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Column 418

really be in trouble." I use the name George in the symbolic sense and I am not referring to any particular Minister or Opposition spokesman. We should get away from such an attitude.

Without sounding oppressive to my colleagues, I must say that we have had a series of fantasy speeches today about the realities of the Community. It is rather disturbing that many of those speeches were made by my hon. Friends rather than Opposition Members. A fantasy feeling abounded about the attitude of the Germans. The German dream of reunification is perhaps the most powerful cement that binds those two nations. It is absurd to believe that we or any other European country could say, "We know that, after the war, we said that you should be united and that it was terrible to have a divided Germany, but we were, in fact, only pretending." Imagine suggesting to the Germans that we have our old ideal blueprint for them and then accusing them of being aggressive and militaristic should they refuse to accept it. That is totally absurd.

The Germans also suffered enormously during the second world war--6.5 million of its people were killed. The nation suffered at the hands of the Nazi terror gang that seized power without any parliamentary majority in 1933. Unlike after the end of the first world war, however, the Germans, especially in the western part, were treated well in 1945. The story of the eastern part was a sad one, but the treatment meted out to those Germans by the Soviets later improved somewhat. After the second world war, however, the West Germans were brought into the comity of nations and they were not excluded as in 1918. No revanchism has arisen and we all view with admiration the firmly anchored tradition of moderate politics and moderate economics in the Federal Republic.

The process of reunification is a complicated matter. I believe that whatever form it may take, however, it will happen faster rather than slower than expected. The East Germans are motivated by two principal aspirations. One is reunification, but, at the moment, the main one is the search for freedom, participation in Government and exercising their choice. Unlike some of my hon. Friends, I do not believe that East Germans are on the verge of embracing Horatio Alger-type capitalism. I would be delighted if that were so, because, as a Conservative, I believe that free enterprise is the best means of economic organisation.

I believe that the East Germans are still addicted to their Socialist form of society, but that they want social democracy and freedom of choice within that framework. Perhaps a small minority will become addicted to the capitalist system later on. If the vast proportion of the new, greater united Germany remains relatively heavily collectivistic but socially democratic, and West Germany remains a much more mixed capitalist system-- we are told that that system operates a high degree of regulation and is inefficient in some respects, but for all that it is an amazing economic miracle--those differences will gradually fade away. The similarities between the systems will then begin to emerge.

Why cannot such changes take place within the context of the European Community? It is manifestly ridiculous for people now to suggest that because of the interesting, fascinating and heart-warming upsurges in eastern European countries and in East Germany with the breaching of the wall, that means that there should be an end to any programme of integration and European

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union. It would be absurd to suggest that the Community should pause for several decades to wait for the complicated east European geo-political processes to be worked out into a final result. Nothing could be further from the truth.

The 11 member states--perhaps I should say 10, as Greece remains an awkward member of the Community--are committed, enthusiastic perpetrators and exponents of increasing and developing European integration and union, including monetary union. Once again the danger is that the United Kingdom remains on the sidelines of that process looking unenthusiastic, curmudgeonly and churlish. That does not serve the interests of our people. The Government show enormous enthusiasm, however, for particular areas of Community policy--the internal market is one good example. On 4 May I asked the then Paymaster General, now Secretary of State for Northern Ireland : "Will my right hon. Friend respond positively to the idea of contracts being gradually and increasingly in ecus as well as in national currencies?"

My right hon. Friend replied :

"The British Government in their separate actions have shown an enthusiasm for such ecu transactions and have regarded them as a much more sensible and practical way forward."--[ Official Report, 4 May 1989 ; Vol. 152, c. 440.]

That is a good example of our enthusiasm for developing European instruments of one kind or another. We make the mistake, once again, however, of not approaching all developments with common enthusiasm. I do not suggest that the Government should agree every jot and tittle and every proposal in a rigid framework. We should try, however, to emulate the enthusiasm of the newest member state, Spain. That country is obviously enthusiastic because of the benefits that will come to Spain as a result of its membership, but its enthusiasm for the Community is genuine. We should share the interests and enthusiasms of the other member states for developing all the aspects of integration mentioned in the Single European Act. My right hon. Friend the Member for Guildford (Mr. Howell)--he is not present at the moment--persists in arguing that other proposals for European union, apart from the internal market, are not mentioned in the Act, but that is not so.

We have nothing to lose from our enthusiasm and everything to gain. The fantasy that we should hold on to our national sovereignty, like some old- fashioned concept which overrides all other considerations, is manifestly absurd. Why are we not worried about the seeming loss of sovereignty in NATO? In NATO it is almost possible--I say "almost" to exaggerate the point --for an American Commander-in-Chief to order this country to war. Our sovereignty is subsumed in NATO in terms of voting and collective decisions. We should consider the European Community in the same light as NATO.

In the process of obfuscation and myopia, which continues to represent our rather silly, old-fashioned attitude towards the European Community, we misrepresent--sometimes, unfortunately, in a rather offensive manner--the proposals of Mr. Delors. We misrepresent the remit given to him by the Council of Ministers in respect of European monetary union and regarding the other proposals he makes as a senior member of the European Commission. The Delors blueprint was a blueprint only because the Council of Ministers and the central bankers committee specifically requested that

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blueprint. That does not mean that it is rigidly couched and cannot be negotiated on in terms of the stages not yet agreed.

The Madrid meeting agreed to stage 1 only. I believe that there is plenty of room for compromise, flexibility, agreement and give and take in the later stages. Notwithstanding the polite response of the Bundesbank president--his response may have been dictated by devious reasons as he is a devious as well as an extremely witty gentleman--we are making a mistake by, once again, being the odd man out. We have said that we have our own rather special esoteric "free-market forces in competing currencies" document and that is what should be accepted. We are continually selective, to the irritation of our European partners, and that is a grave mistake.

There is misunderstanding not only of Delors's aspirations as president of the Commission, but about the form that the Community will probably take in future. It will not be some rigid, bureaucratic, centralised body directed by a Brussels bureaucracy which is a single governmental entity. The accidental modern American definition of federal government as a single government entity is a historic aberration. Federalism did not originally mean that. It meant what nationalists in Britain presumably aspire to--a federation of powerful component elements with a weak central authority embracing the whole federation which carries out only the functions common to all the components, as agreed by the components.

Perhaps that is not possible now because of centrifugal forces within a country and between member states in a cohesive grouping, such as the European Community. No one in the Community has suggested that Europe should have one Government. A federal system would be a co-operative structure based on majority voting and the Single European Act with each sovereign Government willingly pooling its sovereignty and agreeing to the necessary treaty changes arising therefrom.

Mr. Janman : I am interested in my hon. Friend's definition of federalism and his reference to the United States. Does he agree that the Delors report in its present form, which proposes a single currency in Europe and a central bank, would make national decisions on monetary, budgetary and fiscal policy meaningless? That is centralisation, as opposed to the federalism of the United States where individual states have federal power over their budgets.

Mr. Dykes : My hon. Friend will forgive me if I do not go into detail. Delors and his colleagues were asked to produce a tightly drawn-up blueprint and that has been done. It does not mean that matters will not be negotiated and then changed. I do not want us to reject those proposals.

Sir Russell Johnston : Does the hon. Gentleman also reject the idea that there will be some sort of European Government one day? I trust not.

Mr. Dykes : I would not necessarily reject that. Although I am regarded as a Eurofanatic--whatever that may be--I do not see a federal Europe as a single governmental entity. We are developing a unique new mechanism which will be the pattern for the future. That is historically exciting. The future is unascertainable even

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to the sage Members of the Social and Liberal Democrats. None of us can tell the future. There will not be a menace to this country. If we had the economic authority and success of some other member nations, people in Brussels would not laugh when we said, "We have lessons, strictures and advice on economics and politics to hand out to you. Please listen to us because we know better." It is absurd for us to do that until we have a more successful economy. Sadly, despite well- meaning propaganda, which I use in my speeches outside the House, we have not had a supply-side miracle yet, although I hope that we shall have one soon.

I hope that we shall not be too selective and say, "the internal market is wonderful. With free enterprise, it is easy to achieve. How dare other member states be so slow?", but in other areas say, "No that is dangerous, we must not do that. We must go slowly and not make haste."

On 12 July I asked my right hon. Friend the then Minister of State, Foreign and Commonwealth Office :

"There is a certain amount of puzzlement in Athens because, when it comes to social charter provisions, the differences between countries and traditions are too great to make any similarity possible whereas in respect of the internal market, for ecomomic and financial reasons, it is possible for us to achieve total harmony within a few years. Why is there a difference in the British Government's attitude to those two aspects?"

She answered :

"As my right hon. and learned Friend said earlier, the difference is that we believe that the social dimension should help to improve economic performance across Europe. It is clear that the Council of Europe social charter, which provided a framework, was a very good text, but it did not extend to deciding at European level those matters that we properly believe should be decided by each nation state. We know that liberalisation and deregulation are the only way to achieve economic growth and a reduction in unemployment. We believe that we should be entitled, in accordance with the Commission's principle of subsidiarity to decide which way the country goes."--[ Official Report, 12 July 1989 ; Vol. 156, c. 966.] In Brussels that is seen as a glaring contradiction of our attitude to the internal market. It is a pity that such glaring contradictions persist in our attitude to Europe.

7.54 pm

Mr. Jim Sillars (Glasgow, Govan) : The hon. Member for Suffolk, Central (Mr. Lord), speaking as a representative of the Western European Union, asked about the motivation behind changes in the Soviet Union and other parts of eastern Europe. It may be instructive to ponder the words of the Italian leader of the Communist party, Antonio Gramsci, who accurately defined a crisis as something that happens when the old order is dying but the new order has not yet been born.

When we witness, particularly in the Soviet Union and elsewhere, the collapse of an ideology, we should bear in mind that the Marxist ideology is a secular religion, if that is not a contradiction. Marxists believed that Marxism and Leninism provided a scientific methodology according to which they could understand the history of the world and, more importantly, its future. They carried that certainty with them from the October revolution of 1917 until the times of Leonid Brezhnev. Since then, we have witnessed in the Communist parties of the Soviet Union and its satellites the collapse of that so-called scientific certainty. We have seen ideological collapse and intellectual

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bankruptcy. Once Communist parties reached the stage of ceasing to believe in the inner core of what motivated them, change was bound to arise.

What changes are we likely to see in east and west Europe as a result of recent events? I do not speak simply as a partisan who dislikes the Prime Minister's ideology when I say that I was disappointed by her speech at the Mansion house. However, she was right when she said that recent changes in eastern Europe represent danger. Everyone accepts that at times one has to be cautious. The one concept that did not come through in her speech was an understanding of the opportunities now opening up in both east and west Europe for a permanent settlement of the post-1945 situation, which many people thought was permanent, but proved to be impermanent. I was struck by the Prime Minister's attitude. She seemed to regard events, particularly in East Germany, as a chance to launch a tactical attack against those arguing for greater integration and unity. She seemed to present the usual Downing street tunnel vision precisely when a wider understanding was needed from the head of the British Government.

As someone who wishes Scotland to be separate from the British state and separately represented in the European Community, I am frustrated that folk like me will be represented at the Paris summit by the lady in Downing street who does not reflect majority Scottish opinion about developments in eastern Europe.

Recent events in eastern Europe were a shock to the regimes in power there. It seems to have been quite a shock to folk in the west, too. I was entertained on Sunday by an article by Bruce Anderson in The Sunday Telegraph in which he said that some people may be nostalgic for the stability of the cold war. Such nostalgia has been displayed in the debate tonight and in several public statements by individuals from various interest groups. I was surprised that people were taken aback when German reunification came back on to the agenda. From the moment when change began in the Soviet Union, I thought that the reunification of Germany was bound to re-emerge as the cardinal political dispute in Europe.

I welcome the reunification of Germany. There can be no permanent settlement of post-war Europe or any serious development of unity within the European Community without that reunification. It is central and it must be dealt with. Like my hon. Friend the Member for Inverness, Nairn and Lochaber (Sir R. Johnston)--I hope that he does not mind me calling him that--I was disturbed by the note of apprehension in a number of speeches today about a reunified Germany. It is not justified.

The people of West Germany have a history which everyone knows, but they have had decades of democratic development ; their democratic roots have grown deep in their political culture. They have prosecuted their Nazi war criminals and made atonement for what was done between 1939 and 1945. There must come a time when we stop telling 19 and 20-year-old West and East Germans that they are guilty of what their grandfathers did. They have a good record of the development of democracy.

The green movement is a good example of this. It originated in Germany and it could have sprung only from a society that is concerned about the whole of humanity--the global village. Since 1945, the people of East Germany have been subjected to Stalinist propaganda--a superior type of malign propaganda--yet at the end of it they are as thirled

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to the idea of freedom and democracy as anyone else. They managed to withstand that sort of assault on their intellects, which says a great deal for their quality and worth.

We should approach German people as we would any others. We all have things in the history of our countries of which to be ashamed, and people should be examined in terms of what they have done recently and of their potential for a constructive contribution in the years that lie ahead.

We must accommodate the reunification of Germany. I do not suggest that that will be easy or that other states will have no opinions about it. We are involved in the geopolitics of western Europe and of the Soviet Union and the United States. We all recognise--some of us emphasise it more than others--that the Soviet Union is paranoid about the necessity of some buffer between it and what it reckons to be a potential Western enemy. We may deplore that historical fact and say that it is unjustified, but it is a geopolitical fact of life, and the Soviet Union's point of view will be important.

However, the fundamental right of the people of Germany to be reunified must be recognised, and all the pieces on the political chessboard must be moved to accommodate it.

Mr. Lord : The hon. Gentleman mentioned regimes disintegrating. My point was that, if that is happening, it is within the power of some of those regimes to make sure that they do not disintegrate. They have done so in the past ; this time for some reason, they are choosing not to.

My other point was about the great dangers in the changeover period. I am as keen to welcome it as anyone, but does the hon. Gentleman accept that now that people are talking about the reunification of Germany, the implications of that for the Warsaw pact and NATO and defence generally--I am not talking about the Common Market--are enormous? I am worried about the instability and the problems that we face in getting it right.

Mr. Sillars : The hon. Gentleman sounds as though he ghosted the article in the Yorkshire Post which was written by the right hon. Member for Manchester, Gorton (Mr. Kaufman), who managed to get through the entire article about problems in the East without ever mentioning the European Community.

I can understand people's anxiety about NATO and the Warsaw pact, and I do not suggest for a moment that they should voluntarily dissolve themselves tomorrow morning. They are part of the geopolitical chessboard about which I was talking earlier. Of course the interests of the core group in each of these alliances must be taken into account, but I am coming to some practical suggestions on how we can constructively seize the opportunity to tackle the problem.

One of the biggest factors in the continuing instability is the economic crisis in the eastern zone ; another is the political problem that Mr. Gorbachev faces. It is strangely paradoxical that Gorbachev is much more popular outside the Soviet Union than inside it. Cries of "Gorby, Gorby" are heard on the streets of West Germany, but not in Moscow or Kiev and certainly not in the Baltic states. Unless we assist the Gorbachev faction- -he represents an important school of thought inside the Soviet Communist party--to remain in the ascendancy, problems in the Soviet Union can spill over and create further instability.

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We should be concerned about underpinning the Gorbachev faction and about how to remove some of the instability. My party has written to the Foreign Secretary about this.

We do not suggest starting at the highest political point of discussion. There are three major trading groups in Europe--the COMECON countries, the European Community and the EFTA countries. The European Community is the most cohesive group--a voluntary political and economic partnership which has existed for some time and shown the capacity to expand and absorb new members. It has an agreement about the co-ordination of foreign policy and we are approaching the single European market. It also has a monetary system from which but a few recalcitrant people dissent. The EC is the biggest, most powerful group in terms of economic power. We suggest that it takes the initiative and calls a major conference of these three trading groups so that the whole of Europe can sit down together, analyse and agree on the problems and then begin to solve them, to create better trade between West and East by studying and understanding each other's systems.

There will need to be more investment in the East by the West. Because of the system on the other side of the former iron curtain, that will have to be done through institutional methods, not the methods of the Western liberal democracies. We shall need to consider how we can transfer technology from the West to the East to raise the competence of its economies, and to consider how we can help train the East's manpower-- senior and middle management--to cope with the trading opportunities that should flow from better relations between West and East. This conference and decisions on trading would be a mechanism of practical co-operation with beneficial results for the economies of eastern Europe. If we can start to raise the standard of living of these folk, we shall remove a great deal of the tension and instability.

The Scottish National party's final point concerns what will happen at the summit between Presidents Bush and Gorbachev, which has been described by Gennady Gerasimov as "from Yalta to Malta". There is a big difference between Yalta and Malta : there were more than two people at Yalta, but there will be only two at Malta. As a European, I object to this sort of summit taking place with us excluded from it. I read that President Mitterrand was hoping that this week's Paris summit would make representations to President Bush to the effect that he would talk on our behalf when he met Gorbachev, but that is unacceptable in principle and in practice and it is not sensible from the point of view of the development of Europe. The Soviet Union and the United States of America remain nuclear super-powers, but their recent history shows that they are no longer political super-powers. The European Community, along with other peoples in Europe, should be saying to those at that summit, "You may meet on this occasion on your own, but on future occasions, particularly if there are substantive matters concerning the development of unity within Europe, we shall invite you to our summit." That rather alters the basis on which the power equation is established.

We have been disturbed by the negative tone and approach from the British Government. It looks as though history is about to repeat itself. The Government have missed nearly every European bus, and it looks as if they are going to miss this one.

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8.10 pm

Mr. John Marshall (Hendon, South) : We welcome and note the commitment of the hon. Member for Hamilton (Mr. Robertson) to Europe, but he said that this is a Government without a vision on Europe. It is pretty rum for any speaker from the Labour party to complain about the Government's vision on Europe. During the six months covered by the report, the British Labour group in the European Parliament was led by a committed opponent of the European Community and British membership of it. During the past five years, two former leaders of the British Labour group in the European Parliament were thrown out because they dared to support the principle of British membership. The British Labour party in Strasbourg did not show much European vision.

As to the British Labour party in the House of Commons and Britain, its policy veers from bitter opposition to the Community to lukewarm support for it. It has more often shown downright hostility, and when it has not shown that, it has indulged in niggling criticism. The Labour party has no grounds for boasting of its vision on Europe. On the other hand, all the major developments in the European Community over the past 10 years have been the result of actions taken by the Government. The campaign for fairness in the European budget was essentially a British campaign, as was the pressure to secure changes in the common agricultural policy. The whole 1992 programme, which will bring so many benefits to everyone, was essentially a British campaign.

While others have been willing to make fiery speeches and indulge in European rhetoric about the ideals of the internal market, they have at the same time been willing to impose restrictions and to indulge in chauvinism. We do not need to be lectured on our commitment to Europe or our commitment to freedom by the French and Italians, who still impose exchange controls, or by the Germans, who are quite happy to indulge in a less than free market in financial services. No one can criticise the Conservative party for a lack of vision on Europe, because the British Government have been both practical and visionary in their approach to this issue.

Sometimes, our debates about Europe are dominated by whether Britain should remain in the Community. I am sure that my hon. Friend the Member for Thurrock (Mr. Janman), if he catches your eye, Madam Deputy Speaker, will yet again raise that issue. However, we should recognise where the tide of history is. It is clear that the destiny of the United Kingdom is increasingly involved with that of our European partners. We have to recognise that Europe takes 50 per cent. of our exports and provides the basis of our defence. Those who seek to deny that our future is in the European Community are seeking, Canute-like, to stop the tide of history.

During the six months covered by this report, the chief issues were the future of the European monetary system, 1992 and the social charter. A number of outside commentators speak as if entry into the exchange rate mechanism would act as a panacea for the British economy, remove uncertainty over currency movements and, somehow or other, lead to faster growth and lower inflation. However, if we look at the way that the British economy compares with those of other countries in the ERM, we see that our inflation rate has been lower than

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some and that our growth rate is higher than that of West Germany and other members. Those who argue that there should be early British membership of the exchange rate mechanism may be guilty of committing the same mistake that we committed in 1925, when we joined the gold standard at the wrong rate of exchange. If we were to join the ERM at current deutschmark-sterling parity, we would be doing a gross disservice to British exporters and those who are competing with continental manufacturers in the British market.

Those who argue that we should join the ERM now ignore the fact that when the French and the Italians remove their exchange control restrictions, the ERM will be a highly volatile organisation. It is surely better for us to join after all that volatility and change have taken place rather than get on, helter-skelter, just before it may, if not get out of control, have a rocky ride. Some say that we should join the ERM not for economic but for political reasons, but we do not need to join the ERM to prove ourselves to be a good European power. We have shown over the past 10 years that we have a strong commitment to the European Community and it is not necessary to join that talisman to demonstrate that commitment yet again. The social charter poses a great threat not only to the United Kingdom but to other countries in the European Community. We have to recognise that within Europe there are wide variations in living standards, productivity and efficiency in industry. If we seek, through the social charter, to impose standardised obligations throughout the Community, the chief victims of those standardised obligations will be those who live in the poorest parts of the Community.

It is wonderful to stand up and say that we are all for the social charter, but we should ask ourselves what it will do to employment in the Community. Will it encourage the creation of more jobs? I doubt it. What will it do to internationally mobile investment? We in the United Kingdom are pleased by the large number of American and Japanese companies that come to invest here. Will the social charter encourage one internationally mobile company to come to the European Community? Of course it will not. It will act as a deterrent to future investment, restrict economic growth and therefore reduce job opportunities.

The policies of Jacques Delors--remembering what happened in Northern Ireland we might almost call them de Lorean dreams as they would be even more expensive than that venture--must be put on hold because of what is happening in the East. It is not sufficient to say to the people of Hungary, Poland, Czechoslovakia and East Germany that we are willing to consider their countries joining the Community in association. After all, when Spain, Portugal and Greece threw off the yoke of dictatorship in the 1970s, we welcomed their applications to join. We must look forward to a Community that includes Eastern European countries now within the Warsaw pact. Were we to do that, we would do a major deal for peace in the whole of Europe and for future prosperity. If we proceed quickly with the Delors proposals it would do nothing to encourage those countries to join the Community and it may discourage them. If we look to the future, there is great merit in saying that we should put all these proposals on hold for at least 12 months to see what is going to happen elsewhere in the world.

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I will now turn to the attitude of Europe to the rest of the world post-1992. It is fashionable to make wonderful, visionary speeches--that is what the Opposition would call them--about the attitude of Europe to the Third world and other countries and to say that the European Community will not indulge in the fortress-Europe policies that we all condemn. However, so far fortress-Europe is winning. The common agricultural policy is based upon the concept of Community preference, which says that if we can grow it in Europe, we should buy it from the European grower and not import it unless it is unavoidable. The EEC sugar regime is based upon the concept of dumping sugar on the Third-world market, pauperising the Third-world growers and then taking a little sugar back and saying that we are being good. That policy has pauperised many Third world economies. The essence of the broadcasting directive, which is referred to in the document we are debating, is to restrict the amount of television that is produced by non-Community producers. Surely that should be left to the viewer to decide. Some time ago, when there was a difficulty in the Community's photocopier industry, it was solved by putting tariffs on Japanese imports. Again, the Community was saying that it would restrict competition in the Community market in order to restrict one Community producer and make it more difficult for people to import into the Community. The Community does not have a good record in respect of fortress Europe.

When the Minister replies to the debate, I hope that he will emphasise the British Government's commitment to that philosophy. Unfortunately, it is not a philosophy that is always shared by the Commission in Brussels, nor by the President of the Commission, who, as a good Socialist does not think too much of the consumer but is more concerned with the producer.

8.21 pm

Mr. William Powell (Corby) : The hon. Member for Gower (Mr. Wardell) and my hon. Friend the Minister reminded us that the subject for debate is developments in the European Community until 30 June this year. However, since then we have been overwhelmed by events that have made the real topic of discussion almost irrelevant to our proceedings.

Whatever the reason in the past for having twice-yearly debates reflecting upon developments that had finished, some time ago, I hope that this will be the last such debate that occurs in the House. I hope that in future we shall move to a system--the Select Committee on Procedure may have something to say on this in its

soon-to-be-published report--of twice-yearly debates taking place just before the European summit meetings so that hon. Members have an opportunity of looking forward to what those summit meetings might achieve rather than looking back upon events which may be in the dim and distant past.

The Select Committee on Procedure--of which I am a member--will shortly publish a major report which I commend to all hon. Members. It will produce at least some ways in which we can considerably improve the handling of European debates and legislation in the House. Those hon. Members who have referred to the inadequacies of the present procedures are absolutely

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right. The report will be a solid document and I hope that hon. Members will look at the evidence as well as the conclusions. During his speech so many hours ago, my hon. Friend the Minister referred to the French presidency. I do not wish to be critical of France ; far from it. Many of my hon. Friends know that I am an enthusiastic Francophile. I am used to negotiating with the French as my wife is French and it is something that I have to do every day. It is much easier than many hon. Members realise.

However, it has to be said that so far the French presidency has been disappointing. My hon. Friend the Minister referred to the success of the Spanish presidency in advancing the single market. That same praise could have been extended to the German presidency just over a year ago. However, the current presidency is not making a great deal of progress. The French still have time to redeem the position and I hope that they will. However, I fear that their single-minded determination to advance the Delors proposals has blinded them to the necessity of proceeding with the 1992 programme as quickly as possible.

I speak as one who has taken an interest in the reform of copyright law in the House. I regret the fact that progress is not being made in establishing the common copyright law for which we had hoped under the French presidency as fast as looked to be possible when the Spanish handed over the chairmanship of the Council of Ministers. The French appear to want us to join the exchange rate mechanism and appear to be surprised that we are not keen to be involved in that evolving new Community institution. When they express those thoughts, they do so in a rather resentful and critical way rather than in a way that woos us and tries to spell out how advantageous it would be to us if we were in the exchange rate mechanism. It has to be said that that is different from the traditional analysis of the way in which the French character operates when it is trying to get people onto its side. I hope that my remarks about the French presidency will be picked up by them and that they will try to redeem what is proving to be--this is not just my view--a rather disappointing presidency.

I want now to deal with checkpoint Charlie in the American sector of Berlin. Many hon. Members have visited checkpoint Charlie, some on a number of occasions. One of the places most worth visiting there is the museum standing close by. Some museums may be magnificent but essentially dead places recalling the past. There is nothing rich and magnificent about the museum at checkpoint Charlie. However, although it commemorates the dead, it lives ; it lives with fire--for freedom. At that museum is celebrated--I use that word deliberately--the 175 people murdered so that they could be free. They were murdered at the Berlin wall. I am amazed that so far during the discussion and with so much public comment made because of the exhilarating events in the past week, we have not taken the time to recall those who gave their lives, not only that they should be free but that others should be free as well. In the past week we have seen the realisation of a dream for which people gave their lives, not just in Berlin but along the length and breadth of the iron curtain from Stettin to Trieste. The other matter which is not commemorated but appears in the museum is the graphic map of the environs of the city of Berlin--east and west--and around it the

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disposition of Soviet armed forces. There are 380,000 men and many thousands of tanks and they are the best forces that the Soviet Union is able to deploy. The events of the past week have certainly made that level of deployment no longer necessary. One message which we should send from the House tonight to the President of the United States and the President of the Soviet Union when they meet in a week or two in Malta, is that all Europe will be expecting an agreement from them to lower the threshold of conventional weapons in both the East and the West.

President Bush has already made some notable proposals. Negotiations about them are taking place in Vienna. The very least that should come out of that meeting of the two presidents in the Mediterranean is a reduction in the enormous level of conventional armed forces in both East Germany and West Germany. As Mr. Gorbachev has always been prepared to accept what are called asymmetrical reductions, the size of the Soviet conventional forces is no longer appropriate to the political circumstances in East Germany, the Soviet sector of Germany.

A number of hon. Members have referred to what may or may not happen in eastern Europe in the coming weeks, months and years. The assumption is that these countries are moving towards democracy. May I stress with every sinew in my body that I hope that they are moving towards democracy. At this stage, however, we should make no assumptions. Eastern Europe is an economic disaster area. The hon. Member for Inverness, Nairn and Lochaber (Sir R. Johnston) referred to the state of the East German economy, with subsidies holding food and house prices down to 1949 levels and further subsidies holding transport prices down to pre-war levels. The right hon. Member for Llanelli (Mr. Davies) referred to the fact that the ostmark would be no longer a sustainable currency. However, what has happened in eastern Europe for a whole generation amounts to no more than a suspension of the laws of arithmetic. Prices have been held down to levels that no longer reflect economic reality.

The changes that are most likely to come about in eastern Europe are surely these : prices will rise, and they are likely to rise faster than wages and salaries. If they do not, it is extremely likely that the countries of eastern Europe will make no economic progress. If prices rise sharply but wages and salaries do not rise so fast, that will be a recipe for considerable social conflict. Inflation and social conflict are the most likely outcome of economic developments in eastern Europe during the next few years. Democracy may emerge out of that. Let us all hope so. However, dictatorship of one sort or another is another possible outcome. It would be a very bleak outcome indeed for eastern Europe. We in the West must do all that we can to ensure that that is not the final outcome. It cannot all be done within the space of a week, by means of an instant reaction to these exhilarating events. The West will have to provide capital, education, accountants, managers--just about everything. I have had the opportunity to visit three of those countries during the last few months. Anyone else who has been there, too, will know just how deficient they are in all the elementary things that are needed to sustain economic life. We must

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all hope that the most optimistic scenario is the one that eventually emerges, but there is a real danger that that may not happen.

The events of the last week cannot now be reversed without shattering consequences for the whole of the continent of Europe. It is still possible that the Red Army could seek to impose law and order in eastern Europe, but if it did it would shatter everything. Eastern Europe would be unable to make the economic advances that it seeks to make. The West has a most profound interest in ensuring that that is not the outcome of future Soviet policy. If, however, the East German regime were to bring down the iron curtain again, the pressure to leave East Germany would be even greater and a gasket would blow. Without question, there would be fighting in the streets in East Germany.

We face very difficult, very testing times. We must hope for the best and most optimistic outcome, but we must be prepared to accept that that may not be the final outcome.

8.35 pm

Mr. Tony Marlow (Northampton, North) : My hon. Friend the Member for Corby (Mr. Powell) is right to be cautious, but he is probably even more right to be hopeful.

On 27 April I asked my right hon. Friend the Prime Minister the following question :

"If my right hon. Friend were the Chancellor of the West German Republic, would her main priority not be the unification of Germany and further traditional moves towards involvement with eastern Europe? What does this mean not only for NATO, but for the European Community?"--[ Official Report, 27 April 1989 ; Vol. 151, c. 1088.] My right hon. Friend, quite naturally in those circumstances, was unable to answer the question. I raise it now, six or seven months later, just to point out that there are some who are less fanatic and less myopic in our views about Europe and who have seen, early, the strategic direction in which European developments are likely to take place.

Since January to June this year, the political earth's crust of our continent has been convulsed. The future political geology of Europe is as yet unknown, but one thing is certain : that the landscape has changed out of all recognition. Like the rise and fall of the Roman empire, the EEC-- from January to June of this year--is history and it is scarcely more relevant than the Roman empire as a means of seeking the future well-being of Europe. Obviously it would be rash to rule out a takeover by the marshals in Moscow. As my hon. Friend has just said, we must fully maintain our defence posture until we can safely negotiate lower levels of defence and new treaties. However, we must make plans for the development of what Mikhail Gorbachev rightly calls the European home under the more likely conditions of military detente.

During the last fortnight the people of East Germany have diverted the mainstream of the European river into a more exciting, a more positive and a very different course. If I may caution the hon. Member for Inverness, Nairn and Lochaber (Sir R. Johnston), anyone who relies on the old maps and charts is inviting the political equivalent of a disaster of titanic proportions.

Much is unpredicatable, but there are some certainties and they should be defined. First, there will be a united Germany--whether a federal Germany or a confederation it is too early to say. The extent of that united Germany is unknown. It is too early to define. Its role is too early to

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define. Its relationship with Austria and the other eastern European countries is also too early to define. One thing, however, is certain : that there will be a larger and more powerful German entity. The fourth Reich--if I can simmer down those who get excited by the words--means commonwealth. The fourth Reich of the tabloids is at hand.

Secondly, the defence structures of Europe are bound to change radically. We are not yet in a position to predict the German position in that defence structure, but what we can say now is that Germany herself will make that decision.

Thirdly, the nature of the European Community is about to change radically. It was conceived as an economic and political grouping within western Europe, with its own internal balance of power. Of the 12 nations, four are roughly of the same size, population and importance. However, the new Europe, covering the whole continent, will be a Europe in which one country is more equal and predominant than any of the others.

The old blueprints of the clerks of the European Commission are about as relevant to the future of Europe as bows and arrows are to the future of warfare. The countries of eastern Europe will develop their own democracies, and naturally, at the same time they will be concerned to redevelop and rediscover their own identities. My right hon. Friend the Prime Minister is quite right. After two generations of totalitarian submergence they will not substitute the central control of Moscow with that of Brussels. Having taken power from their gaolers it is hardly likely that the people of Dresden will hastily hand it back to the beampters of the Berlaymont.

The feeling persists among a shrinking minority of antediluvian federalist dinosaurs who pay court to the ideas of my right hon. Friend the Member for Old Bexley and Sidcup (Mr. Heath) that nothing has happened and that the world is the same--still flat. Their champion is President Mitterrand of France who nai"vely believes that locking the Federal Republic into an ever -tightening EEC will somehow prevent the unification of Germany, and if not, will ensure that what takes place is acceptable to Mr. Delors. They would have slightly less chance of success imprisoning a mature eagle in a soggy cardboard box.

Sir Russell Johnston : Will the hon. Gentleman give way?

Mr. Marlow : I am sorry but other hon. Members wish to speak.

Sir Russell Johnston : Palaeolithic poppycock.

Mr. Marlow : The hon. Gentleman said, "Palaeolithic poppycock." I reject that totally.

Germany will unite and it will be unified in a manner which is suited and satisfactory to the Germans--not to France and still less to Brussels. As Germany unites, it will progressively develop its penumbra of political and economic power into eastern Europe. As the Gulliver of German manufacturing industry ruptures the Lilliputian constraints of French policy, France may discover--I hope not too late--the traditional attractions of the balance of power--the economic balance of power rather than the military balance of power. Perhaps when the French discover that, they will discover that the country they need most is not Germany but the United Kingdom.

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Hopefully, their short-term manic obsession with a federal Europe will not lead them to blow up too many bridges which should be maintained against future needs.

Germany, while pursuing the rhetoric of stability and status quo, will quite naturally seek to advance her own interests. She will talk of Delors, but does anyone really believe that she will put European unity ahead of Germany? Would we do that in those circumstances? Given the strategic strength of the German position and the German economy, the only way in which the cup of success can be dashed from her lips would be through the spread of alarm. So it is not surprising that every statement from the Federal Republic will be designed to lessen that alarm. Even so, the reality of German interests will be the driving force of German policy.

The Germans have a massive prize within their grasp--the economic domination of Europe, the rebuilding of German pride and prestige and the final absolution from the guilt of 1939-45. How will that be achieved? Massive aid will pour into Prussia, Saxony and the rest of central Europe, financing the purchase of West German capital goods, technology, equipment and investment. East European industries will develop rapidly further in the interests of the countries involved and increasing still further the dominance of German manufacturing and the German economy within Europe.

Naturally, the cornucopia of aid to the East will drain the reservoir of German financial generosity available to the Common Market and at the same time German interest in and commitment to the ever-burgeoning social pressures and financial extravagances of the EEC will decline.

Whatever Germany says, she will be slow on Delors and monetary union. Whatever Germany says, she will be resentful of the power-centralising ambition of Brussels bureaucracy. Whatever Germany says, she will be impatient with the unnecessary development of yesterday's European institutions.

The future is exciting but uncertain. At this stage, all we can do is seek objectives, not set out detailed policies. I am amazed and not a little disturbed to read that this weekend the Commission had a brainstorming session on how to bring the rest of Europe under its control. This is a matter for elected Governments not clerks, for democracy and not for bureaucracy. I understand that the Commission may feel that its vested interests are threatened and I rejoice in that. Never again should so much power--including the power to initiate policies--be passed to bureaucrats.

The new Europe will be a democratic Europe, not a bureaucratic Europe. There will be a new Europe without barriers to trade but a Europe of nations, each country with its own identity, its own democratic institutions and its own economic and social priorities. It will be a Europe to which all nations from the Atlantic to the Urals are welcome. Federal Europe is dead. Long live Europe. 8.45 pm

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