Release of MT's private files for 1980 - (4) Foreign policy - the Falklands, Europe & the US

Foreign policy: the Falklands

On 5 June in her room at the Commons after PMQs MT had a 15 minute meeting with the Argentinian Minister of the Economy, Martinez de Hoz, of which Foreign Office junior minister Nick Ridley made a note, now released from her personal files. (Ridley seems to have been the only other person present.) This meeting does not feature in the Franks Report, or the lengthy two-volume Official History of the Falklands War by Sir Lawrence Freedman. It is a surprise to discover that it has somehow slipped from the record. Certainly it is the only face-to-face contact MT had with an Argentinian minister prior to the war. She later wrote a letter of thanks to de Hoz, who had brought a gift (nature unknown).

It was not a secret meeting. Bernard Ingham mentioned it at the morning lobby briefing and the fact that it had taken place was duly reported in the press – eg, The Times. Sr de Hoz also saw Carrington, Howe and Nott. At the time his visit to the UK attracted little attention. Policy under the new government (as it had been under Labour) was to improve relations with the Argentinians, with economic cooperation a particular goal – not least in defusing tensions over the issue of Falklands sovereignty.

According to the Ridley note the content of the meeting was solely economic – de Hoz spent the time making grand claims for his own free market policy, which was in fact shortly to come spectacularly unstuck, the Minister driven from office amid claims that he had profited from shorting the Argentinian currency when its then-peg to the dollar collapsed.

There is a little more to it than that, however. Nick Ridley was the Foreign Office Minister of State responsible for the Falklands, and on 11 June he sent Ian Gow a letter alongside his note of the meeting asking to see MT about the Falklands: “I know the Prime Minister is very concerned about this whole subject”. He wanted to lobby her before the next meeting of the Cabinet’s Overseas and Defence Committee (OD) which was due to consider FCO plans to begin secret discussions with the Argentinians of a ‘leaseback’ proposal, whereby Britain would transfer sovereignty to the islands in return for a lease under which we would administer them for a lengthy term of years. OD duly gave the necessary authority and a secret negotiation begun, ending only when the House of Commons mauled Ridley over the matter in December 1980.

It is an odd thing for a junior minister to approach the PM to lobby for a policy, and in such an informal way, even one they are directly responsible for: one would expect any such approach to go through the departmental head. Notably Gow’s reply makes no reference to the suggestion of a meeting and MT’s appointment diary is silent as to whether one took place – not conclusive that it didn’t. Of course, by seeing de Hoz with Ridley alone, MT was lending power to his elbow in dealing with the Argentinians, who would see that he had the highest level of access, so she had already done him and his policy a considerable favour.

Foreign policy: Europe

There is a small file on the May 1980 budget deal which resolved, on an interim basis, the argument about British contributions to the EC budget, memorably framed by MT at the Dublin European Council in Nov 1979 when she asked for her money back. It contains one particularly striking document: a note from the Treasury on 29 May, ‘EEC Budget: Withholding’. MT had asked for an update on contingency planning to stop British payments into the Community’s accounts. Work had been done on this over winter 1979/80 on a contingency basis, and left on hold. Now she suddenly showed revived interest. This is not the smoking gun – rather, she is removing the safety.

The immediate background was that Foreign Office ministers Carrington and Gilmour had achieved the deal following an 18-hour non-stop negotiation in Luxembourg. They flew home immediately (29 May) and drove straight to Chequers, where MT greeted them in the coolest possible way, furious at the terms.

At Chequers that weekend she read through papers on the deal faxed down to her in preparation for a Cabinet discussion the following week. The Treasury had been the most hawkish department on the budget (at one stage demanding that we push for an end to any British net contribution) but at this point the Chancellor, Geoffrey Howe, reversed himself smartly and accepted the deal as the best available. The British press, primed by Ian Gilmour, portrayed it as a British triumph while the French treated it as a betrayal (MT read a telegram from Paris to that effect). She found herself without allies in Cabinet and gave ground. But the Treasury note implies just how deeply unhappy she was. Had she made a serious attempt to use the withholding weapon it would likely have cost her the Foreign Office ministers.

A Eurosceptic group of backbenchers – the Conservative European Reform Group – was organised at the end of 1980. Ian Gilmour in the Commons publicly branded their position “a dud prospectus”, inconsistent with membership of the Community, clearly to MT’s annoyance. She saw them on 15 December, and according to Gow’s note “started off by asking whether the Group were all committed to Britain’s continued membership of the Community? There was a loud response of yes from most of those present, with Dick Body and Ronnie Bell dissenting”. She made herself what you might call a Cold War case for the Community – if it “were to break up, Moscow would rejoice”. She refused to let Gow’s note of the meeting even be sent to the Foreign Office.

Her tone was rather different in a private meeting with Terence Higgins, probably 24 July 1980, but conceivably March (when she also saw him). "PM Europe Only thing that would make Europe sit up would be to withhold" (THCR 2/6/2/16) [the final word is hard to read/incomplete - probably withhold, could even be withdraw]

Foreign policy: the US

MT seems to have been very careful to say nothing even in fairly private contexts that would imply a preference between Carter and Reagan in the presidential election. There are no expressions of delight at the latter’s election or reflections on Carter’s failings. She had worked hard to establish a relationship with Carter and, at least comparatively to other Western leaders, with some success. By contrast she liked what she knew of Ronald Reagan, but knew that she knew really very little. (See Nico Henderson’s diary account of her February 1981 visit to the White House, on margaretthatcher.org.)

Her staff formed a poor opinion of one key figure in the Reagan entourage – Richard Allen. (See THCR 2/6/2/35 Ryder correspondence with Robert Conquest.) He proved indeed perhaps the least friendly of Reagan’s National Security Advisors from the British point of view, though his tenure was very brief.

The Conservative Party’s chief media adviser, Gordon Reece, visited the Carter, Anderson and Reagan campaign teams in Washington over summer 1980. His report to MT does not suggest a special closeness to the Republicans on the part of the Conservative machine, and no special confidence that the Republicans would win either.

There is a complete set of MT’s correspondence with Jimmy Carter in 1980 in files THCR 3/1/5-11. One letter, 8 Jan 1980, from Carter to MT has B.P. a target of US ire, for deal-making with the Iranian regime (Shell also).