Lady Thatcher is helping to destroy the cause she loves

'Margaret Thatcher has blown open the Tories' regime of self-denial on the European single currency'

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Duncan Smith goaded for Thatcher's outburst

Margaret Thatcher has almost certainly brought a euro referendum a little nearer. Before we examine why, however, let us pay homage. This is apostasy on a truly epic scale. In Germany, the Foreign Minister, Joschka Fischer, has had to fend off accusations that he had youthful revolutionary tendencies. In France, Lionel Jospin enters the presidential race pressed by his right-wing critics to answer claims that he had Trotskyite links when hardly anyone had heard of him. Even Tony Blair has in the past had to explain away a brief flirtation with CND. But now Margaret Thatcher outdoes them all by disowning as wholly wrong the views she held on the issue that she regards as the most fundamental in British politics until after she had won three general elections and been Prime Minister for the best part of eight years.

This elevates the rare political art of admitting your past mistakes to a new plane. She was – of course – mistaken when as a cabinet minister under Ted Heath she supported EC entry. She was mistaken when she agreed the famous rebate at the Fontainbleau summit instead of pressing to the absolute limit a proposal by her own government for a wholesale restructuring of the Community's budget arrangements. And she was mistaken when she signed the Single European Act in 1985, which substantially increased qualified majority voting in the interests of an EU internal market that she no longer appears to think worth having.

Not all these disavowals are explicit in the extracts published yesterday of her new book. But it is an inescapable conclusion of her analysis of the EU's defects that she now regrets all this and much, much more about the period when she was, in her own, spiky, fiercely pugnacious way, a committed if argumentative European. This was the period of Thatcher Mark I that everyone apart from her and the coterie of her disciples at the heart of the present Tory leadership thinks was the one that entitled her to claim greatness. This was the period before her adherence to the poll tax and her growing hatred of everything European precipitated the fall, first of her Chancellor, her deputy, and then herself.

The temptation is to think that none of this matters. Didn't she leave office 12 years ago? That might be so, if it were not for the deafening silence with which her most controversial remarks were greeted yesterday by the Tory leadership. Iain Duncan Smith cannot even bear to go as far as his shadow Chancellor, Michael Howard, swiftly did on Sunday night and disavow her scarcely veiled call for withdrawal. To understand why, turn for a moment to page 350 of John Major's autobiography, in which he describes how new members were lured into his predecessor's office "so that she could persuade them to vote against [the] Maastricht [treaty]".

As Mr Major says, this was "unique" – a former prime minister fomenting rebellion against her successor – also a Conservative – and against a manifesto commitment put to a general election six months earlier. Mr Duncan Smith was one of the new members, a Maastricht rebel par excellence. Mark II Thatcher exercised a baleful influence over cadres of her party then as she does now. Some of them openly espoused withdrawal until it ceased to be electorally respectable (but still privately do). What's more, they are now in charge.

The fact that Margaret Thatcher has blown open the regime of self-denial in which those very cadres remain silent should not blind us to whole diagnosis. The Common Agricultural Policy, for example, is indeed a disgrace, a vehicle for subsidising European farmers at the expense of First World consumers and Third World producers. What strains credulity beyond the limit is her quite disproportionate prescription for dealing with it. To her credit she doesn't, as the Tory party did when presenting the policy of "renegotiation" with which it was so catastrophically defeated at the polls last year, maintain that it will be necessarily successful. Instead, she only says – also preposterously – that it may be. Even though she must know, as the most experienced EU negotiator in Britain, that the UK would have nothing to offer in return.

But it is when she tries to demolish the arguments against withdrawal that she really gets motoring. Even if you grant her spectacularly shaky argument that inward investment in the UK has nothing to do with membership of the EU, you then have to contend with her notion that the EU would not penalise a withdrawing UK because it is too dependent on exports to Britain.

Never mind that, without a sophisticated and agreed system of rules, trading partners have all sorts of ways of denying access to their markets, as the supposedly anti-protectionist US has just rather neatly proved with steel. Which is why she promoted the single market. But it also rather undermines her proposal for British Nafta membership – one demolished by, among others, John Major. If you can trade without rules, why do you need Nafta?

But this misses the larger points. Among the more breathtaking is her airy dismissal of EU enlargement, once an article of faith even among eurosceptics, and the key to stability and security in Europe. Didn't Spain, Portugal and Greece assert a new democratic national identity by joining the EU? And won't the countries of once communist Eastern Europe do the same? And doesn't enlargement offer the best chance of CAP reform? I'm sorry, finally, that Margaret Thatcher feels national shame that Karl Marx worked in the British Museum. But she can't be allowed to get away with yet again perpetrating her innuendo-packed claim that Nazism was also a "European" ideology. This grossly perverts the purpose of Germany's post-war leaders; to prevent war breaking out again.

One reason that her remarks will bring a euro referendum closer is that they have exposed a real agenda among many – though not all – of the most prominent politicians opposing entry. They even underline that a referendum might be a less risky option than it sometimes seems. For if it was lost, the withdrawers would be unstoppable, tumbling triumphantly out of the woodwork with an enthusiasm that they have hitherto suppressed, because they know that is not what the public wants. And the result of that would be electorally disastrous for the Tories.

There are many ironies in the fact that Margaret Thatcher helped to save Labour from itself by winning three elections in a row, with trade union legislation that brought the Labour Party back to the centre. In an ideal world a euro referendum called by Mr Blair would return the favour by healing the split in Conservatism that has hobbled it electorally for so long. That no longer looks certain. For many of the leading Tories would probably fight, fight, and fight again to reverse a referendum decision in favour of the euro. What is clear, however, is that just as Margaret Thatcher helped to save the Labour Party, so she is helping to destroy Conservatism as the electoral force it once was – including when she herself was winning elections.

d.macintyre@independent.co.uk