Below is the text of Mr Major’s joint press conference with the Chancellor of the Exchequer, Ken Clarke, held in Lyon on Saturday 29th June 1996.
Let me just try and summarise some of the things that have happened over the last couple of days at this summit. The Chancellor set out a number of issues yesterday, and I won’t repeat those, though of course we will be happy to answer questions on them.
At the outset, one of the things we most wished to discuss was the question of terrorism. That thought was enhanced by what had happened in Dhahran, and was certainly carried forward by what happened in Osnabruck last night. The declaration that we have issued against terrorism is really the continuation of action we have taken in the past, and a forerunner of action that we anticipate to take in the future. There is a strong declaration that we have issued, with a significant plan dealing with crime, not just terrorism but crime in the generality. And the essential purpose of that is to bridge different judicial systems and try to help the law enforcement agencies in different countries in practical ways.
We want to make sure, as far as we can, that there is no opportunity either for international criminals or terrorists to move from country to country and find a particularly easy climate in which to live.
We agreed also, on the back of our discussions, that senior Ministers would meet in July, probably at Foreign Secretary/Home Secretary level as far as the United Kingdom is concerned, to examine carefully what of a practical nature can be done to coordinate the activities against terrorism. The purpose of this is absolutely straightforward. We just want to make life intolerable for terrorists in every conceivable way that we can so there is no hiding place for them. A lot of preparation is going on and I hope that meeting in Paris in July will bring forward some more practical proposals.
The Chancellor set out yesterday the substance of the economic communique which represents a great deal of British thinking over recent years. I think the area that I am most pleased about is the extent to which it supports the UK agenda on jobs and job creation, and the vitally important fact that we need to continually liberalise labour markets if we are to try and get an increasing proportion of our people back in work. There are something like 18 million adults who are at present unemployed in the European Union alone, and clearly that is far more than is comfortable and we need to take whatever supply side measures are necessary to try and ease more of them back into productive employment.
There was also a consensus on the approach that we have adopted in the United Kingdom to monetary stability through domestic policies, rather than the old concept of seeking to control interest rates. And that again is a change of thinking we have seen over recent years for one that we very much welcome in the United Kingdom.
One area that is now going to give rise to a good deal of extra work, was the agreement on the need to clarify the role and improve the coordination between regulators and the financial markets. We have had a number of instances – Barings and of course on a different sort of the scale the problems in Mexico – where the degree of regulation internationally perhaps hasn’t been as good as it might have been. The United Kingdom have been looking at ideas on the prospect of having Lead Regulators who would have a coordinating role through a group’s activities, albeit in different countries. That met with a good deal of support amongst our colleagues here and it has been agreed that that will be followed up speedily after this summit at official level, and I hope we can get again some practical proposals.
We had some discussions this morning on various ways of assisting poorer countries. A large number of propositions were put forward. I think some points were universally agreed – the necessity of continuing to discourage unproductive, generally military expenditure in developing countries; an endorsement of the Chancellor of the Exchequer’s multilateral initiative on debt, the latest of a series of initiatives, the Toronto terms some years ago, Trinidad terms and very substantial write-offs of debt [indistinct], we would personally be perfectly prepared to go further than the Naples agreement, writing off 67% of the debt for the poorest countries, and I hope at some stage we will be able to make further progress. There was also agreement to urge the Paris Club creditor countries to go beyond Naples and I illustrated my support for that and I hope that will be forthcoming.
We had a further discussion on United Nations reform, which was one of the great themes of the Halifax summit last year, and I think will probably be a theme of the summit next year in the United States. A good deal of progress has been made but there is self-evidently a great deal still to be done. And everyone placed a very strong emphasis on continuing the drive for reform and greater efficiency.
Both the Foreign Ministers and the Heads of Government separately spent a considerable amount of time on the present circumstances and the prospects in Bosnia, with a special interest in the Dayton process. Very strong support for the Dayton process to work, and a complete unanimity of view that the pressure needs to be kept up to remove Mr Karadzic from politics in the Republic of Srpska. By remove him, I emphatically do not just mean remove his name but leave his influence, we are concerned with removing his name and his influence, because without that successful removal, our judgement is there is much less chance of elections taking place satisfactorily and the Dayton agreement being satisfactorily applied.
I think there is little doubt now that in the event that Mr Karadzic does not withdraw completely and satisfactorily, that there will be a very swift coming together on the need to re-impose sanctions to ensure that he does go. That I think is a universal view.
We spent some time also on the Middle East process. I am not sure that there is a great deal fresh to report except the universal feeling that whatever support needs to be given, both to the Israelis and for the Palestinians and others, to ensure that that process keeps on track is a desirable effort. Particular concern was expressed by a number of people about the conditions in Gaza and the particular problems faced by the Palestinian authority. We very much hope that further progress can be made.
The Prime Minister of Russia, Mr Chernomyrdin, joined us last evening, reported on the present state of play in the Russian elections whilst they wait for the second round to take place very shortly, and on the prospects for Russia thereafterwards. I don’t think there is a great deal I particularly wish to say about that.
I will invite the Chancellor to say a word about gold sales and a little more about financial regulation, and then we will endeavour to field any questions you may have.
CHANCELLOR OF THE EXCHEQUER:
Just on the two specific things within our economic and employment agenda that we took forward on this occasion, firstly gold sales is all part of this dealing with the need to lift the burden of debt from the very poorest countries which are now performing well, but can only make their economies go ahead if they can get rid of a burden of past debt which they are never actually going to be able to discharge.
The Prime Minister and myself have been running a kind of relay race on this really, because when he was Chancellor of the Exchequer the Toronto Terms and other things he touched upon, added detail as he went through, all went back to his time as Chancellor, and what is going on at the Paris Club now, building on the Naples Terms, goes back to that – 67 percent relief on debts being given to some of the countries we have in mind, the British would go to 80 percent if we wished – but all that is the fruition of British initiatives of some years ago. We are now dealing with multilateral debt and I explained at a press conference yesterday that we had made further progress, because we have already committed ourselves to concluding this in the autumn at the annual meeting of the IMF and the World Bank.
I discussed yesterday the terms of the communique, which the press I think have already sussed out the nuances of. I discussed it with Michael Camdessus and with Jim Wolfensen who were interested in how this had come to fruition, together with other Finance Ministers who were here.
It only has one meaning, that we are going to go now for more concessional terms, for the ESAF, that we are going to finance primarily out of the IMF. If necessary they will manage their reserves and I think Michael Camdessus agreed with myself and my colleagues from the other countries who have been on board, that that means they are going to sell gold unless those who disagree can come up with something better, and no-one can think that there is anything better actually available. So that is where we were I think, getting near to fruition on our efforts on multilateral debt.
The financial regulation is important. Again, it is important to see these meetings as flowing one to another, because we already have the G10 banks and the financial regulators around the world improving their collaboration. That collaboration has got to get better in the modern world as you have so many multinational institutions operating in marks throughout the world. Somebody has to be in charge somewhere of getting all the regulators together to take the necessary action, particularly in a crisis where you move quickly. So the British idea of a Lead Regulator has supporters, it is coming along and it will emerge at another of these meetings in due course.
The employment and economic agenda is very much in line with British thinking. We have published a policy on monetary stability which supports the approach we take to those things and doesn’t take us back to the grand management of exchange rates. Our approach to employment policy, that in the modern world you need a flexible labour market, is accepted by Finances Ministers, as well as their Heads of Government and Foreign Secretaries at a gathering of the big seven countries of this kind.
I am sure you all agree that this G7 Summit shows that the British are serious players in these gatherings of the big 7 countries of the world. We have a clear view of our role in the world, we have worldwide responsibilities. We also have the economic clout because we are one of the better performing G7 countries to be able to make a real contribution.
And so I think this was a success in Lyon, but there was a big British hand in the discussions in each of the three fora where things took place.
QUESTIONS AND ANSWERS
QUESTION (David Buchan, Financial Times):
Prime Minister, on Bosnia and Mr Karadzic, is there any kind of deadline given for him to get out of Bosnian/Serb politics? There is some talk that he has been given the deadline of Monday to resign from his newly elected post? Chancellor, is the idea of a Lead Regulator someone would could be appointed to take charge in a certain area of financial markets, or is it simply that there would be an agreement when a crisis came up that someone would be sort of pre-designated to take charge?
On the Karadzic point, there is no formal deadline set out in the communique. Our expectation is that we will hear something Mr Karadzic literally within days, by Monday or so, and if we do not then I would expect we would take action very speedily thereafter.
CHANCELLOR OF THE EXCHEQUER:
And the Lead Regulator, the idea is that you have a Lead Regulator for a particular big multinational institution, not a section of the market, but that in the regulation that has to take place of some large organisation that worldwide participates in the banking system or the financial markets of many countries, whilst all countries will of course regulate the activities of that multinational organisation within their jurisdiction, they will work together closely, they will exchange information and one Lead Regulator in one country will be responsible for pulling together the activity of them all, so all the time, not just when there is a crisis, all the time when regulating. Of course if you ever had a crisis that affected one of the world’s big players, then the lead regulator would be responsible for calling the meetings and coordinating the global response. We now have, I won’t name any company or bank, but we have based in several countries huge organisations, perfectly respectable organisations, playing a very big role in the world’s financial markets. And it is conceivable that a crisis in one of those could have a systemic effect if the global regulators weren’t up to the mark in handling all the time the regulation of their affairs and reacting in a crisis.
QUESTION (Barry Wood, VOA):
When you say there is unanimity on sanctions on Bosnia, could you indicate what those sanctions would be and who they would be imposed against? Just the Republic of Srpska or against Belgrade? And is there consensus within the G7 that Yugoslavia should be kept out of the IMF until Karadzic is out of power?
On the first point, the question of sanctions, that would be the subject of further discussion if and when Mr Karadzic doesn’t go very speedily. But I can certainly set out for you the British proposal. The British proposal would be that sanctions in the first place would be imposed upon Republika Srpska, and if that was not rapidly followed by action, we would certainly be prepared to extent those to the FRY. But that is a matter for determination, it is not yet determined finally amongst colleagues and there are different alternatives that are still floating around, but I think they would be speedily resolved as necessary.
On the second point, I think that is the general position, we would need some further progress before we would be happy with an entry into the IMF.
QUESTION (Ian Black, Guardian):
Have you any further thoughts on the question of the Secretary Generalship of the UN following the American announcement that they would veto a second term by Mr Boutros Ghali?
No, it hasn’t been discussed over the weekend and I certainly haven’t given it any further discussion myself. There is some way to go before we need to make decisions upon that. And traditionally, not just in this case, we have not indicated what our view is.
QUESTION (David Smith, Sunday Times):
On terrorism, you said earlier today that you had never ruled out the reintroduction of internment against the IRA. Can you envisage any circumstances in which you would rule it back in? And has the subject of BSE come up during your visit here, perhaps even in your meetings with the celebrated chefs?
No, I am delighted to tell you it didn’t come up in any of our meetings! It wasn’t mentioned, we have even got beyond the stage of jokes about beef, whomsoever’s beef it may be. So there was no mention whatsoever of BSE.
I don’t want to elaborate on internment and I am sure you will understand that. We have always taken the position that that is there, we have never ruled it out as an option, but I certainly would be most unwise to contemplate in public any circumstances that might encourage us to rule it back in. And if you will forgive me, I won’t do so.
QUESTION (Robin Oakley, BBC):
You are throwing things forward in terms of terrorism to the Paris meeting of Security Ministers and Foreign Ministers, what specifics would you like to see come out of that Paris meeting? And when you talk about there being no hiding place for terrorists, do you find any problem with the easing of border controls in the European Union in this respect?
There are a whole series of things where we have been urging action for some time, for example, on the question of extradition. Extradition is not remotely as effective as it ought to be. We also need to consider, as we have managed to get into the communique, the possibility of extradition without a treaty. These are matters that need to be examined and we need to reach a final conclusion. There is also the question, a slightly different but related question, of some of the protections that are available under some UN conventions, there are certain conventions under the Refugee Convention. We strongly support the 1951 Refugee Convention, but there are some people who are using the activities of the 1951 Refugee Convention in order not to engage in terrorism but certainly to encourage it. And I think we want to discuss with our partners what they feel about areas like that. So that is but two illustrations. I could probably give you a great deal more, but those are the sort of practical issues that we hope are going to be discussed.
We really want a much better coordination. We don’t want terrorists shifting from one capital to another because it is more convenient for them to stay there, and we don’t want them using a particular capital in order to launch an encouragement for terrorism in a quite different area. It is a problem we all face. We have seen terrorist activities in recent years in Japan, in the United Kingdom, in Northern Ireland, in the United States, in the Middle East and many other places. And I have never known in the seven or eight years in total that I have been coming to summits on one capacity or another, I have never known such a unanimity of view amongst Heads of Government about the need for taking some collective action to deal with this problem. There is a much greater recognition of it and a much greater recognition of the need for collective action than I can ever recall at any stage in the past.
On the European Union front, does this mean you would set your face still more firmly against any further erosion of border controls?
We are very concerned about border controls. We certainly want to make sure that the external border is strong. There is a good deal of seepage on the external border and there has been a good deal of seepage on the external border for a long time. And of course there is also the question of UK border controls, about which we feel very strongly.
QUESTION (Adam Boulton, Sky News):
This is one summit when we have been unable to describe the British government team as beleaguered. Can I ask whether you think your political luck has turned, and also when you will be reshuffling your government?
You can certainly ask. I am sorry if we disappointed you by finding ourselves in agreement with colleagues, and finding colleagues in agreement with our initiatives. For some of them, the initiatives the Chancellor has been referring to, were very much British initiatives. So it was a very productive summit in every way. As far as change in the government is concerned, I think the first person to learn about whether or when there will be any of those will be the people concerned.