• A mood of disappointment and alienation now dominates moderate Arab thinking about the US. (Arabs hesitate to express the true strength of their feeling directly to us.)
• The view prevails that we are one-sidedly committed to Israel and ignore the Palestinians.26message, an aide noted, ‘calls for a response’. But two more letters followed before the White House got round to drafting a reply in which the President thanked her for ‘the candid insights that you have shared with me’.understand the perceptions of the Arab leaders on the peace process alluded to in your letter. A comprehensive Middle East peace remains our objective, and I agree fully that one cannot be achieved unless it addresses the Palestinian problem.27next month Reagan assured her that Israeli withdrawal must be ‘the fundamental basis of a settlement on the West Bank and Gaza’;28 and this was the premise of proposals which he set out in September 1982. But Mrs Thatcher never felt the Americans put enough pressure on Israel. The following year she was again giving Washington ‘her read-out on meetings with King Hussein in London… She makes a powerful case that the President weigh in with the Arabs to demonstrate again that we are committed to the September 1 proposals.’29 She was critical of Israel’s bloody invasion of southern Lebanon in June 1982, but equally sceptical of the value of the multinational – predominantly American – UN peace-keeping force sent to Beirut, and restricted British participation to a token contribution of just one hundred troops. The killing of 300 American and French troops by a suicide bomber in October 1983 only confirmed her view that they were a sitting target: she urged Reagan not to retaliate but to withdraw the multinational force.30 The next year he did so. In her memoirs she described the American intervention in Lebanon as a lesson in the folly of military action without a clearly attainable objective.31February 1984, following the massacre of refugees in southern Lebanon, Mrs Thatcher’s patience with 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.’33September 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.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.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.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’.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…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.35Thatcher 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: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.36and armsThatcher 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.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.she most resolutely opposed was coordinated international action. In October 1981 a global summit in Cancún, 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’.37particularly 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 entrée 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.’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.greatest coup was the huge Al-Yamamah contract with Saudi Arabia, negotiated in two parts in 1985 and 1987, said to be the biggest arms deal in history, worth something like £40 billion to British Aerospace and other British companies, and partly paid for in oil. Mrs Thatcher met Prince Bandar, a nephew of King Fahd and son of the Saudi Defence Minister, at least twice in 1985, once in Riyadh in April, the second time in Salzburg in August, when she was supposed to be on holiday. On the announcement of the first part of the deal – for forty-eight Tornado fighter/bombers, twenty-four Tornado air-defence aircraft, thirty Hawk advanced training aircraft and thirty basic training aircraft – Heseltine told the press that Mrs Thatcher’s contribution ‘cannot be overstated’.39 She secured the second part at a stopover in Bermuda on her way to Australia in 1988. Given her usual readiness to boast of her achievements, however, it is curious that this went unmentioned in her memoirs.obvious reason was embarrassment over reports which soon emerged of huge commissions, running into millions of pounds, paid to middlemen – among them her own son. Mark’s business interests had already attracted attention in 1984, when questions were raised about a large contract for the building of a university in Oman, which Mrs Thatcher had personally secured on her visit – with Mark in attendance – in 1981. The company principally concerned was Cementation Ltd, for which Mark was then acting as a ‘consultant’. With no relevant qualifications or experience, his only possible value was his contacts, and specifically his name. ‘We did pay him,’ the company admitted, ‘and we used him because he is the Prime Minister’s son.’40 In the Commons and on television Mrs Thatcher indignantly denied any impropriety: she had been ‘batting for Britain’ not for any individual company, and Mark’s activities were his own affair.41 In fact, since Cementation was the only British company bidding for the university contract, this defence was disingenuous. Mrs Thatcher must have known that her son stood to profit if Cementation won the contract, though that is not necessarily to say that she should therefore not have lobbied for them. The allegation that Mark was enriching himself on the back of his mother’s patriotic salesmanship, however, did not go away. Much bigger sums were involved five years later in the Al-Yamamah contract, from which Mark was alleged to have pocketed £12 – 20 million for his role as a ‘facilitator’. There is no doubt that he became inexplicably wealthy around this time, nor that he and his partner were active in the arms trade and in the Middle East.42 The evidence is only circumstantial, however, since an investigation of the Al-Yamamah deal by the National Audit Office was never published.second criticism of Mrs Thatcher’s enthusiasm for arms sales is that it distorted the allocation of the aid budget – a charge highlighted by the saga of the Pergau Dam project in Malaysia. Mrs Thatcher visited Malaysia in April 1985. On that occasion she ‘got on rather well’ with the Prime Minister, Dr Mahathir. Three years later she went back and negotiated – without reference to the Foreign Office – a deal whereby Britain financed the construction of an economically unviable and environmentally damaging hydroelectric power station in northern Malaysia in return for an agreement to buy British defence equipment worth £1.3 billion. Subsequently a pro-Third World pressure group took the Government to court, alleging that this was an improper diversion of ‘aid’ for commercial purposes, and in 1994 won their case when the High Court ruled the deal illegal. Douglas Hurd, then Foreign Secretary in John Major’s Government, was obliged to refund the aid budget £65 million from Treasury reserves.Pergau affair threw a murky light on Mrs Thatcher’s cavalier way with aid. In December 1994 Hurd was forced to reveal that three more aid projects – in Turkey, Indonesia and Botswana – had been found to breach the criteria of the 1980 Overseas Development and Co-operation Act. The money wasted on the Pergau project was more than Britain gave over the same period to Somalia, Ethiopia and Tanzania combined, while wealthy Oman alone received more British ‘aid’ than Ethiopia. Moreover, it emerged that nearly half the money expended under the Aid and Trade Provision (ATP) for projects in Third World countries went to finance contracts won by a handful of favoured companies all of which were major contributors to the Conservative party.43 In short, British aid was recycled to the Prime Minister’s friends and supporters at home and abroad.third charge against Mrs Thatcher’s pursuit of arms sales is that much of it was carried on secretly, in contravention of the Government’s declared policy. The most glaring instance was the supply of military equipment to Saddam Hussein’s Iraq throughout the eight years of the Iran – Iraq war when Britain was supposed to be restricting the flow of arms to both sides. This turned into a major embarrassment in 1990 when Saddam invaded Kuwait and Britain and her allies found themselves at war with a country they had been busily arming just a few weeks earlier. But this is an occupational hazard of the arms trade: much the same had happened with Argentina in 1982.The real scandal was the secrecy – duplicity – with which the policy had been conducted for the previous ten years.the West was neutral in the bloody war of attrition which began in 1980 when Iraq launched its troops against Iran: up to 1985 Britain continued to train pilots and supply low-level equipment impartially to both sides. In practice, however, both Britain and the United States covertly supported Iraq. Saddam was a revolting tyrant, but he was a tyrant of a familiar sort whom they could get along with: Iran’s fanatical Ayatollah Khomeini, on the other hand, seemed much more dangerous. With the trauma of the Teheran hostage crisis still fresh in American minds, Iran outranked even Gaddafi’s Libya as Washington’s ‘public enemy number one’. As Mrs Thatcher told Caspar Weinberger in 1984, ‘the West did not need another success by Moslem fundamentalists’.44 Moreover, the war provided a tempting opportunity. So long as the Shah was on the Peacock Throne, Britain had been a major supplier of arms to Iran. But Khomeini’s Islamic revolution had closed that market. British manufacturers were now keen to get into Iraq instead. Their American counterparts were hamstrung by Congress, which not only imposed an embargo on trade with both sides, but actually enforced it, so the Reagan administration was happy to see Britain secretly supply Baghdad. It was easier to deceive the House of Commons than it was to deceive Congress.Britain followed the American lead by banning the export of ‘lethal’ equipment to either side. But a meeting of the Cabinet’s Overseas and Defence Committee (OD) on 29 January 1981, chaired by Mrs Thatcher, agreed to define the critical word ‘as flexibly as possible’.45 Before the end of the year the MoD’s arms-trade subsidiary International Military Services (IMS) had won a contract to build an integrated weapons complex at Basra in southern Iraq; and this was just the beginning. Over the next four years ‘something like ten times as much defence equipment [was] exported to Iraq than to Iran’.46a time in 1983 – 4, when an Iranian victory seemed likely, however, the Foreign Office worried that this ‘tilt’ to Iraq might be imprudent and began to hedge for a more balanced neutrality. In November 1984 Richard Luce proposed more detailed ‘guidelines’ to restrict the supply of arms to either side. By the time Howe disclosed them to Parliament in October 1985 they had already been in operation for nearly a year.that they never really operated at all. Giving evidence at the Matrix Churchill trial in 1990, Alan Clark dismissed them with typical candour as ‘tiresome and intrusive’, mere ‘Whitehall cosmetics’. 47 They were framed to be deliberately ambiguous. Only finished weapons were classed as ‘lethal’. Every other sort of military equipment, from aircraft spares to laser range-finders, and above all lathes for manufacturing artillery shells, went through without difficulty. They were made by a number of firms, all of which enjoyed a close relationship with the MoD, with little effort to disguise either their purpose or their destination. One of those most heavily involved, Matrix Churchill in Coventry, was actually acquired in 1987 by a subsidiary of the Iraqi Government, presumably to get round the fact that Britain had just signed a pact banning the export of ballistic missile technology to the Third World. Matrix Churchill was then developing the Condor 2 missile with a range of 1,000 kilometres and capable of carrying nuclear warheads, in which Baghdad was known to be interested.48 When questions were asked in Parliament they were batted away by junior ministers.2 December 1986, when there was some question of changing the guidelines, Charles Powell wrote to the Foreign Office that Mrs Thatcher found them ‘very useful’ when answering questions in the House of Commons and had no wish to alter them.49 Two days later she gave a perfect example of what he meant when she told the House that ‘British policy on arms sales to Iran and Iraq is one of the strictest in Europe and is rigidly enforced, at substantial cost to British industry. That policy has been maintained scrupulously and consistently.’50 Presumably this formula accorded with her reading of the guidelines. But the reality was very different from the impression given to Parliament.it possible that she did not know what was really going on? There is no doubt that some individuals in all the relevant departments knew. But did Mrs Thatcher know? Quite apart from the fact that no Prime Minister so prided herself on knowing what was going on in every corner of Whitehall, the involvement of the intelligence service is the clearest indication that she was fully informed. After the scandal broke, the Scott Inquiry set up by John Major concentrated – so far as Mrs Thatcher was concerned – on whether she knew that the 1985 guidelines were secretly relaxed in 1988, when the Iran – Iraq war ended. But this was a very minor issue. More important is the overwhelming evidence that she knew – she must have known – that the guidelines had been worthless ever since 1985.one thing she received a quarterly report listing arms sales, country by country, all round the world, and she had given explicit approval to a substantial (and unannounced) level of exports to Iraq. Of course the undercover trade might have been omitted from this list. But she also received intelligence reports, and we know that she read them avidly. More specifically, Scott quotes an intelligence digest dated 29 March 1988 – before the guidelines were changed – summarising the British machine-tool industry’s involvement in Iraqi weapons manufacture and singling out Matrix Churchill as ‘heavily involved’. This was initialled by Mrs Thatcher.51there was the fact that large amounts of British equipment reached Iraq indirectly via other countries – notably Jordan. In her evidence to the Scott Inquiry, Mrs Thatcher claimed to have been deeply shocked by the discovery of this ‘glaring loophole’ (as Scott called it).52 She attached great importance to Britain’s relationship with Jordan and took pride in the three big arms deals she had made with King Hussein since 1979 – suspiciously large for such a tiny country. Other ministers followed her lead in claiming to have no idea that much of this equipment was destined for Iraq. But as usual there was one exception. Alan Clark told Scott that it was common gossip in the MoD that ‘more than half the material purchased by Iraq was actually consigned to Jordan’. An instance came to light in 1983 when HM Customs intercepted a consignment of 200 sub-machine guns bound for Iraq via Jordan: three men were charged and fined, but their conviction was later set aside.53 But Mrs Thatcher did not need customs to tell her that this was happening. In October 1985 the Joint Intelligence Committee circulated a confidential document entitled ‘Use of Jordanian facilities for the transshipment of war material to Iraq’; and the Scott Inquiry was given details of twenty-five more intelligence reports on the same subject between 1986 and 1991.54 Is it possible that the Prime Minister read none of them? She had certainly done so by July 1990 when she commissioned from the Cabinet Office a document known as the ‘Iraqnote’ tracing the history of defence exports to Iraq, which stated: ‘Iraq systematically uses Jordan as a cover for her procurement activities almost certainly with the connivance of senior figures within the Jordanian administration.’55 Her pretence that this came as a great shock to her the following month is demonstrably untrue.scandal of the arms trade to Iraq only began to unravel in the last months of Mrs Thatcher’s premiership, and the Scott Inquiry concentrated largely on when she had known what after 1988. But the covert arming of Iraq had begun very much earlier, in 1981, and was well established during her second term, when British manufacturers were given every encouragement and assistance to export military equipment energetically to Iraq, both directly and (via Jordan) indirectly, in cynical contradiction of the Government’s professed policy of scrupulous restriction. There is ample evidence that Mrs Thatcher both knew of and encouraged this policy: it would have been very remarkable if she had not. So why did she do it? She was not normally cynical, and she prided herself on her high ethical standards. The answer is twofold., she genuinely believed that every country was entitled to purchase the means to defend itself, that a free trade in armaments promoted peace, not war, and that others would sell them if Britain did not. Second, however, her Manichean world view disposed her to the dangerous doctrine that ‘my enemy’s enemy is my friend’. If Iran was the enemy of the West, then it was in Britain’s interest to help arm Iraq. In her own mind she knew that it was right, even though it might be difficult to defend the policy to Parliament. So she closed her mind to the impropriety of deceiving Parliament, and probably also deceived herself. But there can be no doubt that she both willed the end and winked at the means. The policy stemmed from the same robust world view that she applied to every area of her foreign policy, from the Falklands war to nuclear disarmament, from the bombing of Libya to the ending of apartheid. But in all those theatres she stood up boldly for what she believed. In the case of Iraq the execution of her policy required that Parliament was systematically misled over a period of eight or nine years. This was a major stain on her record.
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