The Iron Lady

Israel was wearing thin. ‘Whenever there was a problem’, she told Caspar Weinberger, ‘it seemed that Israel annexed what it wanted. She urged that there should be a reappraisal of Israeli policy.’³² An opportunity arose later that year when Yitzhak Shamir’s hard-line Likud Government was replaced by a Labour – Likud coalition to be headed by Shimon Peres and Shamir in turn. At Camp David before Christmas she told the Americans that ‘she personally knew the new Israeli Prime Minister very well and favourably. Prime Minister Peres wanted to be constructive, and if we are to get anywhere in the Middle East we should attempt to do it while he is Prime Minister.’³³

In September 1985 she visited Egypt and Jordan to encourage President Mubarak and King Hussein to keep up the momentum for peace. ‘I felt that President Mubarak and I understood one another’, she wrote. She confessed to ‘some sympathy’ with his view that ‘the Americans were not being sufficiently positive’, and believed that King Hussein, too, had been taking ‘a real risk’ in trying to promote a peace initiative, but was being let down by the Americans.³⁴ Before leaving Jordan she and Denis made a point of visiting another refugee camp. The following spring she paid her first visit as Prime Minister to Israel, where she was again impressed by Peres, but dismayed by Shamir – another former terrorist – who rejected any question of giving up Jewish settlements on the West Bank in exchange for peace.

In 1986 Shamir took over as Prime Minister.Visiting Washington the next year Mrs Thatcher again vented her frustration with Israeli intransigence and chided the Americans for acquiescing in it.

She regretted that there had been no major Western initiative since the Camp David accords; noted that President Reagan’s 1982 speech had been superb but had been rejected by Begin; characterised Peres and Hussein as two positive figures who are doing everything possible to advance the peace process and deserve our support; and… asked rhetorically whether it was not timely to move forward by promoting an international conference.

Shultz replied that it was no good promoting a new initiative without Likud support: the American approach was ‘to seek to find a way of getting Shamir and Likud on board’.

Mrs Thatcher asked the Secretary whether he thought that Shamir ever intends to negotiate over the West Bank or Jerusalem or whether in fact it is Shamir’s view that all of biblical Israel belongs to modern Israel. If the latter, Shamir is simply holding the entire world ransom and there will never be negotiations…

Mrs Thatcher characterised this position by Shamir as hypocritical because it denies basic rights to the Arabs and removes Israel’s credibility as the only Middle East democracy.³⁵

Mrs Thatcher got nowhere on the Middle East, but she deserves credit for trying. Despite her instinctive admiration for Israel and substantial dependence on her own large Jewish vote in Finchley, she saw that there would be no serious pressure on Israel to negotiate so long as successive US administrations were terrified of offending the powerful American Jewish lobby. She told the Americans so, with her usual frankness, but this was one area in which they did not listen to her. Far from withdrawing from the occupied territories, the Israelis carried on planting more Jewish settlements in the West Bank and Gaza. President Clinton made more effort than any of his predecessors to broker a real compromise. But nineteen years after Mrs Thatcher’s fall, hope of an Arab-Israeli settlement was as distant as ever. In her memoirs she reflected on the paradox of modern Jews denying others the rights they were so long and tragically denied themselves:

I only wished that Israeli emphasis on the human rights of the Russian refuseniks was matched by proper appreciation of the plight of landless and stateless Palestinians.³⁶

Aid and arms

Mrs Thatcher viewed the whole world through Cold War spectacles as a battleground for conflict with the Soviet Union, a struggle for geopolitical advantage to be waged by all means – political, cultural, economic and military. Whatever might be the particular local circumstances of different countries, she saw Britain’s role in every corner of the globe as helping the Americans to combat those they classed as Communists and support those regimes – however undemocratic and repressive – approved by Washington as friends of the West. As well as taking a high-profile role as a global evangelist for the wealth-creating benefits of free enterprise, she had two practical means of exerting influence in the developing world: the provision of aid and the sale of military equipment. She was sceptical of the former, and Britain’s aid budget declined sharply during her years in power. But she was a great enthusiast for the latter, and Britain’s share of the world arms trade grew spectacularly.

Her attitude to aid mirrored on a global scale her suspicion of the welfare state at home. In defiance of the international liberal consensus which inspired the ‘North-South Commission’ chaired by Willy Brandt in the late 1970s, she believed that handouts from rich countries to poor countries merely propped up corrupt regimes and perpetuated dependency, instead of promoting free trade and enterprise which would enable the underdeveloped to develop prosperous economies of their own. Far from trying to meet the target agreed by all the industrialised countries (except the US and Switzerland) that they should raise their aid budgets to 0.7 per cent of GNP, she allowed Britain’s performance to decline from 0.52 per cent in 1979 to 0.31 per cent in 1989. Moreover, most of the aid that Britain did give was tied to British trade.

What she most resolutely opposed was coordinated international action. In October 1981 a global summit in Cancun, Mexico, chaired jointly by the Mexican President and Pierre Trudeau, raised exactly the sort of hopes she was determined to dash. Mrs Thatcher only attended – and persuaded Reagan to attend – because she thought it important that they should be there to argue the free-market case; specifically, she was anxious to block proposals to place the International Monetary Fund and the World Bank under direct UN control. She and Reagan deliberately set out to ensure that the conference imposed no new commitments, and by that standard she was happy to pronounce it ‘very successful’.³⁷

A particularly effective way of killing two birds with one stone was by linking aid to the sale of arms. By this means she could boost an important British industry while simultaneously supporting regional allies and helping to counter Soviet influence. The arms trade was a perfect marriage of her two primary concerns. Particularly after the Falklands, Mrs Thatcher took a close interest in the products of the defence industry. Acting as a saleswoman for British arms manufacturers also gave her a useful entree to Third World kings and presidents: she had something to sell which they wanted, and she enjoyed dealing personally, leader to leader, trading in the very symbols and sinews of national power. Normally the Defence Secretary was the frontman in negotiating these sales; but Mrs Thatcher’s role, as Michael Heseltine recalled, was ‘not inconspicuous’. Her part in clinching sales to Saudi Arabia, the Gulf States and Malaysia was widely reported, and he found her always very supportive. ‘I knew I had only to ask my office to contact No. 10 to wheel in the heavy guns if they could in any way help to achieve sales of British equipment.’

In 1985 Heseltine, with Mrs Thatcher’s support, appointed Peter Levene, the managing director of his own arms-trading company, at an unprecedented salary to become head of defence procurement at the MoD. As a poacher-turned-gamekeeper, Levene earned his salary over the next six years by forcing down the prices the Government paid for military equipment. One way of cutting the manufacturers’ costs was by helping them sell their products around the world. Partly as a result of his efforts Britain climbed during the 1980s from being the fifth- to the second-largest supplier of military equipment after the United States. But Mrs Thatcher herself set up many of the biggest and most contentious deals, including major contracts with King Hussein of Jordan, General Suharto of Indonesia and General Augusto Pinochet of Chile. She lubricated these deals by soft loans and vigorous use of the export credit system. The result was a less good deal for the taxpayer than at first appeared. Many of the arms supposedly purchased – by Jordan, Iraq and probably others – were never paid for at all. Even before the Gulf war intervened, Nicholas Ridley admitted that Iraq owed ?1 billion and the true figure may have been nearer ?2.3 billion.³⁸ In practice Mrs Thatcher was subsidising British companies with public money – something she refused to do in other areas of industry.