Defense Secretary Michael Heseltine resigned today, charging Prime Minister Margaret Thatcher with perverting Britain's system of collective Cabinet government and manipulating a defense decision of "profound" importance.
Heseltine's surprise resignation was viewed here as the most serious political crisis of Thatcher's 6 1/2 years in office and provided an unusual view of dissension within a government that has been fiercely protective of the secrecy of its decision-making process.
The immediate cause of Heseltine's departure was a dispute over rival bids to take over a major share of Britain's ailing Westland Helicopters by the American Sikorsky Aircraft and a consortium of Western European companies.
Also underlying today's events are long-circulating reports some Cabinet members objecting to Thatcher's style of leadership, which has been described as autocratic and authoritarian.
"To serve as a member of a Tory Cabinet within the constitutional understandings and practices of a system under which the prime minister is primus inter pares first among equals is a memory I will always treasure," Heseltine said today at a news conference.
"But if the basis of trust between the prime minister and her defense secretary no longer exists, there is no place for me with honor in such a Cabinet," he said.
Among other things, Heseltine accused Thatcher of "ill temper," cancellation of scheduled Cabinet meetings once it was clear that she would be disagreed with, approving the censorship of minutes from Cabinet meetings in which dissension had arisen and seeking to present a public image of policy that was belied by actions taken in private.
The government made no public response to the specifics of Heseltine's bitter attack, except to say that its version of events was "at variance" in some areas with that of Heseltine. In a letter accepting his resignation, Thatcher said it was "a matter for regret."
No senior government official moved publicly to Heseltine's defense, and some supporters of the prime minister went public to describe their former Cabinet colleague as "obsessive" and misguided over the helicopter dispute.
Thatcher acted quickly to blunt the domestic impact of his departure, appointing a replacement for Heseltine within an hour after he stormed out of a morning Cabinet meeting into the chill air outside her Downing Street office and residence.
The new defense chief is George Younger, promoted from his former post as Cabinet secretary in charge of Scotland. During the mid-1970s, when Thatcher's Conservative Party was out of government, Younger served as its defense spokesman.
The controversy that led to Heseltine's move began six weeks ago as a little-noticed and relatively straightforward effort to save Britain's sole helicopter manufacturer from bankruptcy.
Heseltine is a leading force in Western European efforts to cooperate in the production and procurement of weapons as a means of competing with American defense contractors that now dominate sales.
Among his European colleagues, Heseltine had argued that such imbalance eventually would cause resentment in Europe and increase public pressure to cut defense spending at the very time the United States, and the Europeans' own interests, indicated that it should be increased.
Additionally, Europe has had its own worries about growing imbalances in technological advancement and brain drain of its leading scientists to U.S. companies that could set the stage for it to fall even further behind in the future.
The United States, Heseltine argued, was growing impatient with European inability to coordinate its production and procurement efforts.
As a result, Heseltine was instrumental in the success of a recent agreement among Britain, West Germany, France, Italy and Spain to design and build a new jet fighter that they would all agree to buy for their air forces during the 1990s. He was eager, he said today, that the same opportunity not be lost with helicopter manufacture.
There was little disagreement on these principles within the Thatcher government. But the crunch came when the principle of European cooperation in defense -- and the government intervention it implies into the affairs of private defense manufacturers -- began to conflict with Thatcher's free-market, hands-off economic policies.
Westland Helicopters was by all accounts a badly managed enterprise with little short-term promise in an international market already glutted.
Its principal product, a civilian helicopter called the W30, had a poor sales record.
Although Westland proposed its own rescue last spring by requesting that the Ministry of Defense order a quantity of new, military-configured W30s, Heseltine said that the ministry neither needed, nor had budgeted for, what Westland was offering.
During subsequent months, Westland announced a series of layoffs and ever-increasing financial deficits.
Talks began with European helicopter manufacturers and with Sikorsky in an effort to find a partner who could inject new capital into the failing concern.
A division of United Technologies Corp., Sikorsky had long worked with Westland under production licenses. At the same time, according to its president, Bill Paul, Sikorsky had for some time wanted "to have a broader European capability."
In late September, Sikorsky announced its intention to purchase 29.9 percent of Westland for about $100 million, approximately equal to Westland's outstanding debt at the time. The offer, it later turned out, included a provision to increase the holdings to 40 percent of Westland, which, under British law, would amount to a complete takeover.
According to Heseltine, the Thatcher government, in internal discussions, had expressed a preference for a European rather than American partner, to promote the goal of European defense cooperation.
But, although talks continued between Westland and the Europeans, including West Germany's Messerschmitt-Boelkow-Blohm (MBB), Aerospatiale of France and Agusta of Italy, no deal was announced.
When Heseltine returned from a tour of Asia in mid-November, the Westland board was close to accepting the Sikorsky deal. Heseltine said today that up to that point, he had not felt that he could interfere directly with the situation -- since it was a commercial rather than defense matter, and thus in the province of Trade and Industry Secretary Leon Brittan.
But with Westland about to sign with Sikorsky, Heseltine, after consulting with West German Defense Minister Manfred Woerner, called a meeting of the national armaments directors of Britain, West Germany, France and Italy. In a special session on Nov. 29, they agreed to recommend to their governments that "their needs within the main helicopter classes should be covered solely in the future by helicopters designed and built in Europe."
According to Heseltine, he told a mini-Cabinet session on Dec. 9 that he had the support of European governments for a counteroffer to Sikorsky by their own helicopter industries.
Thatcher, he said, gave him four days to work with the European companies and formulate a firm financial proposal.
Heseltine put together the offer by Dec. 13, including MBB, Aerospatiale, Agusta and the added component of British Aerospace and Britain's leading electronics company, GEC. The money and work shares the Europeans were offering were virtually the same as the Sikorsky bid.
But Thatcher, Heseltine charged, refused to call the promised Cabinet meeting to discuss it.
The Westland board turned down the European offer. To inject a European component into its own bid, Sikorsky announced that the Italian company Fiat was joining its proposal as a minority partner.
Sikorsky and the Europeans both subsequently sweetened their offers.
But, although the Westland board repeatedly said it was going to sign with Sikorsky, the final decision was to be left to a Westland's shareholders' meeting, scheduled for next Tuesday.
By maintaining a position of leaving the decision "up to Westland," Heseltine argued, Thatcher was undercutting her own government's policy of promoting European cooperation. He had made commitments to his European colleagues, he argued, and the European deal was a firm and attractive one.
At this morning's Cabinet meeting, Brittan made the case for Sikorsky, followed by Heseltine's case for the Europeans. Then, according to numerous accounts of the meeting, Thatcher spoke. The collective Cabinet, she said, had decided to take no position on the matter. Moreover, the Cabinet had decided that no member was to make a further public statement on the issue unless it had first been cleared through her office.
In an atmosphere described as "grim," there was only one dissenter. Announcing that he could no longer remain in the Cabinet under those circumstances, Heseltine gathered up his papers and walked out the door.