Margaret Thatcher and Helmut Kohl in Germany. (Courtesy Reuters)

The United Kingdom has had its share of remarkable twentieth-century prime ministers. David Lloyd George was in many respects the architect of victory over Germany in the First World War. Winston Churchill led the country to victory in the second. Clement Attlee spearheaded the transformation of British society after 1945 with the creation of the welfare state. None of them, however, lent their names to an “ism”; there would have been something almost un-British about it. All that changed in 1979 with the election of Margaret Thatcher. The outlines of Thatcherism on the socio-economic front are well known: rolling back the frontiers of the state, emphasizing individual responsibility, and championing entrepreneurial creativity. Today, the legacy of Thatcherism is ambivalent. On the one hand, Thatcher pulled the country out of the economic tailspin of the 1970s; on the other hand, her war on regulation facilitated the banking extravaganzas that eventually resulted in the ongoing financial crisis. What is less well grasped, however, is Thatcher’s legacy in foreign policy, which is at least as important and equally complex.

After all, the sobriquet “Iron Lady” was bestowed on Thatcher not by British miners or Thatcher’s many other domestic opponents, but by the Soviet press in the mid-1980s. It reflected her reputation for toughness on the military and diplomatic fronts, particularly in the joint effort with U.S. President Ronald Reagan to strengthen the West’s nuclear defenses during the Cold War. Thatcher’s uncompromising struggle against Irish republican terrorism earned her the undying hatred of the Irish Republican Army (IRA), which made its first targeted assassination attempt against a British prime minister in the notorious Brighton hotel bombing of 1984. Her most complete victory came in the 1982 Falklands War, when she dispatched a British task force -- at considerable risk -- to expel an Argentinian junta from the Falklands Islands. (The conflict ended in a decisive British victory.) Thatcher’s relations with her partners in the European Economic Community were more pacific, but the leaders of continental Europe nevertheless feared the vigor with which she represented British interests in Brussels. After decades of drift and decline, Thatcher re-established the United Kingdom as a major force on the international scene.

Three interlocking -- but not always mutually reinforcing -- impulses drove Thatcher’s foreign policy. First, the Iron Lady hated dictators and bullies of any kind. She refused to be intimidated by IRA violence, and she despised the culture of fear that the Irish republican movement fostered to keep its community in line. Her toughness on the Falklands reflected a determination not to hand island’s inhabitants over to the military regime in Buenos Aires, whose abysmal human rights record was well known. And her opposition to the Soviet bloc was informed by a deep sympathy for the dissident movements in such places as Czechoslovakia and Poland. Later, Thatcher was one of the few members of the British political establishment to speak out strongly against Serb ethnic cleansing in Bosnia.

Underpinning this hatred of dictators was the second impulse that drove Thatcher’s foreign policy: her passionate commitment to democracy. She was outraged that the National Union of Mineworkers refused to allow its members to vote on whether to strike, a decision that was ultimately made for the miners by an authoritarian, Soviet-leaning leadership. Her unyielding line against IRA terror was rooted in the knowledge that the majority of those in Northern Ireland wanted to remain part of the United Kingdom. Thatcher’s close relationship with Reagan was based, above all, on their shared belief in economic liberalization at home and democracy promotion abroad, at least in the Communist world. To be sure, her conception of democracy could be a little narrow. She was slow to understand, for example, that a first-past-the-post electoral scheme was not suitable for a divided society such as Northern Ireland, and that a system that guaranteed more power-sharing among different groups would work better.

Despite her reputation for inflexibility, Thatcher often showed remarkable imagination. She was the first Western leader to recognize the importance of Mikhail Gorbachev, whom she defined as “a man we can do business with” even before his elevation to the Soviet leadership. In this respect, she played a key role in ending the Cold War. Likewise, Thatcher pushed through the Anglo-Irish Agreement in the 1980s, in the face of furious opposition from Unionists, thus paving the way for a constructive role for the Dublin government in the peace process. In both cases, however, Thatcher knew she needed to negotiate from a position of strength -- be it a favorable balance of nuclear weapons with the Soviet Union or a robust counterterrorist strategy that reduced the IRA threat to what was dubbed “an acceptable level of violence.” Subsequently, the Good Friday Agreement of 1998 incorporated the democratic consent principle so long resisted by armed republicanism.

Where Thatcher ultimately came unstuck was in her third principle, which was a preoccupation with German power -- and a related profound ambivalence about European integration. She was a strong supporter of the European common market, partly because of her belief in free trade and partly because she thought that a reinvigorated and economically robust Europe would help contain the Soviet Union. At the same time, however, Thatcher belonged to a generation that had gone through World War II and naturally feared German power and German unification. By the late 1980s, she began to view the growing influence of the European Commission in Brussels not only as an encroachment on the democratic rights of the British people, but also as a vehicle for the reassertion of German power on the continent. This divided her not only from the French, for whom Europe was a device to contain its historical enemy, but also from German Chancellor Helmut Kohl, whose genuine commitment to a united Europe she mistakenly saw as a fig leaf for the reassertion of German power.

In 1989–90, Thatcher’s commitment to democracy and her fear of Germany were in direct contradiction. The fall of the Berlin Wall and the collapse of the Soviet bloc cleared the way for the German people to express their democratic desire for reunification. Thatcher now expressed concern that a united republic would “once again, dominate the whole of Europe.” For a time, it seemed as if she would team up with Gorbachev and French President Francois Mitterand to prevent it. It was only with difficulty that the United States and her own advisers persuaded her to accept the inevitable.

Nearly 25 years later, as Europe struggles with its sovereign debt crisis and the ever-widening gulf between Berlin and continent’s periphery, Thatcher’s concerns seem less far-fetched -- not because of any malevolence on the part of Germany, but because of the flawed structure of the common currency and the sheer size of the Federal Republic. Her failure of imagination in the 1980s was to insist on the renationalization of the powers drifting toward Brussels, rather than allowing for the different European countries to buy in to the project of integration democratically, through the creation of a single electoral and political space. Of course, the resulting loss of British sovereignty would have been unacceptable for Thatcher and indeed for the British people. But such a program would at least have given London a positive agenda toward Europe, instead of its half-in, half-out approach of the past three decades.