Britain The Melting of the "Iron Lady"

By Bruce W. Nelan

A political attack from the mild, mumbling Sir Geoffrey Howe, one of his parliamentary opponents once gibed, was "like being savaged by a dead sheep." Margaret Thatcher might have wished it were so as she sat rigidly, arms folded, in the House of Commons last week, listening to Howe attack her. In a speech explaining his resignation as Deputy Prime Minister earlier this month, he sounded more like a lion, and a very live one at that.

One of the founders of Thatcherism, Howe charged that her resistance to the European Community's economic and political integration was running "serious risks for our nation." He called on his Conservative Party colleagues to distinguish between "loyalty to the Prime Minister" and "loyalty to what I perceive to be the true interests of this nation," a conflict that Howe admitted he had wrestled with "for perhaps too long."

This broadside from Howe became the catalyst for the most serious challenge to Thatcher's leadership in her 11 years as Prime Minister. Michael Heseltine, a former Minister of Defense who stalked out of the Cabinet in 1986 and had been circling Fort Thatcher ever since, finally decided to make his move. He said Howe's resignation revealed a split in the party that could not be resolved without a fight.

"I am persuaded," said Heseltine, "that I have a better prospect now than Mrs. Thatcher of leading the Conservative Party into a fourth election victory." The party's 372 Members of Parliament were to indicate in a secret ballot this week whether they agreed with him. Bookmakers were offering 2-to-1 odds on Thatcher to retain her position as leader of the ruling party and thus as Prime Minister. To win outright, she must receive an overall majority plus 15% more votes than any other candidate. To force a second ballot next week, Heseltine has to garner at least 159.

That was the arithmetic of victory, but measuring the impact of the contest itself is less clear cut. Heseltine's challenge was only the latest proof of Thatcher's declining fortunes as her third term nears its end. She can lose even by winning. In last year's leadership ballot, 60 M.P.s voted against her or abstained. This time, Heseltine's supporters claim he will top 100, which would be a major blow to her authority. As the Times of London put it last week, "The country needs to know whether Mrs. Thatcher does or does not retain sufficient party support to remain a strong Prime Minister. If she does not, she must go."

Ostensibly, the divisive issue is Europe. Britain has been debating its role in the European Community for decades. Thatcher, though she insists she backs such steps as monetary union and closer political cooperation, in fact does her best to delay or weaken them. Her obstructionism has produced a string of Cabinet resignations by ministers who tried to correct her course. Howe was demoted from Foreign Minister to the powerless post of deputy to Thatcher in July 1989 for pushing her to accept currency union.

Even Heseltine's resignation in 1986 was precipitated by a dispute over whether to sell the country's only helicopter producer to an American consortium or a European group. When Thatcher tilted, as she usually does, to the "special relationship" with the U.S., Heseltine literally stormed out of the Cabinet.

Behind this unending fight over high policy, of course, are the pocketbook issues that usually determine democratic elections. One of Thatcher's biggest vote losers is her unpopular new "poll tax," which forces every adult to pay a fixed portion of local government costs. Britain is also tumbling into recession, and that leads once again to the European question. Howe argued last week that Britain would not be suffering its present inflation rate if it had joined Europe's exchange-rate mechanism at least five years ago.

! Heseltine offers only variations on the government's themes. He supports the free-market thrust of Thatcher's domestic programs, though with a slightly more populist twist. He speaks of "compassion" for those who cannot compete, and favors "caring capitalism." Some skeptics call that a "kinder, gentler Thatcherism." He is a hawk on defense and fully backs the U.S.-led alliance against Iraq.

While he supports American foreign policy, Heseltine refuses to romanticize the "special relationship" and takes a measured view of Britain's obvious need to find its future in Europe. Even there he is a moderate: he refers to the E.C. as a club, to which one must belong in order to write the rules. "Better by far to reach for the levers of power," he says, "if only to prevent others from pulling them first." If Thatcher falters in the party's voting, Heseltine would not necessarily become Prime Minister. Officials at 10 Downing Street say her choice to succeed her if she became incapacitated would be Foreign Minister Douglas Hurd. He could become the compromise candidate in later ballots.

If Thatcher wins narrowly in this week's vote, she will be badly wounded politically -- and even more so if there is another round. Her own parliamentarians will have shown their lack of faith in her leadership and, most important to them, in her ability to win the next election, which must take place before July 1992. Some Tories are suggesting she resign in a month or two, even after a victory. Her loyalists scorn the idea, saying the Prime Minister will win easily and, in her words, "go on and on." In all likelihood, however, the Heseltine challenge marks the beginning of the end for the Thatcher era.

CHART: NOT AVAILABLE

CREDIT: TIME Chart by Steve Hart

CAPTION: MAGGIE'S ECONOMIC REPORT CARD

With reporting by William Mader/London