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High-Level Dispute Over Europe Divides British Tories

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`ON Europe, there are now two British governments.'' The comment came not from a member of the opposition Labour Party, but from a senior member of Parliament (MP) of the ruling Conservative Party.

An hour earlier, he had heard Prime Minister Margaret Thatcher tell the House of Commons that she would never accept the need for full political and economic integration in Europe. She was followed by John Major, the chancellor of the Exchequer, who delivered a speech that seemed to leave open the door to a European federation, complete with monetary union.

The gap between Mrs. Thatcher's adamant ``never'' and Mr. Major's carefully phrased ``maybe'' (a stance shared by other leading ministers, including Foreign Secretary Douglas Hurd) is causing deepening concern in the government's ranks.

The party that has governed Britain for 11 years is battling to restore its political credibility amid rising inflation, economic downturn, and mounting evidence that the prime minister is no longer the dominant politician she used to be. Polls published in British newspapers last weekend showed Thatcher's Conservative Party trailing Labour by 10 to 16 points.

The signs of high-level disagreement on the key issue of Britain's future in Europe were exposed in the run-up to a series of summit meetings and intergovernmental conferences to chart the course to a fully united European Community.

The opposition last week demanded a debate on the prime minister's decision, after long delays, to make Britain part of the Exchange Rate Mechanism (ERM) of the European Monetary System - a move branded by her foes as political opportunism and a sign of panic.

Instead of leading off the debate herself, as many Conservatives had expected, Thatcher designated Major to speak. But before he had a chance to do so, Thatcher, taunted by the Labour leader, Neil Kinnock, during a twice-weekly session of questions to the prime minister, stood up and declared flatly that Britain under her leadership could never contemplate a federal Europe, or the single European currency being urged on the EC by its executive president, Jacques Delors.

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