[G7 Summit -- London, June 7-9,

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[Summit Contents]


June 9, 1984

Question: Prime Minister, one of the agreements today in the final communiqué says: "to work with the developing countries, to encourage more openness towards private investment flows." That seems to be much less forceful than your statement on the same subject yesterday.

Do you think this final conclusion was a watering down of what you were proposing yesterday?

Prime Minister: No, I think it was a slightly briefer version perhaps of what I said yesterday. We were talking about the debtor countries, the countries that have a serious international debt position. One of the ways of dealing with that debt is obviously either sale of assets or equity investment. It is not a path which a lot of them take because somehow some of them have either laws against it or do not wish to take that path. But it is one which is a method of dealing with their debt and if they made certain changes, they could follow.

I think it would help if we had a code for international investment, but if you are dealing with the problem of international debt, it is a path that must be considered. After all, some of the countries that have welcomed external equity investment have been those which have recovered fast and also those which have developed their economies fast.

So it is a shorthand version of what we discussed.

Question: Prime Minister, I wonder which came first, the chicken or the egg?

Prime Minister: Don't ask me!

Question: Inasmuch whether it is a reflection of what the international institutions and the banks in Great Britain are thinking about the measures for the international indebtedness and also seeing it is being considered on more of a technical approach as a strategy, I wonder what you think are the international political consequences of the indebtedness of our countries?

Prime Minister: We now have a problem and we have to deal with it as it is. If you look back, you can have several different analyses and two points in the analysis would be that perhaps some of the developing countries borrowed more than they could properly service and some of the lending banks lent more than it was wise to lend to those countries.

Be that as it may, we actually have the existing problem to deal with and we had to set out a framework of how to deal with it. We have done that. I think there are about five or six points in that section. They do not all apply to each country. Some of them will apply to every country, but we have set out that framework and then said, really rather for the political reason which indicated that each country is different and you have to look at it for what that country is and the problems it has, and you have to look at it in the light of its own specific problems. Mexico ... Are you from Mexico?

Questioner: Yes, I am.

Prime Minister: Yes. Well, you know, Mexico has made enormous strides in tackling her underlying problems with great courage and I believe just two days ago she did get a longerterm rescheduling of debt which we hope helps her. It will take a longer time to repay, but it is partly because she has done so much herself to restore confidence.

So what we have tried to lay out is a framework and some criteria which will apply to those developing countries and then they are applied according to the specific circumstances of that country.

They recognize two factors: that the debtor country has to make considerable efforts, as Mexico is doing, to solve its problems, and then also, of course, the banks have their problems to deal with, and in my speech yesterday I said that they would have to look at ways of strengthening their balance sheet.

So I hope we have got an economic framework and criteria and that the application of those criteria will take into account the political difficulties, circumstances, problems of the countries to which the framework applies.

Question: Prime Minister, are you at all disappointed with the statement on terrorism? It seems to be more an expression of concern, with proposals instead of firm action or mechanisms to combat terrorism.

Prime Minister: No, I am not disappointed with it. I know all of the problems, but I know that above all we have to have a much closer exchange of information and a much closer cooperation between countries and that, I think, is what this sets out to achieve.

Question: Prime Minister, you refer in the communiqué by Heads of Government that you should strengthen the role of the IBRD [International Bank for Reconstruction and Development] in fostering the development over the medium and long term. I was just wondering how you intend to strengthen the role of the IBRD and if you or the Chancellor could perhaps be more specific in explaining that.

Prime Minister: I think in one's earlier speech one pointed out that you could use some of the public money as a catalyst to stimulate private investment as well and that that might in fact get larger amounts of help to some of those countries who need it.

To some extent, that is already done, but not sufficiently, and we believe that that aspect of its work could be strengthened.

Question: Prime Minister, the communiqué refers to the need to reduce federal deficits where necessary. My question is: is the United States one of the places where that is necessary and is the United States taking adequate steps to do that?

Prime Minister: I think you should address that question to the United States. I think, if you look at the percentage of GDP [gross domestic product] which is represented by the deficit, you will find quite a number of countries may wish to reduce their deficit, so it does not necessarily apply only to one country but to quite a number.

We have, after all, taken strenuous steps to reduce our own deficit, thank goodness, so we are not in an acute position and we will go on trying to hold down our deficit, but it is done, really, by a variety of ways: trying to hold your public expenditure and then trying to cover a reasonable amount of it by taxation so that your borrowing - that is, your actual deficit - is kept to fairly low percentage terms of your GDP.

I am not going to mention any countries. You must ask each of them.

Question: Prime Minister, I would like to follow up on the subject of terrorism. American officials have said that they felt that private agreements were more important than public statements. Really, a twopart question:

First of all, what do you think you have achieved by the public statement, and secondly, have there been the kinds of private agreements on concrete action that may be more important in the long run?

Prime Minister: Well, if there are private agreements on concrete action, by definition a private agreement is a private agreement and I will not refer to it. What I think we have done publicly is to show our joint concern about this and willingness, indeed determination, to do as much jointly as we possibly can to defeat this thing, which is the scourge of many people's lives.

Question: Prime Minister, are you not a little disappointed with the statement on the IranIraq gulf war? Does it not mean that the seven leading statesmen of the world cannot find a solution or impose a solution on these two countries? Surely there must be some way round this particular problem?

Prime Minister: Really, your last sentence illustrates what is the answer to your own question. I do not find it surprising that you cannot impose a solution on two countries. Nor, I think, on reflection, would you. I think it is a matter of great concern; it is a matter of great sorrow. The loss of life, particularly of young people there, is enormous, but you cannot impose a settlement on those two countries. There is no way in which you can do it, anymore than we were ever able to avoid the terrible slaughter that took place in Cambodia. Many of us felt deeply concerned and with all the international institutions we could not stop that.

One is deeply concerned, but it is in fact a fact of life and it is a realistic fact which I am sure you face just as much as we have to. We still continue to do everything we can, but it is not enough to stop the hostilities and conflict between those two countries. That will only come when they themselves are prepared to negotiate to stop it and have the will to stop it.

Question: Prime Minister, in the section dealing with the problems of the debtor nations...

Prime Minister: You have come a long way since education, haven't you?

Questioner: I could return the compliment.

Prime Minister: Yes, indeed! We were both together on education. Ten years ago.

Question: On the section dealing with international debt, in paragraph 5 of the communiqué, you left out the section about the multiyear rescheduling of official debt when you were reading it out. Was there any significance in that? It seems to be rather an important part of the communiqué.

Prime Minister: No, I am sure I read out multiyear rescheduling, but I might have cut it down. Frankly, when you are reading this thing through, you realize how long it is. When you are going through it, everyone is straining to get their bits in and to get a complete section. When you are reading it through you realize that you are going to be there rather long if you read out absolutely everything. But I am sure that I did read out. Yes, I read out the first part of that and then I just dropped. The last three lines were not absolutely vital to the reading out of it, but the communiqué stands. But I think I saved people at least five minutes of listening time by doing some quick editing as I was going through, but the communiqué stands as a whole even though I did not read out each and every word. Trust an education correspondent to pick that up.

Question: Prime Minister, perhaps Chancellor Lawson will want to answer this as well. I am wondering if there was a sense of whether the IMF is currently adequately funded or whether, particularly with a large number of debt repayments coming due in a bunch in 1986/87, whether there will have to be more money put into that agency.

Prime Minister: That, as you know, is being reconsidered in September 1984. It is not long since we increased the funds available to the IMF by fifty percent.

Chancellor: That was in February 1983. There is no need for additional funds at the present time. The [IMF] Managing Director is not asking the countries to put up extra funds at the present time. There will obviously come a time, as you look ahead, when there will be a need for further funds, but that time is not yet.

Question: Prime Minister, you will probably like this question. A very distinguished writer, one of the most distinguished writers in the world, Lev Kopelev, who was born in the Soviet Union, has expressed considerable disgust at the fact that the West does not seem to care for Sakharov. Why was not Andrei Sakharov mentioned in that statement so that his treatment should have been exposed to a little more contempt than it already has?

Prime Minister: I do not think we need to mention Andrei Sakharov in a statement to give greater exposure to his case, because we all of us frequently mentioned it and have done everything we can to make representations that he should be properly treated and his wife should have the requisite medical treatment. So I do not think we needed to deal with it in this statement. This, after all, is an economic statement and it did not seem appropriate to mention specific cases in one on EastWest relations without also mentioning many other cases.

Question: Prime Minister, what is the basic objective of the declaration on EastWest relations? One accepts your good intentions but is it realistic to expect the Soviet Union to come back to the negotiating table before November?

Prime Minister: Whether it is realistic or not, we meet once a year and we have to express our views as they are and the views really are threefold. One, the total unity and solidarity and determination of the Western countries; the wish, nevertheless, to have dialogue across the EastWest divide, believing that the avoidance of conflict is in the interests both of East and West. That is absolutely clear; and the third one that it was the Soviet Union that walked out of the nuclear disarmament talks. The United States has indicated that she will go back to the table without preconditions and we hope to get some response before very long to return to the negotiating table. Whether that is before or after November, your views may well be the realistic ones.

Question: Prime Minister, what is going to happen to interest rates and unemployment?

Prime Minister: It would be a very unwise Prime Minister who would say anything about interest rates. As you know, it is always asked and never answered.

On unemployment, we seek to do as much as we can for job creation. You will know that we have to create quite a lot of jobs even to stand still on unemployment, because the demographic curve in this country is such that in the last six years we have had one million more people of working age in the population than previously, and the increase of numbers of people in the working population will continue until 1989. It is because of the extra numbers of children leaving school compared with those who are retiring. So we have to go as fast as we can on trying to create extra jobs and having the kind of financial system and help which enables genuine jobs to be created. We had quite a long discussion about this in the Summit. Indeed, a very long and interesting one, and most people find that their extra jobs are coming really from two sources; to some extent the two sources overlap. One is small businesses, and among the small businesses in particular it is businesses in services.

So we shall go as fast as we can.

Question: Prime Minister, was it the sense of the nations meeting here in the discussion on EastWest that deployment of missiles will continue in Europe if the Soviets do not return to the bargaining table to negotiate an agreement?

Prime Minister: It is the anticipation that we shall complete the dualtrack decision of NATO [North Atlantic Treaty Organization] and deploy the missiles which we agreed to deploy.

Question: Prime Minister, you told us before the Summit began that we would be blessed if we expected nothing. Now, you are trying to tell us in fact that the Summit accomplished a very great deal. Are we wrong now or were we misguided earlier?

Prime Minister: No. You had such enormous expectations of brand new, magic solutions that I had to damp those down and therefore I hope, having damped those down you might really be very, very pleased with what you actually find in the communiqué. I had a pretty good idea of what it would be and we managed to deliver it, so I hope you are quite pleased.

It would have been terrible if we had delivered all this and you had been disappointed. It is much better to have you pleased, I trust.

Question: Prime Minister, which subjects generated the most argument and disagreement?

Prime Minister: Oh goodness me! Genuine debate, I think, is the appropriate term. It is not so much the actual discussion of the subjects which generates the debate. It is when you translate what you think you have agreed to precise language in a communiqué. Then you will find very considerable debate over two or three words and certainly there was quite a debate on the precise wording we should use in EastWest. And that was not a fundamental debate. They were really debates on emphasis, rather more than fundamentals.

Question: Why were the specific references to the U.S. budget deficit and to a specific timetable for GATT that were evident in the draft communiqué dropped from the final communiqué and were you at all disappointed by that?

Prime Minister: No, we have not made any reference to the financial affairs of any particular country at all and I think that that was the best way to take, and on GATT there was a difference of opinion as to whether we should set some kind of time in which the decision should be taken or we should say it should be effected as soon as possible, and some felt it would be wise to set a target for the decision and others were not prepared to do that. They wanted to complete the GATT work program first and they thought that if we set a target for a decision, some of the other GATT countries might think we were trying to impose one upon them, and of course, we are only a very small part of the GATT apparatus. That was the reason.

Source: Great Britain, British Information Services, Economic Summit: Press Conference, 9 June 1984 (Ottawa) [unpublished].

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