political and social integration. She believed that she had preserved Britain’s essential independence by steadfastly refusing to join the ERM, and trusted in her ability to continue to do so. Having got what she wanted – the single market – she believed she could send back the rest of the menu.
Yet MrsThatcher did, ironically, sanction one powerfully symbolic act of European integration – the old dream of linking Britain physically to the Continent by building a Channel tunnel. This was a project she had strongly supported as a member of Ted Heath’s Government in the early 1970s.When the incoming Labour Government scrapped it in 1974, she condemned their short-sighted penny-pinching, arguing – somewhat out of character – that the country could not live on bread and cheese alone but needed some ‘visionary ideas’ as well.12 Now, as Prime Minister, she still liked the idea of a ‘grand project’, but insisted that it would have to be financed and built entirely by private enterprise. Initially it seemed that this condition would be enough to sink the project.
At her first meeting with Mitterrand in 1981 they both spoke warm words about wanting a tunnel in principle; but it did not become a serious possibility until the economy improved. Then a number of her favourite businessmen began to show an interest. The National Westminster Bank took the lead in persuading the DTI that a tunnel could be financed without a Government guarantee. On this basis, Mrs Thatcher’s enthusiasm cautiously increased. Ideologically she was keen to give the private sector a chance to show what it could do, while she could see a political dividend from a big project which would create a lot of jobs.
Visiting Paris for a bilateral summit in December 1984, she and Mitterrand duly agreed to inject ‘a new urgency’ into studying the options. Both of them initially favoured a road, rather than a rail link: he wanted a bridge, she a drive-through tunnel. In practice, however, it became clear that a rail link was cheaper and more practical. Over the next year several bidders competed for the contract, but in the end it was the Channel Tunnel Group, headed by the former Ambassador to the US (and before that France), Nicholas Henderson, which gained the Prime Minister’s ear and won the prize.
The decision was announced by the two leaders at Lille in northern France in January 1986. Mrs Thatcher made a humorous speech recalling previous attempts to build a tunnel, going back to Napoleon, and claimed that Churchill had supported a Channel bridge on condition that the last span was a drawbridge which could be raised in case of French attack. Times had now changed, she suggested.13 As a rare gesture to Anglo- French fraternity she was persuaded to deliver the final part of her speech in French, which she learned phonetically with characteristic professionalism. This was the high point of Mrs Thatcher’s enthusiasm for Europe.
Opened in 1994, the Channel tunnel does indeed stand today as one of the few concrete legacies of Mrs Thatcher’s rule. For travellers to the Continent it is an established success. But as a demonstration of what private enterprise could do it was an ambiguous success. It was indeed financed (on the British side) by private capital, as Mrs Thatcher insisted it should be; but only at a loss to the shareholders who were persuaded to invest in it. It did not make money. Then private enterprise was not willing to fund the projected high-speed rail link from London to Folkestone, a necessary part of the service which fell years behind schedule and had, after all, to be paid for by the taxpayer. The lesson, as of so much of the privatisation experience, is that big infrastructural projects of this sort cannot be built without public money.
Pragmatism in Hong Kong
Outside the major theatres of Europe and the Cold War, Britain still faced a troublesome legacy of post- imperial problems in other far-flung corners of the world. During her first term Mrs Thatcher had been confronted with two such hangovers of empire, in Africa and the South Atlantic, both of which she handled successfully, though in opposite ways. Now in her second term she faced a more intractable problem than either: the approaching expiry of Britain’s hundred-year lease on Hong Kong, which was due to revert to China in 1997. Britain had immense commercial interests at stake as well as political responsibility for this anomalous enclave of Far Eastern capitalism, which was threatened with extinction in a decade’s time unless the Chinese Communists could be persuaded to permit its survival after the handover.
Once again all Mrs Thatcher’s instincts were aroused. First, Hong Kong was, like the Falklands, a British colony threatened with takeover by a neighbouring state. Although undeniably most of the territory was legally due to be returned to China, Hong Kong island itself was British sovereign territory which could in theory be retained, or at least used as a bargaining counter. Second, Hong Kong was a haven of freedom, prosperity and economic enterprise – though little democracy – besieged by Communism. Third, she did not like the Chinese. She accepted China as a fact of life and an ancient civilisation, culturally different and commanding respect on its own terms. But she had a ‘visceral dislike’ of the Chinese system and felt deeply that it should be possible to save Hong Kong from being swallowed by it. Coming straight after the Falklands, the problem of Hong Kong caused her ‘a lot of mental difficulty’.14
Yet the facts of the two situations were entirely different. On the one hand, China’s legal claim on 90 per cent of the territory was irrefutable – and Mrs Thatcher believed profoundly in the sanctity of law – while no one suggested that Hong Kong island was economically viable on its own. On the other, China possessed overwhelming military superiority, and anyway the island was indefensible: the Chinese could simply have cut off the water supply. Defiance was not an option.
So Britain had no choice but to negotiate – from a weak position – and try to secure the best possible result by diplomacy. Unwelcome as it was, Mrs Thatcher recognised the reality; but she still hoped, at the outset, to be able to bargain the sovereignty of Hong Kong island for continued British administration of the whole colony under nominal Chinese rule: in other words a form of the ‘leaseback’ idea originally proposed for the Falklands.
But when she met Deng Xiaoping in Beijing in September 1984 she found him unyielding. Believing that it was in China’s interest to preserve the prosperity of Hong Kong, she held out the possibility of ceding sovereignty in return for continued British administration. But Deng knew that he held all the cards and called her bluff. Like Mrs Thatcher herself in regard to the Falklands, he regarded sovereignty as non-negotiable. If Britain made difficulties, he warned, China would simply reoccupy Hong Kong before 1997.
In March 1983 she was persuaded to send a letter to the Chinese Prime Minister Zhao Ziyang indicating a more positive approach. Specifically, she undertook that she would not merely consider but ‘recommend’ ceding sovereignty in return for certain assurances about Hong Kong’s future. That cleared the way for Geoffrey Howe to open negotiations with Beijing on the basis of Deng’s characteristically paradoxical formula ‘one country, two systems’, which offered the possibility of preserving the essentials of Hong Kong’s capitalist way of life under Chinese rule. What this might mean in practice was impossible to know. The people of Hong Kong were suspicious that they were being sold down the river; but Howe still had no cards to play. In principle the Chinese recognised no distinction between sovereignty and administration, so he had nothing to bargain with. But he persisted, with quiet skill, and eventually secured an agreement in September 1984, guaranteeing Hong Kong’s ‘special status’ within China for fifty years after 1997, plus agreement on passports, air travel and land ownership. Mrs Thatcher was persuaded to accept it as the best deal that could be achieved. At the end of the year she flew to China again to sign the agreement and reassure the people of Hong Kong in person. It was a realistic settlement and the best she could do.
South Africa and the Commonwealth
Though greatly diminished in importance compared with the Atlantic alliance and the European Community, the Commonwealth was still another set of relationships which Mrs Thatcher had to maintain, and a biennial forum of international diplomacy which gave her considerable trouble. At the beginning of her first term she earned considerable credit by the unexpectedly pragmatic way she resolved the Rhodesian problem, and by her willingness to recognise the new Zimbabwe. But that success only brought into greater salience the affront to the conscience of a multiracial organisation represented by the persistence of white minority rule in South Africa. Before long Mrs Thatcher had dissipated most of the credit she had won in Rhodesia by her determined refusal to
