Margaret Thatcher: The Autobiography

by Margaret Thatcher

  We began to look at the options from almost the first days in government. These quickly proved a good deal narrower than they at first appeared, though inevitably they seemed wider to those without access to all the information. By late September 1979 we had discarded the option of a successor force of air-launched Cruise missiles because they would be too vulnerable to attack. The possibility of co-operation with France, which retained its own independent deterrent, was rejected for technological reasons. From an early stage the American Trident looked the most promising option.

  We had received firm assurances that the SALT II Agreement, reached between Presidents Carter and Brezhnev in June 1979, would not affect the situation regarding our own deterrent. But our aim was, if possible, to conclude an agreement with the Americans on purchasing Trident before the end of that year, so that it could not get caught up in the argument in the runup to the expected ratification by the US Senate of the treaty. The Trident missile included the advanced and very important technology of multiple nuclear warheads, each separately targeted (MIRVs). Not only was this the most up-to-date and therefore credible system – as measured against Soviet anti-submarine warfare capability and anti-ballistic missile defences – but by purchasing it from the Americans we could hope to avoid immensely expensive improvement programmes like Chevaline. On 6 December 1979 the ministers concerned agreed that the best system to replace Polaris was the Trident I (C4) MIRV system if it could be purchased from the US, less the warheads and the submarines carrying the system which would be produced in Britain. The decision was later confirmed by Cabinet.

  But at this point, although President Carter told me that he would supply us with whatever we needed, he was desperately worried that news of his decision would cause him political difficulties in the SALT II Agreement whose chances of being ratified by the Senate were already in doubt. The Americans were also keen to ensure that the announcement on Trident did not occur before the scheduled 12 December meeting of NATO to decide on deploying Cruise and Pershing. I could see the sense of this. But in view of the problems which SALT II was facing I began to be anxious lest the decision on Trident be postponed well into 1980.

  With the Soviet invasion of Afghanistan at the end of the year the prospect of ratifying SALT II immediately sharply receded. But at this point the US Administration said that it was reluctant to announce the Trident decision because it could be seen as an overreaction to events in Afghanistan. The Americans were similarly unduly worried about the attitude of Chancellor Schmidt to the Trident decision. More hard-headedly, the Carter Administration also pressed strongly for both political and financial returns on the decision to supply us with Trident. They wanted us to agree to a form of words which would commit us to expanding our defence efforts. They were also keen to develop their defence facilities at our island of Diego Garcia in the Indian Ocean – something for which I had a good deal of sympathy. There was the matter of a substantial levy which we would be charged for American research and development costs which they were not prepared to waive.

  On the afternoon of Monday 2 June 1980 I finalized the terms in discussion with Dr Harold Brown, the able US Defense Secretary, in Downing Street. I said that Britain wanted to purchase the Trident I missile on the same terms as regards research and development as Polaris, that is, paying a 5 per cent levy. Dr Brown would not agree to this – but he would accept it providing the British Government bore the cost of manning the Rapier Air Defence Systems which the US intended to purchase for their bases in Britain. I agreed. I also agreed with the objective of extending and increasing US use of the base at Diego Garcia; but this made sense on its own merits and had nothing to do with the Trident decision. Dr Brown accepted this. At last the decision was effectively made and I wrote formally to President Carter requesting purchase of Trident, simultaneously informing President Giscard, Chancellor Schmidt and Italy’s Prime Minister Cossiga. The decision was announced to the House by Francis Pym on 15 July and at Francis’s suggestion fully debated and endorsed on 3 March 1981.

  In the summer of 1980 we thought that we had made our final decision on the independent nuclear deterrent. But it was not to be. President Reagan came into office in 1981 with a programme of modernizing US strategic nuclear forces, including Trident. On 24 August the new US Defense Secretary, Caspar Weinberger, wrote to me to confirm that President Reagan had now decided to use the Trident II (D5) missile in the Trident submarines. The US Administration would make this missile available to us if we wished to buy it. On 1 October President Reagan formally told me of his decision.

  I well understood and indeed supported President Reagan’s decision to improve the US strategic nuclear capability. However, we now faced a new situation. If we were still to go ahead with Trident I we risked spending huge sums on a system that would be outdated and increasingly difficult to maintain as the Americans went over to Trident II. But if we were to accept President Reagan’s generous offer of the new technology represented by Trident II we risked the increasing costs of any new project. Moreover, a number of political difficulties arose.

  In November 1981 a group of ministers met to discuss what we should do. We argued out all the questions between us; and all the arguments which would be raised in the outside world were discussed, including some feeble and unrealistic ones.

  In January 1982 we had a further and fuller discussion based on a presentation. The more we considered the question the more it seemed that we must indeed have the Trident II. But we must get it on the best possible terms. The issue was put to Cabinet later that month and on 1 February I sent a message to President Reagan saying that I would send officials to Washington to discuss terms.

  In the end, we concluded an agreement to buy Trident II on more advantageous terms than Trident I. The missile was to be purchased at the same price as the United States Navy’s own requirements in accordance with the Polaris Sales Agreement. But the additional overheads and levies would be lower than would have been the case under the 1980 Agreement to purchase Trident I. In particular, the so-called R & D levy would be a fixed sum in real terms and there would be a complete waiver of the facilities charge which was part of the Trident I deal. The terms protected us completely from the escalation of the development cost. The United States would set up a liaison office in London to advise British industry on how to compete on equal terms with US industry for sub-contracts for the Trident II programme as a whole, including the American programme. We also decided to improve and increase the size of the submarines which would carry Trident, making them more efficient and less detectable, and by running longer between refits make them more available for patrol. The total cost of Trident II and the other changes over the whole period would be £7.5 billion, just over 3 per cent of the total defence budget over the same period. When I learned of the terms now being offered I was delighted and I gladly authorized their acceptance.

  No matter how effectively Britain managed its defence effort it was on the unity, strength and credibility of NATO that our security ultimately depended. It was of the utmost importance that American public opinion remained committed to western Europe. So the tensions and divisions which arose in the alliance at this time were of great concern to me. My view was that ultimately we must support American leadership: but that did not mean that the Americans could pursue their interests regardless of the opinion of their European allies.

  The need to decide how to react to the imposition of martial law by General Jaruzelski’s Government in Poland on 13 December 1981 highlighted problems which had been growing throughout 1981. Some European countries, most importantly the Germans, were hostile to President Reagan’s economic policy and mistrustful of his rhetoric on defence and arms control. I did not share these attitudes, though I wanted tougher action to control the widening US budget deficit. What I found irritating was the way in which the actions the Americans preferred inflicted a good deal more pain on their allies than on themselves and, one might argue, the communists in Poland
and the Soviet Union. The first such issue was the Polish Government’s crackdown on Solidarity.

  Martial law was declared in Poland from midnight on 12–13 December 1981 and a ‘Military Council for National Salvation’ consisting of military leaders was set up under the Prime Minister, General Jaruzelski. The borders were sealed, telex and telephone links severed, a curfew imposed, strikes and assemblies banned, the broadcasting system brought under tight control. There was no doubt in my mind that all of this was morally unacceptable but that did not make it easier to gauge the correct response. After all, in order to ward off Soviet intervention, we had consistently said that the Poles must be allowed to decide on their own internal affairs. Were the Soviets themselves behind it, intending to use the crackdown as a means of turning the clock back to hardline communism and subordination to Moscow? Or was this really a temporary decision, as the Jaruzelski Government claimed, forced upon them to bring some kind of order to Poland, with the implication that this would prevent a Soviet takeover?

  The more we learned of the background to what had happened, however, the worse it appeared. President Reagan was personally outraged by what had occurred, believed that the Soviet Union was behind it and was determined to take swift action. I received a message from him on 19 December to this effect. Al Haig sent a parallel message to Peter Carrington pointing out that the Americans were not proposing that the West should now implement the far-reaching measures to meet Soviet military intervention that had already been agreed in NATO. What they wanted were some political and economic measures at once and others in reserve if the situation worsened. Without any further reference to us, the Americans would be announcing sanctions against the Soviet Union later that day. These, we were glad to note, rightly did not include abandonment of the disarmament talks going on in Geneva. But they did include measures such as the cancellation of Aeroflot landing rights, a halt to negotiations on a new long-term grain agreement and a halt to the export of material for the construction of the planned natural gas pipelines on which work had already begun.

  It was this last point which was to be the cause of great anger in Britain and other European countries. British, German and Italian firms had legally binding contracts to provide equipment for the West Siberian Gas Pipeline, which involved components made in the United States or under United States licence. If the ban extended to existing contracts this would deprive British firms of over £200 million of business with the Soviet Union. Worst affected would be a contract of John Brown Engineering for pump equipment for the pipeline project on which large numbers of jobs depended.

  While pressing the Americans on this particular point, I ensured that we gave them the strongest possible backing both in NATO and the European Community for the general line they wanted to take. This was by no means easy. Initially, the Germans were reluctant to take any measures against the Polish Government. The French were pressing hard for continuing the sale of food at special subsidized prices by the European Community to the Soviet Union. But I still felt that if we could persuade the Americans to take a more reasonable line over the pipeline project we would be able to demonstrate a fairly impressive western unity. The trouble was that there were those in the American Administration whose opposition to the pipeline project had nothing much to do with events in Poland. These people believed that if it went ahead the Germans and the French would be dangerously dependent on Soviet energy supplies, which would have damaging strategic implications. There was some force in this argument; but although Russia would be providing just over a quarter of Germany’s and just under a third of France’s gas, this would be no more than 5 per cent of either country’s total energy consumption. In any case, neither the Germans nor the French were going to accede to American pressure. Such pressure would therefore be counter-productive as well as irrelevant to the specific problem we faced in Poland. There was also American talk, which seriously worried the Bank of England, of forcing Poland to default on her international debts, which would have had severe effects on European banks.

  Al Haig joined me for a late lunch at Downing Street on Friday 29 January. I told him that the single most important aim must be to keep the western alliance together. The most recent meeting of the NATO Council had gone well. But the measures now being proposed by the United States were causing concern. I said that whatever the Americans felt about the matter we had to face the fact that the French and the Germans were never going to abandon their contracts for the Siberian Gas Pipeline. Nearer the bone, I noted that the Americans had not included a grain embargo which would hurt their own people. Indeed, few of the measures adopted by the United States would have any serious effect at home – but they would hurt Europe. I gained the strong impression that Mr Haig basically agreed with my analysis.

  Out of the blue, however, the Americans announced on 18 June that the ban on the supply of oil and gas technology to the Soviet Union was to apply not only to US companies but also to their foreign subsidiaries and to foreign companies manufacturing American-designed components under licence. I was appalled. The reaction of the Europeans generally was still more hostile.

  Britain took legislative action under the Protection of Trading Interests Act to resist what was in effect the extension of US extra-territorial authority. Then European irritation was increased still further by the news that the Americans were intending to renew grain sales to the USSR on the pretext that this would drain the USSR of hard currency – but transparently because it was in the interests of American farmers to sell their grain. It was left to America’s excellent new Secretary of State, George Shultz, to find a way out of the difficulties, which he did later in the year, allowing the existing contracts for the pipeline to go ahead. But it had all been a lesson in how not to conduct alliance business.

  The summer of 1982 saw some useful international diplomacy. Between 4 and 6 June the heads of government of the G7 countries met amid the splendid opulence of Versailles and my most vivid recollection of the proceedings is of the impression made by President Reagan. At one point he spoke for twenty minutes or so without notes, outlining his economic vision. His quiet but powerful words provided those who did not yet know him with some insight into the qualities which made him such a remarkable political leader. After he had finished, President Mitterrand acknowledged that no one would criticize President Reagan for being true to his beliefs. Given President Mitterrand’s socialist policies, that was almost a compliment.

  From Paris President Reagan flew to London for an official visit where he addressed both Houses of Parliament in the Royal Gallery of the Palace of Westminster. The speech itself was a remarkable one. It marked a decisive stage in the battle of ideas which he and I wished to wage against socialism, above all the socialism of the Soviet Union. Both of us were convinced that strong defence was a necessary, but not sufficient, means of overcoming the communist threat. Instead of seeking merely to contain communism, we wished to put freedom on the offensive. In his speech President Reagan proposed a worldwide campaign for democracy to support ‘the democratic revolution [which was] gathering new strength’. In retrospect, however, that speech had a larger significance. It marked a new direction in the West’s battle against communism. It was the manifesto of the Reagan doctrine under which the West would not abandon those countries which had had communism forced upon them.

  By the time I visited the Far East in September 1982 Britain’s standing in the world, and my own, had been transformed as a result of victory in the Falklands. But one issue on which this was, if anything, a drawback was in talking to the Chinese over Hong Kong. The Chinese leaders were out to demonstrate that the Falklands was no precedent for dealing with the Colony.

  On the morning of Wednesday 22 September my party and I took off from Tokyo, where I had been visiting, for Peking. Fifteen years remained of the lease to Britain of the New Territories which constitute over 90 per cent of the land of the Colony of Hong Kong. The island of Hong Kong itself is British sovereign territory,
but, like the rest of the Colony, dependent on the mainland for water and other supplies. The People’s Republic of China refused to recognize the Treaty of Nanking, signed in 1842, by which the island of Hong Kong had been acquired by Britain. Consequently, our negotiating aim was to exchange sovereignty over the island of Hong Kong in return for continued British administration of the entire Colony well into the future. This I knew from my many consultations with politicians and business leaders of Hong Kong was the solution which would suit them best.

  The immediate danger was that financial confidence would evaporate and that money and in due course key personnel would flee the Colony, impoverishing and destabilizing it well before the lease of the New Territories came to an end. Moreover, it was necessary to act now if new investment was to be made, since investors would be looking some fifteen years or so ahead in judging what decisions to make.

  I had visited Peking in April 1977 as Leader of the Opposition. The ‘Gang of Four’ had been deposed a few months before and Hua Guo Feng was Chairman. Deng Xiaoping, who had suffered so much during the Cultural Revolution, had been ousted by the ‘Gang of Four’ the previous year and was still in detention. But on the occasion of this, my first visit as Prime Minister – indeed the first visit of any Prime Minister while still in office – Deng Xiaoping was indisputably in charge.

  On the afternoon of Wednesday 22 September I had my first meeting with the Chinese Prime Minister, Zhao Ziyang – whose moderation and reasonableness proved to be a great handicap to him in his subsequent career. We had a discussion of the world scene in which, because of the Chinese hostility to Soviet hegemony, we found much to agree about. However, we were aware that the following morning’s meeting on Hong Kong would be a very different matter.