British Prime Minister David Cameron Speaks to ABC's Diane Sawyer

Washington, D.C. July 20, 2010— -- Newly-elected British Prime Minister David Cameron is making his first official visit to the United States. Today, he spoke with ABC's Diane Sawyer in an exclusive, wide-ranging interview on everything from the BP oil spill to the release of the Lockerbie bomber to the U.S.-U.K. coalition in Afghanistan.

Below, read the transcript of their conversation, conducted today at the Newseum in Washington, D.C.:

TRANSCRIPT

DIANE SAWYER:Tell me, your first official visit to the United States.

DAVID CAMERON:Yes.

DIANE SAWYER:What is it you most want to get done, most want to say?

DAVID CAMERON:What I most want to get done is to build a strong relationship with, you know, our oldest and best ally. It's a very important opportunity for -- for me and for Britain, to make sure that the oldest alliance we have, the most important one, the special relationship as we see it, the essential relationship, as I would call it, that it -- it works well. And you know, from the times I've met Barack Obama before, we do have very, very close -- allegiances and very close positions on all the key issues, whether that is Afghanistan or Middle East peace process or Iran. Our interests are aligned and we've got to make this partnership work.

DIANE SAWYER:You've defined it a little differently. You said, "We are the junior partner."

DAVID CAMERON:Well, we are. I mean, we were the junior partner in 1940, when we were fighting against Hitler. We're the junior partner now. I think it's -- I'm a realist about life. I mean, I think you shouldn't pretend to be something that you're not. Britain is a staunch ally of the US. We do many, many things together, but we are the junior partner. If you look at the size of our armed forces, if you look at our respective contributions in Afghanistan, we're the second largest troop contributor. But America is way the largest.

You've got 100,000 troops. We've got 10,000 troops. We're the second largest, but there's a big gap between the two. So we're the junior partner. But I think we bring a lot to the relationship. I think that we have allegiances around the world, knowledge of countries through the commonwealth, through our old relations with countries like India and Pakistan, relations in the gulf.

We've got a lot of things that we bring to the relationship. Intelligence services, the very good work of our armed forces. So I think there's quite a lot that we bring to this special relationship, but yes, we are the junior partner in it. And we shouldn't -- we shouldn't have ideas beyond, you know, the -- it's very important that you're realistic about what you are, who you are, what you can achieve.

DIANE SAWYER:I know you've met Barack Obama before, but I'm curious. When you first met him, what's the thing personally you most wanted to know about him? What intrigued you the most?

DAVID CAMERON:I was just intrigued. I mean, I met him during the sort of campaign period. He -- when he did his big speech in Berlin, he then came over to the U.K. And I met him. I think I was the last person to meet him before he got on the plane to come back here. And I was just intrigued to find out what -- what this guy was like. And he is, you know, he's one of the calmest, coolest people I've come across -- extremely friendly, very easy to get to know, very clear in his mind about what he believes and what he wants.

DIANE SAWYER:Anything about him surprise you?

DAVID CAMERON:Yes, his frankness, actually. We had -- it's the first time we'd met, so the calmness. He was -- you know, if I was in his shoes, I was meeting some opposition politician, 'cause I wasn't in government then. You know, you want to get back to the United States, but we had a good hour proper long session, discuss things. So the calmness. Also the frankness about his prospects in the elections. He was very frank about the problems he had to overcome, in terms of -- you know, people's beliefs about him and his background and his name and all. I remember him being very frank about that. And I thought that was -- that was great, actually, to have such a frank assessment, such a calm assessment of all the problems you have to overcome to win. And -- and he won big.

DIANE SAWYER:You talk about the economic problems and the budgetary problems. You have declared it a kind of age of austerity now for Great Britain. And you have talked about cuts that make eyes pop open here in the United States, 20 to 25 percent cuts across so many of your government programs, including some in defense as well as tax increases, which again, stupefy a lot of Americans that you can do that right now.

Here's the question. As we know, the Obama administration has expressed the feeling that it is too soon to start cutting and start cutting toward real austerity. They think it's still a time for stimulus. Do you think the United States is just wrong?

DAVID CAMERON:No, I don't. I mean, there are -- we're different countries. We have -- different needs and we're going to do things at different speeds. You know, America is still a reserve currency. You guys can run -- a bigger deficit for longer than we can. But you know, this year, we are borrowing more than virtually any other country in the G20. We're actually borrowing this -- more this year than Greece. So it's necessary for Britain to tighten its belt and to prove that we can live within our means. And -- having won the election on that basis and formed a coalition government on that basis, I want to demonstrate that that's what we're going to do.

DIANE SAWYER:But did the president and his team indicate to you that they were worried that this was going to trigger a second dip in the recession, that this would be the very trigger that suddenly turned everything down again?

DAVID CAMERON:What the president said to me was that -- he -- he understood why different European countries have to do things at different speeds. At the G20, what was discussed was how we all need to deal with our deficits. Some have to move earlier than others. And the G20 specifically endorsed that. And if anyone has to move early, it's us, 'cause we've got the biggest budget deficit.

And also we've got to correct the imbalances in the world. We need the Chinese to -- you know, spend more, save less -- consume more and not be so focused on exports. There are big changes we need in the world. That's what the G20 concluded. So there's no differences between Britain and America on this issue. There's just the difference of timing. But our timing is, we need to get on with it. And when I stand back from it, I think, "This is right."

I mean, I'm a conservative. I believe that, you know, if you borrow too much, you just build up debts for your children to pay off. You put pressure on interest rates. You put at risk your economy. That's the case in Britain. We're not a reserve currency, so we need to get on and deal with this issue. Now we've passed -- a budget that was quite tough. It does have some tax increases. But most of the burden is going to be borne by spending reduction. But we need to do this to prove that we can live within our means. That will strengthen our economy, strengthen our recovery and -- give us a chance to -- to build a strong -- a strong society for the future.