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Thatcher Heads Into EC Summit on the Defensive

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AFTER the prime minister's first-ever defeat in a national election, no one is sure how deeply Margaret Thatcher has been chastened by British voters. One measure of Mrs. Thatcher's response to the disastrous results reaped by her Conservative Party in European Parliament elections will be a two-day meeting in Madrid next week with other leaders of the 12-member European Community. The summit, which begins Monday, will focus on the pace of Western European economic and social integration.

Many Conservatives blame the prime minister's strident anti-EC campaign for their party's losses. They look to the Madrid summit as a test of how flexible and conciliatory she can be after an election that handed the opposition Labour Party its first nation-wide victory in over a decade and hinted that the Iron Lady is not invincible.

But Thatcher's advisers insist that she will not compromise her defense of Britain's interests, as she sees them, nor back down from her opposition to European monetary union and a charter outlining the social dimensions of the community.

``She is the strongest-placed political leader in Europe,'' says a senior Thatcher adviser. ``We go there to argue what we believe is a sensible case.''

That case includes opposition to a full program of monetary and economic union - which is being urged by France and West Germany - as well as rejection of a socialist-style ``social charter'' for the community which includes an affirmation of workers' rights.

Anti-marketeers in the British Parliament say that full monetary and economic union would involve surrendering more power to the European parliament, especially control over taxation and public expenditure.

THESE issues are contentious not only in Britain. EC observers say that without cross-party consensus at home, other European leaders may not be confident enough to press their views against Thatcher's strongly held positions.

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