How Margaret Thatcher's Falklands gamble paid off

The Falklands war of April-June 1982 was the turning point in Mrs Thatcher's premiership, indeed in her political career. The previous October, the Tory party conference had been alive with dissent. The so-called "wets" were openly conspiring against her. Bets were being taken against her surviving into the new year. Well behind in the polls and with the new Social Democratic party challenging both Labour and Conservatives, few believed Thatcher would ever lead her party to another election win.

Though spring brought some relief to the battered economy, Thatcher appeared a weak, broken leader with little support even within her party. What was later called Thatcherism was still a dream, with only top-rate tax cuts in place. The ruling obsession was reducing double-digit inflation and cutting public spending. Nothing else seemed to concern the government.

In the frontline for cuts were defence and foreign affairs. John Nott's defence review would pull back the surface fleet to home waters. Hong Kong was to be handed over to the Chinese and a tiny colony of islands in the south Atlantic was being negotiated for "sale and leaseback" to neighbouring Argentina by Thatcher's trusted junior foreign minister, Nicholas Ridley. The one naval vessel in its vicinity, HMS Endurance, was to be withdrawn.

To Argentina's military junta, the British government was patently eager to dispose of the Falklands. Thus when Ridley's initiative was mauled in the Commons and talks stalled, the invitation to the Argentinian junta to imitate India's seizure of Goa in 1961 was irresistible. The invasion was named Operation Goa. Even with tension mounting, Thatcher turned a deaf ear to pleas from the Foreign Office to reinforce the islands and deploy ships to the area. The foreign secretary, Lord Carrington, felt his relations with Thatcher were too delicate to press the matter.

While Thatcher could hardly be held directly responsible for the Argentinian invasion, it was certainly the result of her style of rule and one-track approach to policy. She had failed to defend the islands from surprise attack and many in Argentina thought she had recklessly drawn the junta "on to the punch". In her defence, Buenos Aires brought forward its plan when pre-empted by a wild-cat occupation of the neighbouring British island of South Georgia. But modern government is designed to monitor such crises. Lord Franks's post-recapture exoneration of Thatcher's role in the Falklands war was a whitewash.

From the moment the disaster was imminent, on the night of 31 March, Thatcher knew she faced humiliation and possible resignation. Overnight she came into her own, changing from a Chamberlain to a Churchill. She was exceptionally lucky in that the cautious chief of the defence staff, Admiral Terence Lewin, was away and the first available advice to her was from the head of the navy, Sir Henry Leach. He pledged his service to recapture the islands, a reckless project at such a distance. For Thatcher, Leach was her one lifeline. In the Commons the next day she was able to convert a sense of national shame into one of shared purpose. The navy put to sea within two days, amid pandemonium in Portsmouth and Plymouth.

The war brought out the best in Thatcher. She knew she was out of her depth, consulting Harold Macmillan and others on how to conduct herself. He advised her to establish a war cabinet, never quibble about money and always cover her diplomatic and legal flanks. The hard-pressed chancellor, Sir Geoffrey Howe, later recalled the war as "like being on sabbatical". In stark contrast to her approach to domestic affairs, Thatcher scrupulously deferred to her military commanders and supported their decisions to the hilt.

During the taskforce's voyage south, Thatcher had both to maintain pressure on the enemy and keep critics and allies satisfied that she was open to a negotiated withdrawal. This was not easy. The US opposed the war. President Reagan had backed the Buenos Aires junta and it was only Thatcher's close relations with him that secured vital logistical support of fuel and weapons as the taskforce moved south from Ascension Island. As it approached the islands and ships began to be sunk, the US even put an aircraft carrier on standby should the venture face disaster.

Thatcher was driven to distraction by the pompous diplomacy of the American Alexander Haig, and by Peruvian and other intermediaries. Nor were matters eased by her foreign secretary, Francis Pym, being a putative rival for her leadership. She believed that only total victory would salve her reputation, and no compromise that rewarded aggression could be tolerated. Yet she knew she had to proceed by the book. Herself a lawyer by background, she meticulously followed UN procedure, always citing its resolutions in her speeches. When told she could not shoot down enemy civilian planes on intelligence watch, she did not do so. There were none of the dodgy dossiers and brow-beaten lawyers of Tony Blair's Iraq war.

Thatcher admitted in her memoirs that she fell for the military cast of mind. Soldiers did not scheme and mutter against her. They stood to attention in her presence, gave her straight advice and carried out orders without question. She particularly admired the calm advice of Lewin as defence chief. He knew he was doing more than winning back a colony, he was winning back the Royal Navy from Nott and Thatcher. Today's extravagant carrier programme is his memorial.

The glow of victory was to conceal how desperately close was the Falklands war. Had Argentinian planes bombed supply and troop ships rather than warships, a land operation could have become logistically impossible. The taskforce's heavy lift helicopters were all lost when the Atlantic Conveyor was sunk. Despite the performance of the Harrier jump jets, the landing was made without air superiority. Nor could it rely on the foolishness of the enemy in garrisoning the islands with poorly trained conscripts and without attack helicopters. The conclusion of most defence analysts is that the Argentinians should have won this war, and had they awaited the south Atlantic storms of June they probably would have done.

The most controversial British decision, the sinking of the Argentinian cruiser, Belgrano, was at the time hardly in doubt. Argentina had a battle fleet at sea, including a carrier force armed with Exocet missiles. The odds were heavily on its side. To have left its navy roaming the ocean off the islands, with planes and missiles able to pick off the taskforce, would have been extraordinary. After the sinking, the Argentinian carrier group retreated to port and played no part in the war. Even so, Thatcher did not authorise any attack of military bases on the Argentinian mainland.

Victory was finally achieved on 14 June, when the dejected Argentinian garrison surrendered in Port Stanley. Thatcher's reaction was one of exhausted relief. She was drained, not least by sitting up at night writing personal letters to bereaved families. The war had been no great political gamble, because she had no option, but the military gamble was awesome. An opposed landing thousands of miles from home was dangerous, and left 255 dead and a £3bn hole in the defence budget. It was a hole that remained gaping three decades later, as service chiefs constantly lobbied for "Falklands-style" capability, and politicians felt they had to capitulate.

The nation drank deep of an experience it had not enjoyed since 1945: a clear military triumph. The victory dragged Thatcher's leadership from the brink of collapse. She won global celebrity, in both the United States and the Soviet Union, and 10 points were added to her poll rating. She was at last in the lead over Labour. The emergent Social Democrats never recovered. Thatcher wrapped herself in the flag, denouncing all sceptics and crudely boasting the renaissance of the British people as a world power against dictatorship. She received a further boost when the Argentinian dictator, General Galtieri, was replaced by a rudimentary democracy.

If war had brought out Thatcher's best features, victory brought out many of her worst, in particular intolerance of those who talked back. But it gave her the confidence and political strength to press ahead with a programme that was otherwise inert. Her 1979 manifesto had been "wet" in content and tone. She had begun to balance the budget, but spending was still rising. The unions had not been confronted. There had been almost no privatisation. The IRA was still on the march. Thatcherism was, as yet, unknown.

The Falklands changed everything. The miners were confronted, leftwing local government crushed, Europe riled and universities humbled. Most crucial of all, the patrician Tory moderates were diluted and eventually driven from power. The now-familiar Thatcher came into her own and "the Eighties" began. In a speech that July, Thatcher declared that Britain had been at war, "but it is not yet a nation at peace." She meant it.