Thatcher on EU and Britain Role by Tom Donelson

Margaret Thatcher viewed Europe as Community of nations, allowed to keep their identity but also one free trade system from Central Europe running through London. In her speech to the College of Europe and now claimed the Burges speech and her first principles was “My first guiding principle is this: willing and active cooperation between independent sovereign states is the best way to build a successful European Community.”   Note the word independent sovereign states, for Thatcher, this was not a Union but a European Community.  She was not opposing European integration or Britain role in Europe and noted, “Europe will be stronger precisely because it has France as France, Spain as Spain, and Britain as 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.”  Translation, she favored a Europe Community in which kept their identity and not adopt a European Union identity that overshadowed nations own identity. 

She warned, “Europe is stronger when we do so, whether it be in trade, in defence or in our relations with the rest of the world. But working more closely together does not require power to be centralised in Brussels or decisions to be taken by an appointed bureaucracy…Indeed, it is ironic that just when those countries such as the Soviet Union, which have tried to run everything from the centre, are learning that success depends on dispersing power and decisions away from the centre, there are some in the Community who seem to want to move in the opposite direction…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 super-state exercising a new dominance from Brussels.”  She envisioned a Europe with independent nations and free trade among each nations, encouraging market reforms including in the soon to be freed nations liberated from the Soviet Empire.  She opposed a European Union that re-imposed a power from a central location.

Her second principles was based on “Community policies must tackle present problems in a practical way, however difficult that may be.” In dealing with Agricultural policies, she noted, “We must continue to pursue policies which relate supply more closely to market requirements, and which will reduce over-production and limit costs.”  This reinforces her view on the importance of markets and enterprise as she noted, “My third guiding principle is the need for Community policies which encourage enterprise…If Europe is to flourish and create the jobs of the future, enterprise is the key…The basic framework is there: the Treaty of Rome itself was intended as a Charter for Economic Liberty…But that it is not how it has always been read, still less applied…The lesson of the economic history of Europe in the 70’s and 80’s is that central planning and detailed control do not work and that personal endeavour and initiative do…That a State-controlled economy is a recipe for low growth and that free enterprise within a framework of law brings better results…The aim of a Europe open to enterprise is the moving force behind the creation of the Single European Market in 1992. By getting rid of barriers, by making it possible for companies to operate on a European scale, we can best compete with the United States, Japan and other new economic powers emerging in Asia and elsewhere…And that means action to free markets, action to widen choice, action to reduce government intervention.”  She viewed Europe as individual nations, acting in their interest but also trading with each other while encouraging competition within the European community and allowing the rise of a market economy capable of competing on the world stage with United States and other economic powers including those that rising nations including China and India.

The fourth principle she wanted, was “My fourth guiding principle is that Europe should not be protectionist…The expansion of the world economy requires us to continue the process of removing barriers to trade, and to do so in the multilateral negotiations in the GATT…It would be a betrayal if, while breaking down constraints on trade within Europe, the Community were to erect greater external protection…We must ensure that our approach to world trade is consistent with the liberalisation we preach at home.”  She wanted not just the spread of market but she also wanted to open up new markets.  She would be disappointed with what she sees in not just EU but also in America on the trade issue. 

Thatcher wanted to build upon the institution already built including NATO for defense but within a short period, she saw that her vision for Europe was not shared. Thatcher ended up opposing the formation of the EU and in a speech given in 1992, she noted, “When Britain joined the ERM we believed not that it was a fixed rate system but an adjustable one. However, when it was treated as a stage towards a single currency it became far more rigid. Devaluations and revaluations were increasingly frowned upon. And so the trouble began. For no fixed exchange rate system—be it the gold standard or Bretton Woods—has been sustainable. Unless there is some adjustment to the realities of the market and capital movements, the devil will always take the hindmost. The strongest currency will always make the running.”  She favored a floating regime of different currency but when she figured out that ERM would be formation of a single currency, she opposed EU integration since she feared that this would leading to a European Super state, She noted, “We must return to the policy of domestic monetary control that worked throughout most of the 1980s, cutting inflation from over 20 per cent to under four per cent while the economy expanded…Such an economic strategy for sustained growth and sound money will require the firmest possible leadership. It will mean rigorous control of public spending and borrowing, enabling the lower interest rates and lower taxes that boost investment, output and jobs. Above all, it requires confidence—the confidence that we had in the 1980s that we can manage our own monetary policy and economic affairs without depending on anyone else.”  Thatcher did not trust the Euro and felt that Great Britain should have the flexibility to follow its own destiny and noted that Britain needed to have its own ability to deal with inflation, favored domestic monetary control.

 She predicted the problems of single currency when she stated, “And that leads directly on to Maastricht. That treaty’s goal of European economic and monetary union looks even more impossible after recent events. At least under the ERM there was an escape hatch—as Britain and Italy found three weeks ago; but there would be none under a single currency, which remains the objective of the treaty.”  While British did not accept the Euro, Italy did and Thatcher viewed the single currency would close any escape hatch, something that the EU wanted.

She put the two vision side by side, “There have been two visions of Europe competing with each other in recent years. There is, first, the federalist vision of a Europe run increasingly from Brussels, united by a common citizenship, harmonised by bureaucratic regulations, equipped with common economic, budgetary, foreign and defence policies, using a single currency and acquiring all the flags, anthems and symbols of nationhood: all in all, a United States of Europe in embryo…Then there is what might be called the “con-federal” concept of a Europe of nation states, based upon the idea of co-operation between independent sovereign countries loosely linked in a free trade area, with competition between differing tax and regulatory systems and with freely floating currencies. This “confederal” Europe would accommodate the countries of Eastern Europe and give them a reasonable stability. It would maintain, not jeopardise, our relationship with Europe’s great friend and protector, the United States.”  She foresaw the formation of a bureaucratic EU and its impact including possibility injuring its long term relations with the United States.  Her vision of independent sovereign nations would not only led to a more confident Europe but it would have most likely to have alleviated the populist mode that is riding across Europe since each nation sovereignty would have been recognized and reduce the tension that between nationalism revival against a bureaucratic Super state.

While She called for re-negotiation of British links with the European Union, and she never called or withdrawal but did recommended that British should pull out of common agricultural, fisheries as well as joint foreign and defense policies.  She wrote, “Most of the problems the world has faced have come from mainland Europe, and the solutions from outside it.”

Thatcher’s argument served as a basis for Brexit and her view of what European Union was evolving into didn’t serve the British interest.  If Europeans had listen to her and her vision, there would be no Brexit or the prospect of other nations leaving as well. The rise of nationalism in Central Europe as well as the populist government in Italy threatens the European Union and a question that need to be asked is whether the EU itself won’t implode. 

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