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1991 - Mr Major’s Briefing with the Chancellor and the Foreign Secretary

Below is the text of Mr Major’s on the record press briefing with the Chancellor of the Exchequer, Norman Lamont, and the Foreign Secretary, Douglas Hurd. The briefing was given in London on 11th July 1991.


PRIME MINISTER:

The Economic Summit this year, as you know, will be held in London next week between 15-17 July. The meeting will be held in Lancaster House, the same venue for the last Economic Summit held in the UK in 1984, seven years ago.

On 17 July, when the Summit itself is over, I have invited President Gorbachev for a full afternoon of talks followed by a less formal dinner. This will be the first time that any Soviet President has taken part in such a meeting and I believe it will mark a further development both in relations between the Summit partners and the Soviet Union and also I hope in the economic and political development of the Soviet Union itself.

These summits, as we have seen over recent years, by tradition range widely. Although they sometimes take decisions, their essential character is informal. The theme we have this year for the summit is building world partnership and strengthening the international order and our aim is to reinforce, to encourage the spread of values which all of those round the summit table share - democracy, sound economic management, respect for human rights, good government and the rule of law. And that over-arching theme runs through the wide range of both political and economic matters that we will discuss during the course of next week. Our overall aim at the summit is to stimulate multilateral economic cooperation and help to extend successful economic principles throughout the world.

On the political side we will certainly discuss Yugoslavia, much of that discussion of course will depend on what state the present crisis has reached by early next week; the Middle East will certainly feature in our discussions; we will cover developments in Iraq, including the refugee problem and the Arab/Israel peace process; on South Africa we will be covering the need to ensure the economic recovery which will be necessary for the political reforms to succeed in both the medium and in the long term.

I am sure also that the summit will consider giving particular emphasis to controlling sales of conventional arms. We simply cannot allow a country like Iraq ever again to build up a huge arsenal of deadly weapons, unchecked and in some cases unknown. So we will need to agree a series of principles governing such sales.

Our focus will also be on ideas for strengthening the international order so that small states can feel safe from aggression from their larger neighbours and in particular we will be advancing a number of ideas for strengthening the role of the United Nations.

On the economic side I hope the summit will be able to range over a number of matters. It will I hope give strong endorsement to the firm counter-inflation policies which produce good growth and low inflation in the 1980s. I certainly hope it will give a very strong push indeed to the Uruguay round of the GATT to ensure a successful conclusion this year. It will I trust give strong political backing to the reforms in Eastern Europe and help to improve access for their exports to Western markets. I hope it will take forward further the debt reduction for the poorest countries on the lines of the Trinidad Terms initiative I launched when I was Chancellor. And I hope it will also make a firm commitment to the successful outcome for the crucial UN Conference on Environment and Development that will be held in Brazil next June and I think that is particularly important insofar as climate change is concerned.

At the end of the summit proper I am of course looking forward to the visit of President Gorbachev. The summit partners' meeting with him will be a development of the process that was initiated at the Paris Summit in 1989 when he wrote a letter to the 7 Heads of Government present, that was carried forward at Houston with a study subsequently of the Soviet Union. The United Kingdom, and I am sure all our summit partners, firmly intend that this meeting should mark the beginning of a new process of cooperation and dialogue between our governments, our countries and the Soviet Union.

The summit will not consider large-scale financial assistance but I do expect summit Heads of Government will want to explore with President Gorbachev his ideas for the economic and political reform of the Soviet Union, his ideas to mobilise the immense resources of the Soviet Union, both natural and human, I think that will be an important part of our discussions. We will also consider with President Gorbachev practical ways in which we can best cooperate, drawing on all relevant sources of bilateral and multilateral skills to support reform and to integrate the Soviet Union increasingly into the world economy.

It looks therefore as though it is going to be a fairly crowded and I hope a worthwhile and productive week. We have endeavoured to make a particular effort to ensure that all of you who will have a difficult job to do over the next few days have the best facilities available at the Queen Elizabeth Press Centre. I have no doubt that you are going to be busy, I hope in addition to being busy that you enjoy the occasion and I hope it turns out to be a successful, as I am sure it will be, and fascinating few days.


QUESTIONS AND ANSWERS

QUESTION (Michael Brunson, ITN):

Prime Minister, I wonder if you could expand just a little on what you meant by the practical ways in which you can cooperate with Mr Gorbachev, you will obviously discuss with him the reforms but he would obviously like to take something concrete away, it is clear obviously that he cannot now expect to take a large suitcase full of cash but could he for example expect cash in the form of access to a know-how fund or greater access to a know-how fund, something of that sort?

PRIME MINISTER:

We do not have a fixed agenda for what we are going to offer President Gorbachev and discuss with him when he comes, it is a genuine dialogue, so there is not a fixed agenda and a clear agreement of what actually will be the outcome of the discussion. There is in fact already a know-how fund available to Eastern Europe and partly to the Soviet Union. The sort of things I think we will discuss are new processes of cooperation to support economic reform, advice and assistance on matters like property rights, privatisation, how to expand and develop businesses.

I think there will be a widespread feeling that there ought to be technical assistance and I draw the distinction between technical assistance and large sums of money. I think it is probable that we will discuss whether the Soviet Union could be associated in some way with international financial institutions, including perhaps the IMF, and we will need to establish a framework to follow-up after the summit the matters that are discussed at the summit. I would not imagine it would be a brief, single discussion that would both begin and terminate on Thursday of next week, I think there would be a framework of some sort to follow it up later.

QUESTION (Peter Day, BBC):

What can the summit do for the ordinary British person perhaps worried about unemployment?

PRIME MINISTER:

I think the concern that people have about unemployment both in this country and in many countries abroad is clearly related to what is going to happen to the world economy generally. None of us is isolated, certainly we are not in the United Kingdom, so I think we will be looking to see what we can determine in terms of economic management to create a low inflation, inflation-free if possible, sustainable growth for the world economy generally. That I think is the best and most productive way we can approach the problems of unemployment both in this country and in many other countries where the unemployment problem is acute,

QUESTION (George Jones, Daily Telegraph):

In view of the speech you made earlier this week expressing strong remarks about the dangers to the environment, particularly the rain forests, what practical steps do you hope to achieve on the environment at the summit?

PRIME MINISTER:

I do not think the summit of itself is going to make vast new proposals insofar as the environment is concerned. I would be very surprised if we did not do a further analysis of Brazilian prospects on safeguarding the Brazilian rainforests, that I suspect is a specific matter that we will discuss. One thing I would hope that would come out of our conference next week is a commitment that the G7 Heads of Government should attend in person the Environment and Development Conference in Rio de Janeiro in 1992 and if that does happen I think it will be probably the first time ever that the Heads of Government from all round the world, not just in groups like the G7 or the Permanent Five or the G24, would have actually gathered together for a single conference to discuss a single particular problem. But I hope that is something that we will encourage at the summit next week so that we may have the most successful development conference we possibly can in Brazil next year.

QUESTION (Jerry Lewis, Israel Radio):

You have mentioned great emphasis on trying to restrict the sale of arms, how does that tie in with the proposal evidently made yesterday at the EC by Mr Hogg to lift the ban on arms sales to Syria and what proposals do you have specifically to advance the peace process on the Arab/Israel front?

PRIME MINISTER:

What we are seeking to do in terms of arms control, each country has a right to arms for defensive purposes, I think no-one would dispute that, the concern that we have particularly in the United Kingdom is where the growth of armaments in a particular country far exceeds what is necessary for defensive purposes and becomes an arsenal satisfactory for offensive purposes.

What we are seeking to do through the United Nations is to obtain more transparency so that people are aware of the scale of armaments that countries are building up and that is of course what underpins our particular desire for a transparent register of arms sales, I think that is a practical proposition that will work, most of the arms sales come from the Permanent Five, if the Permanent Five will actually agree to such transparency then we will be able to monitor to a far greater extent than ever before what armaments are actually in the hands of regional governments and observe when a particular regional government becomes so powerful in terms of armaments that it may have an offensive intention.

I have nothing to add about Syria to what Mr Hogg said yesterday.

ADAM BOULTON (SKY NEWS):

Prime Minister, given the extent of the preparatory bilateral meetings which have been taking place in which you have not been playing a part in the last week or so, are you confident you won't be ambushed with any surprises? Following up on that, what would you say to the suggestion that G7 is in fact a fiction and that really G3 - Japan, America and Germany - call all the shots?

PRIME MINISTER:

I would not agree with that both in terms of the discussions I have had previously in G7 fora as a finance minister and also briefly as a foreign affairs minister as well; I certainly would not agree that that is the case and I think there is a lot of practical evidence to indicate that it is not.

Insofar as ambush is concerned, I don't think there has been a single week since I became Prime Minister last November when someone has not suggested somewhere that I was going to be ambushed by someone on some particular topic. Thus far, I have no arrows sticking out of me and I certainly don't expect any next week.

ELEANOR GOODMAN (CHANNEL 4 NEWS):

You talked about firm counter-inflationary policies. Can you hope that this Summit will in any way accelerate the reduction in interest rates or are the members of G7 too divided over this?

PRIME MINISTER:

I am not sure that Heads of Government is the right place necessary to consider the more detailed matter that you raise of coordination of interest rates; that is a matter for the finance ministers and the finance ministers meet in G7 fora as well so that would be a matter for them. I don't imagine that is going to be a particular subject for discussion this week. The general framework of economic management, the objectives of economic management, the need to bear down continually on inflation and produce sustainable growth is a legitimate matter for Heads of Government to discuss and we will do so. The details of coordination under Louvre, under Plaza or whatever other agreement one may have in mind, I think is more appropriate a matter for the finance ministers themselves to discuss.

CHANCELLOR OF THE EXCHEQUER:

We had a discussion in G7 just a few weeks ago. I would imagine we will be talking more generally about savings and investment and the position of fiscal deficits and emphasising that the reduction of fiscal deficits is extremely important and from a long-term point of view of achieving lower interest rates it is concentration on a strong fiscal position - that is what I imagine we will discuss.

ROBIN OAKLEY (THE TIMES):

Prime Minister, the political achievements since the Gulf War don't seem to have lived up to the military achievements. Do you hope that this Summit can do anything in the next week to help along the Middle East peace process?

A second, practical question: we often get grand declarations about drugs or terrorism and such subjects at these Summits but there never seems to be much follow-up afterwards. Are you going to do anything about the practical follow-up process between this Summit and the next one?

PRIME MINISTER:

I mentioned insofar as the latter point is concerned, particularly a framework for following up the discussions with President Gorbachev and I certainly would not expect that this conference should produce declarations that are not then going to be subject to a detailed follow-up - I would not expect that to happen. If we indicate areas of interest and policy, then we would wish to see how they were going to be followed up in order that we could monitor what was to be done.

Insofar as the peace process in the Middle East is concerned, I don't think you should expect anything dramatic out of this Summit. This has been a problem that has been with us for a long time; it is continuing. I think we will wish to take stock of the present position and ensure that the drift of policy is in the right direction but I would not expect any dramatic new initiatives over the period of the next week.

FOREIGN SECRETARY:

The initiative which the United States Administration launched earlier this year after the end of the Gulf War on the Arab-Israel problem is of course still in action and I think everybody around the G7 table supports it and will continue to do so. It has always seemed to us very important that the Americans should put all the energy and enthusiasm they can into bringing the parties together. They have made some progress but not yet sufficient for a conference to be held. I am sure that backing will continue.

PETER NORMAN:

Prime Minister, you said you wanted to give a very strong push indeed to the GATT talks and also said you hoped that the Summit would come out and press for a favourable conclusion by the end of this year. The Houston Summit a year ago said exactly the same thing after much wrangling and the GATT talks nearly collapsed in December, so what has changed since then? Why are you confident that things can be different this year and isn't the G7 credibility getting rather tattered on this issue?

PRIME MINISTER:

I regard the successful outcome of the Uruguay Round as one of the most important things on the international scene at the moment. The impact of a Uruguay Round that failed I think would be very serious in the temptation that it would lead people towards all sorts of artificial trade barriers, protectionism and a trade war so I think it is extremely important that the Uruguay Round is a success. I think we not only need to signal the need for success, including progress on agriculture at the earliest possible date, on matters to do with services and also market access but I think the particular point that I would wish to emphasise is that we need a specific commitment of the Heads of Government if necessary to make sure that there is a sufficient degree of political clout to make sure that the Uruguay Round does proceed. No-one doubts the difficulties of getting a successful outcome to the Uruguay Round, equally I think no-one can possibly push aside the dangers of not having such an outcome.

QUESTION (JAPANESE NEWSPAPER):

Concerning aid to the Soviet Union, it is reported that Japan is reluctant to offer a large amount of money because of the problem of the Northern Islands. Are you going to suggest to the Japanese Government or persuade the Japanese Government to take a more positive attitude or to become our biggest contributor?

PRIME MINISTER:

I think the relationship between the Japanese Government and the Soviet Union over the Northern Islands is one that has been there for a long time; it has been the subject of discussion and I can't answer for how the Japanese Government will deal with that matter in our general discussions but the question of large-scale aid, as I indicated earlier, is not likely to come up at this particular Summit. I indicated the areas where I thought there would be discussion with the Soviet Union and what would happen but I do not expect it to embrace large-scale financial aid, perhaps the balance of payments or even for some other purpose so I don't think the particular push you have in mind is one that is likely to feature on our agenda at all.

KEITH ROCKWELL (JOURNAL OF COMMERCE):

Prime Minister, Mr. Yevenski and Mr. Allison have been trundling their plan around Europe in the past couple of weeks. I wonder if you could give us your impressions of that plan and what areas of it may need to be firmed-up before it would meet with your approval?

PRIME MINISTER:

We don't yet know what President Gorbachev is going to say to us when he comes and I don't know whether it will be any one of the variety of plans that have been circulated or whether it will be a combination or whether it will be something wholly separate. I think I am going to concentrate on what President Gorbachev actually says to us and not the plans that have been in circulation for some time, so I would prefer to say nothing until I hear what the President has to say.

HELEN PIK:

Do you have any indication in advance if Mr. Gorbachev will be content with being told that he can expect no money at this Summit? Are you willing to make any commitment of future financial assistance after the review which you are going to set up in [Indistinct] and do you think that you can give Mr. Gorbachev enough to strengthen him domestically?

PRIME MINISTER:

Mr. Gorbachev knows the remit for the discussions this week - that has of course been a matter of discussion with him. What he is going to say and what plans and ideas and what he is going to tell us about economic reform in the Soviet Union we don't know but he knows the broad parameters for discussion for this week so I see no difficulties in that at all.

We are very concerned to ensure that not only do the Soviet Union pass the legislation for economic reform but they actually implement the legislation so that economic reform itself can actually come about. That is the key point and we will be very interested to hear what President Gorbachev has to say about that. How matters develop subsequently will of course depend upon how the economic reform programme proceeds.

QUESTION (POLISH PRESS AGENCY):

Central European countries' balance of trade suffers with the collapse of trade with the Soviet Union which simply does not have money to pay for sufficient imported goods. There were some ideas circulating to help the Soviet Union and those Central European countries by supporting mutual trade. Do you agree with this concept?

PRIME MINISTER:

There are several things floating around in Central and Eastern Europe, certainly what we have in the United Kingdom and call the Know-How Fund and there are similar arrangements with other countries that have a slightly different remit but they all have the same underlying objective and that is to promote long-term private investment in Eastern Europe and promote the movement towards a market economy so that the Eastern European nations are manufacturing and producing goods that are readily saleable to the West. The counterpoint for that is to make sure that we provide them with the market access to the West without which of course it would be a pretty futile gesture simply providing them with the know-how in order to increase their manufacturing and private sector capacity. I think those are the matters that are likely to be under discussion over the next few days.

QUESTION (LE MONDE):

Prime Minister, I understand that this activity, Economic Summits, were initiated by Monsieur [Indistinct] quite a long time ago. At that time it was supposed to be totally informal and based on economics. For quite a time it seems to be more political and less and less informal and more and more formal. Do you believe there is still space for real economic activity or negotiation in those meetings and what do you think of Mr. Gorbachev's invitation to this Summit?

PRIME MINISTER:

I think they are still informal occasions; they are conducted informally; there isn't a rigidity about the matters that are raised - they are discussed beforehand and if any of the G7 want a particular matter on the agenda it tends to be there. Other matters will be raised no doubt that are not on the agenda, so they retain their informal aspect. I think the value in them is not only in the informality of the way a wide number of things are addressed but also as an increasing acknowledgement of the inter-independence that each of the countries even up to and including the largest and most powerful of them have with the economies of the other countries there, so that interdependence, that knowledge of what is actually in the minds of the people running the economies in those countries and the foreign affairs in terms of the foreign affairs ministers in those countries is very valuable. That would be destroyed I think if it were too rigid a structure, which is why although you may be correct in saying they are less informal than they were many years - I can't vouch for that, I wasn't there - I can promise you that this week will certainly be informal.

WILL HUTTON:

[Indistinct] for the GATT talks, will that be confirmed or not? Endorsing the Trinidad terms: does that mean two-thirds debt write-off for the poorest countries?

PRIME MINISTER:

On the first question, we will have to wait and see - I hope so. So far as the Trinidad terms are concerned, I am extremely keen to see progress on the Trinidad terms. It is a difficult package, it is a complex package. The theory of it is simple - writing off their large sums of debts; the technical application of that theory is extremely difficult and has different ramifications in each of the G7 countries. I think we will make progress on the Trinidad terms; how far that progress will get, I am afraid I don't yet know and that perhaps illustrates the point I made a few moments ago that there is an informality in these meetings and there is a great deal to be determined as a result of the discussions that take place at them.

COLIN BROWN (THE INDEPENDENT):

The Soviet Union appears to be increasing spending on defence in spite of the various arms negotiations they are involved in. Although you are not going to directly discuss the subject of financial aid, do you think in principle the two ought to be linked and that the Soviet Union ought not to get financial aid until it starts cutting expenditure on defence?

PRIME MINISTER:

We are naturally concerned about two things related to defence: firstly, the degree of expenditure the Soviet Union continues to put into its defence structure - that is a matter of concern and may well be discussed; secondly, to ensure that the Soviet Union actually implements the agreements that they have previously entered into on disbandment of defence. It is still a matter of some concern to us, the transfer of tanks from the army to the navy which leaves the Soviet navy with rather more tanks than many Western armies, so those are the sort of things that will be discussed and of course we will have to take those into account in considering what assistance we can offer the Soviet Union in the short- and the long-term on their economic reform programme.

WILLIAM KEEGAN (THE OBSERVER):

Prime Minister, if there is to be no new Marshall Plan on this occasion, is there going to be a Major Plan?

PRIME MINISTER:

There certainly is not going to be a Marshall Plan, William. There will certainly be a discussion but I certainly would not give it any such name!