Two Davids against 'Goliath' Thatcher

British Liberals and Social Democrats are giving themselves five years to capture the center and moderate left of the nation's politics and to edge the Labour Party toward the margins.

The two parties fought the June general election as close allies with separate identities. But pressures are rising for them to replace their present alliance by merging into a single party of the center capable of confronting the ruling Conservatives.

Just how the Liberals under David Steel and the Social Democratic Party under David Owen will cope with these pressures is proving a key question at their annual conferences this month.

Both Davids see the long-term advantages of a merger, but Owen is against a coming-together before the next general election. He wants the SDP, a political force for a bare three years, to develop its policies more and make a deeper impression on the electorate.

Steel accepts his alliance partner's approach but is being urged by many grass-roots Liberals to accelerate merger plans so a single party can be forged in time for the next general election.

Both men realize that if they play their tactics well and sense the mood of British voters correctly, they may be able to displace the Labour Party as the main party of opposition in Britain.

Labour strategists recognize the threat posed by the two Davids. Their party is in the final three weeks of a campaign to replace Michael Foot as leader.

The vote for the leadership will be taken at next month's party conference. At present, Neil Kinnock, a leftist, looks like the winner. The race for a deputy leader is close between Roy Hattersley, a moderate, and Michael Meacher, who is further to the left than Kinnock.

Steel and Owen are hoping both Meacher and Kinnock win, as this would tend to stamp the Labour Party as a party of the radical left and rob it of its appeal to moderate voters. The conditions would then exist for the Liberal-SDP alliance to attract more support from disenchanted Labourites.

But the two Davids know their dreams could be shattered by disunity in their own ranks. Many Liberals are impatient at having to work in tandem with another party and want Steel to demand an early merger.

Owen has responded that a merger before the next general election would do neither party any good.

Meanwhile, Prime Minister Margaret Thatcher has been remarkably quiet. She knows the alliance could be a major threat if the Labour Party lost credibility and began to fade.

In his first major speech as SDP leader, Owen shifted position on two key issues likely to appeal to Tories. He spoke favorably of the free market economy and said he supported deployment of cruise missiles by year's end. He calculates that at present there is more support to be gained from cutting into Mrs. Thatcher's following than from holding to a position closer to Labour's.

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