HL Deb 26 February 1985 vol 460 cc854-62

4.11 p.m.

Viscount Whitelaw

My Lords, with the leave of the House, I shall now repeat a Statement being made in another place by my right honourable friend the Prime Minister. The Statement is as follows:

"With permission, Mr. Speaker, I shall make a Statement on the visit which I paid to the United States from 19th to 21st February, accompanied by my right honourable friends the Foreign and Commonwealth Secretary and the Secretary of State for Defence.

"In the course of my visit I delivered an address to a joint meeting of the United States Congress. I had a meeting with President Reagan, and meetings with eight members of the US Cabinet, and with other senior members of the Administration, as well as with the chairman of the Federal Reserve Board. I also met leading members of the Senate and House of Representatives.

"My colleagues and I were guests at a luncheon at the White House and the President and Mrs. Reagan came to a dinner at the British Embassy to mark the 200th anniversary of diplomatic relations between the United Kingdom and the United States.

"The principal themes discussed in my talks with the President and other members of the Administration were East-West relations and arms control, economic issues and the Middle East.

"On East-West relations and arms control, we agreed that the West's objective in the negotiations which will open in Geneva on 12th March should be a sizeable and verifiable reduction in nuclear weapons, which would allow us to maintain security at a lower level of weaponry and at lower cost. In our discussions on the Strategic Defence Initiative, we reaffirmed the four points agreed during my visit to Camp David in December and, in particular, that research, as permitted under the Anti-Ballistic Missile Treaty, should go ahead but that eventual deployment of a defensive system in space would be a matter for negotiation under the terms of that treaty. I expressed the hope that British scientists would be associated with research into the Strategic Defence Initiative.

"In our discussion of economic issues I explained the concern in Europe at the continued rise of the US dollar against other currencies. I found this concern widely shared within the United States Administration, not least because of the adverse effect on their own agricultural and manufacturing industries, but it was recognised that no easy remedy existed. The President and I agreed that the best contribution the United States could make to a long-term solution lay in a reduction of their budget deficit. The President has put specific proposals to Congress to this end. I argued strongly against protectionist measures as a way of dealing with the trade effects of the high dollar on the United States economy. I was assured that the Administration was not contemplating such measures.

"On the Middle East, the President and I both felt that the time was propitious for fresh efforts to arrive at a solution of the Arab-Israel problem. We both expressed our support for King Hussein's endeavours to arrive at a common position among moderate Arab Governments and I welcomed the result of King Fahd's recent visit to Washington. The President confirmed that his proposals of September 1982 remained on the table and that the Administration was ready to pursue them with the parties.

"Our talks also dealt with Central Africa; with co-operation against terrorism; and with Northern Ireland—where I thanked the President and members of Congress for their efforts to discourage the donation of funds to organisations which promote and sustain violence. In addition, I raised a number of bilateral issues, in particular the case for more American purchases of British defence equipment and the matter of unitary taxation.

"The visit enabled my right honourable friends and me to convey the British point of view on current issues, as well as the extent of Europe's contribution to the NATO Alliance and Britain's particular contribution to the defence of Western interests worldwide."

My Lords, that concludes the Statement.

Lord Cledwyn of Penrhos

My Lords, we are grateful to the noble Viscount for repeating that Statement. We are also glad that the Prime Minister was well received in the United States and that she was able to discuss most of the matters which are of urgent concern to our country at this time. Is the noble Viscount aware, however, that on economic issues we must be disappointed that the pressing matter of the world economic crisis which threatens to upset the balance of international politics was not dealt with convincingly? How does the noble Viscount reconcile the President's remarks mentioned in the Statement with the real position; that is, that today the exchange rate is hovering around one dollar five cents; parity looms large along with other matters; and there are high interest rates? Why were strong representations not made to the President?

Is it not the case that soon after the Prime Minister left the United States the President announced that he would not be taking positive measures to repress the strengthening dollar? How does the noble Viscount reconcile the Prime Minister's confidence with the President's pessimistic remarks?

We welcome the assurance that the United States accepts that although research into Star Wars is permissible, deployment remains a matter of negotiation. Are the Government confident that those negotiations will take place prior to any attempt at deployment? With regard to the Statement's reference to the Geneva talks, can the noble Viscount explain to the House how the cause of international peace is forwarded by statements such as the following, which the Prime Minister made when she addressed Congress? She said: Wars are not caused by the build up of weapons; they are caused when an aggressor believes he can achieve his objectives at an acceptable price". Does not the noble Viscount agree that support for Western nuclear and conventional build-up, in conjunction with the assumption that the potential aggressor exists, waiting to pounce, is not conducive to calm and constructive negotiation and could in fact be harmful to its success?

Further, is the noble Viscount aware that many regard it as deplorable that the Government, in the person of the Prime Minister, used this opportunity to criticise New Zealand, while the same opportunity to criticise President Reagan's involvement against the Nicaraguan Government was apparently missed? However, we welcome some of the matters mentioned in the Statement; for example, the Prime Minister's initiative in respect of the Arab-Israeli problem.

Finally, and to end on a more constructive note, we welcome the Prime Minister's appeal to restrict the flow of aid to Northern Ireland terrorist groups. Can the noble Viscount expand on what concrete proposals were made to ensure the success of that policy?

4.19 p.m.

Lord Diamond

My Lords, we on these Benches thank the noble Viscount for repeating this important and full Statement on the Prime Minister's recent visit. We welcome such visits; they must obviously be of benefit. We congratulate the noble lady on the number of important persons in American life whom she was able to meet. We hope that the noble Viscount will be good enough to convey to the noble lady—

Noble Lords

The right honourable lady.

Lord Diamond

The right honourable lady the Prime Minister, my Lords—our congratulations on the great energy she displayed in putting forward the Government's views. I say the Government's views because, of course, we do not share all the views expressed in the Statement—certainly with regard to SDI, where we have the greatest reservations for the reasons already given. Although I note that every time the Government refer to SDI they also refer to the fact that research is permitted under the ABM treaty, I wonder whether that is for self assurance or whether it is a statement of fact. There are those who have hesitation on this topic and there are certainly many of us who believe that, although it might be just within the legal framework of the treaty, it is certainly not within the spirit of the treaty and it could be setting a most unfortunate precedent for the future.

With regard to what is called the continued rise of the dollar against other currencies—and that, of course, means, in particular, against sterling, which I believe now stands at only three cents above parity—was the Prime Minister told of the statement that the President was going to make to the effect that there was very little that he or Congress could do at present and that we would be better off looking to our own economic policies, by which he meant changes that might be relevant and appropriate? Does not the way that currencies have behaved since the Prime Minister's visit—and sterling in particular—indicate that there is some deeper malaise and that we would be well advised to rely not on temporary attempted interference with the markets but on a closer examination of the policies that we have been pursuing in this country, to see whether they are conducive to the growth of the wealth of this country?

Lest I be thought to be unduly critical I give the warmest welcome to what is called in the Statement the Prime Minister's "strong argument". We can all imagine that when the Prime Minister makes a strong argument, it is indeed a very strong argument. We therefore very much welcome that she argued strongly against protectionist measures, which the present difficulties of American exporters would naturally lead America to try to adopt. We feel that protectionism could be extremely damaging to world trade and to this country in particular. We therefore very much welcome that expression of strong views.

I have just one question on the Middle East. Did the Prime Minister represent the view that the best method in trying to seek a solution to the Arab-Israel problem is one which would lead to the parties who are directly involved getting round a negotiating table?

Then, if the noble Viscount has a note about unitary taxation, I am sure that a word of explanation would also be welcome there.

Finally, may I ask whether there was any discussion between the President and the Prime Minister on the little local difficulty that the United States is having with New Zealand? Did the President ask that the Prime Minister of this country should publicly lecture the Prime Minister of a Commonwealth country? If not, what on earth is the explanation of that extraordinarily undiplomatic outburst? Do we not desire that there should be a 200th anniversary of diplomatic relations with the Commonwealth of New Zealand?

4.24 p.m.

Viscount Whitelaw

My Lords, I am grateful to both noble Lords for their reception of the Statement. I am also grateful for the kind but limited messages of congratulation to the Prime Minister. They were kind but limited in the case of the noble Lord, Lord Cledwyn, who said he was pleased that she was well received: to which I reply that with a performance such as she gave, no wonder she was well received! But that is for me to say, and I can understand why the noble Lord, Lord Cledwyn, did not say it.

The noble Lord, Lord Diamond, praised the Prime Minister's great energy. No one who knows the Prime Minister is surprised that she displayed that energy. It was a remarkable achievement. I think it would be fair for me to say in answer to both noble Lords that many people who heard and saw on their television screens her address to Congress—whether or not they agreed with all the matters concerned in it, and I can quite understand if they did not—would still admit that it was a remarkable performance.

I now turn to the particular points raised by the noble Lords. First, the noble Lord, Lord Cledwyn, obviously raised the pressing issues of the dollar and President Reagan's statement shortly after the Prime Minister left. It is important to differentiate between two matters. One, of course, is whether any action that the United States could take urgently on the exchange rate would benefit the position of many other countries—I shall come back to that when answering the noble Lord, Lord Diamond—and whether, in the long term, the United States cannot do best by seeking to reduce their budget deficit. In the Statement I made it quite clear that the President had said that the United States would be very keen and determined to seek to reduce the size of their budget deficit. I think it is fair to President Reagan to say that in his immediate comments afterwards he was referring to immediate action which could possibly be taken on the exchange rates at this moment. It is fair to say that the two are somewhat different matters.

The noble Lord, Lord Cledwyn, referred to the NATO deterrent position. As regards the Prime Minister's remarks on deterrence and on the NATO deterrents, I should have thought it was fair to say, as she pointed out in her speech, that as regards the work of NATO and the maintenance of our deterrents over the years, whatever may be the criticisms that some people may have, no one can deny that it has preserved peace in the world for a considerable time. As has been said by many people, against that background we would be very unwise to let down our guard in any way.

Both noble Lords criticised the Prime Minister's remarks on what the Prime Minister of New Zealand has done. It is only fair to say that, yes, in the Commonwealth we speak plainly, and must speak plainly. My right honourable friend the Prime Minister made perfectly clear her anxieties on the position taken by New Zealand over nuclear issues, which I believe she was perfectly entitled to do. Some of these Commonwealth countries from time to time feel perfectly able to criticise this country when it suits them, and I do not see why it is unreasonable for the Prime Minister to make clear our anxieties which affect the alliance generally and the New Zealanders' position.

I am grateful to both noble Lords for their remarks about the Middle East. While progress is very slow, I believe that constructive attitudes were taken.

The noble Lord, Lord Diamond, made one other remark to which I should refer. He said that the surging rise of the dollar was particularly affecting the pound. I hesitate to enter into any economic discussion with the noble Lord at any time, but I think it is fair to point out that over the past week the dollar has risen by 5 per cent. against sterling but by 4 per cent. against the Swiss franc and 4 per cent. against the Deutschmark. Therefore, when he says "particularly the pound", that should be put in reasonable perspective.

I have done my best to answer the fairly long points put by the noble Lords. I hope I replied to most of them.

Lord Home of the Hirsel

My Lords, while echoing my noble friend's words about the Prime Minister's speech and admiration of it, may I ask him whether he agrees that the Prime Minister and the President—particularly the latter—established something of real significance in terms of the disarmament negotiations about to proceed; in other words, that the Star Wars research would continue but that before testing and before deployment the results would be used in negotiation with the Soviet Union? It seems to me that to have established that is of considerable significance.

Viscount Whitelaw

My Lords, I am extremely grateful to my noble friend for what he has said, particularly for his kind remarks about my right honourable friend the Prime Minister. As one would expect, he states totally correctly the position about research and development and their relationship to the disarmament negotiations. In stressing that, he has perhaps repaired an omission in my original reply to the other two noble Lords if I did not refer to that aspect sufficiently.

Lord Gladwyn

My Lords, as I am hoping that we shall shortly have an opportunity in his House of discussing whether the public pronouncements—and I repeat the phrase "public pronouncements"—of President Reagan on the subject of Star Wars are fully in accord with what we understand to be the spirit at least of the Camp David agreement, might I at this point merely inquire whether the Government are satisfied that British participation in research on this, as I think, totally misguided project will not result in a brain drain or at any rate in the deflection of British scientists from the study of what I believe to be much more profitable and important defence projects?

Viscount Whitelaw

My Lords, I think that I am right in saying to the noble Lord that of course my right honourable friend referred to the agreement at Camp David and felt that what was being discussed and what was being said followed through clearly from what had been agreed at Camp David. As to the participation of this country in the research involved, I think that my right honourable friend made it perfectly clear that this was something which we were very well prepared to do and which we should like to do. Of course, the details of exactly how that can be done will clearly have to be worked out further on. But that was her view. I do not see why it should lead to a brain drain as the noble Lord suggests.

Lord Chelwood

My Lords, may I put a very brief question to my noble friend about the Middle East? While it was encouraging to hear that the time is considered propitious for a fresh initiative to try to solve the long-running—almost 40 years—Arab-Israel dispute, is it not very worrying that there is such a wide gap between American thinking on the basic principles on which any peaceful settlement has to be based and our own, supported by all our European Community partners and indeed by King Hussein, whom my noble friend mentioned? Can he possibly say whether any progress was made in persuading the United States Government, and in particular the White House, that our thinking is correct and that theirs is fundamentally wrong?

Viscount Whitelaw

My Lords, in answer to my noble friend I do not think that I can go beyond what was said in the terms of the communiqué, that both my right honourable friend and the President expressed their support for King Hussein's endeavours to arrive at a common position among moderate Arab Governments and welcomed the result of King Fand's recent visit to Washington. Of course, that support and that welcome cover some clear arguments which have been conducted on the exact way in which such a settlement could be reached. But I think that both recognised that it was through supporting moderate elements in the Middle East that the best hope lay.

Lord Boothby

My Lords, I only want to ask one question of the noble Viscount and it arises out of his reference to the Middle East. Can he give us an assurance, in view of the agreement reached between the Prime Minister and the President, that Her Majesty's Government will now join with the Government of the United States in following up the initiative since taken by the Prime Minister of Egypt for a conference to be held as soon as possible and containing representatives of every country in the Middle East, including the Palestinians of the West Bank and Israel? The combined influence of the United States and the United Kingdom on this matter would be very great. May I finally ask the noble Viscount whether he is aware that most of the people in this country listening to the Prime Minister's speech in the Congress of the United States felt momentarily proud to be British?

Viscount Whitelaw

My Lords, I am extremely grateful to the noble Lord for what he said about my right honourable friend's speech to Congress. On his point about the Middle East and the initiative of the Egyptian Prime Minister, I think that it would be wrong for me, as I am not fully informed, to go anywhere beyond the communiqué which was set out at the end of my right honourable friend's visit.

Lord Tordoff

My Lords, those of us who are proud to be British more than momentarily and do not need the Prime Minister to remind us would perhaps direct your Lordships' attention to that part of the Statement referring to Central America, co-operation against terrorism and Northern Ireland. While I support the efforts that the right honourable lady made to persuade Americans not to supply arms and finance to the IRA, may I ask what pressure she put on President Reagan in relation to terrorism in Central America? When they were talking about terrorism in Central America, to whom were they referring? Was the Prime Minister taking the President's view, for instance, that the Sandinistas in Nicaragua are the terrorists and the Contras are on the side of peace and light, or, as many of us would wish to believe, the other way round?

Viscount Whitelaw

My Lords, I am afraid that I cannot enlighten the noble Lord on that. I think that I must stick to the terms of the communiqué. On the position so far as Northern Ireland is concerned, I am grateful to the noble Lord for what he said. I think that it was very important that the Prime Minister got that message very plainly across.

Having answered that, as the point came in the same paragraph, I should perhaps say to the noble Lord, Lord Diamond, that I have no note on unitary taxation and, unless I had, I should be quite incapable of referring to it!

4.36 p.m.

Lord Annan

My Lords, I am sure that the noble Viscount is aware that many people have greatly admired the Prime Minister's negotiating ability in Europe and the way in which she stood out against the rest of the Community and got the rights of this country to the rebate recognised by the Community, as we well know. Would it not have been possible for her to adopt something of that tone with the President in private as regards American interest rates and to have pointed out that, as the value of the pound falls, and as the United States is able to get Europe to finance its enormous deficit, it really would be possible to argue that we can no longer afford to purchase at very great cost to ourselves such highly sophisticated weapons as Trident and that we need some kind of rebate so long as those high interest rates stand?

Viscount Whitelaw

My Lords, while I understand very much what the noble Lord says and respect his point of view, I think that it would be wrong for me to go any further or to get committed any deeper than the communiqué. As the noble Lord will appreciate, I have of course a little knowledge of what the Prime Minister said to the President but not a great deal, and some of what I have I obviously should not communicate publicly.

Lord Mayhew

My Lords, is the noble Viscount aware that there will be a warm welcome for his assurance that in the view of the Government the development of the SDI will be a matter for negotiation not only under the anti-ballistic missile treaty, as the Statement said, but also in the current Soviet-American arms negotiations? Can he say whether the Prime Minister gathered that that is also the view of the United States? Is there not a serious danger of some division here between the views of this Government and other European Governments on the one hand and the views of the United States Government on the other?

Viscount Whitelaw

My Lords, with all respect to the noble Lord, I do not think that I quite said what he interpreted I had said. In truth, I believe I said that of course how we were to co-operate in research and the research side of it would necessarily be a matter of discussion and negotiation between the two Governments. I did not say that the whole question of the handling of the disarmament negotiations, on which of course there have been discussions between the two Governments, would necessarily be a matter for further negotiation. I did not say that.

Lord Mayhew

My Lords, I wonder whether I might just ask a supplementary question on that. It is a very important point. I think that everyone agrees that the launching of the SDI led to the Soviet Union resuming negotiations on a wide field of nuclear disarmament. I believe that it is also the view of the Government and certainly of European Governments that this should be a matter for serious bargaining in the Soviet-American negotiations. Can the noble Viscount assure the House that that is the position?

Viscount Whitelaw

Oh, yes, my Lords, that most certainly is the position. That of course was in the communiqué. On that I can certainly assure the noble Lord. The whole question will be part of the very serious negotiations. That was made perfectly clear in the communiqué.