The Downing Street Years, 1979-1990

We were not to know it at the time, but 1981 was the last year of the West’s retreat before the axis of convenience between the Soviet Union and the Third World. The year began with Iran’s release of US hostages in a manner calculated to humiliate President Carter and ended with the crushing, albeit temporarily, of Solidarity in Poland. The post-Vietnam drift of international politics, with the Soviet Union pushing further into the Third World with the help of Cuban surrogates, and the United States reacting with a nervous defensiveness, had settled into an apparently fixed pattern. Several consequences flowed from that. The Soviet Union was increasingly arrogant; the Third World was increasingly aggressive in its demands for international redistribution of wealth; the West was increasingly apt to quarrel with itself, and to cut special deals with bodies like OPEC; and our friends in Third World countries, seeing the fate of the Shah, were increasingly inclined to hedge their bets. Such countervailing trends as had been set in motion — in particular, the 1979 decision to deploy Cruise and Pershing in Europe — had not yet been given concrete effect or persuaded people that the tide had turned. In fact it had just begun to do so.

EARLY TALKS WITH PRESIDENT REAGAN

The election of Ronald Reagan as President of the United States in November 1980 was as much of a watershed in American affairs as my own election victory in May 1979 was in those of the United Kingdom, and, of course, a greater one in world politics. As the years went by, the British example steadily influenced other countries in different continents, particularly in economic policy. But Ronald Reagan’s election was of immediate and fundamental importance, because it demonstrated that the United States, the greatest force for liberty that the world has known, was about to reassert a self-confident leadership in world affairs. I never had any doubt of the importance of this change and from the first I regarded it as my duty to do everything I could to reinforce and further President Reagan’s bold strategy to win the Cold War which the West had been slowly but surely losing.

I heard the news of the American election result in the early hours of Wednesday 5 November and quickly sent my warmest congratulations, inviting the President-elect to visit Britain soon. I had met Governor Reagan twice before when I was Leader of the Opposition. I had been immediately struck by his warmth, charm and complete lack of affectation — qualities which never altered in the years of leadership which lay ahead. Above all, I knew that I was talking to someone who instinctively felt and thought as I did; not just about policies but about a philosophy of government, a view of human nature, all the high ideals and values which lie — or ought to lie — beneath any politician’s ambition to lead his country.

It was easy for lesser men to underrate Ronald Reagan, as many of his opponents had done in the past. His style of work and decision-making was apparently detached and broad-brush — very different from my own. This was in part the result of our two very different systems of government rather than differences of temperament. He laid down clear general directions for his Administration, and expected his subordinates to carry them out at the level of detail. These objectives were the recovery of the American economy through tax cuts, the revival of American power by means of a defence build-up, and the reassertion of American self-confidence. Ronald Reagan succeeded in attaining these objectives because he not only advocated them; in a sense, he embodied them. He was a buoyant, self-confident, good-natured American who had risen from poverty to the White House — the American dream in action — and who was not shy about using American power or exercising American leadership in the Atlantic alliance. In addition to inspiring the American people, he went on later to inspire the people behind the Iron Curtain by speaking honest words about the evil empire that oppressed them.

At this point, however, the policies of military, economic and technological competition with the Soviet Union were only beginning to be put in place; and President Reagan still had to face a largely sceptical audience at home and particularly among his allies, including most of my colleagues in the Government. I was perhaps his principal cheerleader in NATO.

So I was soon 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. At 3.45 on the afternoon of Wednesday 25 February the RAF VC10 on which I travelled on such occasions took off for Washington. Peter Carrington was with me. He did not altogether share my view of the President’s policies and was intent on pursuing lines which I knew would in practice be quite fruitless, given the President’s unshakeable commitment to a limited number of positions. The US was already meeting opposition from its allies on a number of issues such as arms control, its support for the military government in El Salvador, and increasingly the size of the US deficit. We feared that the new Administration’s plans for tax cuts might widen the deficit — though at this stage we were still hopeful that the President would succeed in achieving the large expenditure cuts he had put before Congress. With so many important things to discuss, I could see no point in raising the issue of Namibia which Peter Carrington wanted to do. I knew that the Americans would not press the South Africans to withdraw from Namibia unless the 20,000 or so Cubans also withdrew from neighbouring Angola. What is more, I privately thought that they were fully justified in asserting this linkage. In any case, there is one principle of diplomacy which diplomats ought to recognize more often: there is no point in engaging in conflict with a friend when you are not going to win and the cost of losing may be the end of the friendship.

I spent the morning of my first day in Washington in meetings with the President — first tête-à-tête, then with the US Secretary of State, Alexander Haig, and Peter Carrington present, and finally with members of the US Cabinet. Two events which occurred on the eve of our discussions had a large impact on them.

First, the Assistant Secretary for European Affairs, Lawrence Eagleburger, had come to Britain and other European capitals to show us a dossier of evidence substantiating the US claim that arms from Cuba, acting as a surrogate for the Soviet Union, were pouring into El Salvador to support the revolution against the pro-western, if undoubtedly unsavoury, government there. There was still some difference of view about whether the threat was as serious as the US claimed. But the evidence which we now saw made it easier to expess support for the American objectives in the region and to resist the pressure from other lobbies. A statement was issued by the Foreign Office just before I left for America to this effect. President Reagan explained to me his determination to pursue a new policy to resist communist subversion via Cuba, which also involved closer US relations with what it saw as a vulnerable and important neighbour, Mexico. I understood all this and agreed with it: but I warned of the danger of losing the propaganda war on El Salvador — the reporting was very one-sided.

The second and much more important development was a speech by President Brezhnev, proposing an international summit and offering a moratorium on theatre nuclear forces (TNF) in Europe. Discussion about how the new Administration should respond dominated the hyperactive Washington media world. I had publicly expressed caution both about the prospect of an early summit meeting and about the Russian TNF proposals, which would have left them with overwhelming superiority since they had deployed and we had not. President Reagan turned out to be of the same mind. Both of us were well aware of Soviet tactics and of the likelihood that this was only part of their attempt to disorientate and divide their western opponents. This was the latest phase in a Soviet propaganda battle in which they proposed no further deployment of nuclear weapons just when they had completed stationing their own modernized weapon systems. This issue was to dominate alliance politics for the next six years.

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 — but never for a moment the President himself — to explain that the alleged failures of the ‘Thatcher experiment’ stemmed from our failure to be sufficiently radical. Indeed, while I was in Washington Treasury Secretary Donald Regan spoke on similar lines to Congress before slipping away to join a lunch at which I was the main guest; this predictably received plenty of press coverage in Britain. 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. Labour’s prices and incomes policy, combined with lax monetary policies, had greatly increased the inevitable difficulty of transition, as the public sector pay explosion forced up state spending. 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.

After another short talk over coffee with the President, at which we were joined by Nancy and Denis, my party left Washington for New York. In the afternoon I had talks with Dr Waldheim, the UN Secretary-General, and then that evening spoke to an audience on the subject of ‘the Defence of Freedom’. In my speech I summed up my feelings of cautious optimism about the decade now opening up before us:

VISITS TO INDIA AND THE GULF

On 20 May 1980 I had held a meeting to consider a subject which the Russian invasion of Afghanistan had belatedly placed near the top of the western international agenda — how to prevent Soviet expansion in the developing world. With a revivified United States, the possibilities had now been transformed. But I never doubted that, over and above the role of ally and friend to the United States, there was much that Britain could achieve and that no one else could. The Left would have it that the legacy of the British empire was one of bitterness and impoverishment in the former colonies: this was a grossly distorted and inaccurate view. Nor for the most part did those with whom I dealt in these countries see Britain in that light. Sweep away some of the rhetoric and with the exception of certain issues, like relations with South Africa, you will find that no country is as trusted in every continent as Britain. In 1981 I began to make more systematic use of these relationships to promote the interests of Britain and the wider objectives of the West.

On Wednesday 15 April 1981 I began a visit to India. I had visited the country twice and met Mrs Indira Gandhi, India’s Prime Minister, three times before. However, the strategic importance of India was now greater. India had been making economic progress, particularly in the crucial sector of agriculture. It was one of the leading countries in the non-aligned movement — still more so since the death of Marshal Tito. That group of nations was itself more important to us because of its attitude to the Soviet invasion of Afghanistan. India could be an even more powerful source of difficulty than benefit if she chose. Her traditionally closer relations with Russia and hostility to Pakistan, at a time when the latter was the main base for the Afghan anti-communist guerillas, meant that the West had to be sensitive to the Indian Government’s feelings and needs. As regards bilateral relations, there was also the thorny question of the new and much misrepresented British Nationality Bill, which was a part of our proposals to limit future large-scale immigration to Britain — not least immigration from the Indian sub-continent.

My talks with Mrs Gandhi were interesting, but largely inconclusive. Much of the time of the Indian Cabinet seemed to be spent in allocating contracts — not perhaps too surprising in a socialist country — whereas I was more concerned with international questions. I did not manage to persuade Mrs Gandhi to condemn the Soviet invasion of Afghanistan, as I would have liked. She put up the standard excuses, but she was clearly embarrassed by it. I never succeeded in drawing Mrs Gandhi or her successors away from India’s traditional alliance with the Soviet Union until the collapse of communism, or in drawing her closer to America. But we established a good Anglo-Indian working relationship in Commonwealth affairs, and on the practicalities of Third World aid, where she had a much more hard-headed grasp of what was required than most other Third World leaders. This good relationship was not soured for long by the dispute over the British Nationality Bill. She pressed strongly for amendments to it that would have permitted more Indian families to be admitted to Britain: I stood my ground in defence of the bill. My impression was that although the attack was pressed home privately and publicly — at the closing press conference I was faced with hostile questioning — Mrs Gandhi was herself largely responding to public pressure.

I liked and respected Mrs Gandhi. Her policies had been more than high-handed, but only a strong figure with a powerful personality could hope successfully to rule India. Mrs Gandhi was also — perhaps it is not just myth to see this as a female trait — immensely practical. For example, she always insisted that what India required was basic — what to some seemed primitive — means of assistance to allow its peasants to produce more food. Like me, she understood the immense benefits which science could bring and indeed was already bringing in new varieties of grain and techniques of cultivation. Her weak spot was that she never grasped the importance of the free market.

Apart from my talks with Mrs Gandhi and others, I saw three different aspects of the new India. On Thursday I addressed the Indian Parliament. On Friday I visited an Indian village where the efficiency of peasant agriculture was being transformed. On Saturday I walked around the Bombay Atomic Research Centre. The Indian visit was, I felt, not only predictably fascinating; slightly less predictably, though without any dramatic developments, it had been a success. I was sorry to leave India so soon: each visit makes me want to return for an extended stay.

On Sunday I left for Saudi Arabia and the Gulf. I had to have clothes specially made for this visit because it was important to conform to the customs of these conservative Muslim societies. Contrary to what one might have thought, they were in no way disconcerted to meet their first western woman prime minister. Later I discovered how important the wives of leading Arab figures are. Indeed, many of these women are highly cultivated, very well educated and well informed. Their influence is greatly underrated in the West and an evening’s conversation with them is a highly stimulating occasion.

I was the first ever British prime minister to visit these states. But Britain’s links with the area were traditionally strong, dating back to the days when we provided the defence of some of the Gulf states, long before oil was discovered. I always regretted, even at the time, the decision of Ted Heath’s Government not to reverse the Wilson Government’s withdrawal of our forces and the severing of many of our responsibilities east of Suez. Repeatedly, events have demonstrated that the West cannot pursue a policy of total disengagement in this strategically vital area. Britain has, however, continued to supply equipment, training and advice.

In Saudi Arabia and the Gulf states I sought to reassure my hosts that whatever decisions were made about a Rapid Deployment Force (RDF) then being discussed, which some of them feared might pave the way for direct military intervention in the Middle East, nothing of the sort would occur without their knowledge and consent. The Iraq-Iran conflict was continuing, though at a lower level of activity. No one knew how serious the threat of Islamic fundamentalism might become. Too overt a western presence might provide an excuse for it: too little support from the West might provide an opportunity. The Gulf Co-operation Council had been formed to bring together the states in the region to guarantee their mutual security: this was clearly a welcome development. It was also important that they should have the right military equipment and be trained to use it. In this our old defence links reinforced our commercial interest. Some British aeroplanes and tanks were eminently suitable for this area.

Abu Dhabi, where I arrived on Tuesday 21 April, is the largest of the members of the United Arab Emirates (UAE). Sheik Zaid, the Amir and President of the UAE, spoke for all the world like an Arab poet and was a man of great charm. He knew Pakistan well because like other Gulf Arabs he regularly went there to hunt with his hawks. The Gulf Arabs therefore learned much of interest about developments in Pakistan and Afghanistan. We supplied the UAE with a good deal of military equipment and advice, and we were keen to sell the excellent Hawk Trainer and Ground Attack aircraft throughout the Gulf.

The other main UAE state is Dubai, where I arrived on Wednesday. Its ruler was Sheik Rashid. When I arrived he was already on the airport tarmac to greet me, even though he had already seen me in Abu Dhabi. By this time he was elderly and unwell. But his powerful features, above all his eyes, still conveyed shrewdness and courage. There is a picture of the young Sheik on horseback, holding his sword aloft, marching in from the desert to claim his land: it struck me that the qualities of his generation would be difficult to repeat in the more comfortable conditions of today.

Dubai is enchanting. Like the other Gulf states that I visited, it is full of flowers, kept absolutely perfectly and tended every day. But it is also a thriving port. Like Bahrain, but unlike some other cities on the shores of the Gulf, it was established long before oil was discovered. From here Arab traders sailed to the Red Sea and to the Indian Ocean.

I also visited Muscat in Oman. Its leader, Sultan Qaboos, has always been one of Britain’s closest friends in the Gulf. Historic forts guard the entrance to the port of Muscat. As elsewhere in the Gulf, development has been very carefully controlled to blend in with the traditional style of buildings. I discussed with the Sultan Oman’s requirements for military equipment. Later when the price of oil fell and Oman’s finances were somewhat less healthy, we suggested that they should purchase the Ground Attack Hawk and Trainer rather than the more expensive Tornado. The Sultan and I discussed the situation in the Gulf and the Iran-Iraq War. He was always a source of valuable information about events in Iran. We too were concerned that the war remained confined to those two states and to the northern end of the Gulf. We had stationed the three ships of the Armilla Patrol in the area in 1980 to keep the sea lanes open. My talks with the Sultan and other Gulf rulers laid the groundwork for later co-operation when the Iran-Iraq War threatened Gulf shipping and, subsequently, when Iraq invaded Kuwait.

My final visit on this occasion was to see Sheik Khalifa, the Emir of Qatar. Qatar has the biggest natural deposits of gas anywhere in the world and the country is very wealthy. I discussed the involvement of British firms in the development of these resources.

The pattern of the visit, combining diplomacy, commerce and private discussion would be repeated on many occasions in the years ahead. Even on this busy trip I had not been able to visit all the important players in the ‘great game’ of the Gulf. I would return in September to do so, visiting Bahrain and Kuwait on my way to the Commonwealth Conference in Melbourne.

THE OTTAWA G7

My second G7 summit — President Reagan’s and President Mitterrand’s first — took place in Montebello, just outside Ottawa, where I arrived on the afternoon of Sunday 19 July to be met by Canada’s Prime Minister Pierre Trudeau. Montebello had been chosen as the site of the conference because the G7 heads of government were determined to try to avoid the relentless pressure from the media which increasingly disrupted proceedings. After each afternoon session Pierre Trudeau flew by helicopter back in to Ottawa to brief the journalists. We enjoyed a kind of splendid isolation at the Château Montebello, sometimes called the world’s biggest log cabin but in fact a very luxurious hotel. It had also been decided to try to inject rather more informality into discussions. Perhaps because of the presence of Ronald Reagan, with his effortless amiability, we all called one another by our Christian names. Something I liked less was the decision that everyone should dress informally. In my experience this kind of approach always presents more rather than fewer problems in choosing what to wear. The Japanese, for example, wore the smartest white ‘barbecue’ suits that I have ever seen — and looked all the more formal beside the westerners in open-neck shirts and slacks. For my part, like the Japanese, I made almost no concessions to informal dress. I believe that the public really likes its leaders to look businesslike and well turned out. I was glad that in retrospect this degree of informality was not thought a success and so was not repeated.

President Reagan was subject to some criticism at Montebello about the level of US interest rates. He explained that he had inherited these from his predecessor. ‘Give me time’, he said; ‘I want them down too.’ He was as good as his word on this. He also hoped to control the US deficit by cuts in public spending, but that proved more intractable. The deficit continued to rise until about 1985. The US deficit was to be the one topic on which the President and I continued to be at odds, until the latter half of his second term when it entered a sharply declining path. My own experience of getting down deficits was that you had to keep a very firm hand on the purse strings and say ‘no’ to much public spending. If you are controlling public spending, you can temporarily put up taxes because in those circumstances the revenue will help to cut the deficit (and therefore interest rates). But if you are increasing spending, then a tax increase will only serve to encourage even more spending and thus may even increase the deficit. Given the separation of powers in the US Constitution, which enabled Congress to spend over and above the president’s wishes, holding taxes down may be the only effective tool a president has to hold spending down. So I came to have some sympathy with Ronald Reagan’s position. Where the President and I were at one was when he argued for the greatest possible international free trade. Trade also figured in others’ contributions. The Japanese were, as usual, sound on the principle of free trade, but, in spite of pressure, definitely less willing to take practical measures to open up their own markets.

Helmut Schmidt, who was known to be privately critical of the policies of the new US Administration, argued for sound and orthodox public finance and open trade, and I did the same in quite a long off-the-cuff speech. My contribution was, I suspect, the more convincing because, as a result of the cuts in government borrowing in our 1981 budget, British interest rates had fallen by this time — even while we were continuing to fight inflation.[34]

Perhaps my most useful discussion at Ottawa was at a private meeting with President Reagan. Since we had met in Washington he had survived injuries from an assassination attempt which would have crippled many a younger man. But he looked fine. I briefed him on events in Britain, putting both our economic problems and the recent inner-city riots in perspective. As regards American relations with Europe, I was becoming increasingly worried about some of the Administration’s rhetoric: for example, I urged him to discourage talk about a ‘rising tide of neutralism’ in Europe: while I agreed with his underlying point, such warnings could all too easily prove self-fulfilling. I took this opportunity to thank him warmly for his tough stand against Irish terrorism and its NORAID supporters. It was good to know that, however powerful the Irish republican lobby in the USA might be, the Reagan Administration would not buckle before it.

MELBOURNE CHOGM AND VISIT TO PAKISTAN

Almost two months later the Commonwealth Heads of Government Meeting opened in Melbourne (on Wednesday 30 September).

The conference was overshadowed, as usual, by South African issues. Robert Mugabe, with whom I had a separate meeting, was there for the first time representing Zimbabwe. There was a good deal of hostility to the new American Administration’s attitude to the problem of Namibia. I was determined to hold the line so that the so-called ‘Contact Group’ of five nations, including the US, should continue to be the means by which pressure for a settlement was exerted. At one point Maurice Bishop, the Marxist Prime Minister of Grenada, delivered an eloquent plea that we should send a clear message of support to our brothers in Namibia, suffering under South African rule. One of the other heads of government later suggested to me that someone should ask Maurice Bishop about the number of his own people, especially his country’s professional and middle class, now held in Grenada’s prisons, put there by his Government. There was also one of those arguments, which so frequently afflicted the Commonwealth, about sporting ties with South Africa. The Springboks had played in New Zealand amid scenes of disorder and Robert Muldoon was bitterly condemned for his alleged breach of the Gleneagles Agreement, by which international sporting relations with South Africa were regulated. He put up a robust defence. At least with the Rhodesian issue now settled, Britain was less the focus of international criticism by the Commonwealth than on the previous occasion, and the serious pressure for sanctions against South Africa still lay in the future.

In my interventions during the conference, I acknowledged that conditions for the developing world were undoubtedly difficult. They had been hit hard both by the rise in the oil price and by the effects of the recession on the western markets on which they relied. However, I emphasized that wealth creation rather than international wealth redistribution still had to come first — indeed more so than ever. I also defended the British record on overseas aid, which was very good when you looked further than the narrowly defined aid programme and took into account both public and private sector loans and investment. With myself and the heads of government of six other Commonwealth countries due to attend the forthcoming international conference on ‘North-South’ issues in Cancún, I thought it would be well worth putting the facts on the record now.

While I was in Australia Ted Heath delivered a vitriolic speech in Manchester attacking my policies. Oddly, perhaps, in view of his record, Ted had become an advocate of the politics of ‘consensus’; or perhaps less oddly, since these policies seemed to come down to state intervention and corporatism. I was sent an advance copy of the speech and used my Sir Robert Menzies Lecture at Monash University to deliver a reply to him and to all the critics of my style of government. It was, unbeknown to him, President Forbes Burnham of Guyana who provided the inspiration for this in the course of the weekend retreat which the heads of government spent away from Melbourne in Canberra. In the course of this we were arguing about an issue to be reported in the final communiqué which we were drafting. At one point Forbes Burnham said that we must achieve a consensus. I asked him what he meant by ‘consensus’ — a word of which I had heard all too much — and he replied that ‘it is something you have if you cannot get agreement.’ This seemed to me an excellent definition. So in my lecture I inserted a passage which read:

On the return journey I took the opportunity to visit Pakistan. I flew to Islamabad to be met by President Zia. The war in Afghanistan was at its height and it was arranged that I should visit one of the refugee camps set up in Pakistan for fleeing Afghans. We flew to the Nasir Bagh Afghan refugee camp by helicopter. It was large, but impeccably clean, orderly and obviously well run. I spoke under a huge tent, sheltered from the burning sun, while the refugees — men, women and children — sat cross-legged on the ground. I told them of my admiration for their refusal to ‘live under a godless communist system which [was] trying to destroy [their] religion and [their] independence’ and promised them my help. My speech was interrupted from time to time as people rose to their feet to express the words of approval, ‘Allah be praised’.

I had lunch in the garden of the beautiful old house of the Governor at Peshawar. There, in the grounds of the house, I addressed a very large meeting of tribal leaders from the surrounding areas. Then I went by helicopter up to the Khyber Pass. I had been warned in advance that, as an honoured guest, I would be presented with the traditional sheep: I patted it appreciatively on the head and asked them to keep it for me. From there I went up to the frontier with Afghanistan itself, always busy despite its new status as a kind of dividing line between communism and freedom. I gazed across into the Soviet dominated lands beyond. A line of lorries was waiting to come through from Afghanistan to Pakistan. Relations with the Russian border guards on the Afghan side at this time were friendly enough. They were taking a very close interest in everything that was happening on our side. I reflected that Pakistan’s was an unsung story of heroism, taking in hundreds of thousands of refugees and bordering the world’s greatest military power. Though it was not a rich country, as I later remarked to President Zia, all the Pakistani people I saw looked healthy and well dressed. He said ‘no one is short of clothes or food, thank God.’ Britain was already providing aid for the refugees. But if Pakistan was to stand as a bulwark against communism it would need still more help from the West.

CANCÚN NORTH-SOUTH SUMMIT

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, whatever our misgivings about the occasion, 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 that there was a homogeneous rich North which confronted a homogeneous poor South: underlying the rhetoric was the idea that redistibution 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. Of course, ‘North-South’ dialogue also appealed to those socialists who wanted to play down the fundamental contrast between the free capitalist West and the unfree communist East.

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 overluxurious hotels which you so often seem to find in countries where large numbers of people are living in appalling poverty. Cancün was built in the 1970s, on a site (it is said) chosen by computer as likely to have maximum appeal to foreign tourists. The city was badly damaged by Hurricane Gilbert in 1988. So much for information technology.

There is no immodesty in saying that Mrs Gandhi and I were the two conference media ‘personalities’. India had just received the largest loan yet given by the International Monetary Fund (IMF) 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. At one point in the proceedings 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 more 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 Cancün 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. I spent much of this time seeking to sort out drafting points with the Americans, who continued until almost the last moment to have reservations about the text.

The summit was a success — though not really for any of the reasons publicly given. At its conclusion there was, of course, the expected general — and largely meaningless — talk about ‘global negotiations’ on North-South issues. A special ‘energy affiliate’ to the World Bank was to be set up. But 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 the night before. 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; there was nowhere you could put your feet. At first I thought that I must have been affected by the altitude, even though I had had no difficulty in my earlier days on skiing holidays. But I was reassured by our ambassador who was sitting beside me: ‘No’, he said, ‘it’s just an earthquake.’

Other earthquakes were sending out tremors that year. Before I left for the international visits chronicled in this chapter, 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. My meetings with President Reagan had persuaded me that the new Administration was apprised of these dangers and determined to combat them. But a combination of exaggerated American rhetoric and the perennial nervousness of European opinion threatened to undermine the good transatlantic relationship that would be needed to guarantee that deployment went ahead. 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.