, we had no intelligence until almost the last moment that Argentina was about to launch a full-scale invasion. Nor did the Americans: Al Haig later told me that they had known even less than we had.