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mechanism. The Prime Minister cannot swallow that idea despite the commitments she and her Ministers have solemnly and regularly given on that subject.

The Prime Minister's baggage that she will transport to France this weekend will include the same old-fashioned, out-moded prejudices that will not let her escape from the cold war time warp that she inhabits. That blend of nostalgia for the special relationship with Ronald Reagan, combined with a little England nationalism, is as useful as the abacus in a computer world. The Prime Minister remains the high priestess of Balkanisation.

In June, at the Royal Institute of International Affairs, I described the position then as the "bonfire of the certainties". Perhaps now the bonfire is bordering on a forest fire. Like a few other politicians, the Prime Minister looks on transfixed as the old, comfortable post-war structures lie in the rubble of the Berlin wall. She, and they, seem bewildered, almost like the guards on the Berlin wall, to be without the enemy they have planned and plotted about for 40 years. Well, those relics had better wake up soon, read the papers and the speeches and follow the street politics--

Mr. Nicholas Winterton (Macclesfield) : Who wrote it?

Mr. Robertson : It is obvious that the hon. Member for Macclesfield (Mr. Winterton), who has come in late as usual is making a characteristic contribution to a serious subject. If he and the Prime Minister were to look at the politics of the streets in eastern Europe, even they would have to come to terms with the realities. If they delay in doing so, they may give birth to the very forces about which they so solemnly warn us.

There is however a positive agenda for the European Community. On security, we must reassure the Soviet Union, whose leader President Gorbachev has been the visionary driving force behind the dash for democracy. The absurd and incredible attempt to claim credit for the collapse of Communism by the disciples of Thatcherism is as unhelpful as it is shamelessly dishonest.

The Warsaw pact and NATO must get together quickly to start work on a new order in Europe and the world with much lower levels of troops and weapons to reflect the new circumstances. Modernisation of short-range nuclear forces is now a military irrelevance and a political impossiblity.

On economics, there must be a major western European aid programme to the new democracies, linked to reconstruction and the development of pluralist structures. however, that will require resources and someone willing to pay for them. Trade access will also be an essential requirement if the economies of those countries are to perform and deliver the prosperity which alone will protect democracy. If that means new imports from the Eastern bloc--for example of food and textiles--who will pay for the effect on our industries? I am sure that the Minister will agree that those issues are not academic but issues that the whole Community will have to face and may start facing this weekend.

On the political front, Britain and the Community must--as I said before-- examine the way in which a framework can be created to include the non- European Community nations. At this point we have to ask precisely what the Prime Minister meant on Monday night at the Lord Mayor's banquet when she talked about the new forms of association. In the treaty of Rome there is a precise

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definition of associate status within the Community. Her amazing linkage with Turkey, which has apparently frightened the living daylights out of the Foreign Office, gives a new meaning to the suggestion that she made on Monday night. Is she advocating associate status for the eastern European nations in accordance with the treaty of Rome?

Mr. Maude : Is the hon. Gentleman aware that Turkey has an association agreement with the Community already?

Mr. Robertson : Of course I am. That is not the question. The question is whether the Prime Minister is proposing for the eastern European countries exactly the same association agreement that is enjoyed by Turkey. It was the Prime Minister who raised the comparison with Turkey in the answers she gave at Prime Minister's Question Time yesterday. Instead of asking me questions it would be helpful if the Minister could answer the question. Is that what she means? I will gladly give way to the Minister. Does he not know? Was it just a clever phrase dreamt up for the Mansion house speech and then the error compounded by a loose phrase thrown away at Prime Minister's Question Time yesterday? The Minister's silence tends to suggest that my analysis is probably true. It would be interesting to know whether the Foreign Office agrees with the new policy. Will it apply to the GDR, Hungary and Poland? And what about the others?

Mr. Maude : The hon. Gentleman dignified his remarks with the title "analysis". He does himself something more than justice. My right hon. Friend the Prime Minister was referring to new forms of association. That goes on all the time. There are co-operation agreements with a number of countries outside the Community. There is an association agreement with Turkey. I said that we are considering a new form of association with the EFTA countries. There is nothing sinister about that. The Community ought to be looking at new forms of association and it is doing so all the time.

Mr. Robertson : We say that the link with Turkey at Prime Minister's Question Time yesterday was a loose expression and meaningless in that context. Turkey's relationship with the Community is rooted in treaty law. It is not some form of convenient, new association, although the link was designed to gain applause on Monday night at the Mansion house. We have to go beyond loose phraseology and provide real help so that the economies of these countries can be rebuilt. We have already started, in a limited way, to give real help in building parliamentary and party institutions in those countries. We have acquired unique expertise. The work that has already been done this year by the Great Britain-East Europe centre and other organisations in bringing Polish, Hungarian and other parliamentarians to this country has already produced enormous dividends.

Why do we not also ensure that English language teaching is at the heart of our help for these countries? Financial help has been ruled out, but it would be one of the simplest ways to help and extend our future influence.

We must also keep in perspective obsessive speculation about a united Germany. Such an eventuality would require four-power agreement. It would also require an

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implicit acceptance of the GDR's Communist party propaganda : that an independent GDR's only raison d'etre is its ideological identity. If the East German people eventually make the choice for reunification--and they have been denied any choice of any kind for 56 years--then so be it. They will have to do so, conscious of the wider implications at the time.

We might do better to consider the economic power of such a Germany rather than its potential military might, which is largely mythical. Beware the second Japan, not the fourth Reich. On this issue the Prime Minister would be wise to read the advice of Sir Nicholas Henderson, a very distinguished diplomat, a former ambassador to Washington and an adviser to the Prime Minister. In yesterday's Evening Standard he said :

"Those who insist on emphasising the nation state should not be entitled to complain if one of the most powerful nation states were to act increasingly according to its own national interests." Perhaps one consequence of the present gale force change in our continent is that in place of the German question will appear the British question.

On the western fringes of a Europe that is looking east for security and trade and represented by a divided Government who abroad leave us out of the mainstream, marginalised and for ever tilting at windmills as they become increasingly beleaguered at home, what influence can we positively have on the recarving of a new European identity? The hard fact is that we need a new Government who will have the vision that the new world demands and that the British people expect.

5.53 pm

Mr. David Howell (Guildford) : The hon. Member for Hamilton (Mr. Robertson) began his speech with some good points, but I hope that he will not mind if I say that the centre of his speech seems to have been invaded by a word processor. He will have to accept that my mind was not captured by every nuance and phrase in his speech. Nevertheless, he agreed with my hon. Friend the Minister of State that we are holding the debate in the shadow of momentous events. We can see their origin long before the White Paper period that we are examining--the first six months of this year. They lie in the amazing process of liberalisation throughout central and eastern Europe. My hon. Friend the Minister of State was right when he said that fundamental questions had been raised and that we must re-examine where we stand and the way in which we want the European Community and the rest of Europe to develop.

We have now enjoyed the longest period of peace in European history since the very concept of Europe was invented. We have had peace for 44 years. On this side of what was the iron curtain, now crumbling, there are parliamentary democracies of one sort or another. Western Europe is engaged in building the largest single market in the entire planet. It is a massive creation, involving herculean work and effort. In itself that is enough to occupy business men, diplomats, politicians and law makers for a long time ahead. That is the position now, and a very incredible one it is. The question is, where do we go from here?

There are three points of view about the next moves in the European Community. Some of those points were referred to by the Minister of State in his very lucid opening speech. The first--what might be described as the

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Delors-Mitterrand camp--argues for acceleration now of the process of European integration. Members of that camp say that history must be speeded up. It is essential, they argue, that European union should be moved forward in double quick time so as to lock in West Germany. That argument was used long before the dancing on the wall and its tearing down at the weekend. That would prevent the Federal Republic of Germany--the most powerful European economy, even as it stands- -from being attracted towards its cousins in East Germany and towards eastern Europe generally, where historically many of its interests lie.

To that end we are told that we must move on beyond the single market-- never mind that we have not yet achieved it--to the creation of an integrated monetary union with centralised institutions, including the establishment of a central bank. We are also told that there must be an intergovernmental conference that ought to turn its mind not merely towards the creation of these new institutions but towards the creation of new treaties and, in turn, further new institutions to control and balance the new institutions that are already proposed. That must be done, we are told, in the name of an advance towards the kind of federal Europe which, it is said, the founders of Europe had in mind. I am not sure whether, if one examined the sayings of Jean Monnet and others, that is what they had in mind, but that is what is now proposed. That is one point of view. I shall return in a few moments to its validity and worth because we ought to examine it with great care and reservation.

The second point of view which could be adopted--some of my hon. Friends may well take it in view of what has been going on in the Community during the last six months--relates to the word "Resist" that is stamped on the bottom of ministerial briefs when awkward amendments are being pressed. The Minister, it is said, would be well advised to resist. We are left on our own. We have to grow our own wings and devise our own devices about how to resist and about how to say no in a way that does not leave us looking too exhausted and isolated. Certain hon. Members may be inclined to adopt that point of view and to dig in and resist.

The third point of view is the one that I sense, from what my hon. Friend the Minister of State has said, the Government are moving towards : a recognition that the process of creating a European union of great power, strength and influence is irreversible--to use President Bush's word about what is happening in eastern Europe in another context--and that we in this island, a powerful, central and historic part of Europe, must work towards shaping and building that union with all the common sense, practicality, energy and genius that we have used down the centuries in the same cause.

We need to shape our endeavours and to decide that we are moving towards and wish to build a European union shaped in our way and our style. That is very much better than digging in and saying that we are against all forms of monetary and political union. That was a stance of weakness whereby events were bound to bypass us, and were beginning to do so. I am glad that there has been a clear change of emphasis.

Mr. Nigel Spearing (Newham, South) : Does the right hon. Gentleman agree that his third option could include a pan-European approach? In the new, totally different circumstances, the emerging democracies of eastern

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Europe may wish to adopt a different characteristic of private and public endeavour which is not possible in Britain or in the European Community. Is it not possible in future to widen that option to create a pan-European association of states, if not a union, which would incorporate the emerging democracies which the arrangement of the treaties would not allow at the moment?

Mr. Howell : I shall move on to my own preferred option and suggest to the hon. Gentleman, who follows these matters with vast expertise, how best the emerging free republics of east and central Europe can fit into that scheme. We have to consider that very carefully. I shall now explain the characteristics that I should like to see in the process of European union to which my right hon. and hon. Friends are turning their energies and efforts most constructively. First, it should be an evolutionary process. That is reflected in the excellent paper by my right hon. Friend the Chancellor of the Exchequer about the processes of monetary convergence in the European Community, emphasising the common sense and practicality embodied in stage one of the Delors report and avoiding the pyramid building and the creation of institutions, before defining their purpose, in stages two and three. In Britain we do not like, and need not be ashamed of disliking, the creation of institutions before working out their common and comfortable purposes. Stages two and three of the Delors report contain absurdities which common sense and realistic people throughout the community are beginning to recognise. The same applies to social policy. Like other hon. Members, I see no need for that elaborate piece of rhetoric, the social charter. Although I am often in sympathy with my hon. Friend the Member for Harrow, East (Mr. Dykes) on European matters, it is not correct that the preamble to the Single European Act contains a commitment to the social charter. The hon. Member for Hamilton was also wrong about that. It contains a commitment to the charter of the Council of Europe, a very different document from the extraordinary social charter. If the hon. Member for Hamilton checks the preamble to the Single European Act he will see that.

The social charter arises from a reference by the Commission to a body called the Economic and Social Committee in Brussels. It is a curious body that has existed for a long time. It has its own mini-Parliament in Brussels and is a product of the corporatist thinking of the 1960s. That is why the social charter contains talk about social partners and economies being run solely by employers, trade unions and officials. Rather comically, it completely ignores the fact that nowadays most people are not in trade unions and we have completely new labour market conditions. I understand that in France membership of trade unions is down to 12 per cent. It is somewhat higher here, but it is shrinking. I am not saying that that is a good or a bad thing, but the modern labour market is not suitable for massive trade union organisation, as employment patterns are far more flexible. That is why the social charter is such an absurd and dated document, dripping with the illusions of the 1960s and 1970s which dragged Britain to the brink of bankruptcy, and I want no part of it.

Mr. Robertson : I remind the right hon. Gentleman that the Commission's thinking on the social charter derives

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from the social charter of the Council of Europe. Conservative Members cannot possibly get away with all that abuse of corporatist thinking. If the social charter is corporatist thinking, how is it that the countries that support it most strongly have performance rates so considerably in excess of ours?

Mr. Howell : I do not think that support for it is that strong. It is rather perfunctory and it is beginning to give way under the logic of my right hon. and hon. Friends. The hon. Gentleman must accept that the origins of the document are in the work of the Economic and Social Committee. Mr. Jacques Delors told me that he had made that reference and that is where he said it came from. I must go by his authority on the matter.

Mr. Dykes : I am sure that the British members of the Economic and Social Committee would be interested in my right hon. Friend's comment that that body is corporatist and out of date. It performs a very useful function and I do not think that there is any shame in acknowledging the peace of social partners in a socially harmonious society. Does my right hon. Friend agree that the preamble to the Single European Act--if my memory serves me right as I do not have a copy with me--contains an equal reference to six broad areas of Community objectives in achieving union : economic and monetary union, the internal market--I agree that there is argument about the language used and the meaning of the wording--economic and social cohesion and a number of others that I do not recall at the moment? It is not true that the Single European Act identifies the single European market as a priority area.

Mr. Howell : There is argument about that, and if my hon. Friend checks, he will find that I am right.

As for the members of the Economic and Social Committee, my hon. Friend is quite right that one is bound to offend someone. I have acquaintances and colleagues who have done excellent work for that body in the past. But it is a body built around the concept of social partners, and the information- intensive economies of the 1990s are no longer organised in that way. Without any criticism of the people who work very hard in the Economic and Social Committee, I believe that we should think again about the fundamental ideas behind that structure. That is my first principle.

Secondly, the Europe of the future will have to be firmly rooted in nation states. The nation state remains the fundamental unit of politics. We are involved in a ridiculous debate about whether nation states are part of the Europe of the future. But if there were no nation states and western Europe was one great federal superstate, we would have to reinvent nation states for the sensible management and organisation of a vast continent of varied cultures, legislative and administrative areas and approaches to public affairs. Nations would have to be reinvented as they are extremely well- rooted and effective and are appropriately scaled organisations for managing the 1990s. The idea of federal pyramid building belonged to an age of centralism that has faded away. We have to consider how we can appropriately and usefully decentralise or maintain at a human scale level the

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administration, the law-giving and the conduct of public affairs of different groups of people formed into the ancient nations.

Sir Russell Johnston : Does the right hon. Gentleman think that the United Kingdom is a nation state or a state composed of nations?

Mr. Howell : The hon. Gentleman is tempting me into other areas. For the purpose of my speech, I regard the United Kingdom as an ancient nation state, but I realise that I am treading on great sensitivities for the hon. Member for Glasgow, Govan (Mr. Sillars) who sits behind the hon. Gentleman. Nevertheless, they must admit the validity of what I am saying.

I must tell those who are concerned about the debate in the Community that began six months ago and is still taking place, about whether there is a challenge to the nation state, that that is an absurd worry. The nation state is, and remains, the most fundamental unit. From the idea of ancient nation states, the new Europe of the 1990s will emerge. What will be its structure? Do we have words to describe it yet? Can we describe it only in negative terms by saying that we do not like federalism?

We need not rest on those negative concepts alone. We should quite readily be prepared to embrace the noble, ancient and highly successful concept of a confederation of free states. Some of the most remarkably successful and permanent unions and alliances of states have been confederations in the past. I have no difficulty in foreseeing our Europe develop as a great and permanent union or confederation, as there have been confederations in the past. I do not want to dispense tedious history lessons, but hon. Members should consider the example of our American friends, who are inclined to ask why we have not yet become a united states of Europe. We have to concede to them, "Your confederacy backed a losing cause and was on the wrong side." However, if one studies its structure, one finds that it was a remarkable institution, as were confederations before it. We should not apologise for saying that this is the vision that we have for the Europe that we are now building.

I am particularly in favour of that because it fulfils other conditions. What we build in Europe should be practical and useful ; it should not be developed for reasons of broad theory and generality, which have no solid grounds. That is why I find the concept of subsidiarity valuable. It is a little difficult to understand, it is a political concept and it has no legal definition. If translated rigorously, it is a recipe that says, "Let things be done at nation state level which can most usefully be done at that level, but let things be done collectively that can more effectively, efficiently and necessarily only be done at the supra-national level." Let us stick with the word "subsidiarity", but let us see whether, as Anglo- Saxons, we can invent better words to describe it. One thinks of phrases such as the principle of the "least degree of collectivisation or centralisation necessary". We must apply our minds to show that we can devise a much more effective and well-articulated Europe than the old federal idea.

The Europe that we are constructing must think in terms of openness and expansion--not expansion in the old military sense, but expansion in embracing other republics and nations as they liberalise, become market

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economies and form price structures and therefore become able to enter into the international trading system. That is not yet the case in Poland, although it may become so, or in Hungary and it is certainly not the case in East Germany. In all three countries, there are aspirations that this should become the way of things. Indeed, we may see those aspirations develop in Czechoslovakia at any moment. As they do, collectively in western Europe and through individual programmes--which must be co-ordinated because we do not want confusion or a muddle because everyone has their own bilateral programmes for a particular country--we should develop means of reinforcing the processes by which those countries become market economies.

Those means are not straightforward. It is not a question of rushing with massive official aid to those countries, because there are enormous difficulties in foreseeing how it could be connected with their economies as they currently stand. In all cases, radical currency reform is necessary. We shall have to tune carefully and sensitively our support and aid to ensure that Governments pushing through highly unpopular currency reforms, which will involve falling living standards and social pressures, are given support in the short term, before they get into their medium-term stride and we begin to see the attractions of inward investment, joint ventures and the driving force of wealth creation, which of course comes from the private sector.

Against that background, the processes of reunification between East and West Germany will have to move slowly. Indeed, as some Germans are wisely suggesting, they perhaps should be put aside almost indefinitely. It can be argued that the Federal Republic of Germany has been one of the most highly successful and mature post-war states. It has been enormously prosperous, has had amazingly balanced politics and has commendably sought to fulfil its role in the post-war world despite the enormous difficulties of the past. The current prospects for the Federal Republic must be very good indeed. It is legitimate to ask why, therefore, some of our West German friends believe that they would be better off if they were to embrace the DDR in a greater Germany. It is not our place to dictate to the Germans whether they should reunify or not, but it should be our aim at least to point out to our German friends that, in terms of their prosperity and freedom, they would probably do far better to think of two republics, both liberalising and developing as market economies with intimate and friendly relations but, nevertheless, remaining as two republics for some time.

Mr. David Madel (Bedfordshire, South-West) : Does my right hon. Friend agree that the difficulty is that if the result of free elections is a demand by East Germans for reunification, Britain and any one else should not stand in their way?

Mr. Howell : That is right. It is not our place to stand in the way, but it is at least reasonable for us as friends to point out to two cool and sensible heads--which certainly exist in the Federal Republic and the DDR--that in terms of the broader scene of a free Europe, free states and a free confederation, they may be better off keeping, for the foreseeable future, two separate republics rather than joining as one giant united republic of Germany of 80 million people. As a friend, that is all I suggest we should point out to our German colleagues, but my hon. Friend

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the Member for Bedfordshire, South-West (Mr. Madel) is right to say that we have no right or locus to urge that unity be resisted if that is what free elections, free will and self-determination drive Germany towards. I am saying only that they would be better not to reunify with the East.

I wish to comment on the points made by my hon. Friend the Minister and the hon. Member for Hamilton about how we further help the eastern and central European economies. I do not believe that early on we should rush at those emerging market economies with massive official aid. We must help them through the difficult winter ahead and devise every conceivable detailed means by which they can build market economies, which means assistance with managerial, financial, entrepreneurial, advertising and market skills and using our resources carefully to promote those programmes.

The hon. Member for Hamilton seemed to deride the idea of £25 million at £5 million a year. If he thinks about it, in this context, that is quite a big programme for getting going the first management teams and for helping universities in Poland to begin to send people here to learn management skills. The administration of this programme, which may not sound vast in the language that we use of hundreds of millions of pounds, requires an enormous amount of administration and is a good, sensible and practical start. Nothing would be worse than throwing hundreds of millions of pounds at those countries when the mechanisms by which the money can be usefully spent on creating the sinews of a market economy simply are not present.

My message to my hon. Friend the Minister is that he is right to proceed carefully. He should leave Poland, Hungary--perhaps Czechoslovakia tomorrow and the emerging DDR as it liberalises--in no doubt that we are determined to offer practical help, and in the long term to help them to create the conditions in which private investment can begin to pour into these areas, thereby enabling them to use their skills, upgrade their technical knowledge, build on the vast number of educated people in eastern Europe, with all their wonderful talents and original design skills, thus will we create the great confederation of Europe which will be--I want to try to avoid triumphalism--one of the most powerful, prosperous, free and democratic areas on the planet.

6.19 pm

Mr. Denzil Davies (Llanelli) : By their very nature, debates on White Papers tend to be wide ranging. Much of a White Paper is often out of date by the time we can debate it. I shall try to choose my texts from a narrow context and speak about European monetary union, which is mentioned on page 7 of the document, linking it to East-West relations, especially in respect of eastern Europe, which is dealt with briefly on page 27.

I do not think that, even before the events in eastern Europe and the momentous events in East Germany over the past week, there was much support in the House for the Delors plan. The right hon. Member for Guildford (Mr. Howell) has echoed the misgivings about the plan. Stage 1 seems innocuous, but perhaps when one studies it, one sees that it is not quite that innocuous. There is little support in the House for stages 2 and 3. I should have thought that, given the upheavals that have taken place, the best course is to put stages 2 and 3 on the back burner until we have

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worked out a stable basis for the changes that are taking place in eastern Europe--perhaps we should now call it central Europe. My fundamental objections to stages 2 and 3 of European monetary union are fairly obvious to any hon. Member. The proposals involve handing over control of monetary policy, which means interest rates. They affect the private and public sectors and the Government's ability to fund public expenditure. The proposals involve handing over control of a major part of the economy to a body that is not accountable to anyone. It is not accountable to the House, the British Government--whatever party is in government--the British people or the electorate, whether in Britain or in western Europe. Power is being handed over to central bankers, whether British, European, or a mixture of both. To paraphrase an expression used a few weeks ago, bankers may advise but Ministers have to decide. That is the basis on which we run our economic policy. Ministers are responsible to the House and the electorate. The idea that central bankers, however good they may be--although their advice is valuable, sometimes it must be turned down --can run huge sections of our economy is anathema to most of us. It is ironic that the EEC calls, quite rightly, for free elections in eastern Europe, yet the European Commission and Mr. Delors want to shift huge sections of economic power towards a body that can operate whether or not there are elections. We are rightly calling for the exercise of democratic control and for freedom in eastern Europe.

The Delors plan is not just about economic and monetary union. It is no secret that the plan was about controlling West Germany. The French, like most people, are worried about the power and strength of the German economy and reunification, which is understandable. The French often come up with clever theories which will not work in practice. The idea is that somehow West Germany can be locked into western Europe by a currency union, so the Germans will not look to the East and will not try to dominate it or produce as they are entitled to do. That is complete nonsense. The deutschmark is a strong currency, but the German economy is strong because the Germans produce goods and their industry is powerful. Whatever kind of union exists in western Europe, that will still happen. West Germany cannot be tied in a straitjacket that constrains and limits its power. Even before the upheavals of the past few weeks and months in eastern Europe, the West German economy was looking east because of its geographical position, its historical ties and its power. There have been rapid changes, and West Germany will certainly look much more to the east because of the events of the past six months. Whether reunification occurs or not, before long East Germany will virtually cease to exist as an independent economic entity. The "ostmark" cannot compete with the deutschmark--the deutschmark would gobble it up. West Germany will invest considerably in East Germany, Hungary and perhaps Poland, eventually extending its investments to parts of the Soviet Union, especially the Baltic states. There is bound to be not only a western deutschmark zone but an eastern deutschmark zone, stretching from Berlin, through the Ukraine, to the Baltic states.

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Most people do not want that to happen. I mean no disrespect to the West Germans. They work hard, they have a thriving economy, and they make things. I wish that the British economy were more similar to the West German economy in those respects. Those little financial wheezes of Mr. Delors will be swept away by the deutschmark and German economic power. We need not a currency union but a new basic structure in Europe to maintain stability and stop uncertainty. It will not be easy to achieve that.

I have a suggestion, which has been made also by members of the West German Social Democratic party and others. Perhaps the allied powers--the powers of Potsdam, plus perhaps France--should think about getting together and drawing up two treaties, one with each part of Germany. Obviously, before that happens, there must be free elections in the German Democratic Republic. I would not be surprised if those free elections take place fairly quickly, partly because of pressure from the population and partly because it is in the interests of the Socialist Unity party to go to the electorate as quickly as it can before other political parties can organise.

The SUP's roots are deep. The party goes back long before Stalin and Hitler. That is why it is no surprise to me that the East Germans, one after the other, talk about social democracy and Socialism. That is not just the voice of propaganda or because they have been brainwashed over the past 30 or 40 years. We must be aware of the deep traditions--many of them Marxist, but honourable, traditions--in that part of the world. If free elections are held, the allied powers should think about negotiating two treaties--one with East Germany and one with West Germany.

No doubt, the treaties will say many things, but they would have to deal with two points. First, a treaty should legitimise the East German state after free elections, whether the Socialist Unity party or the New Forum wins the elections. I believe that we have not recognised the East German state. The right hon. Member for Guildford (Mr. Howell), who is the Chairman of the Select Committee on Foreign Affairs, will no doubt correct me if I am wrong. I believe that there has been no de jure recognition and that there is still only de facto recognition. However, many countries do not recognise East Germany. There was once no de facto recognition and people from East Germany could not travel to the West because their passports were not recognised. There was then a long period of de facto recognition and I do not know whether it has now become de jure recognition.

Mr. Robertson : It has.

Mr. Davies : That must be enshrined in a treaty with the East German state which will legitimise it, and will legitimise East Berlin as the capital of the East German state.

Secondly, the treaties should finally establish the existing borders in Europe as the borders of the two Germanies in terms of their relationships with their neighbours. That has never been done. The West German Basic Law says clearly, as many hon. Members know well, that legally there is only one Germany. The borders are the borders of 1937 and that was confirmed by a decision of the federal constitutional court some years ago.

Most West Germans do not care about the Basic Law--I imagine that they do not even think about it--but

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Germany's neighbours perhaps do. The Poles are concerned about it and the Soviet Union may be concerned. Let us end the farce and the fiction. Let us enshrine the existing borders of the two Germanies in a treaty made between the allied powers and Germany.

The hon. Member for Bedfordshire, South-West (Mr. Madel) said in an intervention in the speech of the right hon. Member for Guildford that if the Germans voted for unification, they should be allowed to carry it out. I do not agree. The principle of self-determination does not go as far as throwing overboard the Yalta-Potsdam settlement. It cannot go that far for obvious reasons which I thought that all hon. Members would see.

Sir Russell Johnston : That is an incredible statement. The right hon. Gentleman seems to be saying that the Germans do not have the right to decide what they want for themselves. That is a profoundly undemocratic remark.

Mr. Davies : Mr. Gorbachev made it clear the other day that he was happy to see the wall coming down.

Sir Russell Johnston : Mr. Gorbachev!

Mr. Davies : It is all very well for the hon. Gentleman to say that. Mr. Gorbachev is the leader of the geographically largest country in Europe which suffered the loss of almost 20 million people in the last war. Mr. Gorbachev made it clear that the wall should come down and that there should be free elections, even though the Communist party might lose, but that there should be no reunification. Mr. Shevardnadze said the same. Is the hon. Member for Inverness, Nairn and Lochaber (Sir R. Johnston) suggesting that if the East German electorate votes for reunification, we should let it happen despite the problems in central and eastern Europe and the effect it would have on the Poles, who are struggling to reconstruct their economy? That makes no sense.

Mr. Dykes : The right hon. Gentleman said only a few years ago that 25 per cent. of the people of France were in agriculture so I take everything he says with a pinch of salt. Was the implication of his remark about Mr. Gorbachev and Mr. Shevardnadze that reunification was not on the agenda now?

Mr. Davies : It is not on the agenda now, but perhaps the Soviet Union will change its mind in future. However, if the Soviet Union does not change its mind, the idea that the East German people can vote and overthrow the post-war settlement is dangerous.

Mr. Michael Irvine (Ipswich) : Does the right hon. Gentleman not see that to deny the German people of East and West the right to unite, if that is their democratic will, would give them a considerable grievance and that grievance would be almost calculated to fan the flames of German nationalism?

Mr. Davies : Is the hon. Gentleman saying that if they vote for reunification, it should happen ?

Mr. Irvine : Yes.

Mr. Davies : I disagree. It would be profoundly dangerous and irresponsible if that idea were accepted.

Mr. Jim Sillars (Glasgow, Govan) : Does the right hon. Gentleman understand the implication of what he is saying? Is he saying that if the peoples of East Germany

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and West Germany have free elections and vote for reunification, not only should it not happen, but people should act to prevent it from happening? Is he saying that we should stand by and welcome, as he appears to do, intervention by the Soviet Union in that respect? That would be an incredible statement.

Mr. Davies : I am saying that the two treaties with the two Germanies should make it absolutely clear that there would be treaty obligations on both those countries. Treaties have to be observed and I should have thought that most people would wish those treaties to be observed.

We need to legitimise the present situation. Apart from a few Conservative Members, nobody wants German reunification and we should make that clear. We are told that neither West Germany nor East Germany wants reunification. Let us, therefore, legitimise the existing borders of the two Germanies so that they can operate side by side as democratic states. If East Germany wants to apply to join the European Community, that matter can be considered. If it wants associate membership, that, too, can be considered. However, until East Germany is legitimised as a state, such matters cannot be considered at all. Instead of going down the blind alley of currency reform, let us think about a more stable structure in Europe so that Germany's neighbours can be reassured and will not be afraid that at some time in the future, reunification will damage and jeopardise them.

6.35 pm

Mr. William Cash (Stafford) : One of the most significant events that occurred recently when Chancellor Kohl visited the Berlin wall was the hostile reaction he received from the ordinary people of the German Democratic Republic. The boos and catcalls that he received when putting forward his thoughts on reunification spoke volumes for the difficulties that he is about to experience in relation to the rest of Europe when he goes to the meeting on Saturday, and when he attends the summit on 8 December.

That reception may have come as a surprise in the light of the West German Basic Law, to which the right hon. Member for Llanelli (Mr. Davies) has just referred. The reason he received that reaction was that the people were calling not for reunification, but for democracy. They have sought freedom of choice and they will exercise that freedom of choice in their own way. I have watched most of the television programmes over the past few days and it has become increasingly clear not only that they insist on exercising that freedom of choice, but that the mayor of West Berlin, Mr. Momper, is clear that it would be extremely difficult for Berlin--or, as we discovered, Bremen, and many of the other cities in West Germany--to absorb reunification if it was followed or preceded by a mass exodus of people. However much the West German economy may wish to absorb the cheap labour and skills of the people of East Germany, the facilities are not there.

When we go to the Strasbourg summit, there will be a difficulty. On one hand, there is the expression of self-determination which we should like to see carried through in free elections, but on the other hand, Chancellor Kohl in his repetition of the call for reunification combined with a united states of Europe is in a directly contradictory position. To call for a United States of Europe with its federal connotations would be effectively to deny self-determination to the countries that

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already have established democracies. That is a contradiction of the concept of self-determination and a dilemma for the German people.

I dealt with some aspects of federalism in my speech on 18 May, and I need not go into that again now, except to refer to the problems that we face because of the immense speed with which we are being pressed towards federalism--by President Mitterrand on 17 October and by M. Delors on 12 October, for example--and the increasing pressure that is being placed on us in the run-up to the December summit. They seem to be ignoring the fact that many of the European

electorates--and indeed, national Parliaments--have not been fully informed or asked whether they want a federal system or not. More effort should be made not only to inform the electorate in this country but to allow and encourage electorates in other European countries to form a measured opinion.

Mr. Tim Janman (Thurrock) : Does my hon. Friend agree that one of the main reasons why the French are keen to proceed extremely quickly to some form of European unification--to a federal Europe--is that they fear the power of Germany and the reunification of Germany? One way of preventing their fears from becoming reality is, they believe, to lock West Germany into a federal Europe as fast as possible--with all the loss of sovereignty that that would entail for Germany, as for Britain.

Mr. Cash : My hon. Friend has anticipated my argument. I had intended to conclude my point by referring to Disraeli's famous expression, "Trust the people." It is essential that the views of the people should be properly canvassed before a step of such immense importance is taken.

My right hon. Friend the Member for Old Bexley and Sidcup (Mr. Heath) and others argue that we should follow the policy advanced by Konrad Adenauer, who said that the way to preserve stability in Europe and to solve the German question would be to bind Germany into a federal Europe. Such sentiments have been endorsed by Sir Leon Brittan and others, who exhort us to a central bank and a single currency, which, in my view, amount to the same thing. Others press us to accept stages 2 and 3 of Delors and others a lesser plan. My right hon. Friend the Member for Guildford suggested a form of confederation. Whichever plan is adopted, it will contain the ingredients of political unity. In fairness to my right hon. Friend the Member for Guildford, I think that he came pretty close to suggesting that he could envisage such a form of government. The difficulty is that if we adopt such a policy, we shall effectively be locking ourselves into a legal order. I voted for the Single European Act, and I repeat that I would do so again. We may have decided to accept majority voting but that does not necessarily imply an automatic progression towards a federal--or confederal --system. If we espouse such a policy we shall lock ourselves into the DNA of the European Community and will not then be able to escape.

An economic difficulty arises. People say that we must bind ourselves and West Germany into a federal system to prevent the domination by Germany of the rest of Europe. But by entrenching that same economic strength within a

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federal Europe, we shall achieve the same result without securing the balance of power that would result were we to proceed with the voluntary agreement of nation states. That represents a vital difference. Moreover, such a move excludes the possibility of the wider liberalised Europe at which we are also aiming in what my right hon. Friend the Member for Guildford referred to as "the evolutionary approach". I prefer to refer to "organic growth" because that implies the sentiments that lay at the heart of the thinking of Edmund Burke and others like him when these matters were last being considered several centuries ago.

It seems to me that we are being accused of breaking rules, when, as my hon. Friend the Minister pointed out, we have been exceptionally good at complying with the rules of the Community. We are also being accused--this is the ultimate irony--of not complying with rules that have not yet been created. There is no definition of economic and monetary union and the concept of federal Europe has been no more than outlined in stages 2 and 3 of Delors. It is not part of a treaty that we have signed. It is not part of any structure to which we have an obligation to subscribe. It is not an inevitable progression from what has gone before. If we accepted that concept, we could say goodbye to Westminster and, in any real sense, to our forms of government. That is what worries me.

My right hon. Friend the Member for Guildford referred in his interesting speech to the notion of subsidiarity. It is a matter of fact and of law that in the context of a federal system the distribution and allocation of functions at the macro level, including economic and monetary union, and the paraphernalia that goes with it--the binding rules, the determination of budget deficit, the penalties that would be imposed and the methods by which to impose them--would leave institutions at the lower level, including the United Kingdom Parliament with next to nothing.

I understood from the debate last Thursday that the House as a whole rejected stages 2 and 3 of Delors. If we reject them, we cannot follow a route that implies a degree of federalism and is implied in the notion of confederation, in the legal sense, to which my right hon. Friend the Member for Guildford referred.

I remain deeply concerned about the question of the dominant position of Germany within Europe. I regard the German people as friends and colleagues. It is nevertheless essential that we ask them to consider the path that they are constructing by the

reassertiveness of their policies--shown, for example, in the speech of Mr. Genscher on 7 May, in subsequent speeches by Chancellor Kohl and in particular by the paper that was recently produced by Mr. Prill and Mr. Mertes, which suggests the path forward that Germany should take within Europe. That paper suggests a series of options that are highly dangerous in terms of the tensions that could develop if the German economy and the German political system became over-dominant rather than merely pre-eminent within the European Community.

A great deal is at stake. We must understand the position taken by France in relation to Germany in the light of the fact that 20 per cent. of French imports and exports are dependent on the German economy. Furthermore, the French have effectively surrendered to the deutschmark. That is the crucial point. We are determined to maintain our independence and ensure that we do not surrender to the deutschmark.

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