The Iron Lady

by John Campbell

  In her memoirs Lady Thatcher claimed that the European Community changed fundamentally in the later 1980s, and that Delors was ‘a new kind of European Commission President’ with grander ambitions than his predecessors – determined, now that the single market was agreed if not yet fully functioning, to press on to the next objectives enshrined in the founding treaties: economic and monetary union (EMU) and the harmonisation of social policy and labour law. The Treaty of Rome had set the nebulous objective of ‘ever-closer union’, building into European institutions the belief that there must always be movement – sometimes rapid, sometimes stalled, now in one area, now in another, but always in the direction of closer integration. Mrs Thatcher tried to portray Jacques Delors as a power-hungry bureaucrat determined to expand his empire. ‘The French socialist,’ she reflected grimly, ‘is an extremely formidable animal.’1 Certainly Delors was ambitious to maintain momentum: he had no intention of letting the single market settle down before seeking fresh areas of advance. But he could have done nothing without the active encouragement of the leaders of the major countries of the Community. Mrs Thatcher blamed the unelected bureaucrat Delors for exceeding his powers; but Delors was only pursuing a course set by François Mitterrand and Helmut Kohl and supported by all the other elected leaders.

  She made a point of treating Delors as a mere official. By 1988, however, she believed that Delors had ‘slipped his leash as a fonc-tionnaire and become a fully fledged political spokesman for federalism’. This might be acceptable to foreigners, she believed, with their shallower democratic tradition and well-founded distrust of their domestic politicians. ‘If I were an Italian I might prefer rule from Brussels too. But the mood in Britain was different.’2

  She had to believe that Delors was behaving improperly in order to argue that he was taking the Community into new areas of integration which Britain had not signed up for when it joined the Common Market. But the goal of economic and monetary union had been set in 1972 and it had been explicitly reaffirmed in the Single European Act which she had signed in 1986. Mrs Thatcher insisted that it did not necessarily entail a single currency or a single central bank, institutions which would involve an unacceptable pooling of national sovereignty. Her difficulty was that this was exactly what all the other members did think it meant. Her need to demonise Delors derived partly from her knowledge that she had been slow to grasp what she now perceived as a mortal threat to Britain’s interest: on the contrary she had actually welcomed and promoted the Act from which the mandate to press on to economic union was derived. She now insisted that she had been tricked. She could not see, because she did not want to see, that movement towards economic and monetary union was, as John Major wrote in his memoirs, ‘the logical extension of the changes she had set in train’.3

  In resisting what she conceived as a mortal threat to Britain’s historic identity – symbolised by the sanctity of sterling – Mrs Thatcher found the great cause of her last years in office, and of her retirement. Here was an external enemy, more threatening by far than a distant South American dictator, whose defeat required the Iron Lady once again to don the armour of Churchillian defiance. In opposing the insidious spectre of rule by Belgian bureaucrats and German bankers, while insisting that Britain’s true interest lay with the United States – ‘the new Europe across the Atlantic’4 – she believed that she was indeed emulating her hero, not only the defiant British bulldog of 1940 but the half-American chronicler of ‘the English-speaking peoples’. But her identification with ‘Winston’ was self-deluding: Churchill was not the simple cartoon patriot that she imagined. Not only did he issue a number of resounding (if vague) statements in support of European unity between 1945 and 1951, but in private letters, even before the end of the war, he had frequently voiced an emotional identity with Europe which was quite alien to Mrs Thatcher’s overriding deference to the United States.

  Europe was her greatest blind spot. She knew and reluctantly accepted that Britain was irreversibly a member of the Community: but in her heart she wished it was not so. She had no respect for European politicians of any stripe. She veered between denouncing federalist ambitions as a mortal threat to Britain’s sovereignty and dismissing them as fantasy that would never happen. As a result she never engaged seriously with what Britain’s role in the evolving Community should be. On other subjects, from Russia to global warming, she set out to inform herself, listened to advice and devised a coherent diplomatic strategy which she then adhered to. On the subject of Europe, however – the central problem of British foreign policy – there were, as her policy adviser Percy Cradock wrote, ‘no large strategic discussions; no seminars’.5 She knew what she thought, and she knew what the rest of the Community ought to think, too, if they knew what was good for them. Consequently she was always two steps behind events, unable to lead or even to participate fully, but only to react angrily to what others proposed.

  Of course she had a case. She was entitled to point out – as she did repeatedly – that Britain was ‘way ahead’ of other countries in implementing the provisions necessary to allow a single market – let alone a single currency – to function properly: the abolition of exchange controls (which Britain had ended in 1979), free capital movements and the dismantling of a host of protectionist barriers. She was constantly complaining that the French were still blocking the import of Nissan cars manufactured in Britain, or imposing unfair duties on Scotch whisky;6 and she believed they should honour what was already agreed before they went on to grander schemes. She believed in small practical steps, an incremental approach, rather than grand schemes. This she thought was the British way, and therefore by definition the better way. But the truculent manner in which she told them so only irritated her partners and alienated potential allies. The merits of her argument for a Europe of independent nations were smothered by the self-righteousness of her performance.

  Moreover, she saw divisions over Europe as a threat to her authority at home. With only two reliable allies in the Cabinet – Ridley and Parkinson – and flanked by a Chancellor and Foreign Secretary who both, for different reasons, wanted to join the ERM as soon as possible, she became obsessed with the idea that Lawson and Howe were ‘in cahoots’ against her and must be kept from ganging up on her if her will was to prevail. In fact Howe and Lawson had scarcely any contact with each other. Their attitudes to the ERM were entirely distinct. Since going to the Foreign Office, Howe had become a convert to the full EMU package, including the single currency, and wanted to join the ERM as soon as possible in order to maintain Britain’s standing as a leading member of the Community. Lawson, by contrast, was as strongly opposed to the single currency as Mrs Thatcher herself. He wanted to join the ERM primarily as a monetary discipline; but he also thought that being inside the ERM would give Britain greater leverage to prevent a single currency than it could exercise outside it. This difference in objectives should have allowed Mrs Thatcher to play them off against each other while maintaining her own authority: instead she dealt with each of them separately, while demonstrating no confidence in either, which eventually, just before the Madrid summit in June 1989, did drive them to make common cause.

  At Hanover in June 1988 Mrs Thatcher set out to block the establishment of a European Central Bank; but as so often she was outmanoeuvred. Chancellor Kohl persuaded her to agree to a committee mainly composed of central bankers – including her own appointee, the Governor of the Bank of England – to study the question; then they slipped in Delors to chair it. Still she convinced herself that the creation of a central bank was not within the committee’s terms of reference. Lawson was amazed at her naivety. ‘Prime Minister,’ he claims to have told her, ‘there is no way that a committee with those terms of reference can possibly do anything else than recommend the setting up of a European Central Bank.’7 Charles Powell confirms that the committee, once set up, ‘put on an unexpected turn of speed’ and within nine months came up with the three-stage timetable for EMU which was to b
e the next great bone of contention between Mrs Thatcher and the rest of the Community.8 If she had been seriously engaged with the issue, she should have fought it from within. On the contrary, either she still thought it would never happen or she believed that she could veto it later.

  Another example of her deafness to what she did not want to hear was her choice of Leon Brittan to replace Arthur Cockfield as Britain’s senior commissioner in Brussels. She refused to reappoint Cockfield because she thought he had ‘gone native’, and persuaded herself that Brittan, because he had been dry on economic policy at the Treasury and tough on policing as Home Secretary, would naturally be sound on Europe as well. She should have known that he was solidly pro-European and had long supported joining the ERM. But she was so anxious to push him out of domestic politics into a suitably prestigious job, to get out of her promise to bring him back into the Cabinet, that she overlooked his record – and then felt betrayed when he too ‘went native’.9

  The turning point in Mrs Thatcher’s public attitude to the Community was her speech to the College of Europe in Bruges in September 1988. She had been booked to speak there, ironically, by the Foreign Office, which hoped it would provide a suitable occasion for a ‘positive’ speech on Europe. By the time she came to deliver it, however, two more developments had determined her to use it as an opportunity to slap down Jacques Delors. First, in a speech to the European Parliament in July, Delors had deliberately trailed his coat by suggesting that ‘an embryo European government’ should be established within six years and that in ten years ‘80 per cent of laws affecting the economy and social policy would be passed at a European and not a national level’.10

  Then Delors compounded his offence by bringing his federalist pretensions into the British political arena. Again it was the Foreign Office which thought it might be helpful to have him address the TUC at Bournemouth. Delors gave what he regarded as a fairly standard speech, expounding the vision of harmonised laws on hours of work, working conditions and collective bargaining which the following year became the European Social Charter. But he succeeded in converting the traditionally anti-European British trade unionists almost overnight to the realisation that Europe could offer a way of regaining some of the ground they had lost during ten years of Thatcherism – which of course was exactly what Mrs Thatcher objected to. If the Foreign Office had hoped to soften Labour hostility to the Community, they succeeded, as Lawson put it, ‘beyond their wildest dreams’.11 But for twenty years Labour’s hostility had been a major factor in keeping Mrs Thatcher positive towards Europe: the moment Labour began to reverse itself, she immediately felt free to do the same.

  In fact Mrs Thatcher’s Bruges speech as eventually delivered contained a good deal that was positive, including the assertion that ‘Our destiny is in Europe, as part of the Community.’ But Britain, she insisted, had its own view of that future. ‘Europe is not the creation of the Treaty of Rome…The European Community is one manifestation of that European identity, but it is not the only one.’ She went on to set out five ‘guiding principles’, of which the most important was the first: the best way to build a successful Community was not through closer integration but through ‘willing and active co-operation between independent sovereign states’. Of course, she conceded, Europe should ‘try to speak with a single voice’ and ‘work more closely on the things we can do better together than alone’. But then came the two killer sentences:

  But working closely together does not require power to be centralised in Brussels or decisions to be taken by an appointed bureaucracy… We have not successfully rolled back the frontiers of the State in Britain, only to see them re-imposed at a European level with a European superstate exercising a new dominance from Brussels.

  This was the key passage. She went on to set four more guiding principles: that solutions should be practical, not utopian; that Europe should be committed to enterprise and open markets; that it should not be protectionist; and that it should maintain its commitment to NATO.12 But most of the controversy the speech aroused centred on her first point.

  It was not so much the content, but the highly charged language which ruffled feathers. It seems commonplace today, but in 1988 no one had spoken of a European ‘superstate’ before. Talk of a ‘European conglomerate’ with bureaucrats exercising ‘dominance from Brussels’ was – in the words of Michael Butler, until 1986 Britain’s permanent representative in Brussels – ‘very dangerous stuff indeed’.13 Mrs Thatcher’s dichotomy between a free-trade area (good) and a superstate (bad) was false, in Butler’s view, since the Community had already developed far beyond the one, and no one wanted the other. By signing the Single European Act Mrs Thatcher herself had already agreed to everything that was now on the table.14

  It was not in fact what she said at Bruges but the way the speech was ‘spun’ by Bernard Ingham which ensured that it haunted the Tory party for years to come. ‘In fact,’ Lawson admitted, ‘it said a number of things that needed to be said, in a perfectly reasonable manner… But the newspaper reports, which reflected the gloss Bernard Ingham had given when briefing the press… were very different in tone and truer to her own feelings: intensely chauvinistic and… hostile to the Community.’15

  Mrs Thatcher herself was delighted with the effect of the speech, and repeated its central message in even less diplomatic language at the Tory Party Conference a few weeks later. She was convinced that she had struck a popular chord, she told The Times, because federalism was ‘against the grain of our people’.16 To keep her up to the mark a number of prominent Eurosceptics formed a pressure group to campaign against ceding any further powers to the Community. The Bruges Group was mainly composed of leading Thatcherite academics – the sort of people who had provided much of the intellectual excitement of early Thatcherism but now merely purveyed an increasingly strident nationalism.

  The problem with the Bruges speech was that it did not represent a policy. It was, rather, as Nye Bevan described unilateral nuclear disarmament in 1957, ‘an emotional spasm’.17 Its impact on the development of the Community was minimal; while its effect on the Conservative party over the next decade was almost wholly disastrous. In the short term, it split the party, releasing in the grass roots a vein of suppressed hostility to the Community which had been building up for years and now burst out unchecked with the leader’s undisguised approval, while at the same time infuriating most of the Cabinet and the party hierarchy whose lifelong commitment to Britain’s role in Europe as pursued by Macmillan and Heath was undiminished.The Prime Minister’s abrupt reversal of the party’s established attitude to Europe led inexorably to Geoffrey Howe’s resignation from the Government just over two years later and to the parliamentary party’s withdrawal of support which forced her own downfall in November 1990.

  The ‘ambush’ before Madrid

  Delors unveiled his programme in April 1989, in two parts: one his three-stage timetable for economic and monetary union, the other the so-called ‘Social Charter’. Mrs Thatcher immediately rejected both documents out of hand. The first, she told the Commons, ‘is aimed at a federal Europe, a common currency and a common economic policy which would take economic policies, including fiscal policy, out of the hands of the House, and that is completely unacceptable’.18 The second was ‘more like a Socialist charter of unnecessary controls and regulations which would… make industry uncompetitive and… increase unemployment and mean that we could not compete with the rest of the world for the trade that we so sorely need’.19 Outright opposition to both initiatives formed the basis of her platform for the elections to the European Parliament on 15 June.

  Since the introduction of direct elections in 1979 the Tories had always won these five-yearly polls quite easily. They were, after all, the pro-European party. June 1989, however, found the Conservatives not only beset by rising inflation and the poll tax, but in disarray over Europe too. Mrs Thatcher authorised a manifesto, and a campaign, at odds with the views of most of her candida
tes, who were almost by definition Europhiles. The tone was set by a disastrously negative poster, displayed on hoardings all round the country, showing a pile of vegetables with the slogan: ‘Stay at home on 15 June and you’ll live on a diet of Brussels.’20 In campaign speeches and television interviews she cast herself as Battling Maggie fighting off the foreign foe.

  The result was the Tories’ first defeat in a national election under Mrs Thatcher’s leadership. On a significantly increased poll, up from 32 to 37 per cent, the party gained only 33 per cent of the vote – its lowest-ever share – and lost thirteen seats to Labour, precisely reversing the 1984 result so that Labour now held forty-two to the Tories’ thirty-five. Of course the outcome owed less to enthusiasm for a federal Europe than to the Government’s growing unpopularity for other reasons nearer home. Nevertheless the result delivered a sharp warning to Tory MPs that Neil Kinnock’s Labour party had finally become electable again, while the Prime Minister was becoming a liability whom they might need to jettison before the next election if they wanted to save their seats.

  The next week the simmering tension between Mrs Thatcher and her senior colleagues came to a head in the run-up to the European Council in Madrid, when she persisted in trying to exclude her Chancellor and Foreign Secretary from any consultation about the decisions that might be taken at the summit. In public she continued to insist that there was no disagreement between them about the ERM. That might have been strictly true insofar as neither Howe nor Lawson thought it practical to join immediately; but they were both convinced that it would strengthen Britain’s hand in forthcoming negotiations about EMU if she would come off the fence at Madrid and give a commitment to join within a set timescale. She was more determined than ever to do no such thing. She prepared for the summit by convening a conference of her private advisers with no elected colleagues present at all.