Margaret Thatcher: The Autobiography (89 page)

The afternoon discussion was less contentious and more informative. He explained to me the economic reforms he was making and the problems still to be faced. This led on to technology. He claimed to be confident about the Soviet Union’s capacity for developing computers in competition with the United States. But I was not convinced. And that led back to SDI which Mr Gorbachev promised the Soviets would match – in some way that he would not disclose. I tried to interest him in my proposal for greater ‘predictability’ as regards the progress of the American SDI programme, but apparently to no avail.

Then I pressed Mr Gorbachev on human rights in general and the treatment of the Jews in particular. I also raised the question of Afghanistan, where I had the impression that he was searching for some way out. Finally, I listed the points which I thought we could agree on for a public account of our discussion which, he agreed, had contributed to better relations and greater confidence between us. But it was now very late. Guests were already assembling for the formal banquet at which I was to speak. Putting diplomacy ahead of fashion, I abandoned my plans to return to the embassy and change: I attended the banquet in the short wool dress I had been wearing all day. I felt rather like Ninotchka in reverse.

Tuesday began with a rather dull meeting with Prime Minister Ryzhkov and other Soviet ministers. I had hoped to learn more about the Soviet economic reforms, but we got bogged down once again in arms control and then in bilateral trade issues.

Far more exciting and worthwhile for all concerned was the interview which I gave to three journalists from Soviet Television. I learned afterwards that this had an enormous impact on Soviet opinion. Most of the questions related to nuclear weapons. I defended the West’s line and indeed the retention of the nuclear deterrent. I reminded them of their huge superiority in conventional and chemical weapons. I pointed out that the Soviet Union was ahead of the United States in ABM defences. Nobody had ever told ordinary Russians these facts. They learned them from my interview for the first time. The interview was allowed to go out uncut from Soviet Television, which I afterwards regarded as proof that my confidence in Mr Gorbachev’s basic integrity was not misplaced.

That evening the Gorbachevs gave me dinner in an old mansion, converted many years before for entertaining foreign guests. The atmosphere was as close to that of Chequers as I ever found in the Soviet Union. In the rooms around which Mr Gorbachev showed us, Churchill, Eden, Stalin and Molotov had smoked, drunk, and argued. We were a small group, the Gorbachevs being joined by just the Ryzhkovs, who did not take a very active part in the conversation. A brightly burning log fire – again like Chequers – illumined the room to which we later withdrew to put right the world’s problems over coffee and liqueurs. I saw two interesting examples of the way in which old Marxist certainties were being challenged. There was a lively argument between the Gorbachevs, which I provoked, about the definition of the ‘working class’ about which we heard so much in Soviet propaganda. I wanted to know how they defined this in the Soviet Union – a point of some substance in a system in which, as the old Polish saying goes, ‘we pretend to work and they pretend to pay us’. Mrs Gorbachev thought that anyone who worked, whatever his job or profession, was a worker. Her husband argued initially that only the blue-collar workers counted. But he then reconsidered and said that this was largely an historical or ‘scientific’ (that is Marxist) term which did not do justice to the diversity of today’s society.

The second indication of a break with old socialist certainties was when he told me – with tantalizingly little detail – of plans which were being discussed for increasing people’s incomes and then having them make some payment for public services like health and education. Not surprisingly, such plans, whatever they were, came to nothing.

The following morning I had breakfast with
refuseniks
at the British Embassy. Theirs was a disturbing tale of heroism under mainly petty but continual persecution. Later that morning I left Moscow for Tbilisi in
Georgia. I had wanted to see a Soviet republic other than Russia and I knew that Georgia would present a great cultural and geographical contrast.

It had been, quite simply, the most fascinating and most important foreign visit I had made. I could sense in the days I spent in the Soviet Union that the ground was shifting underneath the communist system. De Tocqueville’s insight that ‘experience shows that the most dangerous moment for a bad government is generally that in which it sets about reform’ sprang to my mind. The welcome I had received – both the warm affection from the Russian crowds, and the respect of the Soviet authorities in long hours of negotiations – suggested that something fundamental was happening under the surface. The West’s system of liberty which Ronald Reagan and I personified in the eastern bloc was increasingly in the ascendant. I sensed that great changes were at hand – but I could never have guessed how quickly they would come.

Diplomacy towards and visits to the Far East, the Middle East and Africa 1984–1990

W
HEN
I
WAS IN
O
PPOSITION
I was very doubtful of the value of high-profile public diplomacy. To some extent I remain so. My political philosophy in domestic affairs is founded on a deep scepticism about the ability of politicians to change the fundamentals of the economy or society: the best they can do is to create a framework in which people’s talents and virtues are mobilized not crushed. Similarly, in foreign affairs, the underlying realities of power are not transformed by meetings and understandings between heads of government. A country with a weak economy, an unstable social base or an ineffective administration cannot compensate for these – at least for long – with an ambitious diplomatic programme. That said, my experience as Prime Minister did convince me that a skilfully conducted foreign policy based on strength can magnify a country’s influence and allow progress to be made in dealing with thorny problems around the world. As the years went by, I put increasing effort into international diplomacy.

Foreign visits allowed me to meet, talk to and seek to influence heads of government on their own ground. These visits gave me insights into the way those I dealt with in the clinical atmosphere of great international conferences actually lived and felt.

In the Far East, the dominant long-term questions concerned the future role and development of a political and military super-power, the People’s Republic of China, and an economic super-power, Japan; for Britain, it was the future of Hong Kong which had to take precedence over everything else.

In the Middle East, it was the Iran-Iraq War, with its undercurrent of destabilizing Muslim fundamentalism, which cost most lives and threatened most economic harm. But I always felt that the Arab-Israeli dispute was of even more abiding importance. For it was this which time and again prevented the emergence – at least until the Gulf War – of a solid bloc of more or less self-confident pro-western Arab states, no longer having to look over their shoulders at what their critics would make of the plight of the landless Palestinians.

Finally, in Africa – where, as in the Middle East, Britain was not just another player in the great game, but a country with historic links and a distinct, if not always favourable, image – it was the future of South Africa which dominated all discussion. For reasons which will become clear, no one had a better opportunity – or a more thankless task – than I did in resolving an issue which had poisoned the West’s relations with black Africa, left isolated the most advanced economic power in that continent and been used, incidentally, to justify more hypocrisy and hyperbole than I heard on any other subject.

China

My visit to China in September 1982 and my talks with Zhao Ziyang and Deng Xiaoping had had three beneficial effects. First, confidence in Hong Kong about the future had been restored. Second, I now had a very clear idea of what the Chinese would and would not accept. Third, we had a form of words which both we and the Chinese could use about the future of Hong Kong which would provide a basis for continuing discussion between us. But there was a real risk that each of these gains would be transitory. And – what I found most worrying – the Chinese proved very reluctant to get on with the talks which I had envisaged when I left Peking.

On the morning of Friday 28 January 1983 I held a meeting with ministers, officials and the Governor of Hong Kong to review the position. We had learnt that in June the Chinese were proposing unilaterally to announce their own plan for Hong Kong’s future. We were all agreed that we must try to prevent this happening. I proposed that in the absence of progress in the talks we should now develop the democratic structure in Hong Kong as though it were our aim to achieve independence or self-government, as we had done with Singapore. This would involve building up a more Chinese government and administration in Hong Kong, with the Chinese members increasingly taking their own decisions and with
Britain in an increasingly subordinate position. We might also consider using referenda as an accepted institution there. Since then legislative elections have demonstrated a strong appetite for democracy among the Hong Kong Chinese, to which the Government has had to respond. At that time, however, nobody else seemed much attracted by my ideas, but I could not just leave things as they were, so in March 1983 I sent a private letter to Zhao Ziyang which broke the deadlock and got Anglo-Chinese talks off the ground again. In Peking I had told Mr Deng that I would be prepared to consider making recommendations to Parliament about Hong Kong’s sovereignty if suitable arrangements could be made to preserve its stability and prosperity. I now subtly strengthened the formulation:

Geoffrey Howe and the Foreign Office argued strongly that I should concede early in the talks that British administration would not continue. I saw no reason to make such a concession. I wanted to use every bargaining card we had to maximum effect. Just how few such cards there were, however, quickly became apparent.

There were three rounds of talks over the summer and when we took stock of the situation at a meeting on Monday 5 September it was clear that the talks would break down when they resumed on 22 September unless we conceded administration as well as sovereignty to the Chinese. One particular problem was that the timing of the talks was publicly known and it had become the practice at the end of each session to announce the date of the next. If the Chinese decided to hold up progress or break off altogether it would immediately become apparent and damage would be done to confidence in Hong Kong.

This is indeed what happened after the 22–23 September talks. Intensified Chinese propaganda and anxiety at the absence of any reassuring element in the official communiqué caused a massive capital flight out of the Hong Kong dollar and a sharp fall in its value on the foreign exchanges.

Early on Sunday morning, 25 September, I received a telephone call from Alan Walters, who was then in Washington and had been unable to track down either Nigel Lawson or the Governor of the Bank of England. Alan was convinced that the only way to prevent a complete collapse of the currency and all the serious political consequences that entailed was to restore the currency board system – backing the Hong Kong dollar at a par value with the United States dollar. Although I was largely convinced and accepted the urgent need for action, I still had some concerns – mainly whether our exchange reserves would be put at risk. But I informed the Treasury of what I considered was a dangerous crisis that needed immediate defusing, and they got in touch with Nigel and the Governor of the Bank. The following Tuesday I met Nigel, the Governor and Alan at the Washington embassy. Although Nigel was at first reluctant and the Governor had reservations, they eventually agreed with me that a restoration of the currency board was the only solution. As always this news soon leaked out to financial markets, confidence was restored and the crisis of the Hong Kong dollar was over.

On 14 October I sent a message to Zhao Ziyang expressing our willingness to explore Chinese ideas for the future of Hong Kong and holding out the possibility of a settlement on those lines. I had by now reluctantly decided that we would have to concede not just sovereignty but administration to the Chinese. On 19 October the talks were accordingly resumed and in November I authorized that working papers on the legal system, financial system and external economic relations of Hong Kong be handed over to the Chinese. But their position hardened. They now made it clear that they were not prepared to sign a treaty with us at all but rather to declare ‘policy objectives’ for Hong Kong themselves. By now I had abandoned any hope of turning Hong Kong into a self-governing territory. The overriding objective had to be to avoid a breakdown in the negotiations, so I authorized our ambassador in Peking to spell out more clearly the implications of my 14 October letter: that we envisaged no link of authority or accountability between Britain and Hong Kong after 1997. But I felt depressed.

The single most difficult issue which we now faced in negotiations with the Chinese was the location of the ‘Joint Liaison Group’ which would be established after the planned Anglo-Chinese Agreement had been signed to make provision for the transition. I was worried that during the transition this body would become an alternative power centre to the Governor or, worse, that it would create the impression of
some kind of Anglo-Chinese ‘Condominium’ which would have destroyed confidence. But I also insisted that it should continue for three years after 1997 so as to maintain confidence after the handover of administration had taken place. Geoffrey Howe had visited Peking in April and now returned in July. He successfully reached a compromise on the Joint Liaison Group, which would not operate in Hong Kong before 1988.