For the Record. David Cameron
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discussion concerned how we should deal with the financial crisis.
I talked about the importance in our case of getting the budget deficit down, and I found lots of people willing to listen. Britain was blazing something of a trail – and this formed part of the wider debate at the G20, indeed the wider debate across the world, about deficit reduction versus stimulus.
However, the idea that there was some great division about this at the G20 was overblown. The IMF approach was clear: those countries with high budget deficits whose stability looked under threat needed to deal with their deficits; those that could afford stimulus should consider it. The IMF was more focused on trading imbalances between countries, and indeed between regions of the world.
In a meeting that brought together China, Saudi Arabia and Germany on the one hand with their enormous trade and financial surpluses, and the United States, Britain and much of Europe on the other with their significant trade deficits, it was possible to have a serious conversation about the scale of the financial imbalances in the world. To some extent these imbalances lay behind the financial crisis. The huge build-up of financial surpluses in the creditor nations, combined with the long period of low interest rates globally, had led to the ‘search for yield’ in which huge risks were taken.
Regulation of banks had become too lax, and leverage ratios too high (i.e. too much lending allowed against too little capital). This had led to the creation of too many inappropriate financial instruments, like the subprime mortgage bonds. When they turned out to be worth so much less than advertised, the world teetered on the edge of financial collapse. From this it followed that we needed, yes, to improve regulation and to ensure that banks had adequate levels of capital; but we should also deal with the underlying problem: the imbalances.
The regulatory changes that followed were sensible, but what I felt was still missing was the need for the IMF when it came to identifying financial imbalances, and for the WTO, when it came to calling out protectionist moves, to act with more vigour. They should lead the debate, and not be frightened to judge countries that were dragging their feet or heading in the wrong direction.
There was also an opportunity in this forum to build a reputation for Britain as the country that is always championing and facilitating free trade. The French were pushing back. The Indians were defensive. The Americans were saying that the Doha Round, the ongoing attempt to reduce global barriers, wouldn’t benefit them by any significant margin.
But even if we weren’t making the progress I wanted, my idea was to mark us out as the most open, globalised, free-trading, anti-protectionist nation on Earth. I was forming alliances with the Germans, Turks and Mexicans. (The full Doha package never made it, but parts of it were carved out into a Trade Facilitation Agreement that Britain championed and helped to get across the line years later, in 2014.)
Generally the summits had fallen into the ‘yielding results’ category, though there was one moment of farce, involving the colourful and volatile president of Argentina, Cristina Kirchner. Officials were worried that she was going to corner me at a drinks party and harangue me about the Falklands, and warned me that I should be robust about my deep belief in the islanders’ right to self-determination.
But when we came to meet, she didn’t even mention the British territory. ‘How can you be tough on Latin American countries’ budgets when your deficit is so high?’ was her line of attack. The only thing she seemed intent on invading was my personal space. We were locked in this Argentine tango where I kept moving backwards as she got closer and closer.
Gabby had already briefed our lobby pack that I would kick back very hard against Argentina if it raised the future of the Falkland Islands. ‘Would’ became ‘did’ as the press hurried to hit their deadlines, and the next day the Sunday Express splashed with ‘Cameron … Tells Argies: Hands Off Falklands’.
It was one occasion where, following a complete falsehood, neither I nor the press wanted to correct the record. We were genuinely all in it together.
Then, in July 2010, came my first trip to America as prime minister.
I knew that getting my relationship right with Barack Obama was essential. So many of the things I wanted to achieve in foreign policy – from bringing an end to the conflict in Afghanistan to pushing for progress on climate change – would depend on the approach taken by the US.
I had met Obama when he was a senator, and we had got on well. I remember asking him if he thought he was going to win the 2008 presidential election. He said he hoped so, but he thought he had a lot of things to get over – the ‘inexperience thing’, the ‘black thing’, the ‘Muslim thing’. I admired his frankness and candour, and we had built on our bond at the recent G8 and G20.
The protocol – bilaterals, meetings of our teams, press conferences – of that visit all went to plan, and Obama insisted on giving me a personal tour of his garden and the private apartments at the White House. He described the place as a ‘beautiful cage – but still a cage’ and showed me a bust of Churchill he had put in pride of place outside his bedroom.
The relationship was plain for all to see in the easy and instant connection we forged – one that was rooted in the values we shared.
Yes, he was a Democrat and I was a Conservative. But when it came to the issues in front of us, we didn’t need time to reach agreement. We were both committed to the defeat of the Taliban, but believed the war in Afghanistan shouldn’t go on forever. We agreed that lethal force should be used to defeat terrorism, and were passionate about progress on climate change and development. We were also pro-free trade, and wanted to counter the forces of protectionism that risked dangerous trade wars. Indeed, I always sensed that Obama was envious of our political system. I was in coalition, but still had the freedom and power to go further on these issues than he could.
My impressions on that visit were that he was a likeable, decent man with a great sense of humour and, as a former law professor, the ability to provide a brilliant analysis of the most complex situations. What a relief it was, I thought, that someone with good values and buckets of common sense was in the White House, in the most powerful job in the world.
The strength of the relationship also mattered at that first meeting, as there were some particularly tricky bilateral issues to deal with, including the horrific oil spill from BP’s Deepwater Horizon rig in the Gulf of Mexico in April 2010. This was being billed as a showdown between the US and the UK, between Obama and me. US officials continued to refer to the company as ‘British Petroleum’, though it had dropped the name in 2000 after a series of mergers and had, as I pointed out to Barack, the same percentage of American shareholders as British ones.
I accepted – as did the company – that it would pay a hefty fine in compensation, but the US system seemed to be hell-bent on breaking the business altogether. Not only would that threaten the livelihoods and pensions of many people – British and American – it would also leave this important company weak and susceptible to takeover, perhaps by a state-owned or state-controlled business from Russia or China. How could that be in our interests?
There was also an issue of basic fairness. When US-based companies – like Halliburton, which was one of the three companies involved in Deepwater Horizon’s operation – were not paying unlimited damages, why should a British-based one be singled out for such treatment?
I made all these points, but it was initially hard to tell how much impact they had. At least Obama could see how strongly we felt about the issue.
The most significant question we discussed in Washington was whether and how to talk to the Taliban. Though I was to make progress on this in the following years, it was another of the agendas I wish I had pushed harder.
After the summits and America came Turkey – not a country that is usually found on the itinerary of new prime ministers’ Grand Tours. But I was eager to change that. In a bid to reach out to the powers of the future, I wanted to go there as early as possible.
I had always believed Turkey’s success was important. It was a potentially powerful ally to