TAKING PART (IN ORDER OF APPEARANCE)

Dr. Henry Kissinger
Former United States Secretary of State

Lucius Battle
Former Assistant to US Secretary of State,
Dean Acheson

Sir Frank Cooper
Former Permanent Under Secretary,
Ministry of Defence

Lord Franks
Former British Ambassador to the United States

Robert Cecil
Former First Secretary, British Embassy, Washington

Sir Nicholas Henderson
Former British Ambassador to Washington

Paul Nitze
Former Director of the US Policy Planning Staff,
State Department

Lord Sherfield
Former British Ambassador to the United Nations

Lord Croham
Former Permanent Secretary, HM Treasury

Alan Milward
Professor of Economic History,
London School of Economics

Lord Watkinson
Former Secretary of State for Defence

Robert McNamara
Former US Defence Secretary

David Greenwood
Director, Centre for Defence Studies,
Aberdeen University

Samuel Brittan
Assistant Editor of the Financial Times

Sir Douglas Wass
Former Permanent Secretary to HM Treasury

Lord Callaghan
Former Prime Minister

Rt. Hon. Edward Heath, MP
Former Prime Minister

KISSINGER: There is a bonus from the Gulf and I think it
is, after all, very interesting that while many others have
helped the only ones that have gone a really straight line
without coming up with clever ideas or edging towards
dissociation has been Britain.

BATTLE: Unbelievable statement. It may improve the
emotional side of things, the historical feeling of
togetherness, but I seriously doubt that there'll be any
largesse coming from us because of gratitude. I just don't
think it's in the cards.

HENNESSY: So it's a blip not a dividend?

BATTLE: That's right, that's exactly what it is.

HENNESSY: When two veteran American diplomats like Henry
Kissinger and Lucius Battle can disagree so fundamentally
about the impact of the Gulf crisis on Anglo-American
affairs, it's time to take a hard look at the "special
relationship" on which so many presidents and prime ministers
have expended so many heart-warming cliches before so many
microphones on the White House lawn.

A year ago it was at a discount. The newspaper columns were
full of the new axis between America and Germany, the special
relationship of the future. But now, with the Royal Air
Force and the Desert Rats alongside GIs in the sands of Saudi
Arabia and the fulsome praise from President Bush for Mrs
Thatcher as the dependable ally, there are those who argue
that the special Anglo-American relationship is, once again,
the one that matters.

Yet, can it really be Anglo-American business as usual?
Won't the convening of the intergovernmental conferences in
December on political and monetary union show where the
future of a small off shore island really lies?

And there's a paradox here. For all the talk of the special
relationship on this side of the Atlantic, it's been the
Americans who, for 45 years, have pressed us constantly to
integrate more fully into Europe. Yet the line put out by
British governments to the British public has usually been
couched as an either/or proposition - either Europe or the
United States. Sir Frank Cooper, whose Whitehall career
spanned 35 years of the special relationship.

COOPER: I don't believe it's an either/or. What it seems to me we have tended to have, often in an unspoken way, is a belief that we can't do both and that we've not wanted to make the choice between Europe and the English speaking world. And that certainly has guided a lot of our actions. My own view is we could have done much more in Europe and become closer to Europeans than has in fact been the case. And in some ways I believe we've lost opportunities, particularly on the economic and political side which would have come to us if we'd been closer to Europe, if we'd been doing more in Europe. And I think we deluded ourselves with this notion which some people have used, that we could interpret Europe to America. It's simply not true.

HENNESSY: Is Sir Frank right? We'll be tracing the Europe versus America strain through the postwar period and asking next week the price that might be paid in terms of a wasting of the special relationship if British ministers take a false either/or mindset to the conference table when the new Europe is pieced together.

But the audit must be wider than that. Foreign policy is about punching heavier than your weight in the world, about choosing allies for what they can do for you. What have been the costs and benefits of the special relationship for Britain? Did it mesmerise successive generations of policy-makers to the detriment of Britain's real international interests? Did it cripple the British economy? Was it hubris or a realistic assessment of Britain's true position which led Ernest Bevin, the British Foreign Secretary, to look across the Atlantic in 1945? Lord Franks, Ambassador to Washington in the late 1940s.

FRANKS: I think that in this period Bevin realised that anyhow for now, the UK couldn't have an independent foreign policy, as Lord Salisbury had had at the beginning of the century. It had to have it with an ally and it couldn't be Russia, it was going to be the United States. Now if you say, did Bevin hope that that degree of dependence, degree of working with the United States was not forever, the answer is I don't know. I would never be surprised if he thought so but I don't know, he never said it to me, he said very little to me on directions on policy. When I went out to America, all he said was, "You did the Marshall Plan in Paris, now you go and get the Atlantic Pact". I had no other instructions.

[L]

HENNESSY: Make no mistake, the idea in the 1940s wasn't to have a begging-bowl Britain living off American largesse in a kind of dependency culture. It was a refined version of the old brains versus brawn idea. Or, as it was expressed in the Foreign Office files when Britain was negotiating a postwar Loan from the Americans in late 1945.

In Washington Lord Halifax once
Whispered to Lord Keynes
It's true **they** have all the moneybags
But **we** have all the brains.

Robert Cecil, First Secretary in the postwar embassy in Washington, prefers a naval metaphor.

CECIL: The special relationship in our view would be a means of making sure that if the little British gunboat was following in the wake of the American battleship, nevertheless on the bridge of the battleship, the Americans would be receiving messages from the British who had had this long experience of international affairs and knew so much more about things than the Americans did or so we liked to think.

HENNESSY: But did it work like that? Sir Nicholas Henderson took the minutes at the secret negotiations which produced the Atlantic Pact in 1949.

HENDERSON: I think NATO was a British invention, in fact I know it was a British invention and you could almost argue, I think, that the Marshall Plan was, too.

BATTLE: Well, I thought we did it but we might get into some competition here, I don't know. I thought this was one of the few really creative things that we did after the war, without being told by you to do it.

HENNESSY: What do you think Dean Acheson would say if he heard one of those silky Brits from that era claiming that they invented NATO. What would he say?

BATTLE: It wouldn't be useable on this network.

HENNESSY: Lucius Battle, assistant to Secretary of State, Dean Acheson, having the last laugh. Who's right? In the end, the only way to test the special relationship is to ask if it ever enabled the British to persuade the Americans to do something they didn't want to and wouldn't have done but for our special pleading. Robert Cecil.

3

[L]

**CECIL:** I don't think there was such an occasion. There certainly wasn't an occasion when the Americans cancelled Lend-Lease without any notification to us; not when in spite of Keynes' pleading they decided that the loan to Britain was to be accompanied by Britain going convertible; not when the wartime agreements about atomic power were ignored and the MacMahon Act was passed making it difficult for the Americans to convey any information to us about nuclear weapons. And certainly not in the Middle East where we were very anxious for the Americans to join up in the Baghdad Pact, when we wanted them to follow our advice as to how to handle Arab interests so that the creation of the state of Israel was not going to damage our relations, both with the Arab world and with the flow of oil. On none of these occasions, in my recollection, were we successful in dissuading the Americans from doing what they intended to do anyway.

**HENNESSY:** "Ah", say the old Atlantic hands. "You're neglecting a magical ingredient that's not susceptible to measurement by management consultants who never understand the intangibles of personal diplomacy". Late in 1949, Bevin travelled to Washington to seek American help in engineering a substantial devaluation of the pound. Veteran American diplomat Paul Nitze was there.

**NITZE:** We had this meeting with Ernie Bevin and he had his Treasury people and the Governor of the Bank of England, I forget his name now, with him and then we had Mr Snyder, who was the Secretary of the Treasury with us and I was helping Mr Acheson and I was appointed to be the Secretary, the recording Secretary at that meeting so I was keeping the notes. Snyder was very tough, he was from Missouri and made some very cutting remarks about England in particular, that England has caused us no end of trouble and was costing us no end of money and he thought it was totally unjustified and there was no excuse at all for England to ask our help in getting out of a problem they'd got themselves into. And Ernie Bevin was offended by the way in which Snyder put this as an attack upon England and England's character and he then began to castigate Snyder and his remarks and defend England, and defend England's record as having had courage and having stood up against the world and made it possible for the then current situation. None of the sentence structure was right - there wasn't a subject or a verb, it was just an outpouring of emotion and it was so strong and he was so powerful in what he said, I was looking at Snyder and suddenly Snyder began to cry, there were tears in his eye. And that was the end of Snyder's revolt. From that point on, he decided that we would do what we could in order to help England in that crisis.

4

HENNESSY: When it comes to British crises, the ability of British politicians - whether it be Bevin with Snyder, Harold Macmillan with Kennedy, and, perhaps - who knows? - Margaret Thatcher with Ronald Reagan - to reduce their American counterparts to tears, should not be underestimated. Maybe the day when a British Prime Minister can successfully apply emotional blackmail rather than table-thumping in Berlin, British governments will at last be at ease with Europe.

But don't be deceived by the sentimental side of the Anglo-American relationship. When crisis strikes in Washington, IOU's have a habit of being called in. History may not repeat itself, but the similarities between the Gulf in 1990 and Korea in 1950 are striking. Lord Franks was in the Washington Embassy when North Korea invaded the South.

FRANKS: On 23 July Ernest Bevin sent me a telegram asking me for my views. So I had to give them. I felt a weight of responsibility because I knew that what I was dealing with was other men's lives, but I decided in the end I'd got to put that from me, and say what I thought and I think I said two things really. The first one was that the Americans regarded us as their dependable ally. They would not understand it if we did not stand with them on the ground in Korea and I thought that the damage would be deep and long-lasting. Secondly, I said something quite different. That there's something in the psychological make-up of the American nation which makes them like to have company when they're in trouble and from this point of view, they wanted, under the United Nations' flag, allies to help them and they turned to Britain as the key. If we helped, others would also. And this went back and the Cabinet decided to send the Gloucesters. That's how it happened.

HENNESSY: Many economic historians think that the British economy, recovering from the 1949 devaluation was choked off by the quadrupling of the defence estimates, that we loaded burdens on the British economy for the sake of being the good ally, that it simply couldn't sustain with a long term deleterious effect on our economic performance. Do you think there's something in that?

FRANKS: If the question is did it harm Britain economically, the answer is yes. But the question that has to be answered is, how far was the perceived threat on a world scale there and therefore, harmful or not, was what we did necessary?

HENNESSY: And looking back, what do you think?

[c]

FRANKS: I am fairly clear. I think that the Russians were weaker than the United States thought they were. I think they were prepared to take advantage of situations where they thought there was no risk or small risk and I think that probably the Russians thought that they were on a low risk activity in Korea. Why? Because the Americans reduced their troops in Korea and speeches have been made suggesting it wasn't a vital part in the world for them and therefore, I think that Moscow got it wrong. But I also think we got it wrong in the sense that it wasn't part of a concerted stepping up of a Russian threat.

HENNESSY: Wasn't Korea the point at which the great partner fixation had lasting consequences for Britain's future wealth? Lord Sherfield was a deputy secretary in the Foreign Office.

SHERFIELD: Looking back on it I think it did put too heavy a burden on us. I think the miscalculation that I and a lot of other people made was that we never foresaw the collapse of British manufacturing industry. I've read one or two things, saying that if we studied the statistics more carefully we would have come to a different conclusion. Well, if you're working in the Foreign Office or something, you don't dive into detailed economic statistics, I mean that's the business of the Treasury. I must admit that I certainly didn't dive into the statistics. If I had I probably wouldn't have drawn the conclusion that, as a result of that, our manufacturing industry was going to collapse. But I think that, looking back on it, is what we did not foresee and I'm not sure that anybody foresaw it.

HENNESSY: Is this the price we pay for too great a separation between foreign and economic policy-making? Lord Croham worked on the other side of the Whitehall divide in the Central Economic Planning Staff. Unlike his Foreign Office colleagues, he did consult the statistics.

CROHAM: I remember researching the consequences of the proposed increase in defence expenditure on our balance of payments and reaching the conclusion that our balance of payments would suffer enormously from what was proposed. We published a White Paper which I had some hand in drafting which suggested that we could save our trade balance by a massive increase in the export of consumption goods. I was quite certain this was impossible and therefore that our balance of payments would suffer very severely. Others felt that if it did, the United States would be able to give us sufficient financial support to make our position tolerable. But for various internal political reasons in the States, that financial support was never forthcoming.

HENNESSY: What price did Britain and the British economy pay for the quadrupling of the defence estimates?

6

SHERFIELD: Well that's a matter of belief rather than proof. I believe that the shock to our export drive was such that we lost much of the momentum which we'd been able to gain in 1948/9 aided by Marshall Aid and in a sense we never recovered that momentum.

HENNESSY: As he rose through the ranks of the Treasury to become its top civil servant in the late 1960s, Lord Croham, like all of his colleagues who worked on the control of defence spending, never forgot the long-term price paid for that sudden Korean-led spurt by Britain's economic performance. Looking back, devoting 12 per cent of the national wealth to military expenditure looks like hubris. But not everyone agrees.

NITZE: Well you can call it hubris or you can call it courage. I think we have much to admire the British for what you could call hubris but which I consider to be breathtaking courage.

HENNESSY: Paul Nitze of the State Department who ran the Korean "burden-sharing" negotiations at the American end - negotiations which never produced the aid the British expected when they turned their engineering factories over to war production. But even Paul Nitze now has his caveats.

NITZE: I think it is possible that it was during that period that the United Kingdom over-stretched its economic base.

HENNESSY: It's important to linger on the Korean War period for two reasons. First, because cold war and special relationship attitudes hardened into robust mind-sets which kept most British ministers, diplomats and defence civil servants inside their mould for another 40 years - and kept defence spending high as a proportion of national wealth, rarely less than five per cent of GDP.

And, second, because the summer of 1950 was the first time the window of European opportunity opened up in the corridors of Whitehall. From the moment the Americans had begun to negotiate Marshall Aid, they'd made it plain (as they have ever since) that they wanted to deal with a more integrated Europe with Britain embedded in it, not hovering, offshore like, around its rim.

But Lord Sherfield's advice was sought about the Schuman Plan.

**SHERFIELD:** It was, so to speak sprung on us and of course there was American involvement there, I mean, the Americans were informed and encouraged it. Then Monnet came over to London and Edwin Plowden and I went to see him in the Hyde Park Hotel and we said, "Now Jean, what's all this about?" And he said, "Oh, it's all here, I've got it .. here's the bit of paper." It was a sheet of paper and so we read it and we said, "But Jean, it says here that in order to come into this, we've got to commit ourselves to the concept of a federal Europe. Now does that mean that if we're not prepared to do that, you don't want us in?" And he said, "Yes." And so we said, "Well you know .. I don't think that the British government is going to, at this stage, commit itself to a federal solution for Europe, I don't think they'll do it".

**HENNESSY:** No federalism, please, we're British. It took another dozen, fractious years before Britain joined what was still a limited economic community. There are some diplomats active in those formative years who've never got over this reluctant Europeanism. Sir Nicholas Henderson, former British Ambassador to Washington.

**HENDERSON:** I feel bitter about it that my generation should have allowed this British insularity, narrow-mindedness and lack of vision to dominate British policy towards the continent of Europe. From the time we turned down the approach of the Schuman Plan, then the Messina Conference and then for a long time, continually, up to this day really, the inability of the British to see where their interests lie - that is to say in close integration with Europe - is a thing that .. well I feel almost a sense of despair about it.

**HENNESSY:** Sir Nicholas wasn't alone. Dean Acheson and successive American secretaries of state have felt the same. It's never been an either/or question in Washington.

To be fair to the Attlee Government, a half of Britain's trade was still with the Commonwealth, a mere quarter with Europe. The same cannot be said today when the figures are more than reversed.

But was it economics or foreign policy which kept British eyes off the continent? The belief that, as Antony Eden put it, "We were a global power or we were nothing". It was undoubtedly the latter. After 1956, the Suez affair persuaded the French to look even more to Europe. Shouldn't Suez have stripped the great power scales from eyes on both sides of the Channel? Lord Franks:

9

[w]

FRANKS: It was like a flash of lightning on a dark night. What it did was to light up an unfamiliar landscape. It was a landscape in which the two superpowers and principally the United States had told us to stop and we'd had to stop. And this was different. This was not being a world power. This was being told by a world power what the limits were and I thought that everything was different from then on. If you like illusion stripped away or you may not want to say that, but I think a great many people in Britain perceived at that point of time that what they might have thought before was no longer valid.

HENNESSY: It could be said, though, that Harold Macmillan was determined as prime minister to behave as if that hadn't happened. That the illusions went on. If you look at the Macmillan record from the Nassau conference, right through his premiership, he treated it as business as usual.

FRANKS: All quite true.

HENNESSY: Illusions continued?

FRANKS: And the facts were still there.

HENNESSY: One lesson that Macmillan did learn, however, was that without American acquiescence at least, serious independent military action by Britain was out of the question anywhere.

He also learned that Britain could no longer go it alone technologically. In 1957 he succeeded in restoring nuclear collaboration cut off by the Americans in 1946.

When British rocketry fell behind with the failure of Blue Streak in 1960, he gained access to the latest US standoff missile, Skybolt, for fitment to the RAF's V bombers. Was this the product of personality or mutual defence interests? Lord Watkinson was Macmillan's Minister of Defence.

10

WATKINSON: I think you must never make a mistake about the special relationship. In my view it has no nuts and bolts attached to it at all. It's a matter of people and it's a matter of people feeling that they could sit together, as we're sitting now, talk frankly to one another and be believed. In fact really I think Bob McNamara and I found this out and I think both of us were equally disillusioned really when, with Cabinet authority I tried to talk to him about what we call complementarity, which is really to try and merge our weapon effort so that we weren't equally competing with one another and often spending money on the same project and so on, but of course he then ran into the West Coast lobby with a big bang and we of course found it difficult as I said to him once in a letter, really complementarity does mean that you've got to trust us as well as we trusting you. And we never really, I think, achieved that sort of personal basis on which it could have gone forward. I had it with Tom Gates, his predecessor and I could have gone tiger-shooting with Tom and felt very happy. I think if I'd gone tiger-shooting with Bob, I wouldn't have been quite so happy. What I'm saying is that it would be a great mistake to think that there's some sort of material dividend you can draw out of this thing at any one time.

HENNESSY: Trust. In June 1962, American Defence Secretary, Robert McNamara, dismissed "limited nuclear capacities operating independently", such as the British and French nuclear deterrents, as "dangerous, expensive, prone to obsolescence and lacking in credibility". Six months later, without warning, he cancelled the missile on which the RAF had been banking.

MCNAMARA: Skybolt. It was an absolute pile of junk, paid for by the way, the development of which had been paid for 100% by the US - the British hadn't put in a dime - but they had an agreement that if we ever went forward with it, they would have a free ride, they could buy them but they'd pay no development costs. We had no obligation, or at least we thought we had no obligation, to produce a pile of junk for some .. what we didn't understand was an ill-defined but very very real political requirement in Britain. So when we cancelled the weapon, all hell broke loose and the agenda for Nassau was totally scrapped and we didn't talk about a damn thing at Nassau except Skybolt and what to do to replace it in the British inventory to permit them to maintain their independent deterrent, which ultimately became Polaris. But it was a very, very, very difficult meeting and it shows how, I guess, naive some of us in this country were, because certainly President Kennedy did not wish, nor did Dean Rusk nor I wish to in any way embarrass or weaken the British government. The reason was that we were allies and the British had played and were going to continue to play a very important role in our common defence and they felt they needed to maintain their nuclear deterrent.

[10]

**HENNESSY:** To the defenders of the special relationship on this side of the Atlantic, Nassau, surely, is a classic example of the moneybags and brains syndrome in action. Remember Robert McNamara's, "we were naive".

But was the Nassau Agreement (which underpins Trident today) that good a deal for Britain? Defence Economist David Greenwood of Aberdeen University.

**GREENWOOD:** I think it probably was given the United Kingdom's circumstances. We clearly wanted to stay in the strategic nuclear business, they'd been a lot of expense and misfortune associated with Blue Streak and so on. It seemed clear at that time that the way to have a durable strategic nuclear capacity was to have submarine launched ballistic missiles and the only way we could get into that promptly was with the help of the Americans. In that sense I think it was a good deal, but of course we insisted on doing the complicated front end of that Polaris missile and that got us into what I would regard as needless expense and especially in the second stage of the Chevaline thing and of course when it came to Trident - the follow on, the successor system to Polaris - we became less and less concerned about the independence, the self reliance element and now we're just making the warhead and the whole of the front end and the missile come from Lockheed and indeed we're almost doing it on a rent-a-rocket basis really. It's been a good deal but it's less and less a good deal as time goes by, I think, this strategic nuclear connection.

**HENNESSY:** It's almost an example of Lend-Lease really, isn't it, the strategic special nuclear relationship since Nassau?

**GREENWOOD:** It's becoming a bit like that, yes and I think now we build the boats and we do our best to get a decent warhead out to Aldermaston. But essentially the missile system itself is something that our guys cruise into King's Bay, Georgia and pick up and then go about their business and then replace it there as well. It's getting fairly close to a dependence relationship which is certainly not what Macmillan had in mind at Nassau I don't think.

**HENNESSY:** Trident is a true dependency relationship. There's no doubt that the special nuclear relationship kept the British deterrent in being. But the terms of trade have moved against us. Whether it's now to France we should look for a better balanced nuclear partnership is something we'll examine next week.

Even the original Nassau deal had its price.

Within a month of Kennedy agreeing the Royal Navy should have Polaris, de Gaulle vetoed Macmillan's application to join the Common Market, citing the missile deal as proof that the British would always put the Atlantic before the Channel. It may have had the air of an alibi on the part of a Frenchman who, as Macmillan told Kennedy wanted "to be the cock on a small dunghill instead of having two cocks on a larger one". But, in terms of the fundamental problem of postwar Britain - its relative economic decline - was Polaris worth a Paris? Samuel Brittan, Assistant Editor of the "Financial Times".

**BRITTAN:** If Britain had been in the European Community from the very beginning events might have gone much better. I don't think it would have brought an instant economic miracle but there would have been a realisation that British industry and British commerce have to compete, at least in the European market, if not in the world market and there would not be the tendency to assume that by picking up the phone to somebody in the United States, you get a respite from your problems.

**HENNESSY:** If you had to look across the whole sweep of Britain's postwar economic history, how high a price do you think we've paid in lost economic performance for having such a high proportion of our GDP, decade in, decade out, going to defence?

**BRITTAN:** I want to be fair. I think it's only in the period 1950-53 that it was crucial in terms of physical performance. Later on, we of course could have afforded what we spent on defence, I mean a country like the United States or Britain and Germany and France could spend what it likes on defence. It's a political decision. Of far more harm than the actual defence spending was the culture that went with it in which foreign policy and military matters were in the ascendent and so far as commerce was in the ascendent, or banking, it was English speaking commerce and English speaking banking where they would talk about people who had been at school with them together and this was fatal.

**HENNESSY:** We have to be careful with that notion of culture. Not all of Whitehall succumbed to its charms. The special relationship, remember, only revived after 1945 under the spur of the cold war. Strip away the rhetoric, and it's always been first and foremost a security phenomenon. Sir Douglas Wass was a Treasury Under Secretary, preoccupied not so much with the Soviet threat as with the financial consequences of that very British economic decline.

WASS: I did have the feeling that the political departments, that's to say the Foreign Office and to some extent, the Ministry of Defence, saw the Anglo-American relationship in quite different ways from the way the Treasury did. I think the Treasury were much more down to earth and were prepared to see a rather unsentimental partner across the Atlantic who would always take his own view of his own self interest and not the view we might be disposed to proffer.

HENNESSY: Why?

WASS: One reason is that the type of person who became Secretary of the Treasury and Chairman of the Federal Reserve Board was from the East Coast banking and financial community and not from Harvard and Yale and the recruiting ground of American secretaries of state who saw issues in political and geopolitical terms. A Secretary of the Treasury saw the issue of Anglo-American relationships as oft as not through Wall Street's eyes.

HENNESSY: Shades of Snyder. So, where money rather than defence or intelligence talked, hard-nosed reality prevailed. Why, then, did the United States prove so willing to rescue Sterling in the mid-1960s, despite Harold Wilson's refusal to provide even "the platoon of bagpipers" that President Johnson was forever urging him to send to Vietnam? Lord Croham.

CROHAM: The British economy was weak but it wasn't permanently weak and we were regularly going through the stop-go cycles. We still maintained quite close discussion with the Americans but you must remember that by the 1960s, the international financial situation was changing and internationally we were getting rather concerned about a shortage of liquidity other than liquidity produced by a US deficit. Therefore collaboration to some extent was based on the fact that neither of the then world currencies was really entirely secure. So that the Americans had to be increasingly concerned about their own state as well as about our state.

HENNESSY: So in a sense they were willing at various occasions in the mid-1960s to bale out the Pound Sterling because they regarded the Pound Sterling as the first line of defence for the Dollar.

CROHAM: Well that maybe the reason. Certainly they gave us great help in the later part of the 1960s - we really began to have quite serious problems round about 1965 and from then on for some years we were heavily dependent on American help, particularly in obtaining support from the international institutions and also in various ways in the markets.

14

LQJ

**CALLAGHAN:** It was in America's interests that we should maintain the value of Sterling because they could see, as I could - and it was one of the things which certainly influenced me - that if Sterling fell, the Dollar wouldn't long remain at the same level and if Sterling and Dollar both came down and Bretton Woods were to dissolve, I thought the consequences for world trade would be extremely severe and I didn't want to take that burden on myself. So it was both in the American interest, in the British interest, and as I thought at the time, in the interest of world trade.

**HENNESSY:** Lord Callaghan, Chancellor of the Exchequer in the mid-Sixties. Of course, the Bretton Woods system of fixed exchange rates collapsed in the early Seventies and didn't bring the world economy down with it. But when Lord Callaghan was Chancellor, preoccupation with the danger of shaky currencies was widespread. In Britain's case, this was made worse by an imperial hangover - the Sterling balances - funds held in London by Commonwealth countries which, if confidence in the pound fell, might suddenly be withdrawn, pushing Sterling into the devaluation eventually forced upon the government in 1967. Weren't the Americans crucial in easing Britain's transfer out of world reserve currency responsibilities? Sir Douglas Wass.

**WASS:** Oh, the Americans were very helpful in our attempts to do that. For instance, the arrangements we had with the Federal Reserve Bank in New York for the support of the Sterling balances; the Basle Agreement for dealing with it, on all those matters, the Americans did a lot to help us. There were midwifing arrangements with other members of the group of ten. But one has to ask oneself what the motive for that was. Was it because of our blue eyes or was it because they perceived a wider American interest in supporting Sterling? Now I believe it was much more the latter than the former. I mean they did it and we're very grateful to have it but most of us didn't have any illusions about the cause of that help.

**HENNESSY:** Scratch any veteran American diplomat in Washington and you find an eloquent romantic about the special relationship. Words like 'courage', 'diplomatic expertise' and reminiscences about late-night parties in Georgetown, trip easily off the tongue - much more so than on this side of the Atlantic where the phrase 'special relationship' is eschewed by the Lord Franks's and Lord Sherfields's of this world.

Yet for all the American's nostalgia, from the ending of Lend-Lease in 1945 to saving the pound in the 1960s, money, not sentiment, talked.

On the British side Foreign Office people may have been reluctant to talk about a special relationship - a reluctance borne, perhaps, of not wanting to blow the whistle on the moneybags and brains tactic. Yes it was always to Washington that hearts and minds turned first.

15

But in 1970, for the first time in thirty five years, Britain
elected a Prime Minister who applied his own cost-benefit
analysis to the relationship as a whole, not just on the
financial side.

All around one can hear the sound of breaking moulds.

HEATH: I've always had my eyes open about the so-called special relationship. I've recognised that our job and Europe's job is to look after our own interests because what the Americans do is to look after their interests.

KISSINGER: Ted Heath was an unusual British leader in that he did not really seem to value the American relationship.

HENNESSY: Dr Henry Kissinger, Secretary of State under
President Nixon.

KISSINGER: I think Ted Heath was wrong in the sense that he threw away an asset without gaining anything corresponding, especially at a time when all the Europeans were very eager to establish a preferential relationship in the United States.

HEATH: What is the asset? First of all it's been proven again in these last ten years, what it does is to estrange us from our European colleagues because they're insulted by the idea that they're inferior and we can always claim some special relationship.

KISSINGER: We did not submit anything to Europe without first having discussed it with the Heath government. Prime Minister Heath for very understandable reasons was eager to demonstrate to the Europeans that he did not have a special relationship with the United States and therefore he went out of his way to reject any attempts to work with him on a special basis. But that was not on our side.

HEATH: His whole argument on that respect is quite unsustainable. He created the Year of Europe, which never of course came about, without any discussions with us as a special relationship or with anybody else. He just declared he was going to have a Year of Europe. Well, we didn't want a Year of Europe. I said to him, "Now you've done this, we must have a Year of the United States. Who are you to propose that there should be a Year of Europe? You're not part of Europe." All right, well we'll come along, have a Year of the United States .. show you how to do these things." But what he did afterwards was go and talk to the French, to explain what he wanted and tell them not to say anything to the British - whereupon of course, the French Foreign Minister as soon as Henry had left Paris, flew over to London and came and told me everything which had happened. You can't carry on diplomacy that way.

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**KISSINGER:** But if I may say one other thing. It is easy or relatively easy to go through twenty years of relations and pick out crises. Nobody ever said that the special relationship precluded disagreements and difference of judgement. What the special relationship involved from our point of view is that we had a degree of confidence in British leaders that we did not have in leaders of any other country.

**HEATH:** What they wanted from the special relationship was to land Britain in it as well. There was the question of the Indo-Pakistan war and what Henry wanted was to land us in that and I was determined not to be landed. We discussed this in Bermuda when President Nixon was there and he opened up the question and said, "there seems to be a misunderstanding about this - Henry try to explain why this was what you wanted", and so then we had a lecture about the conceptual nature of Kissinger policy. Well we easily despatched that and Nixon said, "Well that's the end of that one Henry, isn't it?" So we didn't go in that war and Harold Macmillan saved us from going in the Vietnam War. Well thank god, we escaped both of those wars. Did we lose anything by it? No of course not. We gained an enormous amount. I can quite see that it's rather difficult for some Americans, including Henry to adjust themselves to this, but it's necessary for them to do it. Now, there are some people who always want to nestle on the shoulder of an American president. That's no future for Britain.

**HENNESSY:** But nestling on American shoulders had certainly been our past. In 1947, Ernest Bevin told his officials that Britain "only had leadership to sell". In the late Forties, we may momentarily have stood like the Captain on the American bridge. NATO and the Marshall Plan were not British inventions. Yet Britain was pivotal in securing an American commitment to Europe, seen as essential to revive Europe's economy and to defend it.

But the price? From Korea onwards over extended military commitments, a false either/or approach to Europe and a special relationship whose architecture was ever more asymmetrical.

In 1973, Britain joined the European Community, as the Americans had long wished. Was this finally to be the dawning of a continental commitment, or, like Suez, a flash of lightning which illuminated the new reality, only for it to be largely ignored? Seventeen years on, as the line-up in the Gulf vividly demonstrates, British policy-makers still pride themselves on nestling on - those broad and dependable? - American shoulders.

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CALLAGHAN We sit down very easily and talk over things with the Americans, that will never wholly disappear. But in terms of us working out a common line in partnership on major issues of policy I don't think that is going to be very significant in the future.

HURD Arguments which made a lot of sense in the spring and summer look a little odd in the autumn - that's what happens in real life. Every now and then events happen which throw the general argument a little bit out of gear and remind us that life is uncertain and perhaps it's better to hang on to old friendships.

HEATH I don't see why we should claim all the benefit for what's happening in the Gulf. This emphasis that it's only the British who do anything just isn't true. Others have got far more troops there than we have and the present Gulf situation's been handled by the United Nations.

BLACKWILL It's important to distinguish between US, British co-operation in times of war. The Second World War, the Korean War, the Falklands War and now the potential crisis in the Gulf. Those are moments when intimacy is most acute. I think that's a quite different matter than the long-term relationship between United States, Britain and the community.

HENNESSY Two former prime ministers, Lord Callaghan and Edward Heath, the current Foreign Secretary, Douglas Hurd, and Robert Blackwill, until this summer, President Bush's special assistant for European and Soviet affairs. Douglas Hurd may claim that events in the Gulf underscore the importance of "old friendships", but note what the friends are saying on the other side of the Atlantic. For them it's long-term peacetime relationships, not temporary military emergencies, that matter most. So how "special" can "special" continue to be? "Ah", says James Dobbins, US principal assistant secretary for Europe, let's not be beguiled by old labels.

**DOBBINS** The special relationship has come to take a specific connotation and the special relationship with Britain is based on a set of shared experiences, in some senses going back to our colonial past, but more specifically going back to our shared experiences in the Second World War and the kinds of defence and intelligence collaboration that we built up. I think that relationship will stay special for as long as one can see into the future. Now how important that relationship is to London or Washington will vary, depending on what are the issues that are uppermost on the public agenda. I think that'll wax and wane. I mean, clearly in the Gulf, the special relationship is also a very important relationship because British and American interests are co-incident, we both can bring weight to bear on the situation but one can envisage other situations developing over the years in which the special relationship will stay special but somewhat less critical to solving whatever the problem is.

**HENNESSY** Always "special" but not necessarily "important". Significantly, Jim Dobbins' parish takes in Europe as a whole - there's no such thing as a "British Desk" in the State Department. More on the implications of "special" and "important" in the context of Britain-in-Europe later.

But first, let's recall our central thesis. Last week we traced the relationship from 1945 to our entry into the European Community in 1973. The audit? That born of the cold war, the Anglo-American special relationship, at times, undoubtedly enabled Britain to punch heavier than its weight. But there was a price:- the elevation of foreign and defence policy over and above Britain's industrial concerns, with a serious and permanently debilitating overstretch of the British economy at the time of the Korean War. And just as damaging, a reluctant Europeanism, which may not alone have prevented a postwar economic miracle, but which certainly diverted attention away from the new dynamic market in the world economy. When trouble struck, whether economic or military, the British instinct was always to pick up the phone to our American cousins rather than to our European neighbours. English-speaking blood will out.

While this may have made sense in the early post war period when the relative power of the United States was at its most marked, matters haven't been so clear cut since.

And our central theme - that the relationship was a cold war partnership or it was nothing - poses this week's question. Throughout the western world, presidents and prime ministers are proclaiming that the cold war is now over. The Gulf, though menacing, is no surrogate for the old Soviet threat. Saddam is no Stalin. To those who would argue that the Middle East may provide a springboard for Anglo-American business-as-usual, the response must be, where now, after 40 years of cold war, do the *Americans* believe that their real long-term interests lie?

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HENNESSY But first, what are the lessons to be learned from the special relationship in its last cold war phase? As we saw last week, even when an issue seemed wholly financial in character, and the hard men in the US Treasury appeared immune to the standard British blandishments, the geopolitical departments could usually be relied upon to back a British Prime Minister, provided, of course, he or she, to American eyes, was sound on defence.

As in the late 1940s, when the pound was in trouble, the first response from the US Treasury could be stony. Sir Derek Mitchell was the permanent secretary for overseas finance in the British Treasury in 1976 when the weakness of the pound sterling caused Labour ministers to seek a loan from the International Monetary Fund.

MITCHELL One of the strongest and most consistent speakers on this subject was Edwin Yeo, who was the Under Secretary for Monetary Affairs at the Treasury who, really felt that he had a mission to save the United Kingdom from itself and to prevent it going the same way as other problem countries, such as at that time, Mexico and Portugal in whose affairs he took a great interest. He felt that unless people could see the light, the UK economy would disappear down the plughole, and would, itself, trigger off other failures throughout the Western world. If you like, this is an aspect of a feeling of a special relationship, he wanted the UK to be saved because of the example that it would give to others and he felt that the Americans were in the prime position to bring influence to bear to that end. But the message that I was getting was a pretty consistent message. It was one which was not given by, for example, Henry Kissinger who was more sympathetic to the much more political line which the Prime Minister, Callaghan, was putting across out of an equally genuine concern, I believe, that democracy in this country was threatened, that the social order would collapse. This, in some degree, inevitably was a paraphrase for saying that this would be the end of this Labour Government, but he felt that it went deeper than that and that was a view that struck chords with Kissinger. It struck no chords whatsoever with Simon, Yeo and Arthur Burns, who was then the Chairman of the Federal Reserve Board.

KISSINGER We in the State Department and in the White House were very sympathetic to Callaghan's problem. We did not want to bring a Labour Government down by bringing pressure of austerity on them and creating the impression that we were doing it for ideological reasons and we valued Callaghan as a man and as a friend.

HENNESSY Henry Kissinger. Could it be that, with the cold war over, saving Britain from itself might take on a whole new meaning in the context of an integrating Europe? Six years later, in the great crisis of Mrs Thatcher's early premiership - the Falklands in 1982, what was it that finally persuaded the Reagan Administration to back Britain against Argentina? Jeanne Kirkpatrick, US Ambassador to the United Nations, who wanted the decision to go the other way.

KIRKPATRICK Oh, I think Mrs Thatcher actually. I think it was the personal relationship between Mrs. Thatcher and Ronald Reagan. I think this was very important at various key points in the US, British relationship. It really wasn't the Europeanist perspective that won, it was a British perspective that won and I think the President was just very sensitive to Mrs. Thatcher's judgment of how important this issue was to Britain and to her, quite personally

HENNESSY Could it have had something to do with the perception that the Labour Party, who would have formed an administration if Mrs. Thatcher had fallen over it as many people thought she might if the war had been lost was, at that stage, semi-neutralist. There was the problem of deploying Cruise and Pershing in Europe and the cold war was still raging and so on. Was that, perhaps a crucial factor in this?

KIRKPATRICK Well, I think that the sense of possible internal domestic political consequences in Britain of success or failure in the Falklands was one of the factors that fell under the general rubric of President Reagan's concern for Mrs. Thatcher. For both her perspectives on the British interest but also her perspectives on her own interest, her own political interests, that is."

HENNESSY The lesson? That the key word, as always, is "interest". The fall of the Thatcher Government over the Falklands was not in President Reagan's interest in 1982.

But beware all those who expect a Gulf dividend now. Gratitude is a very transient thing as the Americans learned, within a year of the Falklands War, when they invaded Grenada, a Commonwealth country. Jeanne Kirkpatrick, for one, had few lessons to learn about British behaviour when British interests are involved.

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**KIRKPATRICK** One factor that had become rather important for me because I was the US Ambassador to the UN was, having learned the hard way, that neither Britain nor any of our friends, in fact, stood with us, some of the time, much of the time maybe even, on issues that did not concern Europe. They could be very difficult on Central American issues, for example. And I had learned that solidarity did not extend to many issues that were of special concern to us. So I was not really surprised when, in the case of Grenada, Britain did, in fact, not only not side with us, but very harshly criticised us, in the first instance. I think President Reagan was _enormously_ surprised. It was rather what I expected, frankly, but I think it was difficult for the President. He was very surprised by it.

**HENNESSY** Did you succumb to the temptation to tell the President, "I told you so."

**KIRKPATRICK** No, I did not. I have never said, "I told you so." I did say, "I rest my case."

**HENNESSY** Diplomats might say, "Don't be so naive. Self-interest always comes first in foreign policy. That's what exerting national sovereignty is all about." Certainly, in the 45 years after World War Two, there were divergences. But the cold war built mutual interest into the relationship as a whole, especially in areas like intelligence which were as concealed as they were important. Admiral Sir James Eberle, former NATO Commander-in-Chief for the Eastern Atlantic saw that particular cold war dividend at first hand.

**EBERLE** It is very close, both in terms of the world wide collection of intelligence and the sharing of the output of that intelligence. This has always been a relationship of almost total sharing. There have been occasions when there have been hiccups and there are occasions when obviously national interests demanded that intelligence be used in a particular way. But on the whole the relationship is very close.

**HENNESSY** But what's been in it for the Americans? William Colby, former Director of the CIA.

**COLBY** I think the big thing is that your good educational system has created a class structure which gets you in trouble security wise, once in a while but it also creates some very, very intelligent and wise people and if they are solid people, why they're very good to talk to. If they turn out to be traitors, why you're disappointed. I mean, I'm not throwing any stones here because we have similar problems.

**HENNESSY** That's a remarkable tribute to the English private schooling system that it's been of inestimable advantage to us, and to you and to the KGB.

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**COLBY** Starting with the classics I think is a very good way to create very good general analysts rather than experts on the third finger of the left hand and I think that kind of wise analysis is something we need in the world and your educational system does produce it. We also have them but I think there's probably a smaller percentage incidence among ours."

**HENNESSY** Was there ever a more vivid example of a top American buying the very British notion that it's all about US moneybags and UK brains? Have we benefited similarly in other areas of cold war know-how? Sir James Eberle.

**EBERLE** In narrow military terms, the special relationship not only in intelligence but in submarine operations and other hi-technology, we have done extremely well. We get extremely high quality information, extremely high quality support for a relatively low cost. But if you look at the cost in wider terms, if you look at the impact that the special relationship has had on the attitude of Britain towards being part of Europe, which is still seen in terms of the difficulty of our relationship with the developing European community then the price we have probably paid, has been high.

**HENNESSY** Are you suggesting then that because the special relationship has been so important to us that it's to some degree mesmerised the political, administrative and military classes here, as being the key relationship, the one you could always rely on. That this has contributed substantially, therefore, to our Euro-reluctance, you might call it?

**EBERLE** Very much so. We have this special, sort of, Anglo-Saxon relationship which sees the symbolism of our relationship with America as being extremely important and fundamental to the practical ways of co-operation. In terms of Europe, Government policy today does move quite strongly down the road of practical co-operation but we will not, and Mrs. Thatcher in particular, does not involve in the symbolism of Europe. Symbolism is important to M. Miterrand and the French, to Chancellor Kohl and the Germans. Mrs. Thatcher does not see it in that way, so we will not involve ourselves in support of European union and yet symbolism in the Atlantic Alliance has always been extremely important.

**HENNESSY** One of the great symbolic totems of the special relationship has been nuclear weapons from Polaris to Trident. If a European symbolism is ever to replace it, won't that, too, need its military totem, including, perhaps, a nuclear component? But here the Americans appear to hold all the cards. In 1958 Eisenhower agreed to Macmillan's request that nuclear collaboration be restored on condition that no American atomic know-how seeped to a third country. What would happen if a future British Prime Minister looked to Paris for a strategic nuclear partner? Sir Hermann Bondi, former Chief Scientific Adviser to the Ministry of Defence.

**BONDI** We would be wholly dependent on how the Americans, to whom we owe so much, viewed such a link with the French. If they felt there should be absolutely impermeable membranes I don't think anybody here would want to do such a thing.

**HEATH** As far as President Nixon was concerned then he was fully prepared to see us move in that direction.

**HENNESSY** He actually said that to you did he?

**HEATH** Oh, yes, of course, otherwise I wouldn't have told you.

**HENNESSY** If President Nixon took this attitude about Anglo-French nuclear co-operation, why is it to this day that so many in Whitehall have a fetish about the sanctity of the 1958 agreement with the United States which makes them say, "Well we can't tell any other power about our nuclear know how 'cos the Americans wouldn't let us?"

**HEATH** Well, on the latter part, of course, they haven't consulted with the Americans about handling this information. They don't want to because they want to be able to go on saying, of course, ours is a special relationship and what we have nobody else has.

**HENNESSY** Why do you think they want to carry on with it so passionately?

**HEATH** Oh, well I think it gratifies their ego. We have an enormous staff in Washington, which I certainly tried to get dramatically reduced, and it ought to be reduced, not the Embassy staff but all the rest of the military and so on. Because they adore being there and they feel that they're next door to a great military power and nuclear power and so on and it's all part of the same business. Well, that's not what appeals to me.

**HENNESSY** And that may no longer appeal to the Americans either. Robert Blackwill, former White House adviser.

**BLACKWILL** George Bush gave a speech over a year ago in Boston in which he indicated American support for whatever degree of British and French nuclear co-operation those two governments felt comfortable with and I think that's probably still the consensus within the administration. So it's my impression that the problem is not really on this side of the Atlantic and, indeed, in the long term it would be in Europe's interest and in America's interest to have closer co-operation between the French and the British on the nuclear side and, indeed, to move toward a real European deterrent, since I think that would be a stabilising force.

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**BONDI** If the Americans withdrew any such objections, at least to part of the business, like long range missiles there would be the question of what would the French expect us to do in return? After all they have developed their own long range missiles, they have their own test range so what's in it for them? You can't have a collaborative relationship in which there aren't advantages for both partners.

**HENNESSY** Hermann Bondi. Could it be that Whitehall's persistent recourse to those so-called impermeable membranes written into the 1958 Agreement has something to do with the possibility that 32 years of increasing nuclear dependence on the United States have left us with very little home grown technological brain to sell in Paris?

**HENNESSY** But in less dramatic, but equally important aspects of weaponry, the move towards technical fusion with Europe is already unstoppable, no matter how many British brakes are applied to the European political and monetary train. David Greenwood, Director of the Centre for Defence Studies at Aberdeen University.

**GREENWOOD** European co-operation for the whole of the arms market business is the way things are going to go in the future. Certainly. Really for three different sets of reasons. Number one, the fact that with a conventional arms agreement coming up, treaty limited item, ceilings on each nation's holdings, the numbers are going to come down and it will make progressively less sense to have individual national packages. People are going to have to think of how many tanks is Europe allowed to have, how many artillery pieces is Europe allowed to have, how many armoured fighting vehicles is Europe allowed to have and what's the most sensible way of making that? Secondly, the procurement agencies through, in particular, the Independent European Programme Group, having in a sense produced an action plan for their own 1992, their own single European market - they've deliberately done it, as Defence Ministers to make sure that those bureaucrats in the Berlaimont building don't get their hands on the defence business and that's an interesting side line but there is a momentum for pan-European procurement on the demand side, on the buyers side. But most important, of course as defence related industry, a large proportion of which is dual use industry bestriding the military civil divide, as the businesses themselves position for the single European market post 1992, the industrial connections are being made through cross shareholdings, mergers, joint ventures and so on. Such that even if the ministries, even if the governments said, We, as Frenchmen would like to buy French, would like to buy Dutch, Brits would like to buy Brit. What's British, what's Dutch, what's French if the ownership of the productive capacity is increasingly European in nature?

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HENNESSY Building joint weapons systems is one thing. But what really counts are the defence and foreign policy structures which control their deployment. There's the rub. Already the Gulf crisis has been commandeered by those who wish to make a particular point about the future arrangements for western and European defence. A Community defence policy? Abandon hope all ye who enter here? Sir Frank Cooper, former permanent secretary to the Ministry of Defence.

COOPER What would Europe have done in the case of the Iraq invasion of Kuwait? And the answer is nothing if we're truthful about it. If we look at the twenty-first century it will be amazing, to my mind, that we didn't have quite a lot of horrific happenings in various parts of the Middle East, Africa and Far East. And the question is what are we going to do about them? And the answer is, we're not going to do very much with Europe in its present form, other than in relations with the United States.

HURD It really was because Britain was able to act independently that we were able to give a lead in Europe by announcing, before anybody else, our willingness to send, first of all, ships and aircraft and then troops to the Gulf. That was an enormous help to United States policy. It wouldn't have happened if we had, as it were, been locked into a common European foreign and defence policy.

DOBBINS On the other hand the impact of those steps by Britain was greatly magnified by the fact that Britain was able by moving rapidly and decisively to catalyse a broader European reaction and within days to bring along the rest of Europe to a comparable set of policies. Now if you hadn't had the process of European political co-operation, if you hadn't had the commitment to European political unification as a long range goal, if you hadn't had the habits and intention to have a common foreign policy approach, I think it would have been much more difficult for Europe to move so quickly to despatch forces to the Gulf to join in sanctions, to join in enforcing sanctions and those kinds of steps.

HENNESSY Jim Dobbins of the State Department. Note his difference of judgment from that of Douglas Hurd - that if Europe hadn't had a commitment to political unification and a common foreign policy as long-range goals, the swift coalition of forces in the Gulf wouldn't have been possible. What does that tell us about what the Americans would like if another emergency arises? Robert Blackwill.

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BLACKWILL Most Americans would have preferred a situation in which they could have gone to a European entity and said, "If you agree with us", - a European political, military entity, - "if you believe, as we do, that this is a major threat to western interests, would you join us there?" And I think that would have been preferable to most Americans than going to national governments one and then the other and the other, not least because you might have attained a much greater and more effective European military presence than was the case when you had to make the arguments separately, especially in London and in Paris, to find that in most other European capitals there simply wasn't the political will to do it.

HENNESSY There's more to this than diplomatic convenience - having one set of politicians to deal with instead of a dozen. Robert Blackwill's point that the military response to the Gulf would have been greater if political co-ordination had been there has special significance for the United States. Put another way the fundamental question for the Americans in the future - is whose boys are going to do most of the dying if the world's troublespots turn nasty? Former US Defence Secretary, Robert McNamara.

MCNAMARA Well, I give tremendous thanks and credit to the British for the way they acted. They acted so promptly but I draw your attention to the numbers. If we went into military conflict today, God forbid, but if we did, together the British and the US would suffer probably ninety-eight per cent of the casualties and of the ninety-eight per cent the US would probably suffer eighty-five and the British, thirteen. These are figures right off the top of my head. My point is, we are moving together but the US today has the bulk of the blood at risk in the Gulf and that I think is a relatively unstable situation for the world. I don't believe that the American people, for the next fifty years, are going to confront conflicts all over the globe and accept eighty-five per cent of the blood risk.

HENNESSY To Robert McNamara, not only an ex-defence secretary but a former President of the World Bank, the moral is plain.

**MCNAMARA** It's in the US interest. that Europe move toward integration economically. It's clearly taking a major step in that direction in the Europe of ninety-two but that's only the first step. It needs to go further in economic integration if it is to be as strong as I think we all would like to see it. If you would think by analogy of the United States, and if the United States economic integration had only a partial trade integration (because even the Europe integration in ninety-two is not going to be as complete a trade integration as we have), but if we had a United States with only a partial trade integration and **no** central bank and **no** common currency and **no** common economic policy, we wouldn't be nearly as strong as we are. So from my point of view, a person who, for three decades, has been interested in seeing the dumb-bell theory come to fruition - and you may recall that in the Kennedy Administration we spoke of conceiving of the Western world in terms of a barbell with two balls of equal weight joined by a bar, the North American ball and the Western European ball, that was the concept of the Kennedy Administration for the western world. It continues to be my concept. If we're to move in that direction we need to get a true ball in Western Europe and that means more than a partial trade integration. And it also means the beginnings not of ceding of total national sovereignty to some European government but it means as well, the beginnings of some form of political unity and some form of military unity.

**HENNESSY** "It means, as well, the beginnings of some form of political unity". Robert McNamara's direct linking of a central bank and a common currency with Europe's ability to build, at last, a defence pillar to stand alongside that of the United States, is very significant. Why? Because the British Government, while continually emphasising the importance of a post cold war defence structure in Europe, refuses to recognise that linkage. "Yes" to a European pillar; but "no thank you" to the idea of the European Community developing a defence capability of its own. Foreign Secretary, Douglas Hurd.

**HURD** Whatever names you call it we believe that what we're talking about is the European pillar of NATO and that actually to think of it in other terms, to hive it off from that, would be dangerous and from our point of view, not really thinkable.

**HEATH** Douglas Hurd knows perfectly well that we can create a defence community with the will power whenever we wish and our colleagues would welcome it. No, it's just the desire to keep control of our own bailiwick instead of moving into modern times and creating a unified defence policy.

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**HENNESSY** The point is not the speed with which a European Defence Community could be fashioned, which, surely, Edward Heath overestimates (the French, after all, have recently indicated their unwillingness to have German troops on their soil. And there is the obvious problem of the neutrals). It's that the Americans, unlike Douglas Hurd, are not insisting that a European capability can *only* be built within the confines of NATO, though they would always want to maintain a strong transatlantic link. Although one can understand the Foreign Secretary's implicit concern that a European Defence Community might not keep American troops on European soil, it's hard to see how a European pillar of equal strength to the American could ever be established without a common European defence policy - and that *must* mean through the European Community. And it's here, in the current debate on the future shape of western Europe and Britain's place in it, that the ending of the cold war is crucial.

For forty years, the Americans have pressed us to think in a more European fashion generally. When we have declined to do so, the special relationship has survived for wider cold war reasons - from providing early postwar bases to the stationing of cruise missiles in Britain in the 1980s. But maintaining the Pax-Anti Sovietica can't help us now. Michael Heseltine, former Defence Secretary.

**HESELTINE** The Americans in the end, essentially, are the most important power complex on earth. They have interests all over the world. They have special relationships with many different sorts of countries and those relationships ebb and flow, very much depending upon what American policy in the area, at any one given time, demands. There's nothing special about that. That's what you should expect to find. Now, it so happens that in our part of the world, in Europe, very frequently the American interest has coincided with that of the British and sometimes historically and heroically. If ever it didn't happen to so coincide, Americans in the end, are going to pursue American foreign policy, American self interest and if anyone thinks that Britain would somehow or other be able to expect Americans to deny their national self interest for the sake of us then that's not realistic politics.

**HENNESSY** American self interest again. Not a new concept but one which increasingly may now lie in areas where the British Government seems all too reluctant to tread. Where *will* the Americans go? Michael Heseltine.

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**HESELTINE** They'll go where the power is, they'll go where the economic weight is, they'll go where the scale of the market is, they'll go with the people who can take big decisions about big issues and, because that's what America's interested in. Quite understandably. Her interests will be unavoidably interwoven with the economy of western Europe and many of the policies that flow from it, whether it's the open trade or the protectionism, whether it's environmental policies, whether it's defence policies, whatever it may be, America will go where the big action is, where the scene is. So if Britain were not to be at the centre of Europe, then America would pursue its relationships with those who were. There's no surprise in any of this. President Eisenhower was, perhaps, as close an example of the personalisation of the special relationship of any recent American. He was the American who told the British Government that asked him to frustrate the European momentum that we'd better join them and not oppose them. I happen to believe that President Bush is a very good friend of this country. He was very clear just a few months ago when he urged the Europeans to get closer together. If you're a policy maker in Washington you haven't got time to, if you like, divert your efforts. If there's one major grouping in western Europe and there's one or two countries on the fringe of it you would go to the scene of the action, that's what you'll find yourself doing.

**HENNESSY** Scaremongering on the part of a committed European with his own political axe to grind? Or an accurate assessment of current American thinking? Robert Blackwill guides us through the new terrain being mapped out in Washington.

**BLACKWILL** Preferably what will happen is that Europe will go on unifying. We will find a way, on both sides of the Atlantic, to intensify our consultation and new patterns of behaviour will emerge, and Britain will be a major part of this and will go on on the nuclear side and the intelligence side in traditional ways. But if we have a situation in which America has to deal with most of Europe through community institutions increasingly and Britain is outside it then I think inevitably it will weaken the ties with the British. You have to remember that our principle national security objective, in my judgment, though the ninety-nineties will be to secure the deep roots of democracy in Eastern Europe and to manage the transition in the Soviet Union to the East and in the West to work out a US EC relationship which allows us to collaborate politically and to manage our economic differences. Now as I mention those you'll notice that none of them are UK-centric in character. We very much want the British to play a role in that, and a major role, but more and more that US-European dialogue is going to take place through community institutions and if Britain somehow were a weakened, or a weak member of that or, not centrally involved that will obviously mean that Britain's influence and role in Washington would change too.

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**HENNESSY** A scenario which could leave Britain with nowhere special to go? "Oh no", says Douglas Hurd, "we still have something special to contribute to both Europe and America".

**HURD** What is one of the main debates at the moment, it's about the Uruguay Round and the future of world trade and we are pressing very hard, the more protectionist members of the community, to produce a stance, a European stance, which will make some sense for the United States. And that's another example where without us I don't doubt that the protectionist members of the community would dominate the smaller ones and certainly Europe would become more united but more united in a direction which the United States would find repulsive.

**HENNESSY** An echo here of the old idea of Britain as honest broker between America and Europe? But didn't the Rome Summit show that that approach simply doesn't work now, if it ever did? Because of Britain's reluctance to contemplate the next steps towards European integration, sorting out Europe's position on the Uruguay Round of the General Agreement on Tariffs and Trade wasn't even properly on the agenda.

Let's be fair to the Foreign Secretary. The Americans do welcome our commitment to freer trade, but commitments, however laudable, need economic muscle to deliver them. Britain is simply not a big economic player anymore. The spectacle of eleven-to-one in Europe might be rendered irrelevant for some by the spectacle of one-and-one in the Gulf. But if Britain is looking for a global role to compensate for being marginalised in Europe, think again. Henry Kissinger.

**KISSINGER** The British problem will become that its resources are not going to be as adequate to the role that many of its admirers would like it to play as they should be and at some point the disparity between resources and concepts becomes too great.

**HENNESSY** Are we close to that now in Britain do you think?

**KISSINGER** You're approaching it.

**HENNESSY** It could be argued that, throughout Britain's postwar history, that disparity between resources and concepts has been a constant from Attlee's Korean War rearmament to two million pounds a day for the Tornados and Challengers in Saudi Arabia. But what is, surely, different now, blips in the Gulf apart, are American perceptions of who and what really matters to them in the long-term.

What are the implications of this for the special relationship as practised in the past by so many postwar British prime ministers? Lord Callaghan.

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[c]

**CALLAGHAN** If by that you mean that the practice which certainly existed for several years after the war under which the Americans and the Brits used to get together and try to work out a common line, if that's the special relationship well that certainly has almost ceased to exist now in so many areas. After all President Bush has made it clear that he wants Germany to take the lead in Europe as the strongest economic power and therefore, presumably, the one with considerable clout, political clout, and what is extraordinarily interesting is that the Soviet Union also want the Germans to take the lead, so Germany is really going to be a fulcrum in this and in terms of working out policy the Americans will look more to a European point of view and possibly to a German point of view than they do to a specific British relationship.

**HENNESSY** Cold wars come and cold wars go, but the special relationship doesn't necessarily go on forever. And cold wars apart, remember Robert Blackwill's distinction between the significance of Anglo-American solidarity in times of military crisis, including the Gulf, and long-term US interests in Europe. But will reality ever dawn on this side of the Atlantic? Samuel Brittan, Assistant Editor of the "Financial Times".

**BRITTAN** The problem is we keep on getting prime ministers who, for all their qualities, are throwbacks in this. When Harold Wilson had reluctantly to pull back from East of Suez it looked as if it was coming to an end and Edward Heath, whatever one may think of his other polices, was European in his orientation. But then, after that, you had Jim Callaghan who was a realist in many ways except when the Stars and Stripes were mentioned. Then, after that, we got Margaret Thatcher, now she was all right for a little bit when President Carter was President of the United States and she didn't feel she had so much in common with him. But once it was Ronald Reagan, a person of similar views and prejudices, and who didn't do as much of his homework and who seemed as if he could be taught by her, then the die was cast again. Now, I've no doubt that other people will be saying that Douglas Hurd and John Major, are not nearly as sold on the special relationship but who knows who the next throwback character will be. Let me give one concrete example. Take this ridiculous way that Jacques Delors is made into some sort of bogey figure, like another Stalin. It's totally absurd but if Jacques Delors were American, I mean if he were just a particularly hardnosed Secretary of State, no British Prime Minister would dream of treating him in the way that Prime Minister Thatcher treates Jacques Delors. We keep on going round in circles here and although, with luck, we'll have a prime minister who doesn't remember the war, he or she will remember something else.

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**HENNESSY** The moral is not that the special relationship has always been without significant substance. But that unless British policy-makers finally wake up to the European future, it may become irrelevant even in its most intimate aspects of nuclear and intelligence collaboration. Let Paul Nitze, veteran American diplomat who advised six presidents, and Robert Blackwill, adviser to George Bush, guide us through the changes. In 1948, Sir Oliver Franks set sail for the British Embassy in Washington.

**NITZE** Oliver had a capacity for lucid exposition greater than anyone else I've ever worked with. We'd have a big meeting with people from the Pentagon, the generals, the defence people and so forth and so on and those of us from the State Department who were involved with the matter and he'd hear the debate between us and there'd be, you know, ten or fifteen different views expressed and then when the argument had settled down so he could see what all the parts, all the elements in the argument were about, he would summarise the discussion in a way which was so much clearer than anything than anybody else had said that we were all entranced with the lucidity of his analysis. And this included the generals and the defence people and everybody else so that we rather looked to Oliver as being the preceptor, the professor of the class. So that everybody valued Oliver. He was much more influential than .. he wasn't representing his country; he was, in effect, doing that but he did it in a way in which he became a US leader. He really captured the US Government, it was beyond belief.

**HENNESSY** I think he even sat in on the National Security Council, on occasion, didn't he?

**NITZE** He did. I forget the occasion but he certainly was very much a central figure in the way in which the US Government made decisions.

**BLACKWILL** If Britain has a major role in Europe, and given the quality of British diplomacy which, in my opinion, is always high, then Britain will be a major interlocker of the United States, as important in this regard as the Germans and the French with the special cultural advantages which make it the most effective diplomatic presence in Washington. If, however, it were to separate itself off from Europe then I think since most American policy preoccupations are going to have to do with the future of events on the continent, willy nilly, British influence would decline then seven, ten years from now, instead of a British diplomat having immediate access when he called up the White House, where I worked until recently, he wouldn't get in, she wouldn't get in, that day and they would be treated like everybody else, or even worse and that's certainly not the situation now.