Margaret Thatcher and the European Union

EU in the 70’s (Pre-Thatcher)

Before understanding the rift between Thatcher and the EU, it is best to know what was the situation of the EU was before Thatcher came into the picture:

In the early 70’s, there were only a few member states in the EU: Germany, France, Italy, the Netherlands, Belgium and Luxembourg. In 1973, three new states joined: Denmark, Ireland and the United Kingdom.

In 1970, the EU came up with a plan that had to do with a single currency. This was to maintain monetary stability, and the first thing they did was that they decided that the different currencies of the member states in the EU would only fluctuate against each other within narrow limits. The exchange rate mechanism would be shortened to ERM, and it became official in 1972. This was the first step towards a single currency, the euro, which would be introduced 30 years later.

In the 70’s the fight against pollution intensified, as the world got a lot more aware of the environmental problems. The EU’s response to this was to adopt laws to protect the environment, such as the notion of “the pollution pays”. Greenpeace, along with other pressure groups were founded around this time too.

In October 1973 there was an Arab-Israeli war, causing the Middle East oil-producing nations to impose big price increases and also restrict sales to certain European countries. This created economic problems in the EU.

In 1974, the European Regional Development Fund was set up. This was done by the EU leaders so that they could show their solidarity. The purpose of this was to transfer money from the richer regions to the poor ones so that the poor regions could improve roads and communications, attract investment in the regions and also create jobs. This would later become a third of all the EU spending.

In the middle of the 70’s, the last right-wing dictatorships ended, due to the death of General Franco, dictator in Spain, and the overthrow of the Salazar regime in Portugal. This was a step closer to being members of the EU for those countries, as the EU does not, and has never, accepted dictatorships.

In the later 70’s, 1978, the former Italian Prime Minister Aldo Moro was murdered. This was one of many acts of terrorism that was carried out during the 70’s. Other victims of terrorism were leading lawyers, businessmen, politicians along with 11 Israeli athletes at the Munich Olympic Games in 1972.

In 1979, EU citizens were able to elect the members of the European Parliament for the very first time. Before this the delegates were chosen from National Parliaments. They would not sit in national delegations, but in pan-European political groups, being Socialists, Conservative, Liberal, Greens etc.

Thatcher’s contribution to the EU and Europe

During her time as Prime Minister of the UK, she made her mark on the EU, both good and bad.

In 1986, British Commissioner Lord Cockfield, with the approval by Thatcher, pushed forward to reform the Treaty of Rome. The EU took this into consideration and later agreed to the Single European Act. With the Treaty of Rome as a foundation, the Single European Act established a single market where there would be free movement of goods, capital, and people within the EU.

Margaret Thatcher and the Conservative party returned to power in 1979 and her critical view on the EU made a mark in 1985 with the UK Rebate. In the rebate, Thatcher demanded the repayment of the UK’s contribution to the EU budget, as at that time, it was being spent on the Common Agricultural Policy which did not benefit the UK as much as the other countries did, as the UK has a small farming sector. The repayment was high in amount, but in the end Thatcher got the money back and the EU had to suffer the consequences.

In 1990, the UK joined the EU’s newest project, the European Exchange Rate Mechanism (ERM), with approval from Thatcher. The aim of the ERM was to reduce the exchange rate variability and improve the stability of the currencies in the EU. Unfortunately the UK was forced to leave in 1992 because they were unable to keep the pound sterling above the agreed lower limit which caused an economic crash.

Not only did Thatcher work within the EU, but also around Europe by helping to end the Cold War. She did so by integrating the Soviet bloc of Eastern Europe with the rest of Europe; 

"We must never forget that east of the Iron Curtain, people who once enjoyed a full share of European culture, freedom and identity have been cut off from their roots...we shall always look on Warsaw, Prague and Budapest as great European cities" 

This was also the time when a journalist in the Soviet Union called her the ‘Iron lady’ which was supposed to be mocking considering how some people thought that she ‘ruled’ the UK with an iron fist, but instead she took this as a compliment that she was strong willed.

The Maastricht Treaty, or formally the Treaty of the European Union was the treaty that led to the creation of the single European currency, the Euro. Thatcher was against the idea of the Euro and wanted the UK to keep the Pound. During the signing of the treaty, Britain got an ‘opt out’ clause which meant that Britain would continue to be a part of the European Union but not participate in the Euro, thus maintaining the Pound.

Thatcher and The Euro - back in the 20th century and now:

Thatcher’s firm belief was that the Euro would ruin the EU. It would prove to be fatal to poorer countries, “devastate their inefficient economies”. She thought that the poorer countries would in the end need bailouts because of their uncompetitiveness and it will also be that Germany and France would take the largest hits from these bailouts. 

Thatcher thought the Euro was a bad idea; in her book ‘Statecraft’ she stated that the Euro would fail "economically, politically and socially". According to her, Britain would be better served keeping control over it’s own financial affairs, but because of her critical thought on the EU she was met with a big resistance in the lower house of the parliament. Her point of view made her lose her left hand, Geoffrey Howe. He later stated “I wanted to change the policies, not the leader. But if that meant the leader had to go, then so it had to be.”

The Euro proved Thatcher right as it has caused a major crisis in the Euro-zone, countries are falling apart because they can’t handle the Euro. Germany and France are taking huge blows to their economy to save the poor countries and even Italy may need a bailout if things continue this way

Thatcher the Euro-skeptic?

Without a doubt Thatcher was a prime example of a Euro-skeptic, but she had her reasons for seeing the EU in her way.

During the United Kingdom European Communities membership referendum in 1975, Thatcher actually voted ‘yes’ for the UK stay in the then European Community. But at this time, she was a Europhile along with many her party members as the dream everyone shared then was to bring peace and stability to Europe and the UK. It was only later in her years as Prime Minister that she became suspicious that the EU stood more for political and ideological ambition rather than bringing together an economical and democratic Europe.

Slowly her impression of the EU changed to that of a centralized bureaucratic super state that would extinguish democracy and take away sovereign power from the European countries ; or in her own words, 

“That such an unnecessary and irrational project as building a European super state ever embarked on will seem in future years to be perhaps the greatest folly of the modern era. And that Britain, with traditional strengths and global destiny, should ever become part of it will appear a political error of the first magnitude” 

(in her book, Statecraft: Strategies for a Changing World, published in 2002)

Looking back at the Single European Act and the ERM, Thatcher wasn’t actually too keen on these ideas and only agreed to them to keep her party, cabinet, and people afloat, as there was a rift between Euro-skeptics like her and Europhiles like Foreign Secretary Geoffrey Howe. While the Single European Act was a major contribution to European growth and integration, the ERM was a total flop that resulted in an economic failure and the eventual defeat of the Conservative government.

Many of her views on the EU, both love and hate, were expressed in her famous Bruges Speech at the College of Europe 1988. In this speech she shared her vision of an EU that was 

“...united and with greater sense of common purpose. But it must be in a way which preserves the different traditions, parliamentary powers and sense of national pride in one’s own country, for these have been the source of Europe’s vitality through the centuries”

She basically wanted the EU to be more of a union of countries that continued to hold on to their sovereignty and worked together independently.

In fact there are parts in her speech that sounded more pro-European than what many would have thought;

“Let Europe be a family of nations, understanding each other better, appreciating each other more, doing more together but relishing our national identity no less than our common European endeavour. Let us have a Europe which plays its full part in the wider world, which looks outward not inward, and which preserves that Atlantic community—that Europe on both sides of the Atlantic—which is our noblest inheritance and our greatest strength”

“Europe will be stronger because it has France as France, Spain as Spain, Britain and Britain, each with its own customs, traditions and identity. It would be folly to try to fit them into some sort of identikit European personality”

“Europe is not the creation of the Treaty of Rome. Nor is the European idea the property of any group or institution. We British are as much heirs to the legacy of European culture as any other nation. Our links to the rest of Europe, the continent of Europe, have been the dominant factor in our history…"

Furthermore, she also put out her thoughts on how the EU could work better if it was not a centralised bureaucratic superstate;

“But working more closely together does not require power to be centralized in Brussels or decisions to be taken by an appointed bureaucracy”

“We have not successfully rolled back the frontiers of the state of Britain, only to see them re-imposed at a European super-state exercising a new dominance from Brussels”

 And to sum all of that up in her own words ;

“To try to suppress nationhood and concentrate power as the centre of a European conglomerate would be highly damaging and would jeopardize the objectives we seek to achieve”

She did try to defend Britain’s isolation from Europe as “Britain does not dream of some cozy, isolated existence on the fringes of the European Community” , but many saw this as ironic since she had for some time given that exact impression (UK not joining the Euro is one example) for the rest of Europe to see.

The rift between her and the rest of cabinet and party continue to worsen, and by the time her right hand man and Euro-phile, Geoffrey Howe resigned after Thatcher's speech at the European Council meeting in Rome 1990 (her famous statement being “No,No,No” to the House of Commons), the plot for her ‘political assassination’ began.

While Margaret Thatcher had her reasons for not trusting the EU and was very skeptical with their projects, she did have her own vision on how the EU should have been, could have been, and would have been.

Authors: Izabella Karlsson, Alexsandra Buachoom, Agnes Ek, Emilia Baunach