IV. POLITICAL ENVIRONMENT NATURE OF BILATERAL RELATIONSHIP WITH THE UNITED STATES The important Anglo-American partnership is one of the most enduring of our bilateral relationships. It remains securely anchored in historical traditions, common political systems and values, compatible security interests and a shared cultural heritage. At the government level, the closeness of the relationship ensures a remarkable degree of cooperation on a very broad range of issues. With the end of the Cold War and the diminished relative importance of security issues, and with the movement towards European integration, our bilateral relationship has further evolved. The United States now emphasizes to a greater extent than previously the value of our economic interests in Asia and Latin America. The United Kingdom, for its part, is working now more closely with its European partners on political, trade and other economic matters. Yet, the US-UK alliance continues to be a key one for both countries, and the pattern of productive cooperation is expected to continue. We share very similar, if not identical, views on such priority issues as extending security to Eastern Europe, promoting political and economic reform in the former Soviet Union, and furthering peace in the Middle East. MAJOR POLITICAL ISSUES AFFECTING BUSINESS CLIMATE None BRIEF SYNOPSIS OF POLITICAL SYSTEM, SCHEDULE FOR ELECTIONS, AND ORIENTATION OF MAJOR POLITICAL PARTIES Constitutional System: The United Kingdom of Great Britain and Northern Ireland is comprised of four national entities: England, Scotland, Wales (together making Great Britain), and Northern Ireland. The United Kingdom is a constitutional monarchy. The constitution is largely unwritten, and almost all political power is vested in one chamber of the bicameral Parliament--the House of Commons. The other chamber, the House of Lords, consisting of hereditary and life peers, as well as senior officials of the Church of England, has limited legislative powers. The House of Commons consists of 651 members -- 524 from England, 72 from Scotland, 38 from Wales, and 17 from Northern Ireland. Members are elected from specific geographic constituencies, each representing about 60,000 voters. Because of population shifts, constituencies in England vary considerably over time. General elections are held no more than five years apart, the last having been in April 1992, always at a date of the government's choosing. The next election must be held by the spring of 1997, but is more likely to occur in the spring or fall of 1996. The government, a cabinet headed by a Prime Minister, is formed by whichever party, or coalition of parties, can command a majority in the Commons. Legislation is passed by majority vote. At present, the major parties are the ruling Conservatives (Tory Party) and the opposition Labour Party. The Liberal Democrats constitute the only other significant political force. Administratively, the United Kingdom acts as a centralized state. The national government, consisting of some 17 cabinet-level departments, plus smaller entities, is staffed by career, nonpartisan civil servants. Only the three or four senior policy positions in each department (the Secretary of State, the Minister of State, and the junior ministers) are occupied by political appointees. They are drawn from the ranks of the ruling party in the House of Commons or the House of Lords. The current Conservative government under Prime Minister John Major is pro-business in orientation and seeks to maximize the growth of private enterprise. While still coping with the economic and social effects of having "weathered" Britain's longest recession in decades, it remains enthusiastically committed to the philosophy and policies of the previous Thatcher administration. Even though firmly focused on implementing the Single Market program, some Conservative Members of Parliament express deep concern over the effects that full European integration will have on the country's sovereignty. Britain opted out of the "social chapter" of the Maastricht Treaty and deferred a decision on joining the European Monetary Union, if and when it becomes operational. Division over these and other related issues has led to a spate of factional disputes, at times weakening the Conservatives' capacity to present a united policy front. Since the early 1980's, the opposition Labour Party has attempted to widen its popular appeal by moving steadily towards a more moderate position nearer to the political center. In the process, it has reduced the traditional dominant influence of the trade unions over party policies. It is not anticipated that a future Labour government would seek to re- nationalize privatized industries and utilities, or significantly reverse legislation restricting trade union business sector activities. A Labour government would most probably pursue orthodox fiscal and monetary policies. Labour is considerably more pro-European than the Conservatives; it endorses the Maastricht "social chapter" and fully supports UK membership in the proposed European Monetary Union, once the requisite economic convergence criteria are met. The third major force in British politics is the centralist Liberal Democrats, formed in the early 1980's when several Labour Party Members of Parliament, dissatisfied with the strongly left-wing orientation of their party at that time, joined forces with the majority of the small Liberal Party. The Liberal Democrats have commanded a sizable share of the popular vote. However, due to the current "first-past-the- post" voting system, they have managed to secure only 25 seats in Parliament. Cultivating an independent identity, strongly pro-European and supporting Parliamentary reforms favoring increased openness in government, the Liberal Democrats might conceivably hold the swing vote in any future "hung" Parliament.