The Iron Lady

by John Campbell

  By chance one of her first meetings was with the Soviet leadership. The Soviet Union was one major country she had not visited in opposition, preferring to denounce the Communist menace from the safety of Kensington Town Hall. But on her way to the Tokyo summit at the end of June her plane made a refuelling stop in Moscow. To her surprise Prime Minister Kosygin, with half the Politburo, came out for an unscheduled dinner in the airport lounge. They were reported to be ‘very curious’ to meet the famous ‘Iron Lady’ who wore their intended insult as a badge of pride. ‘They were absolutely mesmerised by her,’ Lord Carrington recalled, ‘because… she was very direct with them.’19 She questioned them specifically on the plight of the Vietnamese ‘boat people’ – refugees from Communist persecution who had taken to the sea in a perilous effort to reach Hong Kong – and was unimpressed by their answers. This brief stopover confirmed her contempt for the moral and intellectual bankruptcy of the Soviet system, without in the least diminishing her perception of the challenge it posed to the West.

  Nevertheless, as Carrington recalled, ‘distrust of the FO… was never far from the surface, and could erupt in impatient hostility unless ably countered’.20 Ably countered it usually was: this was Carrington’s great skill. Certainly they had their rows. But better than anyone else in her first Cabinet he knew how to handle the Prime Minister. For all her belief in meritocracy, Mrs Thatcher had a curious weakness for a genuine toff; and the sixth Baron Carrington was the real thing. Though a close colleague of Ted Heath who personified many of the attitudes of the Establishment she most despised, Carrington’s hereditary peerage gave him a special immunity: unlike the other Heathites in the Cabinet he posed no threat to her leadership. At the nadir of her popularity in 1981 there was actually a flurry of speculation that he might renounce his peerage to challenge her; but Carrington firmly quashed the idea.21 He was delighted to get the Foreign Office and had no greater ambition. Moreover, he was effortlessly charming, undeferential and irreverent: he made her laugh. Sometimes when she was inclined to lecture visiting foreign leaders without drawing breath, he would pass her a note saying, ‘He’s come 500 miles, let him say something.’ Once, with the Chinese leader, Chairman Hua, the situation was reversed: it was Mrs Thatcher who could not get a word in as Hua talked non-stop for fifty minutes. So Carrington passed her a note saying, ‘You are speaking too much, as usual.’ ‘Luckily,’ he recalled, ‘she had a handkerchief – she held it in front of her face and didn’t laugh too much.’22 The episode became part of Foreign Office mythology; but none of her subsequent Foreign Secretaries would have dared to tease her in this way.

  Whatever her general intentions, there was one central area of foreign policy where Mrs Thatcher was always going to take the lead. She came into office determined to restore Britain’s credentials as America’s most reliable ally in the war against Soviet expansionism. That central ideological struggle was the global reflection of her mission to turn back socialism at home. Although in practice she was quickly drawn into two major foreign-policy questions in other spheres – the acrimonious quarrel over Britain’s contribution to the European Community budget and the long-running saga of Rhodesia – these were to her mind subordinate sideshows to the over-arching imperative of the Cold War. Accordingly she was keen to visit Washington as soon as possible to forge a special relationship with President Jimmy Carter.

  Mrs Thatcher’s premiership overlapped so closely with the presidency of her Republican soulmate Ronald Reagan that it is easily forgotten that Reagan was not elected President until November 1980. For her first twenty months in Downing Street Mrs Thatcher had to deal with his very different Democratic predecessor. She had first met Jimmy Carter when visiting Washington in 1977 and again at the G7 summit in Tokyo in June, when Carter was not altogether impressed. ‘A tough lady’, he wrote in his diary, ‘highly opinionated, strong willed, cannot admit that she doesn’t know something.’23 After this encounter the State Department put Mrs Thatcher off until December. Before she left Carrington privately ‘doubted whether Mrs Thatcher would become great buddies with President Carter’.24 In fact, they got on better than he expected. As she later wrote, ‘it was impossible not to like Jimmy Carter’. He was a more serious man than his rather folksy manner suggested – ‘a deeply committed Christian and a man of obvious sincerity’, with a scientific background like her own. Though in retrospect she was scathing about his ‘poor handle on economics’ and what she saw as weakness in the face of Soviet expansionism, he was the leader of the free world and she was determined to get on with him.25

  She arrived in Washington six weeks after the seizure of fifty American diplomats in Teheran. It was a measure of her early uncertainty that she initially intended to say nothing about the prolonged hostage crisis, feeling that to do so would be to intrude on a private American agony. Carrington and Frank Cooper (Permanent Secretary at the Ministry of Defence) had to tell her that the Americans were interested in nothing else at that moment: she must give them unequivocal support. She agreed only reluctantly (‘Margaret, you have got to say yes. You have got to,’ Carrington urged her). But then, once persuaded, she came out with a ‘clarion call’ on the White House lawn which instantly confirmed the impact she had made on her first visit to Washington as leader in 1975:

  At times like these you are entitled to look to your friends for support. We are your friends, we do support you. And we shall support you. Let there be no doubt about that.26

  ‘The effect was like a trumpet blast of cheer to a government and people badly in need of reassurance from their allies,’ the British Ambassador, Sir Nicholas Henderson, recorded.27 The rest of her visit was a triumph. On Henderson’s advice she was carefully non-polemical in her conversations with Carter; but then, addressing Congress, she threw off all restraint and wowed her audience with a ten-minute ‘harangue’ on the virtues of the free market and the evil of Communism, followed by questions which she handled with an informality and relish the like of which Washington had never seen before from a visiting leader. More than one Congressman invited her to accept the Republican nomination for President. She went on the next day to address an audience of 2,000 at the Foreign Policy Association in New York, where the directness of her message again made a tremendous hit. The Russians, she boasted, had called her the Iron Lady: ‘They’re quite right – I am.’28 In that moment – a year before Reagan entered the White House – MargaretThatcher became a heroine to the American right.

  Ten days later the Soviet Union invaded Afghanistan. In her memoirs LadyThatcher described this action as ‘one of those genuine watersheds which are so often predicted, which so rarely occur’. She immediately saw the invasion as bearing out her warnings of worldwide Soviet expansionism, part of a pattern with Cuban and East German intervention in Angola and Namibia, all taking advantage of the West’s gullible belief in détente. She was determined that the Russians must be ‘punished for their aggression and taught, albeit belatedly, that the West would not only talk about freedom but was prepared to make sacrifices to defend it’.29 On this occasion Carter needed no prompting. When he rang her at Chequers three days after Christmas he likened the Soviet action to their invasion of Czechoslovakia in 1968.‘In effect Moscow had changed a buffer nation into a puppet nation under Soviet direction,’ he told her. ‘This would have profound strategic consequences for the stability of the entire region… He did not think we could let the Soviets get away with this intervention with impunity.’ Mrs Thatcher agreed, ‘and observed that when something like this occurred it was important to act right at the beginning’.30 She quickly pledged British support for economic and cultural sanctions to punish the invader. In particular they agreed that the best way to hurt the Russians would be a Western boycott of the forthcoming Moscow Olympics. To her fury, however, she found that this was something she could not deliver. While the United States Olympic Committee did stay away from Moscow the following summer, most British athletes declined to give up their medal hopes at t
he behest of the Prime Minister.

  More seriously she discovered that her call for a resolute response to the Soviet action was not supported by the rest of Europe. The invasion of Afghanistan sharply highlighted the gulf between American and European perceptions of the Cold War. The Europeans, particularly the Germans, had always gained more tangible benefits from détente, in the form of trade and cross-border cooperation, than the Americans and British, and were anxious not to jeopardise them.They were disinclined to view the Soviet action as part of a strategy of world domination, but rather as an understandable response to Iranian-type Islamic fundamentalism on their southern border. Mrs Thatcher’s instincts were strongly with the Americans; but to Washington’s disappointment she proved unable to deliver concerted European backing for significant sanctions.

  ‘The Bloody British Question’

  If Mrs Thatcher could not bring her European partners with her on Afghanistan, this was partly because she had already antagonised them over Britain’s contribution to the Community budget. This was a matter she could not possibly leave to the Foreign Office, combining as it did her two favourite themes of patriotism and good housekeeping. It was exactly the sort of issue on which she thought the Foreign Office liable to give up vital British interests for the sake of being good Europeans. It offered a wonderful early opportunity to be seen battling for Britain on the international stage, cheered on by the tabloid press, on a simple issue that every voter could understand. At a time when the economy was already proving intractable, Europe offered a much more popular cause in which to display her determination not to compromise, and she seized it with relish. It took five years before she finally achieved a satisfactory settlement. The long battle helped set the style of her premiership. It also got her relationship with the European Community off to a bad start from which it never recovered.

  There is no dispute that there was a genuine problem, left over from the original terms of Britain’s entry to the Community negotiated by Ted Heath in 1971 and not resolved by Callaghan’s essentially cosmetic renegotiation in 1974 – 5.The fundamental imbalance derived from the fact that Britain continued to import more than other members from outside the Community, so paying more in import levies, while having a much smaller farming sector, and consequently gaining much less benefit from the Common Agricultural Policy (CAP). Over the past decade Britain’s growth had fallen behind that of other countries, so the budget contribution fixed in 1971 had become disproportionately high. By 1980 Britain was paying about £1,000 million a year more into the Community than she was getting out.

  The existence of an imbalance was recognised in Brussels. Callaghan and his Foreign Secretary, David Owen, had been making efforts to correct it; but Labour was handicapped by its history of hostility to the Community. The election of a Conservative Government with a more positive attitude to Europe was expected to make agreement easier. Callaghan exaggerated when he told the House of Commons: ‘We took the shine off the ball, and it is now for her to hit the runs.’31 But with goodwill it should not have been difficult, by the normal processes of Community bargaining, to achieve an equitable adjustment without a bruising confrontation. The Foreign Office would have considered a rebate of about two-thirds both satisfactory and achievable.32 It was the heads of government on both sides of the Channel – Mrs Thatcher on one side, but equally Schmidt and Giscard on the other – who played to their domestic galleries and elevated the issue into a trial of political strength.

  By chance the first overseas leader to visit London the week after the British election was Helmut Schmidt. Their talks in Downing Street actually went quite well. Though he was supposed to be a socialist, Mrs Thatcher approved of his sound economic views, while Schmidt in turn told the Bundestag (a touch patronisingly) that he was impressed by her ‘knowledge, authority and responsibility’.33 But she left the German Chancellor in no doubt that she regarded Britain’s present budget contribution as unacceptable and intended to seek a rebate. That was quite right and proper; but she soon struck a discordant note by talking truculently about getting ‘our’ money back, as though the Community had stolen it, and declaring that she was not going to be ‘a soft touch’, as though her European partners were a bunch of con men.34 This sort of talk went down badly in Paris, Bonn and Brussels, because it showed a fundamental failure to understand how the Community worked.

  First of all, the Community did not recognise the concept of ‘her’ money; funds contributed by each member country belonged to the Community, to be expended by the Commission for the benefit of the Community as a whole. The idea of each member keeping a profit-and-loss account was strictly non-communautaire. Within this broad principle there was certainly a case that Britain was paying more than her fair share; but if Mrs Thatcher was going to be legalistic about it, her partners could argue that Britain had signed up in 1972 and could not now rewrite the contract because it had turned out to be disadvantageous. They were particularly unsympathetic since Britain’s economic position had now been transformed by North Sea oil, a benefit which no other member enjoyed. Moreover, in the wider context of European trade, the sums involved were really very small.

  Second, Mrs Thatcher exasperated her partners – and not least the President of the Commission, Roy Jenkins, whose job it was to broker a deal – by insisting that Britain’s demand for a budget rebate should be treated as an issue entirely on its own, not settled as part of a wider package, as was the Community’s normal way. Schmidt and several of the other leaders were willing to help Britain, but they expected Mrs Thatcher in turn to be flexible and constructive in other difficult areas like lamb, fish, oil and the European Monetary System. This she adamantly refused. ‘We simply cannot do so,’ she told the Commons in March 1980.35 In opposition just twelve months earlier she had repeatedly condemned Labour’s counterproductive obstructiveness towards Europe.36 But now she wanted Britain’s grievance settled before she would allow progress on anything else.

  The other leaders first realised what they were up against at the European Council at Strasbourg on 21 – 2 June, where Mrs Thatcher began by trying to get the budget issue placed first on the agenda, which naturally irritated Giscard. When they eventually reached it, Jenkins wrote in his diary, she ‘immediately became shrill’ and picked an unnecessary quarrel with Schmidt, ‘which was silly because he was absolutely crucial to her getting the result that she wanted’.37 She herself was well pleased with her performance. ‘I felt that I had made an impression as someone who meant business.’ She was delighted to overhear ‘a foreign government official’ comment that ‘Britain is back’ – ‘a stray remark that pleased me as much as anything I can remember’.38

  She deliberately set out to be difficult. But Giscard and Schmidt, the experienced European statesmen, both in office since 1974, should have handled her better. After five years of Wilson and Callaghan, they had every reason to welcome the return of a British Government unambiguously committed to Europe. Giscard particularly welcomed British support for the French nuclear force de frappe.They should have set out to disarm her. Instead, at the purely personal level, Giscard as the host at Strasbourg went out of his way to snub her, first by failing to seat her next to himself at either lunch or dinner, and then by insisting on being served first – asserting his precedence as head of state over the normal courtesy due to her sex.39 French gallantry alone might have dictated an effort to make a fuss of her. She was susceptible to Gallic charm, as François Mitterrand later proved. Instead she thought Giscard’s behaviour, with reason, ‘petulant, vain and rather ill-mannered’.40 When the French President came back to dinner in Downing Street later that year she got her own back by deliberately seating him opposite full-length portraits of Nelson and Wellington.41 More seriously, the two European leaders (and Giscard in particular) seem to have decided that the way to deal with the British Prime Minister was to put her down.

  They misjudged their woman. Once she had defined the issue as a trial of her strength, she would
not – could not – back down. Carrington, caught uncomfortably in the crossfire, thought the Europeans’ handling of her was ‘pretty stupid… enormously short-sighted and selfish’.42 They would have done much better to have taken her aside right at the outset, before Strasbourg, and offered her a generous out-of-court settlement before the political stakes were raised too high. As it was, Mrs Thatcher spent the interval between Strasbourg and the next European Council at Dublin in November working herself into a position of determined intransigence. In Luxembourg in October to deliver a Winston Churchill memorial lecture, she declared truculently: ‘I cannot play Sister Bountiful to the Community while my own electorate are being asked to forgo improvements in the field of health, education, welfare and the rest.’43 In the House of Commons, pressed both by Labour and by anti-Market Tories, she talked up what she hoped to achieve at Dublin. What she wanted was ‘a broad balance between what we put in and what we get out’.44

  In fact she was offered a refund of just £350 million for the current year. Instead of taking it as a starting point for bargaining, she rejected it with contempt as ‘a third of a loaf’. Roy Jenkins had a ringside view of what followed. ‘She kept us all round the dinner table for four interminable hours,’ he wrote in his diary,45 ‘for the greater part of which,’ he later recalled, she talked without pause, but not without repetition.46 ‘It was obvious to everyone except her that she wasn’t making progress and was alienating people.’