The European Council on Foreign Relations

What would Thatcher do?

Date: 16th November 2011  |  Author: Hans Kundnani,

Categories: Euro Crisis, Germany in Europe, Reinventing Europe,
Tags: , germany , germany, merkel , merkel, robin hood tax, thatcher, eurocrisis

We're all back at work after our latest annual Council meeting, which took place last week in Warsaw. We all stayed at the splendid art nouveau Hotel Bristol, which goes back to 1900 and, following  renovation after the end of the Cold War, was re-opened in 1993 by Margaret Thatcher (a plaque in the lobby commemorates her visit).

As a result, the Iron Lady - a popular figure in Poland, as in much of the rest of Central and Eastern Europe - was on my mind during the few days we spent in Warsaw. As I sat listening to our Council members discuss the euro crisis, and in particular the British government's response to it (see point 3 of Gideon Rachman's blog post on Friday), I found myself thinking: What would Thatcher do?

It’s a particularly interesting question right now because we are currently seeing one of Thatcher's fears becoming a reality: the emergence of a German-dominated Europe. Famously, both Thatcher and President François Mitterrand feared German reunification would create a Germany that would be too powerful. But Mitterrand thought the introduction of a single European currency could help control Germany; Thatcher, on the other hand, believed it would only increase German power in Europe. It is now starting to look as if history has proved Thatcher right in this respect.

The Cameron government, which has largely stayed out of the crisis (e.g. by refusing to contribute to the European Financial Stability Facility) and says it will use any change to the European treaties as an opportunity to repatriate powers, probably thinks it is responding to the euro crisis in a Thatcherite way. No doubt the even more radical Conservative eurosceptics who last month defied a three-line whip to vote for a referendum on British membership of the EU also believe they are acting as Thatcher would have done under the circumstances. Maybe they're right.

However, I wonder whether there is also another possibility. After all, Thatcher's political hero was Winston Churchill, who took a long view of British history. For 200 years, the aim of British foreign policy in Europe was to prevent the emergence of a dominant continental European power; it sought to maintain a balance of power on the continent by supporting the weaker powers and in particular smaller countries (especially the Low Countries) against France and, after 1871, Germany. At moments when this equilibrium broke down, Britain reluctantly intervened. 1939 was such a moment, in which Churchill played a decisive role.

Of course, 2011 is not 1939. The German Europe that is now emerging through the EU rather than through military conquest is very different from that of the 1930s – as I have argued elsewhere, Germany is now a “geo-economic power” rather than a great power. Nevertheless, Britain's national interests could now be directly threatened if it is left out as the EU presses ahead with greater integration, as Chancellor of the Exchequer George Osborne has urged it to. In some ways, Germany’s economic interests could be more aligned with those of the UK than France, as my colleague Nicholas Walton suggested in this blog post yesterday. However, Germany’s Christian Democrats seem determined to press ahead with a financial transaction tax that would directly impact the City even if it is only adopted by the eurozone 17.

So is it possible that, with Churchill in mind, Thatcher might have argued that, at a moment like this, Britain could not detach itself further from Europe but rather should pursue a more forward-leaning European policy in order to protect its national interests?

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