I'D LIKE TO START, IF I MAY, LORD CALLAGHAN, BY ASKING YOU ABOUT THE LONDON SUMMIT IN MAY, 1977. THAT IN A SENSE WAS THE FIRST TIME THAT PRESIDENT CARTER TOOK HIS PLACE AS THE LEADER OF THE ALLIANCE. FROM YOUR OBSERVATION, HOW DID CHANCELLOR SCHMIDT AND PRESIDENT CARTER GET ON AT THAT MEETING?

Oh quite well. After all, Chancellor Schmidt has an admiration for the United States. He began by having an admiration for Britain. Then, I think he became disillusioned with us and he had, he was in the middle of his period of admiration for the United States. And then, of course, he became disillusioned with them and turned his illusions elsewhere. But, so, he welcomed, like the rest of us did, the advent of President Carter, although we'd got on very well with President Ford, as you know. And there was no, there was no feeling at all of any hostile feeling between them. Although, I think, President Carter, rather Helmut Schmidt was getting a little disillusioned about American economic policy at that time.

NOW, THIS WAS THE TIME WHEN DISCUSSIONS WERE AFOOT ON SALT II, WHICH AS IT TURNED OUT WAS QUITE LONG IN THE BREWING. IT WAS AGAINST THIS BACKGROUND THAT HELMUT SCHMIDT IN 1977, IN OCTOBER 1977, MADE A SPEECH WHICH SUBSEQUENTLY, TO WHICH SUBSEQUENTLY A GREAT DEAL OF IMPORTANCE HAS BEEN ATTACHED, DO YOU RECALL AT THE TIME YOUR OWN REACTIONS?

Oh, yes, I remember the speech. And I remember that hardly anyone took very much notice of it, except the defense circles. It certainly didn't become a cause celebre. But he did raise this question as a former Minister of Defense in Germany that there would be a rung missing in the nuclear ladder of ascent. And I don't think anybody really understood very much what it was, except the great defense experts who constantly examine these things, and so it didn't catch on. But Helmut Schmidt was always very conscious of the fact, and becoming increasingly conscious of the fact that, as talk in America grew about possible withdrawals and now there was now there was a possibility of equilibrium in the nuclear field, whether America would risk her cities in the event of an attack on Europe. Or would we be separated. Helmut Schmidt saw this all very clearly from the beginning. And he followed it through with typical German logic.

I'D LIKE TO MOVE ON NOW, IF I MAY TO THE SUMMIT IN GUADALUPE IN 1979 WHEN, AS YOU SAID AND AS YOU DESCRIBED IN YOUR MEMOIRS, YOU DISCUSSED THE ATTEMPTS MADE BY THE CARTER ADMINISTRATION TO ADDRESS THIS QUESTION. CAN YOU BRIEFLY DESCRIBE FOR US THE EXCHANGES WHICH TOOK PLACE WHEN PRESIDENT CARTER ATTEMPTED TO DEAL WITH THIS?

What President Carter was hoping for from Europe was a combined approach in his forthcoming discussions with General Secretary Brezhnev. He was due to sign the SALT II Agreement and he wanted to be certain that we Europeans would back the SALT II Agreement, which, as you remember, put a ceiling, was supposed to put a ceiling on nuclear weapons. And in addition, he want, wanted, when he met Brezhnev, not only to sign SALT II with him, he wanted to raise the question of SALT III, whether there shouldn't be a next round of Strategic Arms Limitations Talks. Now, I think we Europeans, if I may put Helmut Schmidt, Giscard and myself in that category, we were quite happy for Carter and Brezhnev to discuss a reduction in the ceiling, if that was what it came to, in nuclear wea... strategic nuclear weapons. But of course, if they were going to embark on a discussion on intermediate range nuclear weapons they began to be called what we then called grey areas, which included American bases in this country from which aircraft were flying and all these other weapons, then obviously Britain and France and Germany all had a much greater interest in that, a more direct interest. And I think what Carter had hoped, rather vainly, and it was never an expectation he should have entertained, if indeed he did, was that we would all three go there with a combined point of view. Well, you know, of course, that the French always stand out of such discussions anyway. They wouldn't take part in these discussions. Helmut Schmidt was very worried about the, this removal of the ladder, of this, of the rung in the ladder of escalation. And so the discussion was a rather a fruitless one and the exchanges grew rather sharp. And I made clear to President Carter that if there was any discussion about weapons that concerned Europe, such as, for example, the British nuclear deterrent, then I would certainly want to be involved in such talks. Giscard took precisely the opposite view. He said to Carter, you have no right to talk about French nuclear weapons and we certainly shouldn't take part in any of the talks, Helmut was rather between the two, I think. And he laid himself open to charges that he was prepared to grumble about this and do nothing about it. That was pretty unfair. You see, I think Carter had in mind the fact that the modernization of our weapons systems had got out of phase because of the introduction of the SS-20. Their, their modernization program of the old SS-4s and SS-5s was ahead of ours. We were now beginning to think about modernizing ours and introducing Cruise and Pershing. And it looked possible that the decisions about this might come up at about the same time that discussions on SALT III would commence. That would, obviously, be a very bad background for discussions of that sort. And Carter was saying to us, look, I'm ready to build these weapons. But I'm not ready to build them and waste the taxpayer's money on them, unless some of you are willing to deploy them. This is where Helmut got a little uptight. And he said, "Well, I don't think I want them on German soil, unless others take them." I pointed out, "Look, we've already got American bases. We have the strategic bases. And we have the F-111s in our country. So, really, you're not taken on any greater risk." And Schmidt acknowledged that this was so. But at the end of a rather ill-natured discussion, I'm bound to say, he did agree that Germany in the end would have to take them, provided others did. And I said that, in those circumstances, of course we would play the full part in the alliance that Britain had always played. But, we then went on to say that if it were possible to get the Soviet Union to see sense and to withdraw, we didn't at those, that moment say destroy, to withdraw the SS-20s well behind the lines in Europe, perhaps even behind the Urals that we in those circumstances would not deploy, even though we would have the Cruise and the Pershing. And that was the point at which we agreed at Guadalupe that this was the dual track that we would pursue. We would be willing to deploy, if we couldn't get agreement. But we would prefer that we should have agreement on the withdrawal of the SS-20.

DID YOU THINK IT WAS LIKELY THAT THERE MIGHT BE AN AGREEMENT? SOME AMERICANS THAT I SPOKE TO, FOR EXAMPLE, LESLIE GELB, FELT THAT NOBODY REALLY EXPECTED THAT, GIVEN ALL SORTS OF THINGS AND PARTICULARLY THE SOVIET'S POSITION, THAT THERE WOULD BE AN AGREEMENT.

I didn't rule it out, or I wouldn't have suggested it as a possible way forward. I thought the odds were probably against and it seemed likely to me that we would have to deploy before we could get agreement. And indeed that's what happened. But it was interesting that the Soviet view did change after our deployment.

YES, INDEED. LORD CALLAGHAN, THE OTHER THING WHICH HAPPENED, THOUGH, WAS THAT YOU SOUNDED OUT PRESIDENT CARTER ABOUT PURCHASING TRIDENT. WERE YOU WORRIED THAT THERE MIGHT BE A DANGER OF NOT BEING ABLE TO REPLACE POLARIS?

No, I don't think I was worried about that. I was pretty certain. And, indeed, President Carter confirmed it at the private talk there that they would be willing to assist us to replace Polaris, if we could afford it.

WAS THIS THE FIRST TIME THIS QUESTION HAD BEEN RAISED, OR HAD THERE BEEN EXPLORATIONS OF THIS AT AN OFFICIAL LEVEL BEFOREHAND?

Oh, I'm pretty sure not, although you're asking me about events of several years ago. I don't think, I think I had, I had said that this was a politically sensitive matter and no one should raise this with the Americans until I had agreed. And what I had done was to set in train a expert discussion on our side of the Atlantic as to what would be involved, either in purchasing Trident or indeed in not purchasing it. What would be the economic, the financial and the strategic consequences. That was for the use of our own cabinet. But when, after I had seen Carter then I decided that I would send two of our great experts one of a great scientist and the other who knew the political area very well, a great civil servant, to see corresponding officials in the United States in order to carry the technical discussions further. So that our cabinet, when it came to consider it, which would have been sometime after the election, perhaps in 1980 early or that sort of thing that they would have had the full information in front of them of what would be involved.

RIGHT. CAN I NOW, LORD CALLAGHAN, JUST ASK YOU A GENERAL QUESTION ABOUT THESE MATTERS? IN YOUR MEMOIRS, YOU DESCRIBE FLEXIBLE RESPONSE AS A NOT WHOLLY CREDIBLE SCENARIO. COULD I ASK YOU TO EXPAND ON THAT SLIGHTLY? DID MAJOR STATESMEN IN NATO SUCH AS YOURSELF TAKE NUCLEAR DOCTRINE SERIOUSLY?

I think we took it seriously because there was nothing better. But it was a faut de mure I was never convinced that we would follow through this particular doctrine. But on the other hand, you have to have some kind of military doctrine, and that was the one which held the field at that time. I think it has become less credible since. And this is one reason why I am ready to support the INF Agreement. That I think it has removed a rung that was never very strong or that you could put much weight on in any case.

CAN I JUST GO BACK TO SOMETHING WE DEALT WITH RIGHT AT THE START, WHICH IS THE RELATIONSHIP BETWEEN CHANCELLOR SCHMIDT AND PRESIDENT CARTER. THERE SEEMS TO BE A GENERAL AGREEMENT AMONG THE PEOPLE THAT WE'VE SPOKEN THAT THEY DIDN'T ALWAYS GET ON TREMENDOUSLY WELL AND THAT HELMUT SCHMIDT, AS YOU'VE INTIMATED, CAME TO LOSE HIS RESPECT FOR CARTER, PERHAPS BECAUSE OF THE NEUTRON EPISODE. DO YOU THINK THIS IS AN INSTANCE WHERE PERSONALITIES WERE IMPORTANT IN HISTORY AND WHERE THIS PARTICULAR RELATIONSHIP WAS SIGNIFICANT FOR THE, WHAT HAPPENED IN THE ALLIANCE?

Well, personalities are important in history. They may not alter the general thrust of the tide, but they can certainly divert the current around a few sandbanks on the way to the sea. And, I've no doubt that personalities can either improve or worsen relationships between countries, even thought the national interest remains predominant. President Carter, Chancellor Schmidt became very disillusioned with American policy. It was more than the, than a personality clash. He really felt the Americans were following an economic and financial policy that was very bad for the world in the long run. There was also a difference in temperament between the two. President Carter had a precise engineer's mind. He was an engineer. He liked clearly set out propositions. He wanted them followed through logically and he wanted to arrive at a conclusion. Having arrived at the conclusion, it should be implemented. On the whole, our discussions didn't normally take that view. It was more an exchange of ideas, out of which would eventually crystallize some common approach. And that, I think, was one of the causes of the difficulties between the two. And the personalities then began to intrude, rather. I don't think it's right to say that Chancellor Schmidt ever lost his respect, to use your word, ever lost his respect for President Carter as a man. I think President Carter emerges as a man of considerable dignity, generosity, and of very fixed principles -- principles and convictions that I admire. I also, I may say that Schmidt, in his own way had his own very, he was a very considerable statesman and thinker. And part of my role as a pretty simple individual was to try to get each of them to understand the other and to interpret each of them to the other. And I very happily assumed that role, without trying to be a broker of any sort. But I could see all Carter's qualities and what he could put into the scene, and I could see Schmidt's great qualities. And hang it all, we don't all of us, indeed none of us has the whole pack of cards, do we? So you've got to combine the best in both.

RIGHT, IF YOU'D LIKE TO ADDRESS THAT QUESTION LORD CALLAGHAN. WHICH WAS YOUR FEELINGS, YOUR REGRETS AT THE ARMS CONTROL AGREEMENT.

Yes. I think what happened after I left office, and after and after President Carter left office, and President Reagan took over, illustrated the inconstancy of foreign policy. We seem to move in various moves from being willing to work with the Soviet Union and not being willing to work with the Soviet Union. Immediately after the return of President Reagan, you'll remember, we had a lot of speeches which portrayed the Soviet Union as the "Empire of Evil." And there was no real attempt to come to an agreement on something that has now been shown in 1987 to be of value to both sides. Now, I think the lesson to be drawn from that is this. That it is a very tricky business to try to manage the relationships between two systems which have a different philosophy, a different ideology, a different set of relationships between the state and its citizens, and we can swing violently from one extreme to the other, a different attitude to human rights, but our national interests remain the same. And we should have more constancy, and there should be more consistency in the approach that we take to the Soviet Union on matters like arms control and disarmament, which are to some extent separate from these issues. They are technical questions, they are in the interests of both sides. And we should not allow... as far as we can avoid it, we should not allow our immediate prejudices to interfere with the constant run of policy. Now clearly, if you have an event like Afghanistan, you cannot pretend to carry on as you were. But that isn't the whole of the story. And I feel, myself, that we should adopt a slogan that I invented, I believe, many years ago, and I constantly say, and I will continue to say it, that our relationship with the Soviet Union should be to cooperate where we can, and compete where we must, recognizing that the systems are different, but despite the difference in the systems, we have common interests; and those common interests are now growing. The environment is such an interest, the whole question of education and other fields are common interests that we must try to work out collectively.

MAY I FINISH WITH ONE FINAL QUESTION, LORD CALLAGHAN? YOU MENTIONED THE RELATIONSHIP BETWEEN THE STATE AND INDIVIDUALS, WHICH RAISES THE QUESTION OF PUBLIC OPINION. NOW, DID YOU FORESEE YOURSELF, IN 1979, WHEN YOU SAT IN TRAIN OR HELPED SET IN TRAIN THE MOVE TOWARDS DEPLOYING CRUISE AND PERSHING, DID YOU FORESEE THAT THIS WOULD TURN OUT TO BE POLITICALLY QUITE DIFFICULT FOR CENTER-LEFT ADMINISTRATIONS IN EUROPE?

I don't think I foresaw that it would be... so difficult, and I don't think it need have been so difficult, frankly. It was a bargaining approach in which we were trying to set off one thing against another, and I think it was beaten up rather artificially. And there was, of course, it was accentuated by the shortsightedness of those who were whipping up the atmosphere in relation to the Soviet Union. And we got to a stage where people feared the nuclear weapon much more than they feared the Soviet Union. And so I think that these are the events of politics that you can never really foresee, and they happen. And now look, what's happening, what has happened now: with the conclusion of the INF agreement, people's fears are much at a much lower level than they were before. Now, this is a thing I complain of, we've got to try to get a steady course if we can.