271. Telegram From the Embassy in the United Kingdom to the Department of State1

9929. For the Secretary from Bruce.

The Prime Minister will come to Washington Friday expecting US interest to focus on international affairs; his own approach to these problems may be largely governed by British domestic preoccupations. Important as the Far East and Middle East are, for the British they are less compelling than domestic economics and politics and the Common Market. Since the sterling crisis of July 1966 the Prime Minister has been progressively committing himself to a bold political gamble—a set of policy commitments that are, in the short run, economically painful and politically distasteful to the British people—trusting to long-term results for his political vindication. Deflation, tight control of wages and price, rising unemployment, defense at the expense of social welfare-these are shorthand reminders of the host of domestic issues that now beset him. Things will get worse before they get better. The latest (April) indicators show unemployment still rising, production sluggish, and a further rise in imports as against exports. Even public support for the Common Market bid, in the wake of DeGaulle’s public opposition,2 is slipping according to the polls.
In the face of these problems, the Prime Minister has bet nearly all his political stack of chips on his Common Market application. Now, having done so, he finds himself in trouble because of DeGaulle’s intransigence, even perhaps on the question of negotiations.
While Wilson has persevered in his long-range strategy through the winter and the spring, the political cost has mounted. Labor has slipped badly in Parliamentary by-elections and lost disastrously in the nationwide local elections. Labor’s public support has been steadily declining in the polls; in the past two months, for the first time in over three years, the Conservatives hold a lead in public favor. Even the Prime Minister’s personal popularity in the polls, always higher than his party’s, is down.
Along with widespread public disaffection, there is trouble within the Labor Party. Large scale revolts in the Parliamentary Party on the defense budget and the Common Market application have posed a serious disciplinary problem. Wilson’s tough and sensational lecture to a Parliamentary Party meeting in March had at best a temporary effect. While the trouble is mainly on the left, it spreads across the party. The defense budget, East of Suez, the Common Market, Vietnam, and domestic economic policies each have their special critics. While they may not all unite on one issue, their sum is a range of discontent that infects a large section of the party. Even the loyalists are unhappy over the Prime Minister’s failure to punish leftist rebels.
Wilson has shown no signs of retreat on what he regards as the basic issues—the domestic economy and the Common Market—to placate his critics. On the contrary, he continues to take a position well ahead of his party (and apparently) of the general public, counting on the fact that, between now and 1971, he can pick his own most favorable moment for a general election.
Nevertheless, no leader can be indifferent to the pressures Wilson is under, and he must, so far as possible, do what he can to improve his present political position. He is putting a lot of personal effort into repairing his intra-party fences and trying to damp down the harmful and publicly visible squabble within the Labor Party. Most important, he is unquestionably looking for issues on which, without sacrifice of his basic purposes, he can make some concession to public and party disaffection.
There may be, for example, some minor improvements in social welfare programs in July mini-budget and as wage increases are reviewed on a case-by-case basis, there may be some politically useful concessions there (the government has conceded that it expects wages to rise six percent during this calendar year and some politically important wage claims are pending).
In this context, the proposed East of Suez reductions are particularly significant. An announcement in July of substantial saving in [Page 574] that area, looking ahead to what may otherwise be a stormy Labor Party conference in September, is probably the juiciest bone he can throw his critics. It commends itself in both budgetary and foreign exchange savings (at a time when no other sources for welfare spending and investment incentives are in view) and it appeals to the growing number who, for doctrinal and emotional reasons, want to reduce Britain’s world role, furthermore, it is thought by some to strengthen the Common Market bid.
The Prime Minister is, thus, under heavy political fortune. There is no sign, however, that he is weakening in his long-term strategy. He is deeply committed on both domestic economic policy and the Common Market; it would probably be as costly to retreat as to see it through (though what to do if the Common Market bid fails must be now an uncomfortable question).
In this difficult situation, the Prime Minister shows every sign of keeping his nerve. He is visibly self confident, retains all his skill and aplomb in public performance, and apparently continues his mastery over his Cabinet and his party. He is helped, of course, by Tory weakness; the swing in public opinion seems more an expression of dissatisfaction with Labor than of support for the Tories. Heath’s personal popularity remains at a low level.
Wilson will probably hold to his present course and he is giving an impressive exhibition of skillful and courageous leadership, but one should not underestimate his difficulties or the stresses on him. Even within his Cabinet, he is under real pressure to retreat on issues not central to Labor’s political fortunes or to the UK economy but of great interest to the United States—issues like Vietnam, the basic East of Suez policy, and even, perhaps, the UK’s role in the present Middle East crisis.
When I come to the Department on Thursday morning I hope for an opportunity to discuss UKG’s attitude toward the Middle East problem.3
  1. Source: National Archives and Records Administration, RG 59, Central Files 1967-69, POL 15 UK. Secret; Priority; Exdis.
  2. The British Government announced its decision to apply for membership in the EEC on May. At a May 16 press conference, President de Gaulle ruled out British membership in the Common Market at that time citing the disruptive effects of the continuing sterling crisis on the process of economic integration.
  3. According to an entry in his diary, Bruce met with President Johnson and Secretary Rusk on June 2 for discussions of “the Middle East and future British East of Suez dispositions.” (Department of State, Bruce Diaries: Lot 64 D 327)