At first foreign policy was very far down Mrs Thatcher’s list of priorities. ‘Must I do all this international stuff?’ she had asked her aides before becoming Prime Minister. Her initial plan was to leave most of it to Lord Carrington, her patrician Foreign Secretary. Although their backgrounds could hardly have been more different, Carrington was the sort of aristocrat she liked: ‘unfailingly civil, effortlessly charming, unexpectedly witty’, as Hugo Young put it. In private, the Foreign Secretary’s attitude to ‘the Boss’, as he called her, was a bit more complicated. Charles Moore reports that once, climbing the stairs to her study, Carrington told her Principal Private Secretary: ‘Clive, if I have any more trouble from this fucking stupid, petit-bourgeois woman, I’m going to go.’ Yet Carrington never betrayed a hint of this to Mrs Thatcher, treating her with faultless respect and a hint of flirtatious teasing. Even Denis, no fan of Carrington’s liberal views about Africa, regarded him as a ‘mighty man’. By contrast, Carrington’s deputy, Sir Ian Gilmour, was not her kind of person at all. Clever, disdainful, a bit snobbish, Gilmour might have been hand-picked to play a languid patrician in some 1950s comedy about the amateurs running Britain’s foreign policy.15
In some ways it is odd that Mrs Thatcher picked Carrington and Gilmour to run the Foreign Office, since they conformed absolutely to the stereotype of everything she distrusted about it. But although she always complained about the Foreign Office, she usually followed its advice. The prime example was Rhodesia, which had been an embarrassment ever since Ian Smith’s white supremacist regime had declared independence in 1965. Like many on the right of her party, Mrs Thatcher instinctively sympathized with the Rhodesian whites, not least because Denis had business interests in South Africa and pretty intransigent views on the subject. When she became Prime Minister, many people expected her to back Smith’s puppet regime. In fact, she allowed Carrington to orchestrate a deal ensuring a black majority government under Robert Mugabe. Even Gilmour thought she ‘performed brilliantly’ to secure the decisive agreement in December 1980, praising ‘her restraint and her readiness to be persuaded’. This was a Margaret Thatcher rarely seen in public: cautious and open-minded, a pragmatist who knew how to give as well as take. But as her European partners were to discover, there was more than one Margaret Thatcher.16
On Mrs Thatcher’s first day in Number 10, one of the documents awaiting her was a two-page briefing entitled ‘European Issues’. By far the most pressing was the immensely complicated question of Britain’s contribution to the EEC budget, which had been festering for the last couple of years. The basic problem was this. Every year, each country paid billions into the collective budget, based on a formula that penalized countries importing a lot of goods from outside Europe. As a result, Britain was one of the biggest contributors. Yet to the delight of hundreds of thousands of French farmers, almost three-quarters of the budget was spent on the infamous Common Agricultural Policy. And since Britain had a very small agricultural sector, the British got less than anybody else. This had been identified as a problem years earlier, and Harold Wilson’s renegotiation of the EEC terms was supposed to have sorted it out. But by 1979, Britain was paying in almost £1 billion more than it got back. As Jim Callaghan told his European partners, that was not on at all.17
In Brussels, the Conservative victory came as something of a relief. Since the Tories were more pro-European, most insiders assumed they would be easier to handle. But they had bargained without Mrs Thatcher. Here was her perfect issue: an opportunity to swing her handbag at the foreign foe, presenting herself as the champion of British thrift against the byzantine wastefulness of the Continental bureaucrats. And no sooner had she arrived in Downing Street than she began to limber up for battle. ‘It has been suggested by some people in this country that I and my government will be a “soft touch” in the Community,’ she told Helmut Schmidt during his first visit. ‘In case such a rumour may have reached your ears … it is only fair that I should advise you frankly to dismiss it … We shall judge what British interests are and we shall be resolute in defending them.’18
In some ways the events of the next twelve months were a good preview of Britain’s relationship with its neighbours for the next three-and-a-half decades. As even Gilmour admitted, the budget anomaly left Britain with very good grounds for complaint. But far from recognizing that Mrs Thatcher had a legitimate grievance, many European leaders were shocked that she brought it up. As far as they were concerned, a good European should simply hand over her contribution and trust Brussels to use it for the greater good. Indeed, the French were outraged that she wanted to publicize who got the most, because they knew the inevitable furore might erode their share. Above all, they were appalled when she started talking about ‘our money’, meaning Britain’s money. No good European would talk about ‘our money’. ‘Voilà parle la vraie fille d’épicier,’ an unnamed European politician muttered during one of the many strained hours to come.fn2 He did not mean it kindly.19
To Mrs Thatcher’s new partners, almost everything about her was a shock. Some handled it better than others. The worldly Schmidt, a Social Democrat, had previously warned American officials that she was a ‘bitch’. But when he actually dealt with her he was impressed by her command of detail, while she was delighted to find that economically he was ‘more right-wing than she was’. On the other hand, the French President Valéry Giscard d’Estaing, who was on the right, was completely unable to cope. A man of almost comical grandeur, who clearly fancied himself as the reincarnation of Louis XIV, he treated her with breathtaking condescension. When she made her first visit to Paris, Giscard insisted on being served first at lunch because he was a head of state, whereas she was a mere head of government. Later, in an immensely revealing anecdote, he recalled that as a boy he had had ‘an English nanny … very correct, very tidy, with a very neat hairdo. She was efficient, religious, always opening the windows, especially when the children were ill; rather tiresome. When I met Mrs Thatcher, I thought, “She is exactly the same, exactly the same!”’20
Mrs Thatcher’s first European summit, at Strasbourg in June 1979, set the tone. Not only did Giscard dismiss her attempts to bring up the budget issue, he conspicuously refused to sit next to her at the two formal dinners, even though he was the host and she was the new girl. Later, one European Commissioner, speaking anonymously, said that Giscard and Schmidt had been ‘very rude, even patronising’ to her throughout, clearly assuming that as a ‘mere woman’ she would soon give way. Even Roy Jenkins, who liked Giscard, was shocked by his ‘extraordinary performance’, though he was impressed that Mrs Thatcher ‘showed no sign of reacting to the slight’.21
But she felt it. In the short term, she got her revenge by deliberately seating Giscard opposite two enormous portraits of Nelson and Wellington when he next came to Downing Street. More seriously, she now realized that she was in for a long struggle. ‘I get more and more disillusioned with the EEC,’ she told one of her officials that September. ‘We are going to have a real fight over the budget and by one means or another we have to get our way. We need the money.’ A month later, giving a lecture in Luxembourg, she took off the gloves. ‘I must be absolutely clear about this,’ she said ominously. ‘Britain cannot accept the present situation on the Budget. It is demonstrably unjust. It is politically indefensible: I cannot play Sister Bountiful to the Community while my own electorate are being asked to forego improvements in the fields of health, education, welfare and the rest.’ As usual, she ended with some fine words about her commitment to European friendship. But everybody knew what the real message was.22
The next round was scheduled for Dublin at the end of November. In a revealing sign of her anxieties, Mrs Thatcher packed a brand-new suit, of which she was very proud, but decided not to wear it because ‘I didn’t want to risk tainting it with unhappy memories’. This was just as well, since the mood was ‘extremely and increasingly hostile’. Giscard and Schmidt had clearly decided to put her in her plac
e, and told her that the best they could do was a refund of some £350 million: a ‘third of a loaf’, as she put it. ‘They had decided to test whether I was able and willing to stand up to them,’ she wrote. ‘It was quite shameless: they were determined to keep as much of our money as they could.’
Even by the standards of the day, Stanley Franklin’s Sun cartoon (20 October 1979) is remarkably uncompromising. Still, the French and German pigs make very satisfying antagonists.
The following scene became part of her Iron Lady legend. As Jenkins recalled, Mrs Thatcher had been pretty ‘shrill’ that afternoon, but she was only ‘tuning up’. When she arrived for their working dinner, she was in recklessly aggressive form. Almost as soon as she sat down, she started talking, and she never stopped. ‘She kept us all round the dinner table for four interminable hours,’ Jenkins wrote, during which she ‘talked without pause, but not without repetition’. The tables were cleared; the clock ticked towards midnight. On and on she went, while her partners sat in silence. Schmidt pretended to go to sleep. Giscard started reading a newspaper.fn3 Outside, on the French president’s instructions, the official cars revved their engines. But still Mrs Thatcher went on, until at last she ran out of steam. Later, Gilmour joked that Schmidt and Giscard now realized what her ministers had to put up with.23
What really captured the public imagination, though, was Mrs Thatcher’s diatribe at the press conference the next morning. Even a long excerpt does not really capture the extraordinarily hectoring effect, almost hypnotic in its intensity:
We are not asking for a penny piece of Community money for Britain. What we are asking is for a very large amount of our own money back … It is not asking the Community for money; it is asking the Community to have our own money back …
Some people think I am asking for other people’s money. I am not … We cannot go on putting money in the Community’s coffers. We are giving notice of that and we want a very large proportion of our own money back, because we need it at home and we are having to cut expenditure at home.
The first difficulty here – I do not disguise it from you – has been to get over that fundamental thing to the Community, that all we are doing is asking for our own money back because we cannot go on being Europe’s biggest benefactor.
To devoted Europeans, this was the most outrageous performance of all. As they saw it, that mantra – ‘our own money back’ – made a mockery of everything the Community stood for.fn4 But the British press corps loved it. The BBC’s John Simpson recalled that when she finished, ‘most of the journalists stood up and applauded her: something I had never seen before, and have never seen again’.24
Even decades later, the shock at Mrs Thatcher’s performance had not quite faded. To European enthusiasts, here was proof that British politicians would always play to their national audience instead of putting the Community first. Roy Jenkins thought Dublin established the image of Britain as a country always demanding special treatment, ‘half in and half out’. Yet most observers agreed that Giscard and Schmidt had treated the Prime Minister with unforgivable condescension. Even the pro-European Hugo Young thought they had been ‘rude and derisive, and determined not to meet her anywhere near halfway’.
Indeed, Labour’s spokesmen thought she had not been strident enough. In the Commons, Jim Callaghan warned that she was clearly preparing for a sell-out, while Tony Benn claimed that she had shown herself to be a ‘paper tigress’. Extraordinarily, therefore, Mrs Thatcher actually ended up defending her European antagonists. At one point she told Benn that their £350 million offer, which had annoyed her so much, was ‘not bad’. When he advised her to boycott European institutions, she snapped: ‘What is the point of boycotting? It is far better to be there.’ And when he asked if she would consider leaving the EEC altogether, she said firmly: ‘No’, adding that if Britain left, ‘the only people who will cheer are those who are based [in] Moscow’.25
In private, though, she remained on the warpath, lashing the Foreign Office for not being ‘tough enough or imaginative enough in arguing the British case’. When they suggested offering the Europeans access to North Sea oil, she scrawled angrily: ‘That statement would be disastrous for Britain and I am not prepared to make it. The idea that we should have to sacrifice our main assets to secure some of our own money back is one that may appeal to the Foreign Office but it doesn’t to me.’ Indeed, by the spring of 1980 she was ready to contemplate very drastic measures. The ‘only thing that would make Europe sit up’, she told the backbencher Terence Higgins in March, ‘would be to withhold’ – in other words, to stop British money going into European accounts.26
But her adversaries’ resistance was weakening. In April the European Council raised their offer to more than £700 million a year for two years, a striking advance on £350 million for just one. Mrs Thatcher turned it down. Schmidt apparently left the council chamber ‘shaking with rage’ and muttering: ‘I can’t stand this any longer. I can’t deal with someone like that.’ Even Giscard came close to losing his Olympian detachment. ‘I will not allow such a contemptible spectacle to happen again,’ he said coldly on his way out. But her intransigence was wearing them down. As Jenkins recorded, ‘everybody except Mrs Thatcher had become bored to death’. Unfortunately, she was now getting such a kick out of the battle that she did not want it to end. When Carrington told her there was talk of a three-year-deal, she proclaimed herself ‘horrified’ and tried to squash it. Only reluctantly did she let Carrington and Gilmour discuss a deal with their opposite numbers at the end of May. In the meantime, she told the Treasury to prepare to cut off British funds from the Community’s accounts.27
The denouement was pure Audrey fforbes-Hamilton. On 29 May, Carrington and Gilmour stayed up all night to secure a rebate of more than £700 million a year for the next three years. By nine the next morning the deal was done, and as the two men flew back to RAF Northolt, they shared a bottle of champagne. When they reached Chequers, Mrs Thatcher was at the door to greet them. She was furious. ‘Had we been bailiffs arriving to take possession of the furniture, or even Ted Heath paying a social call in company with Jacques Delors,’ wrote Gilmour, ‘we would probably have been more cordially received.’
She showed them into a sitting room, and told them at once that they had ‘sold the country down the river’. She would have to resign. No, said Carrington, they would resign. No, she would resign. At this point a civil servant from the Treasury, Rachel Lomax, piped up and said that actually it was a pretty good deal. That took the wind out of Mrs Thatcher’s sails. As Gilmour recalled, she offered objection after objection, only for Mrs Lomax, ‘sweetly but a little wearily’, to dismiss them one by one (‘No, Prime Minister, you have not got that quite right … No, I think you must be looking at the wrong page’). At last, after hours of this, Carrington lost his temper. ‘Prime Minister,’ he burst out, ‘we have been up all night, we have not had one moment’s sleep, we have been here for hours. Could we please have a drink?’
It was now that Gilmour realized what was bothering Mrs Thatcher. There was nothing wrong with the deal. What annoyed her was the thought of losing such an excellent populist cause. Unlike everybody else, she had enjoyed every moment of the budget battle, and was sorry to say goodbye to it. In the end, though, Carrington and Gilmour outsmarted her. That evening, they briefed the press that the agreement had been a stunning vindication of her patriotic resistance to the Brussels bureaucrats. ‘A great success for Mrs Thatcher’, declared the next day’s Times, while the Sunday Express’s cartoonist Michael Cummings, marking the fortieth anniversary of Dunkirk, drew Giscard and Schmidt standing forlornly on the French coast and clutching a piece of paper entitled ‘Maggie’s Common Market Fight’. ‘There are times, Dr Schmidt,’ says a miserable Giscard, ‘when I wish the British had stayed away and not come back on D-Day.’ So when Mrs Thatcher met her Cabinet the following Monday, she found them united behind the deal. ‘We have no alternative but to accept,’ said Lord Hailsha
m. ‘We shan’t get better. The press have treated it as a victory.’ She was still cross. She had no choice, though, but to agree.28
The great budget battle, which recouped more than £700 million a year for Britain, the equivalent of at least £4 billion today, had been a gift to Mrs Thatcher. At a time when nothing else seemed to be going right, she had won a significant victory. Her critics conceded that her intransigence had paid off; even the bruised Carrington admitted that she had got a better result by ranting and raving than she would if she had played the good European. At home, the imbroglio established forever her image as ‘battling Maggie swinging her handbag and standing up for Britain’, as her biographer John Campbell puts it. But in the capitals of Europe she became something of a bogeywoman, striking dread into politicians and officials alike. That, of course, was just as she liked it.29
But the battle of the budget was about more than just £700 million a year. It was about Britain’s national pride and its place in the world, its patriotic self-image and its relationship with Europe. Mrs Thatcher knew perfectly well that many people regarded entry to the Common Market as a sad but inevitable result of national decline. She knew that few saw themselves as Europeans, and that most wanted to see somebody standing up for Britain. This was a role that, by instinct and temperament, she was perfectly suited to play. Now that she had sampled the pleasures of the anti-European grievance, she would never lose her taste for it. Her scribbled comments on government papers tell the story: ‘No – the procedure is ridiculous. Its whole purpose is to demean Britain … we must fight this one … No … Woolly … Never … It is our water and, but for the Common Fisheries Policy, our fish. Don’t give them away.’
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