WORLD

Thatcher’s compromise

The Iron Lady adopts a conciliatory tone

ANDREW PHILLIPS July 10 1989
WORLD

Thatcher’s compromise

The Iron Lady adopts a conciliatory tone

ANDREW PHILLIPS July 10 1989

Thatcher’s compromise

The Iron Lady adopts a conciliatory tone

WORLD

BRITAIN

When leaders of the 12 European Community (EC) countries assembled in Madrid for their twice-yearly summit meeting last week, the stage seemed to be set for a major confrontation. The leaders were scheduled to tackle the controversial subject of monetary union—which includes plans for a common currency—that is a key part of a program to merge their economies into a single market by the end of 1992. And with British Prime Minister Margaret Thatcher fiercely opposed to complete economic union, many observers predicted that she would provoke a bitter public clash. But then, instead of adopting the intransigent attitude that other leaders had come to expect from Thatcher, she behaved in an uncharacteristically conciliatory manner—and agreed to a compromise on the central issue. Her sudden mellowing so impressed the meeting’s host, Spanish Prime Minister Felipe González, that he exclaimed, “Thank God for Mrs. Thatcher.”

Thatcher’s change of tone was partly a result of a desire to ensure that Britain is not politically isolated as the EC moves closer to its ambitious goal of removing remaining barriers to create a single market of some 320 million consumers over the next three years. But it also reflected an important change in the British prime minister’s own fortunes since December, when the 12 Western European lead-

ers last met in Rhodes, Greece. At that time, she was in unchallenged control of her government and party and enjoyed a comfortable lead in British opinion polls. Six months later, Thatcher is in a much weaker position. The British economy has soured, critics inside her own Conservative party are more vocal—and British voters dealt her government a stinging rebuke last month in elections for the European Parliament. “There has been a sea change against her,” said Sir Anthony Meyer, vicechairman of the Conservative party’s backbench committee on European affairs. “Mrs. Thatcher can no longer claim to speak for Britain.”

That claim is almost certainly exaggerated. Thatcher’s government still holds a 100-seat majority in the House of Commons and does not have to call an election for another three years. But the results of the June 15 vote for the 518-seat European assembly have rocked British politics. The Conservatives won just 34 per cent of the vote, while the opposition Labour Party took 40 per cent—reflecting a trend in which European Socialists posted the largest gains. Despite a low British voter turnout of just 36 per cent, it was Thatcher’s first defeat in a national election in her 14 years as Conservative party leader—and the Tories’ lowest share of a nationwide vote in a century. Suddenly, Labour looked like a credible alter-

native for the first time in a decade, and Thatcher’s aura of electoral invulnerability was pierced. After the European vote, wrote political analyst Robert Harris of The Sunday Times of London, “the prime minister’s impregnable air of superiority will never look quite the same again.”

The results of that vote threatened to undermine Thatcher’s credibility with her fellow EC leaders, because the campaign was fought largely on European issues. Since last September, when she attacked any moves toward a “federal” Europe in a blistering speech in Bruges, Belgium, Thatcher has positioned herself as the champion of British sovereignty against what she depicted as attempts to dilute national identity in the drive for a single European market. The Tories’ campaign closely reflected her views and included an appeal to voters to back Conservative candidates or live “on a diet of Brussels”—a clumsy swipe at the EC bureaucracy that even many Tories admitted only confused the electorate.

The campaign accentuated divisions among Conservatives. Former Tory prime minister Edward Heath, a strong advocate of European unity, attacked Thatcher’s “aggressive and nationalistic rhetoric.” And Michael Heseltine—a Tory MP who quit Thatcher’s cabinet in 1986 and is widely regarded as a leading contender for the party leadership after Thatcher steps down—warned that London risks losing its position as Europe’s financial capital if Britain does not formally link the pound to other European currencies by joining the existing European Monetary System (EMS).

Thatcher’s position was further weakened by increasing troubles in the British economy. Britain’s annual inflation rate is 8.3 per cent, nearly double the European average. The key interest rate is 14 per cent, and the country’s trade deficit is running at an annual rate of more than $33 billion. Strikes in the rail system and dockyards further undermined Thatcher’s most potent political weapon: her claim to have engineered an “economic miracle” in Britain over the past 10 years.

With those troubles at home, Thatcher moderated her rhetoric at the Madrid summit— and compromised on the central issue of Britain’s future membership in the EMS. She came closer than she had before to agreeing that Britain will link the pound to other European currencies by joining the system’s exchangerate mechanism, to which all the major EC nations already belong. At the same time, she insisted that such a move would not necessarily imply additional steps toward full monetary union—including a European central bank and a common European currency—that some other EC leaders advocate. Her reservations plainly annoyed some leaders, particularly French President François Mitterrand, who accused Thatcher of continuing to act as “a brake on Europe.” Still, Thatcher’s chastened tone averted a public split and suggested that even the Iron Lady knows when it is wise to bend.

ANDREW PHILLIPS

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