Western Europe Great Britain Domestic Affairs A HE POLITICAL WORLD was startled by the news of Prime Minister Harold Wilson's resignation in March 1976. He was succeeded by former Foreign Secretary James Callaghan, elected by the parliamentary Labour party after three ballots. The precarious position of the government was emphasized both in March, when three by-elections showed a fall in Labour votes and a rise in C^ nservative —though no party lost a seat it had previously held; and in April, when the resignation of one Labour Member of Parliament reduced the party's voting strength to 314, as compared with 316 for all other parties. In February 1975 Margaret Thatcher had replaced Edward Heath as leader of the Conservative party. In June of that year, in a 64.5 per cent turnout, 67.2 per cent of those who went to the polls voted for the United Kingdom to stay in the European Economic Community (EEC). On the economic front significant changes of policy took place. Foremost among these were the imposition in July of a limit of £6 per week on pay rises and the introduction of more food and government housing subsidies. These measures were taken to combat a rapidly rising rate of inflation, which in May was running at 30 per cent per annum. In this way the Labour party, which had won power in 1974 by asserting the principle of free collective bargaining, reverted to a policy of compulsory wage controls after only a year. There were still doubts whether the Trades Union Congress would agree to the change; it did so at its annual conference in September by a majority of two to one. The deflationary effect soon became apparent: the annual rate of inflation was reported in December to have declined to 14.9 per cent and unemployment to have passed the million mark. In other respects, the government pursued an interventionist policy in the econ- omy through a newly established National Enterprise Board, which was reflected in the take-over of British Leyland in April and governmental assistance to the British branch of Chrysler in December. A more hopeful development of the year was the first deliveries of oil from the North Sea. In February 1976 the problems caused by cost inflation and the demand for 359 360 / AMERICAN JEWISH YEAR BOOK, 1977 improved public and welfare services led to the issuance of a White Paper designed to cut public expenditure. This would hold back public expenditure in 1979-80 to much the same level, measured at constant prices, as had prevailed in 1974-1975. The White Paper provided for reductions in defense spending, food subsidies, hous- ing subsidies, new roads and transport services, and educational facilities. Compen- sation to the nationalized industries for their policies of price restraint was also to be phased out. These measures provoked intense controversy inside the Labour party and were only accepted in the House of Commons when the government made them an issue of confidence. On the day Harold Wilson announced his resignation, he emphasized at a news conference that he did not expect his successor to adopt radical changes in policy, particularly on economic issues, but to carry out present policies with renewed vigor. Indeed, on April 5, the day Callaghan was chosen as the new Prime Minister, he called on the factions of his party to unify behind efforts to rescue Britain from its long-term economic decline. In June the government successfully secured the adoption of a new policy aimed at limiting wage and salary increases to 4.5 per cent, to succeed the prevailing maximum increase of £6 a week. The fact that the number of strikes in the first five months of 1976 was lower than in any comparable period since 1968 demonstrated the acceptance of the policy of wage restraint. This, com- bined with a reduction in the rate of inflation and an improvement in the balance of payments, gave a more hopeful augury for the future of the economy. Elsewhere in the United Kingdom the demands of Scottish nationalism were met in part by a White Paper on devolution (November 1975). But there was no relaxa- tion of tension in Northern Ireland. Although the last detainees were released in December, this did not prevent bomb attacks in London and Manchester (January, August, and October). Middle East Policy In April Britain refused to provide Libya with either submarines or combat aircraft in a deal rumored to amount to £1,000 million, on the grounds that their supply would prejudice chances of finding a peaceful solution to the Middle East conflict. Prime Minister Harold Wilson told the House of Commons that the deci- sion was made within the policy framework announced to Parliament in June 1974 by Minister of State at the Foreign Office David Ennals (AJYB, 1976 [Vol. 76], p. 291). This was reiterated in November, when Israel Ambassador to Great Britain Gideon Raphael was assured that the main principles guiding British policy in the Middle East had not changed and no new commitment to sell arms to Egypt was made during President Anwar al-Sadat's London visit. The assurance followed rumors of a large British arms deal with Egypt not dispelled by the denial of David Ennals, minister of state in charge of Middle East affairs, in the Commons in June that such an agreement was signed when Egyptian Deputy Premier and Foreign GREAT BRITAIN / 361 Minister Ismail Fahmy came to London that month. However, Foreign Minister James Callaghan did sign agreements with Egypt on investment protection and on economic, industrial, and technological cooperation. VOTE ON ISRAEL IN UN Britain joined the United States in a sustained, but unavailing, effort to prevent the UN General Assembly from passing, on November 10, 1975, the resolution branding Zionism as "a form of racism and racial discrimination." Using unusually forceful language, chief British delegate Ivor Richards pointed out that the resolu- tion's confusion of racism and racial discrimination with nationalism "can only serve to undermine the right of the State of Israel to exist. The UK categorically rejects and will oppose any such move." Amidst communal protest, the Board of Deputies passed an emergency resolution denouncing "the latest international libel perpetrated against Israel and the entire Jewish people by the Arab-Communist dominated Assembly of the United Na- tions." A motion deploring the resolution and supporting a declaration made on behalf of all EEC members rejecting any notion that Zionism was racist was tabled in the House of Commons in November. A December Gallup poll, based on repre- sentative samples in four countries, showed that only one in four of the British public agreed with the resolution that Zionism was a form of racism or racial discrimina- tion, compared with one in four in France, and one in six in West Germany and Switzerland. In December Britain voted for a Security Council resolution condemning Israel for its air-raid attacks on Lebanon (vetoed by the U.S.) on the grounds that "there can be no justification" for such large operations. It rejected the right of any government to take such action. In the same month Britain and the United States walked out of a Paris conference of intergovernmental experts of UNESCO in protest against a vote to define Zionism as "a form of racism and racial discrimina- tion." PARTY POLITICS AND ISRAEL In January a pro-Israel group within the Conservative party was launched with the support of nearly 90 M.P.s, including Tory leader Mrs. Thatcher. Fears aroused by the February appointment as principal Opposition spokesman on foreign affairs of Reginald Maudling, one-time supporter of Alec Douglas-Home's policies, and by his November speech which was interpreted in some quarters to signify a dramatic change in Conservative Middle East policy, were allayed in December when Mrs. Thatcher declared that the party continued to believe that any Israeli-Arab settle- ment must be based on UN Resolution 242. The party also supported the govern- ment's vote against the anti-Zionist resolution in the UN and condemned terrorism in any form, no matter for what cause. 362 / AMERICAN JEWISH YEAR BOOK, 1977 In June the Labour party's pro-Arab faction, organized in the Labour Middle East Council, initiated a campaign to bring about "a revision of Labour's pro-Zionist attitude" with a pamphlet Labour and Palestine written by David Watkins, M.P., who succeeded Christopher Mayhew as chairman of the group (AJYB, 1976 [Vol. 76], p. 289). The Council's membership was 26, less than one quarter of that of the pro-Israel Labour Friends. Over 100 Young Liberals walked out of the September Liberal Assembly at Scarborough after the national conference rejected a motion by Mayhew to allow London Palestine Liberation Organization representatives to address it. A Liberal party Middle East policy statement in October attempted to reconcile older mem- bers' pro-Israel sentiments with Young Liberals' pro-Arabism by calling for both "the recognition by the Arabs of Israel's right to exist" and an end to Israel's "territorial occupation" of Arab territories acquired since 1967. It also supported the right of the West Bank and Gaza Palestinians "to determine their own future through their own chosen representatives." Whereas current government policy fully supported Secretary of State Henry Kissinger's initiatives and refrained from any direct involvement in peace-making efforts unless it was invited to do so by both sides, the Liberals advocated a British effort, in cooperation with its partners in the European Economic Community (EEC), particularly France, based on Security Council resolutions.