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In foreign affairs, Thatcher cultivated a close political and personal relationship with US president Ronald Reagan, based on a common mistrust of communism, combined with free-market economic ideology. Thatcher was nicknamed the 'Iron Lady' by the Soviets. She warmly welcomed the rise of reformist Soviet leader Mikhail Gorbachev.
In the 1987 general election, Thatcher won an unprecedented third term in office. But controversial policies, including the poll tax and her opposition to any closer integration with Europe, produced divisions within the Conservative Party which led to a leadership challenge. In November 1990, she agreed to resign and was succeeded as party leader and prime minister by John Major.