Sir John Major’s Speech at the Sir Edward Heath Memorial Lecture – 14 November 2006

Below is the text of Sir John Major’s speech at the Sir Edward Heath Memorial Lecture, held at the British Embassy in Paris on Tuesday 14th November 2006.

SIR JOHN MAJOR:
This is the last of a Series of Lectures to commemorate the life’s work of Sir Edward Heath. It says much about the current political mood in Britain that these Lectures are in Paris.
Ted Heath had many passions – sailing, music, art – and, in politics, the binding together of Europe and Western relations with China. They remained consuming interests until the end of his life.
And upon such matters he was resolute and immovable.
Very little is immovable today. We live in a world changing more comprehensively than ever before. In politics and economics, we can no longer rely on many of the assumptions we have lived with for generations.
Old disciplines once available to Government – exchange controls, for example – are redundant. Common standards and specifications are often international, rather than the prerogative of the Nation State. Even tax policy must bow to the need for competitiveness and, in small and medium sized economies, can be determined by the demands of footloose international capital.
In recent years, corporate leadership has given us the global economy, the cellnet revolution, the internet and e-commerce. The landscape of investment has been changed by Private Equity and Hedge Funds.
In the face of this revolution, Governments often fall behind, out-paced, as the private sector and the free market set the agenda.
In the future – more than ever before – the influence of the private sector will be a key factor, not only in the prosperity of nations, but also in our way of life. As politicians diminish; the private sector grows. It is merging our tastes and shrinking our planet.
When Kipling wrote those famous lines:
“East is East and West is West
And never the twain shall meet”
he had not factored in the global market.
Today – nothing is as it was: nothing will be as it is.
CHINA
Economically, the world is turning to the East which – for the first time since 1820 – now produces the majority of world growth. No-one should be surprised at this return to the past: for 1800 years, China had the largest economy in the world: then in the early 19th century, the West had an industrial revolution – and the East did not.
Now, China is re-asserting the old order. The Chinese were making silk and pottery before the Egyptians built the Pyramids, and before the ancient Britons built Stonehenge.
Today, China is utilising her natural advantages. She has space, and an inexhaustible supply of cheap labour. The lure of her gigantic market attracts US$ 60 billion of foreign investment each year. This combination has made her hugely competitive.
She does not have energy – and so she is buying up oil fields, petro-chemical facilities, technology, mineral and natural resources whenever she can. She is short of many commodities and – as a by-product of her huge purchases of food, soya, rice, wheat and minerals – she is making political alliances around the non-aligned world.
As her economy grows, so does her political influence. It is a sight I never thought I’d see: a once closed Communist economy challenging the Capitalist world.
But not all is rosy for China. She is not El Dorado. Accepting the advantages of the free market means she must face the problems of it as well.
Unemployment in China is huge. Hundreds of millions of workers from rural areas are migrating to the cities, in the hope of finding work. China faces serious problems of pollution, lack of water and shortage of energy.
Ironically, even her 9½% annual growth brings political problems. Greater economic wellbeing leads to greater expectations: resentment of a growing disparity of wealth; demands for a social welfare system; an appetite for more self-government. Shanghai does not wish to be micro-directed from Beijing.
Some people worry that China will be a threat to the West. Economically, of course, she already is. Politically, she is becoming more influential. But neither politically nor militarily is China a threat in the sense of the former Soviet Union. China’s focus will be internal for many years to come.
Some of their problems are unexpected. The divorce rate in China has tripled as women exercise an independence they have never known before.
Above all, China must overcome a paradox that will challenge Communist rule: to retain popular support, the Government need successful economic growth, but to obtain that they must loosen their grip on the regions. This is alien to their philosophy, but essential to China’s well-being.
INDIA
Behind China – perhaps 10-15 years behind – comes India, who once had nearly one-quarter of the output of the whole world.
Today, once more, she is in the midst of an explosion of ambition and has cornered a large part of the market in knowledge-based industries; in R&D; in IT; in bio-technology and molecular biology. But India’s potential for manufacturing and engineering is also enormous and her employment costs are now more favourable than China. Within twenty years or so, she is likely to be one of the four biggest economies in the world.
Although China and India are the biggest single ingredient in the economic shift from West to East they are not alone. Japan is an established economic giant but all SE Asia is growing.
There is even a North-South movement as Latin America ceases to be the “old” Continent of lost opportunities.
Between 1986-96 – inflation in Latin America was 180%. Today – between 6-7%.
Budget deficits and country debts are falling. Prospects are rising.
Even Africa – poor, forgotten, disregarded Africa – is benefiting from high commodity prices and growing faster than for many years.
Other countries, too, are in phoenix mode.
RUSSIA
Politically, Russia under Putin is regressing. Economically, she has problems with corruption, with the Russian mafia, with bureaucracy, but business performance is strong with many niche opportunities for investors – if the right partner can be found.
The reason for economic growth in – by our standards – a lawless background, is that Russia is blessed with natural resources. She:
– Can lift as much oil as Saudi Arabia;
– Has one-third of the world’s supply of natural gas; and
– By any yardstick – has enormous scope for future growth.
There are concerns about internal democracy.
– President Putin has re-claimed too much power for the Kremlin.
– The judicial system is neither swift, just nor independent.
– The free press has all but disappeared.
I am, in no sense, a Cold War warrior, but we do no favours to Russia if we overlook this authoritarian, anti-democratic trend.
Externally, Ukraine and Georgia might also welcome the West letting her disapproval be known, so that Russia is aware there will be a price to pay if she slips back into her old ways. But – even as we watch political developments – it is time to recognise that the “New” Russia is not the “Old” Soviet Union.
Even within the EU, there is a drift from the mature democracies of Western Europe to the new European nations. It is easy to see why: the cost of a skilled engineer in Slovakia or Romania is 14,000 Euros a year, whereas in Bonn, Paris or London it is 92,000 Euros a year.
The free market has many virtues – but it is ruthless in pursuit of competitiveness, and mature economies must recognise this.
Let me pull all this together:
For the last quarter of a century, the principal engines of world growth have been the US, Japan and the EU. Soon, China, non-Japanese Asia and India will join them.
And, added to the economic mix, is a new ingredient: over the last two years, every emerging economy in the world has out-performed every mature economy. As a result, growth in the world economy is becoming better balanced than ever before – which is excellent news for future economic stability – but the price for the democracies of the West is that political power will be more widespread.
POLITICAL CHANGE
We can see this new phenomenon taking shape. As the world economy re-configures, so does politics. The political map of the world is fluid.
The battle between Communism and the Free Market has been comprehensively won.
But the conflict between competing religious ideologies – so long dormant – is re-engaged. Radicals wish to unite Islam and pit that religion against the rest of the world.
Much of the Middle East is in dis-array, as an extraordinary number of problems have come together in our own time: Oil; Terror; Iraq; Iran; MEPP; Afghanistan; Lebanon.
Although these problems may seem insoluble – they are not. But it is essential to focus on the objectives we seek and then set out a route to achieve them.
Every situation will require diplomacy and statesmanship to be enlisted alongside military power.
We need a dose of reality, too. We had better accept there may be no ideal solutions. We may have to compromise.
Our preferred outcome may be un-achievable. But, sometimes, even compromise solutions are a triumph.
IRAQ
In Iraq – and Afghanistan – we need to be clear about the mission, and we need an exit strategy. If I asked everyone in this room to write down what they thought that mission was, I would get a wide variety of different answers.
Iraq is messy and getting messier. Those who predicted the coalition would be greeted as liberators on flower-strewn paths are wiser now. If they had known their history, they would have been much wiser much earlier on. We are not – alas – remotely where we had hoped to be.
Both casualties and civil violence are mounting especially in the 30 miles radius of Baghdad. As American soldiers clean up districts, the insurgents move to neighbouring areas. As those troops move on, the insurgents re-occupy the area, because the Iraqi armed forces cannot hold the ground. This failure to hold the territory gained, means that policy is simply chasing its tail.
At the same time, the Iraqi Government refuses permission for troops to enter the most violent areas, on the grounds that it would be inflammatory. This is an Alice-in-Wonderland decision, that merely provides a haven for militancy.
Decisions that are fundamental to the future of Iraq are not yet made. We do not yet know how oil revenue will be shared. The boundaries of the future Federalist system are not known. The future of Kirkuk is still uncertain. The new Police Force is – to put it kindly – inefficient, and with divided loyalties.
For the average Iraqi, life is dire. Many are killed each month. Unemployment is huge. Inflation is at 70%. Electricity supplies – in Baghdad for example – fluctuate wildly during every 24 hour period: a couple of weeks ago it was 3-4 hours only; this past week, I believe they had the luxury of 10 hours power. All of this, in turn, creates instability – and a deep resentment of the coalition forces on the ground.
The situation is full of ironies. The Iraqi Government is weak and unstable. It is possible that only the presence of the coalition prevents a coup.
And yet – to buy domestic popularity – the Government may be tempted to tell the coalition to leave.
But such a departure would create a double-dilemma: not only would it be humiliating for the coalition to be asked to leave, but if they did so, and Iraq was torn apart by civil war, the implications of a militant Islamic Government emerging scarcely need to be spelled out.
From where we are today there are no simple solutions, which is why I spoke of the need for diplomacy and statesmanship alongside military power. And – as we consider policy – we should factor in the lessons of history.
AFGHANISTAN
All of this is relevant to Afghanistan. The catalyst for democracy’s response to terror was the attack on New York five years ago.
To promote democracy and destroy terror is a noble mission, but the justice of the cause doesn’t lessen the need for a clear-cut objective, good planning and adequate resources.
In Iraq, the most dangerous place is Baghdad, where American forces take the lead. In Afghanistan, it is Helmand and Kandahar Provinces, where British and Canadian forces are in the front line.
The Afghan mission, as seen from the UK, is uncertain.
Is it a peacekeeping mission?
Or a nation-building one?
Is it to catch Bin Laden?
Or to defeat the Taliban; drug barons; warlords; Iraqi infiltrators; Pakistani bandits; and the local population fearful of their poppy crop being destroyed?
Or is it all of the above – and more?
History tells us Afghanistan is a very tough place to be. In the Afghan Wars – during the height of the British Empire – Britain did not even come a poor second. And, more recently, between 1979-1989, the Red Army was defeated in Afghanistan: 120,000 troops, ten years on the ground – and then retreat – as they were beaten back to Moscow. And this was when Russia was still, herself, a superpower.
A senior British General warned recently of the danger of an aggrieved population turning back to support the Taliban.
From our perspective of the Taliban – as a brutal force with a medieval culture – that seems absurd. But the local population see the UK, America and Canada painted each day as invading interlopers – much like the Russians over twenty years ago. It is a crude untruth – but an effective one.
Moreover, as we destroy the poppy crop – an evil trade, but the only way of earning a livelihood for many Afghans – we need to put in place alternative sources of income. If we fail to do this, we will simply turn the population against us – and back into the arms of the Taliban.
There is a common thread that runs through Iraq and Afghanistan: both are ideological conflicts that must be fought by intellectual as well as martial force.
TERROR
If we are to lift the curse of terror from the next generation – or, more realistically, render it impotent – we must win the hearts and minds of those into whose ears radical poison is poured.
Without an intellectual victory, there will be no lasting military victory, and no respite. If we are to protect our way of life we must mobilise our best instincts as well as our military might.
The West must counter the malign way in which it is misrepresented. We will not be able to persuade the hard-line militants but we can siphon off their support. We can dry up their recruitment. We can isolate them. We can do more to encourage our allies to be more active in our support.
All around the world, even in the grimmest of circumstances, people hope for something better. Hope for something better is the most powerful antidote to anti-Western propaganda. And to gain the allies necessary to isolate and defeat terror, we must offer that hope.
This is not some impossible dream. We saw hope triumph when the free market defeated communism. Now it must do so again, to help democracy defeat terror.
We have one great advantage. The on-rush of the free market is delivering material benefits to nearly every part of the world. Politics must offer hope too.
This will mean dialogue. It will mean enlisting other nations. It will mean working with regimes of whom we strongly disapprove.
Some say this can’t be done. I say it can. Tough – yes. Long-term – yes. But it can be done.
Sixteen years ago, I began a dialogue with the IRA when they were still bombing Northern Ireland and the British mainland. Many opposed this. More doubted it would ever succeed. Some even said it was folly.
And yet it began a peace process that has transformed Northern Ireland.
The same principles apply today, even to the core disputes in the Middle East, and the ideological divides that are so dangerous. Dialogue can be productive. But it must be dialogue – not monologue – and it cannot be with a megaphone.
The alternative – a lack of dialogue – enables our motives to be distorted, and our policies to be mis-represented. It would be folly to allow that to happen.
CONCLUSION
The political and economic challenges arising from the Near and Far East are more complex and far-reaching than any we have faced before. They will not fade away.
I’ll read you a poem you may know and I learned as a child:
For the want of a nail the shoe was lost.
For the want of a shoe the horse was lost.
For the want of a horse the rider was lost.
For the want of a rider the message was lost.
For the want of a message the battle was lost.
For the want of a battle the war was lost.
For the want of a war the kingdom was lost.
And all for the want of a horseshoe nail.
Benjamin Franklin, 1758
It is the classic illustration of how a chain of events can follow on – one from another.
If that was true in the world of Benjamin Franklin, how much more true it is in the integrated global world of today.
Our task in this generation is to look at our world with a critical and honest eye and see how it is – so we can try and shape how it could be.
We have the ability to do so. Only time will tell whether we have the wisdom – and the will – to channel that knowledge into policies – to safeguard our future.