Downing Street Years - Margaret Thatcher [157]
Meanwhile, the West’s response to events in Poland was becoming increasingly entangled with the wider question of our political and economic stance towards the Soviet Union. President Reagan sent a message to me on 8 March stressing the need to halt or at least restrict the grant of export credit to the Soviet Union, particularly credit subsidized by our Governments. The American argument was that not only was the USSR economically weak, it was suffering from an acute shortage of foreign exchange. European and other governments which provided the Soviet Union with subsidized credit were cushioning their failing system from economic realities which would otherwise have forced its reform. The Administration had a good argument here, though our assessment was that restricting credit would not have the dramatic impact which some US experts imagined. At this time we were receiving conflicting and confusing signals from the US Administration about its intentions. But I hoped that tighter controls by European governments on credit for the Soviet Union might allow us to secure the undertaking we wanted that the US restrictions on contracts for the Siberian Pipeline would not be retrospective.
Out of the blue, however, the Americans announced on 18 June that the ban on the supply of oil and gas technology to the Soviet Union was to apply not only to US companies but also to their foreign subsidiaries and to foreign companies manufacturing American-designed components under licence. I was appalled when I learnt of this decision. I condemned it in public. The reaction of the Europeans generally was still more hostile.
Britain took legislative action under the Protection of Trading Interests Act to resist what was in effect the extension of US extra-territorial authority. Then European irritation was increased still further by the news that the Americans were intending to renew grain sales to the USSR on the pretext that this would drain the USSR of hard currency — but transparently because it was in the interests of American farmers to sell their grain. The Administration was somewhat taken aback by the strength of opposition they faced and it was left to the excellent new Secretary of State, George Shultz, to find a way out of the difficulties, which he did later in the year, allowing the existing contracts for the pipeline to go ahead. But it had all been a lesson in how not to conduct alliance business.
THE VERSAILLES G7 SUMMIT
I like to think that my own relationship with President Reagan and the efforts I made to try to establish common ground between the United States and the Europeans helped to prevent disagreements over the pipeline and other trading issues from poisoning western co-operation at this critical juncture. Certainly, the summer of 1982 saw some useful international diplomacy. Between 4 and 6 June the heads of government of the G7 countries met amid the splendid opulence of Versailles. The rooms of the Palace itself were used for meetings and relaxation. There was a final banquet in the Hall of Mirrors followed by after-dinner entertainment of opera and fireworks. (In fact, I left early: it would not have been right to stay for all this while our troops were still fighting in the Falklands.)
President Mitterrand, who chaired the summit, had prepared a paper on the impact of new technology on employment. It quite often happened that the country in the chair at summit meetings felt that they must introduce some new initiatives even at the cost of extra government intervention and increased bureaucracy. This was no exception. For my part, I had no doubt about the attitude to take to technological innovation: it must be welcomed not resisted. There might be ‘new’ technology but technological progress itself was nothing new, and over the years it