On Wednesday 14 June Howe and Lawson sent her a joint minute setting out their advice that she should give a ‘non-legally binding’ undertaking at Madrid to join the ERM by the end of 1992, and asked her for a meeting.21 She was furious – she describes their request in her memoirs as an attempt to ‘ambush’ her – but grudgingly agreed to see them the following Tuesday, 20 June, when she bluntly rejected their arguments and refused to tie her hands. A few hours later she sent Howe a paper adding further conditions before Britain could contemplate joining, including the final completion of the single market, which might take years. Their response was to ask for another meeting. She was angrier than ever, tried to talk to the two of them separately by telephone but eventually agreed to see them together at Chequers early on Sunday morning, just before she left for Madrid. There is not much disagreement between the three of them about what happened at this ‘nasty little meeting’, as she called it. In her view they tried to ‘blackmail’ her by threatening to resign if she would not agree to state her ‘firm intention’ to join the ERM not later than a specified date. ‘They said that if I did this I would stop the whole Delors process from going on to Stages 2 and 3. And if I did not agree to their terms and their formulation they would both resign.’22 ‘The atmosphere was unbelievably tense,’ Lawson confirms:
Margaret was immovable. Geoffrey said that if she had no time whatever for his advice… he would have no alternative but to resign. I then chipped in, briefly, to say, ‘You know, Prime Minister, that if Geoffrey goes I must go too.’ There was an icy silence, and the meeting came to an abrupt end, with nothing resolved.23
‘I knew that Geoffrey had put Nigel up to this,’ Lady Thatcher wrote. ‘They had clearly worked out precisely what they were going to say.’24 Lawson does not deny it, but insists that this was ‘the only instance in eight years as Cabinet colleagues when we combined to promote a particular course of action’.25 All they were doing, in the first instance, was asking – as Chancellor and Foreign Secretary – to be consulted.Yet she bitterly resented what she called ‘this way of proceeding – by joint minutes, pressure and cabals’.26 It is difficult to argue with Percy Cradock’s verdict that the fact that ‘a ministerial request for consultation could be construed as a conspiracy… illustrated an alarming breakdown of communication and trust within government’.27
Prime Minister and Foreign Secretary flew together to Madrid, but Mrs Thatcher did not speak to her colleague on the plane and when they got to the British Embassy she closeted herself all evening with Powell and Ingham, while Howe enjoyed a relaxed supper downstairs with the Ambassador and his staff. When she spoke in the Council the next morning, ‘her Foreign Secretary still had not the least idea what she intended to say’.28
In fact she was unwontedly conciliatory and constructive. It was widely suggested that following her rebuff in the European elections she came to Madrid with ‘diminished clout’ and conducted herself less stridently as a result – though she of course denied it.29 She insisted afterwards that she had defied Howe and Lawson’s ‘blackmail’ by still refusing to set a date for joining the ERM. But in reality she did move most of the way to meet them, by advancing from the vague formula that Britain would join ‘when the time is right’ to a much more specific set of conditions – not, as she had threatened on 20 June, the final completion of the single market, but merely further progress towards completion, plus British inflation falling to the European average, progress by other countries towards the abolition of exchange controls, and further liberalisation of financial services. These new tests were much more flexible and open to interpretation than her stance hitherto, as was demonstrated just over a year later when John Major was able to persuade her that sufficient progress had been made to declare that the conditions had been met.
On the wider issues at Madrid, EMU and the Social Charter, Mrs Thatcher congratulated herself that she had stood firm. She claimed to have prevented President Mitterrand fixing a timetable for the second and third stages of the Delors Report before the first stage had been completed.
The faithful Wyatt thought that she had done ‘brilliantly’.30 But she had not really achieved anything at all, as the following year showed. Whether, as Lawson and Howe believed, she would have gained herself more leverage at future meetings by agreeing to set a clear timetable to join the ERM cannot be proved. The fact is that Britain was now isolated, however she conducted herself. She did not significantly hold up progress towards EMU by being marginally more constructive; but neither would she have achieved any more by being intransigent. It was too late.
Her fury was reserved for Howe and Lawson, who had backed her into a corner and demonstrated that they had the power to bring her down. At the time she pretended that she had called their bluff. In fact there was no need for resignations since the threat had achieved most of what they wanted. Years later she admitted: ‘They overpowered me.’31 She knew she could not have survived either or both of them resigning. But she vowed, ‘I would never, never allow this to happen again.’32 Four weeks later she employed the Prime Minister’s ultimate power to break the Howe – Lawson axis. She resolved to punish Howe – and warn Lawson – by removing him from the Foreign Office. But it was a messy operation.
She was due for a reshuffle anyway – she normally held one before the summer holidays – but this was exceptionally sweeping. Only eight out of twenty-one Cabinet ministers stayed where they were. Two she removed, and two more left voluntarily. The other nine were switched around. Into the Cabinet for the first time came Peter Brooke, Chris Patten, John Gummer and Norman Lamont. Of these only the last could be called a Thatcherite. The overall effect of the changes, Lady Thatcher noted in her memoirs, was that the balance of the Cabinet ‘slipped slightly further to the left’. But ‘none of this mattered’, she assured herself, ‘as long as crises which threatened my authority could be avoided’.33
But all this minor juggling was overshadowed by the removal of Geoffrey Howe from the job he had held for the past six years. Howe had no warning of what was coming. It was a brutal way to treat one of her most loyal colleagues, her shadow Chancellor in opposition and the architect of the 1981 budget, who in his quiet way had borne the heat of the early economic reforms. The debt she owed Howe’s dogged persistence for her survival and success was incalculable; yet Mrs Thatcher had come to despise but simultaneously fear him, believing that he was positioning himself to replace her.
Having decided to remove Howe from the Foreign Office she offered him the choice of becoming Leader of the House or Home Secretary. He accepted the former, but held out for the consolation title of deputy Prime Minister to salve his pride. With hindsight she thought she should have sacked him altogether, rather than leave him bruised but still in a position from which he could wound her fatally the following year. Howe, too, quickly realised that he would have done better to make a clean break. By becoming deputy Prime Minister he hoped to inherit the sort of position within the Government that Willie Whitelaw had occupied before his illness. If Mrs Thatcher had not by this time lost all sense of Cabinet management she would have invited him to fill that crucial vacancy: Howe would have made a very good Willie, had she been prepared to trust him. But ‘because Geoffrey bargained for the job,’ she sneered, ‘it never conferred the status which he hoped’.34 Bernard Ingham made a point of telling the press that there was no such job as deputy Prime Minister anyway.
And that was not the end of it. If she was determined to remove Howe, Douglas Hurd was by far the best-qualified replacement. After Peter Carrington, Francis Pym and Howe, however, Mrs Thatcher did not want another pro-European toff at the Foreign Office; and at this point she was still strong enough to appoint whomever she wished. She wanted a Foreign Secretary with no ‘form’, who would uncomplainingly do her bidding. So she appointed John Major.
She had already identified Major as a possible long-term successor. As Chief Secretary at the Treasury since 1987 he had impressed her with his quiet mast
ery of detail and calm judgement. Always on the lookout for competent right-wingers, she had persuaded herself that he was more of a Thatcherite than he really was. ‘He is another one of us,’ she assured a sceptical Nicholas Ridley.35 In fact, though dry on economic issues, Major was by no means a Thatcherite on social policy; he was also unenthusiastic about the poll tax. Even if she had been right, however, thrusting him into the Foreign Office at the age of forty-five, with no relevant experience or aptitude, was bad for him and also bad for her: he could not help looking like her poodle.
Altogether the 1989 reshuffle was a political shambles which antagonised practically all her colleagues, dismayed her party and delighted only the opposition. Loyal supporters like Ian Gow foresaw trouble ahead;36 while even Wyatt worried that ‘she has made a bitter enemy of Geoffrey Howe’.37 For her part Mrs Thatcher quickly recognised that by leaving Howe in office she had got the worst of all worlds. Meanwhile the rest of the Cabinet felt that if she could treat Howe like that, none of them was safe.
From now on Mrs Thatcher took a positive delight in flaunting her hostility to all things European. When France hosted a G7 summit in Paris that summer to coincide with the bicentenary of the French Revolution she took the chance to deliver a patronising lecture on the superiority of the British tradition of human rights going back to Magna Carta.Then at Strasbourg in December she unilaterally vetoed the adoption of the Social Charter. She was happy to accept common rules in some areas, like health and safety and freedom of movement, but she rejected the harmonisation of working hours, compulsory schemes of worker participation and the like. More importantly, however, she was unable to block the next stage of progress towards EMU. It needed only a majority of member countries to call an Intergovernmental Conference (IGC) to set a definite timetable. But she still insisted that it would require unanimity for the conference to decide anything, and so long as she was there this was out of the question.
‘I do not think we are out of step,’ she declared at her post-summit press conference. ‘I think steadily others are coming in step with us.’38 Alternatively she persuaded herself that it was actually good to be isolated, that in being isolated she was actually leading Europe. ‘Sometimes you have to be isolated to give a lead.’39 But this was self-delusion. She had a legitimate alternative vision of Europe. But right or wrong she was the worst possible advocate for her vision. Her ceaselessly confrontational style became – in the view of her long-suffering colleagues who had to try to pick up the pieces after her barnstorming performances – ‘counterproductive’. 40 ‘It wears out a bit,’ Douglas Hurd recalled. ‘I think that quite a lot of her colleagues began to regard it as theatre.’41
The truth is that Mrs Thatcher’s European policy was no policy at all. It reflected, but also greatly exacerbated, instinctive British suspicion of the Continent. It pointed up real difficulties – of sovereignty, of democratic accountability, of economic divergence – in the way of ‘ever-closer union’ of the Community. There was a case for proceeding one step at a time, just as there was – and still is – a case for preferring a community of independent nations to a superstate. But by continually saying ‘no’ Britain only lost influence on a process from which it was in the end unable to stand aside, thus repeating the dismal game of catch-up which it had been playing at every stage of Europe’s development since 1950. Europe was the greatest challenge facing Mrs Thatcher’s premiership. It was also the greatest failure of her premiership. And it was a failure directly attributable to her own confrontational, xenophobic and narrow-minded personality.
24
Tomorrow the World
The export of Thatcherism
BY the mid-1980s Thatcherism had become an international phenomenon. Partly just because she was a woman, which meant that in all the photographs of international gatherings she stood out, in blue or red or green, from the grey-suited men around her (and was always placed chivalrously in the middle); partly on account of the strident clarity of her personality, her tireless travelling and her evangelical compulsion to trumpet her beliefs wherever she went; partly as a result of Britain’s unlikely victory in the Falklands war; partly in recognition of her close relationship with Ronald Reagan and her intermediary role between the Americans and Mikhail Gorbachev – for all these reasons Margaret Thatcher had become by about 1985 one of the best-known leaders on the planet, a superstar on the world stage, an object of curiosity and admiration wherever she went and far more popular around the world than she ever was at home.
Above all she was the most articulate and charismatic champion of a wave of economic liberalisation which was sweeping the world, turning back the dominant collectivism of the past half-century. She did not, of course, originate it. The anti-socialist and anti-corporatist counter-revolution was a global phenomenon observable literally from China to Peru. It originated, if anywhere, in Chicago, where both Friedrich Hayek and Milton Friedman had been at different times professors. The turning of the intellectual tide was reflected before Mrs Thatcher even became Tory leader by both of them being awarded the Nobel prize for economics – Hayek in 1974, Friedman in 1976. It was in Chile that their heretical ideas were first determinedly put into practice when General Augusto Pinochet, having overthrown (with American help) the democratically elected Marxist government of Salvador Allende in 1973, brought in the so-called ‘Chicago boys’ to instigate an extreme experiment in free-market reform enforced by the methods of a police state. The politics were detestable, but the economics set a model for the rest of South America and beyond.
In the early days of her leadership Mrs Thatcher knew that she was riding, or hoped to ride, a global wave. ‘Across the Western world the tide is turning’, she declared in March 1979, just before the General Election which brought her in to power, ‘and soon the same thing will happen here.’1 The idea that she was the pathfinder only seized her some years later. ‘In 1981,’ she recalled, ‘a finance minister came to see me. “We’re all very interested in what you’re doing,” he said, “because if you succeed, others will follow.” That had never occurred to me.’2 By 1986, however, she had begun to glory in the claim that Britain had led the world.
Incontestably the British example – particularly privatisation – played a part. But equally obviously the counter-revolution had its own momentum, in both East and West, as one social democratic country after another ran into the same sort of problems that Britain had encountered in the 1970s and responded in more or less the same way. Over the next decade the same necessity imposed itself right across Europe. In the fifteen years from 1985 over $100 billion worth of state assets were sold off, including such flagship national companies as Renault, Volkswagen, Lufthansa, Elf and the Italian oil company ENI, adding up to ‘the greatest sale in the history of the world’.3
Above all the free-market contagion spread to the citadels of Communism itself – to China as early as 1981 (where the experiment of economic liberalisation remained under strict political control) and then to the Soviet Union in the form of Mikhail Gorbachev’s perestroika programme, whose inherent contradictions rapidly precipitated the collapse of the whole Communist system. Mrs Thatcher was entitled to celebrate the triumph of ideas which she had not only followed but proselytised with missionary fervour. But the very fact that the phenomenon has been virtually universal – so that, as Mrs Thatcher herself noted, not just conservative but even nominally socialist governments were equally forced to conform to the global Zeitgeist – is the proof that it had its own irresistible momentum, irrespective of her contribution, significant though that was.
The collapse of Communism and the ‘problem’ of Germany
Nevertheless the sudden and quite unexpected collapse of Communism in the autumn of 1989 was a triumphant vindication of all that Mrs Thatcher had stood for and striven to bring about since 1975. Whether you call it Thatcherism or some other name, the fall of the Berlin Wall, the liberation of the Soviet empire and the disintegration within two years of the Soviet Un
ion itself represented the ultimate victory for her philosophy and her – and Ronald Reagan’s – military strategy. The overriding context of all her politics for forty years had been the Cold War; and now suddenly the West had won it.
In her memoirs she gave the principal credit to Reagan ‘whose policies of military and economic competition with the Soviet Union forced the Soviet leaders… to abandon their ambitions of hegemony and to embark on the process of reform which in the end brought the entire Communist system crashing down’. But since the actual collapse had occurred after Reagan’s time she felt obliged to extend the credit to his successor, George Bush, who ‘managed the dangerous and volatile transformation with great diplomatic skill’; and even, through gritted teeth, to some of the other European allies, ‘who resisted both Soviet pressure and Soviet blandishments to maintain a strong western defence – in particular Helmut Schmidt, Helmut Kohl, François Mitterrand and… but modesty forbids’.4 This was false modesty, however. As the President’s staunchest ally she had no doubt who deserved most credit, after Reagan himself, for the success of their joint strategy. In retirement she had no doubt that this was her greatest achievement.
The Iron Lady Page 56
