Britain's 'Iron Lady' tries to shed some of nation's armor

Can a nation build a strong military force while cutting public spending? As American presidential candidates mull over this question, Britain, the ally with the strongest reputation for hawkishness, appears ready to answer "no."

Prime Minister Margaret Thatcher's well-earned reputation for supporting a military buildup her has been threatened by several recent leaks that indicate that her government, despite its strong military posture, is being forced to cut back on defense because of a deepening recession.

The leaks have revealed a shift in Cabinet attitudes in recent months. When Mrs. Thatcher came to Downing Street in May 1979, one of her first acts was to award a substantial pay increase to members of the armed forces. Since then, the Cabinet has approved the $:5 billion ($12 billion) Trident missile program and voted to invest heavily in new tanks, and Mrs. Thatcher has earned the epithet "Iron Lady."

While the other major spending department in Whitehall have come under the Treasury's ax, the Ministry of Defense has remained unassailable -- until now.

Several recent leaks have undermined Mrs. Thatcher's position. They show that one of her staunchest Cabinet allies, Chief Secretary of the Treasury John Biffen, secretly told the Ministry of Defense to prune spending by a substantial

Mr. Biffen's request, which follows a $:140 million ($336 million) cut in military spending in July and a three-month moratorium on defense contracts announced in August, would reduce the growth of Britain's new defense budget to about 1.5 percent in real terms by next spring.

Right-wing Conservative members of Parliament, surprised by the leak and outraged by its substance, note that figure is only half of the 3 percent annual increase requested by NATO from its members up to 1984. Adherence to the NATO plan was a cardinal point in Mrs. Thatcher's election campaign in 1979, and one that many Conservatives hold sacrosanct.

The proposal for the cut came in a letter to Defense Secretary Francis Pym. It was leaked just as the Cabinet began searching for ways to cut public spending by $:2 billion ($4.8 billion) in the face of the deepening recession here.

Another letter to Mr. Pym, from Sir Frank Cooper, a permanent undersecretary at the ministry, told of serious concern among the chiefs of staff of the armed forces about the effect of the economic measures on their operational capacities.

The Navy, in particular, has been fending off a government plan to cut the fleet's fuel consumption, with officers arguing that its ability to patrol the Gulf would be seriously hampered.

The issue of leaking a rollback in defense spending has several ramifications:

* Relations with NATO. Britain will not fall out of favor in the alliance over the cuts. Other countries, including Canada, Denmark, and West Germany, have had difficulties meeting the 3 percent target. Nevertheless, the cuts will worry military planners, facing this year's crop of military problems (in Afghanistan and the Gulf) and the rising costs of fuel, manpower, and equipment.

But as the thrust for unilateral nuclear disarmament grows in the opposition Labour Party here and spills over into opposition to Britain's membership in NATO, Mrs. Thatcher is expected to maintain her pro-alliance image vigorously -- while simultaneously trying to cut costs.

* Breaches in government secrecy. The timing of the leak (just before Parliament reconvened, and just as the Cabinet is gearing up for what may be its bitterest battle yet over spending cuts) is seen as a typical attempt by supposedly apolitical civil servants and military men to influence public opinion and sway government policy. An angry Mrs. Thatcher, already peeved by leaks from what many feel is an unduly secretive system, has launched a full-scale mole hunt. But many observers are pleased that the leak has allowed fuller public debate on an issue that they feel had no military reason for secrecy.

* Cabinet politics. Mr. Pym earlier took a fund-me-or-I-resign approach threatened defense cuts -- and won. Now some observers feel he may again talk of resigning -- especially if money saved on defense is seen to be going into bailing out nationalized industries.