House of Commons Hansard Debates for 19 Oct 1990

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As was pointed out by my hon. Friend the Member for Hamilton (Mr. Robertson), 12 months ago our own Prime Minister was turning her face against the inevitable--as she does so often with regard to developments in Europe. In a sense, I do not blame her : she did not see what was coming any more than did the politicians of either east or west. Now that it has come, however, we must ensure that we take the maximum advantage of it.

A united Germany will, of course, become a super-state ; indeed, it is a super-state already, because of the enormous economic power of West Germany. The 77 million people in the united German economy make it one of the most successful in the world. Certainly it is the only economy in Europe that could have sustained the absorption of a run-down country like the GDR. Imagine the economic consequences for Britain if it tried to absorb such a country, economically and politically : we simply would not have the economic strength. The figures for the cost of unification seem to be enormous. Of course, they cannot be regarded as wholly accurate ; anyone who must provide a range of costs over 10 years running from $550 billion to $700 billion can clearly make only an intelligent guess. But, with the cost of the pollution clean-up in the eastern part of Germany estimated at $140 billion, it is clear that we are talking serious money here. Only one European economy could possibly even contemplate such costs without rushing into blind panic. Certainly, we could not have done it in this country.

When the Minister pointed out the cost to the EEC and to the United Kingdom --my hon. Friend the Member for Bolsover (Mr. Skinner) was concerned to quiz him--we realised that, because of the great contribution that will be made by the West German people to unification, the costs to the EEC and to the United Kingdom are minimal.

One understands that there is a great deal of anti-German sentiment in this country and in the House. I am disappointed that the right hon. Member for Cirencester and Tewkesbury (Mr. Ridley) has not made a much-heralded appearance today. Many hon. Members would have liked to have heard him speak in the unaccustomed position of a Back-Bench Member. Perhaps his speech would have been more considered than his interview in The Spectator. The right hon. Gentleman enunciates something--there is anti-German feeling in this country ; there is unease. We cannot really blame the people of this country. The second world war was not that long ago. It is still well within living memory. Many people come to my advice surgery and point out that they fought for this country during the war. They are now asking about what has happened to the successes that we are supposed to have achieved in the past 11 years of Thatcherism. They are asking, "Why haven't I got a decent pension on which to live?" They point to the success of Germany and say, "We are supposed to have defeated Germany in the last war, but it is undoubtedly true that the Germans have won the peace."

Hon. Members always pay attention to the enormous power of the West German mark. Who created the West German mark? It was France, the United States of America and the United Kingdom. We instituted the deutschmark in 1948. It is interesting to see what the exchange rate for the deutschmark was 1948. In 1948 we

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could have got DM13.4 to the pound. Now in 1990, if we are lucky we can get about DM2.9 to the pound. Over those years our inflation has eroded our wealth, but West German inflation has more or less stayed at about 3 per cent. That is economic success. That is the sort of success that we should want for this country.

The Prime Minister talks about the lessons that Thatcherism has taught the Germans or the rest of eastern Europe. Pardon me for smiling, but that is an absolute farce. I have never known any senior politician to delude herself so often and so regularly as the Prime Minister does with regard to the developments of Europe and the power of the West German economy.

Again referring to anti-German sentiment, one must understand that there is no longer a military threat from the Germans. There is a vast economic threat if we go our separate ways, but there is no military threat. The only thing in my character that I find anti-German at the moment is that, as we all know, they manage to get the best places on the beach first. That also says something about their outlook on life generally. They are more efficient than we are, even when they are on holiday. That is another tribute to them.

Dr. Godman : They get up earlier.

Mr. Banks : They have always been getting up earlier. That is why they have achieved so much economic success. While we are still slumbering in our beds, they are getting the best places on the beach. They are creating the best products that are now flooding our markets. We are finding it very difficult, not to say impossible, to compete economically with them.

There is no doubt that Germany will make unification work. In 10 years--it may be a little longer, but it will be about 10 years--the eastern part of Germany will match the western part of Germany in terms of economic parity. Then we really will face the most formidable economic power on the planet.

I have already mentioned costs. It is interesting to see how the German Government intend to pay the costs. They are vast. I understand that they are prepared to allow the federal budget deficit to grow. Chancellor Kohl has even talked about the necessity, if need be, to raise taxes. One thing about Chancellor Kohl is that he is prepared to face political realities honestly and openly. We would all pay tribute to him for that, despite the fact that Opposition Members do not share his political outlook.

The other aspect of this debate which I want to refer to is the general criticism and condemnation of the old German Democratic Republic. The hon. Member for Mid-Kent referred to Trabants. I accept that Trabants make even Ladas look an attractive proposition. However, the concept was good, although, perhaps, the execution was not so successful. The concept of not having unnecessary competition in an area like motor vehicle manufacture might be something that we will all accept as normal in an advanced world, perhaps in 100 years' time. There will be other more necessary areas of expenditure where such resources will be needed. It does not matter if we are all driving around in cars that look the same if the car is efficient and gets us to our destination. Hon. Members have referred to choice, but when choice is provided only at enormous economic and social cost, that cannot be the kind of choice we want.

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Mr. Rowe : The hon. Gentleman is making a theoretically very attractive point. However, modern motor vehicles are more efficient in their use of oil and petrol and also safer to drive than ever before and I believe that that is a direct consequence of manufacturers competing against each other.

Mr. Banks : That does not necessarily follow, but we certainly always want a product to be improved. As I have said, the concept of the Trabant had something to commend it, but we must link concept with execution. I did not mean to spend so much time talking about Trabants. There are many things that I do not want to do in this life and one of them is to become a Trabant salesperson. However, the Trabant was not a bad concept.

The GDR has taken a fair old kicking today. However, not everything in the GDR was worthless. The social guarantees available in the GDR constitution are worthy of comment, as are the welfare benefits and women's rights. I visited the GDR and witnessed the care and attention given to young people in nursery schools and I met a 108-year-old woman in an excellent old people's home. There was no homelessness in the GDR. Perhaps much of the housing was at a level that Members of Parliament would not be prepared to accept, but when I look round my constituency or around London as a whole, I see a lot of people who would be grateful to be driving a Trabant home to an East German flat.

Ms. Diane Abbott (Hackney, North and Stoke Newington) : I visited East Berlin in June. Although the people there were very relieved to be free of the tyranny of the secret police, the quality of the public housing there was far superior to what many of my unfortunate constituents have to endure in Hackney. The women I saw were very concerned about their rights to abortions under the new regime. Not everything about the old GDR was bad.

Mr. Banks : I am grateful that my hon. Friend the Member for Hackney, North and Stoke Newington (Ms. Abbott) has joined me in putting that on the record. There has been a tendency in this debate to ignore everything in East Germany, disregard it and say that everything there was rubbish. That is not true. It is important to state that the East Germans will gain a great deal in terms of future prosperity, choice and consumer goods. However, they will also lose something. I hope that disillusionment does not set in too soon. Unification is good because the German economy is so strong and there is so much homogeneity. The polarisation that exists in this country does not exist there. I believe that they will be able to get a mix which combines the best of the consumerism of western Germany with some of the better aspects of the welfare provision of eastern Germany.

Mr. Spearing : Does my hon. Friend agree that it is vital to get the best of the experience of all nations? My hon. Friend will be aware that York House in Plaistow in Newham, a charity for elderly people which has run since 1925, must now close because the Government will not increase the residential homes allowance. Were old people ever turned out of charitable homes in East Germany?

Mr. Banks : My hon. Friend mentions yet more of the benefits of Thatcherism, rather than the sort of arrangements that the people of Germany, East or West, will be prepared to accept. We in this country have a lot to

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learn from the experiences of East and West Germany. In the end, unification represents a victory for consumerism. Markism has replaced Marxism. The great German mark has been the driving force behind unification.

As my hon. Friend the Member for Hamilton said, by the December elections the position will have shaken down in Germany and people will make a cooler judgment of future possibilities and a future direction. If that does not happen then, it will happen at the election after that. The ability to combine the economic efficiency of West Germany with the social justice of certain aspects of East Germany will represent a significant victory for the united German people. I hope that the SPD will win the December elections. One cannot detract from Chancellor Kohl's achievements. He has achieved a major historic role in all of this and he will be commented on favourably when history comes to be written. As my hon. Friend the Member for Hamilton said, one does not share his political views and outlook, but one approves of his style. I read his comment that Germany does not seek the leading role in Europe, but will live up to her responsibilities. That non-arrogant, diplomatic style contrasts with the shrill narrow tones of the narrow-minded bigot who is temporarily Prime Minister of this country, and makes me realise the great gulf between Great Britain and united Germany. It may be all right for Helmut Kohl to adopt a position of humility and to speak of a united Germany not seeking the leading role, but it will be difficult for Germany to avoid playing the leading role in Europe. The integration of the GDR brings a complexity of special relationships between united Germany and eastern Europe. A unified Germany is undoubtedly pivotal to east-west relations.

The Soviets have now warmly welcomed unification. Vladimir Shenayev, the deputy director of the Soviet Institute of Europe said : "We trust Germany. We have a united, democratic Germany that is actively disarming itself. Germany is the Soviet Union's largest trading partner--15 per cent. of foreign trade turnover will go through Germany--more than the United States, Britain and Italy combined."

That is the strength of and power behind the relationship between united Germany and the Soviet Union. We ignore it at our peril. Mr. Shenayev talked about a unified Germany disarming itself. Because of the fears of many people, not only in this country but in France and elsewhere in Europe, there is an agreement to reduce the combined armed forces from 590,000 to 370,000 over the next four years. We have before us the prospect of 360,000 Soviet troops based in the eastern part of Germany leaving by 1994. That gives us a wonderful opportunity to ensure that we get all our British troops out of a united Germany. I understand that the Government aim to achieve that. I hope that when the Minister replies he will give us a clear assurance and perhaps a date for when British Army of the Rhine forces will be out of a united Germany.

I should like to see a unified Germany declared a nuclear-free zone and all nuclear weapons off German soil. That is another issue which will be raised in the December elections. According to opinion polls, a non-nuclear Germany would find favour with the great majority of German people.

There is now a united Germany standing at the crossroads of Europe with a Moscow-Berlin-Washington axis as the vital one linking east and west. It worries many

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people that that enormous economic power will act as a gravitational force of irresistible political strength--if there is economic power, there is political power--that that enormous eco- political structure will sit in Europe and its gravitational force will distort economies all around. That worries many people in this country and beyond. The only way that the United Kingdom can influence such an axis, and such economic and political power, is through European institutions-- there is no other way.

I know that my hon. Friend the Member for Newham, South (Mr. Spearing) might disagree with some of the things I am about to say, but I believe them. In many ways my attitude on Europe has changed in the Gorbachev period. I am right to have changed my position because circumstances have changed so dramatically and for a politician to stand pat on a previous position without attempting to modify it in view of the momentous world changes would mean that he or she would probably be left behind in a major way.

Chancellor Kohl made an interesting statement on French television on Wednesday. Many people thought that the economic problems of unification would mean that enthusiasm for economic and monetary union western Germany would definitely wane. That has not happened. In his statement on television Chancellor Kohl made it quite clear that he agreed with the Dutch proposal that stage 2 could be achieved by January 1994. When the French and Germans agree on something such as that, it means that it will happen. It does not matter what the Prime Minister says, because she is increasingly irrelevant in all of it. I am sure that there will be some welcome among some Conservative Members for what Chancellor Kohl said ; I am sure that the deputy Prime Minister and the Foreign Secretary will be quite happy about it and, in his quieter and more honest moments--those spent away from the Prime Minister--the Chancellor of the Exchequer will also welcome the news from Germany and Chancellor Kohl's statement.

We cannot stand aside, although some are determined to try to do so. A new club has been announced. I have a document stating : "Tebbit joins new European club."

That is no recommendation for membership. The document continues : "The right hon. Member for Chingford is joining with the right hon. Member for Cirencester and Tewkesbury to form a new club." The club has no name yet but it has been formed to combat the insidious influences of Mr. Delors so perhaps it will be called, "Up yours, Delors" or something like that. It is to be a dining club and I should like to see some of its menus--obviously there will be no sauerkraut or French wines, it will be all bangers and chips. The club is pathetic and will not mean anything.

One of the club's new members, Mr. Alan Sked, said :

"This will be a massive campaign on the issue to drive a wedge between one European country and another."

That is a throwback. There is no way in which this country will stand in the way of economic and monetary union, which is an inevitability and became so as soon as Helmut Kohl and President Mitterrand agreed that it was so.

We cannot live in competition with the deutschmark. The pound sterling cannot survive in competition with the

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deutschmark, which is the powerhouse of Europe. The only way that we can influence events in a united Germany, whether economic or political events, will be through pan-European institutions. We can survive in an expanding Europe only in junior partnership with the united Germany.

Mr. Spearing : I am grateful to my hon. Friend, who is making a good, serious and important speech, expressing in the latter part of it the views of many of my hon. Friends. However, does not he agree that the basic and fundamental object is not in irrelevant dining clubs--I agree with him- -but in not being left behind? The important question is whether we are going ahead in the right direction. There is all the difference between a true co-operative movement in Europe, which my hon. Friend wants--and I want co-operation--and political union which, in the words of the former Chancellor of the Exchequer, the right hon. Member for Blaby (Mr. Lawson), means one currency, one nation. Therein lies an enormous danger.

Mr. Banks : My hon. Friend thinks of it as a danger ; I think of it as an exciting prospect. I grant that it is fraught with danger, but nothing momentous can be achieved without an element of danger. What is the hang-up about the nation state? The United Kingdom is made up of constituent countries, which themselves were formedfrom smaller principalities, kingdoms and states. Notwithstanding what is happening following the immediate break-up of the Soviet empire, the movement is definitely towards a larger Europe. I do not find anything frightening about the idea of a European Government, a European president, a European Prime Minister, a European Chancellor, a European bank and other European democratic institutions such as a European Parliament.

The days of this Parliament are numbered because we are surrendering national sovereignty. This place will become rather like a regional town hall. Those are the developments of the future and I am not frightened of them. I accept that there are dangers and that we should be wary, but it is the way of the future. Obviously, I am not someone given to good judgment, and I could be wrong, but having seen and thought about what is happening, I think that historically it is the way that this country will go. It will have to do so because of the momentous events that have occurred. Without Mr. Gorbachev, none of this would have happened, none of the discussions would have taken place and none of the possibilities would have been available.

My attitude has changed because of Mr. Gorbachev's concept of a common European house--a Europe that stretches from the Atlantic to the Urals. It is such an exciting concept that we must go for broke on it. The opportunity peacefully to redraw the map of Europe for the first time is a gift that former politicians would have given everything to achieve. Some, like Hitler, tried through war, but it did not work. We now have an opportunity to achieve it through peaceful means.

Although I understand the problems, the concept of a federal European state involving both east and west Europe captures the imagination and the mood of the country and beyond. I only wish that my hon. Friend the Member for Bolsover were here today. I know that I would disappoint him greatly. However, he is an avid

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reader of Hansard , so no doubt retribution will speedily follow on Monday when he reads my speech. Although I have great respect for my hon. Friend's views--and I do not say that in the hope that he does not totally brutalise me--he is wrong in his view about Europe and the developments currently taking place.

I am afraid that I have spoken for rather longer than I intended, having been diverted by my hon. Friend the Member for Newham, South, with whom I am sure I will have many opportunities to discuss the issue. For my money, I believe that German unification has given a major boost to the possibility of the greater Europe that I have described, and I wholeheartedly commend it.

1.14 pm

Sir Alan Glyn (Windsor and Maidenhead) : It is not often that I agree with the hon. Member for Newham, North-West (Mr. Banks), but I agree with him about the role played by Mr. Gorbachev. However, I must also pay tribute--the hon. Gentleman will not agree with me--to my right hon. Friend the Prime Minister, who lit the torch of freedom when she visited Poland. I agree with the hon. Gentleman that not everything in the German Democratic Republic was bad, but I am sure that he will agree that it was an oppressive regime.

Those of us who knew Europe before the last war, and who then saw its artificial break-up as a result of the Yalta conference, would never have believed that its reunification could take place so quickly. Again, we must pay tribute for that to Mr. Gorbachev and my hon. Friend the Prime Minister.

Reunification has wide implications--some good, some bad. It will cost a great deal of money, and although there is a great pool of labour in East Germany, its industry has broken down, and it will take about 10 years for everything to be sorted out.

My right hon. Friend the Member for Guildford (Mr. Howell) pointed out that Germany is paying not only for its own reconstruction but for Soviet troops in East Germany to be withdrawn and rehoused in the Soviet Union, wherever the Soviets may choose. That has two advantages. It gets the troops out of Germany quickly, and at a very low price. Rather than pay for them to remain there, it is just as well to get them out of the way altogether. It is a miracle that Germany is able to do that without destroying its own economy. I was worried that, economically, reunification would destroy Germany, but instead it seems likely to become one of the most powerful economic units in Europe.

There is no point in paying tribute to the people who have made reunification possible. Instead, we must ask ourselves what role they are to play in the future. May we expect them to neglect a military role, and instead to spend money on rehabilitating a combined Germany--as was done after the last war? It seems possible that Germany can do the same again.

Shall we stop at Germany, or shall we also welcome into Europe countries such as Czechoslovakia and Hungary? That may be a good idea, with the proviso that those countries attain democracy first. Subject only to that, we should surely welcome them into a united Europe that might eventually include even Russia. There is no reason why that should not happen. There are immense opportunities for a united Europe.

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If all that occurs, what are we to do with the NATO troops who would be withdrawn from Europe? Given the experience of the Gulf crisis, the right thing might be to create an international force, so that the resources made available as a consequence of reunification throughout Europe could be used to deal with any situation that arose. It might not even be a NATO force, because NATO, too, might lose some of its significance. Nevertheless, it would be capable of bringing peace to the middle east, the Gulf, South America or anywhere else in the world. However, we must realise that many nations are developing weapons that are not exactly nice--nuclear and chemical weapons. We must retain sufficient nuclear capacity to be able to say to them, "Look here, it's no good your trying this on, because we have a stronger force and you will be wiped out." That argument kept the peace for 40 years and it must be maintained. No doubt, a strong Germany after reunification will be a strong competitor, but we have to live with the new Germany, accept it and work with it. We must try to get Germany interested, not merely in its own affairs but in world peace. East and West Germany suffered equally in two wars, so that would not be too much to ask now. Germany was built up by America, with the help of other nations. It has survived two wars and it is time that it helped an international force to maintain peace in the rest of the world.

I look towards a united Germany to fulfil that commitment to world peace not merely with weapons and armies but with money. I hope that it will assume such responsibilities when unification is complete, or should I say when reconstruction has finished. I agree that it may take 10 years, but during that time Germany should not neglect its contribution to world peace and it should be reminded of that. 1.22 pm

Mr. John Browne (Winchester) : First, I must declare that I have financial interests that could be affected by German reunification. To a large extent, German reunification is the result of the drive, wish and initiative of the German people. It is a just and great event and the stage for it was set by Mr. Gorbachev. He did so in response to the great political fortitude shown by the United States, Great Britain and by our NATO allies. He had to meet the fortitude of the western nations with a response, so he issued the world with a new challenge. Unlike most challenges, Mr. Gorbachev's was not that of war but of peace. He proposed to change the nature of peace itself, from one based on deterrence to one based on detente. He swapped the threat of mutual destruction for the opportunity and hope of mutual trust.

Gorbachev's new challenge has successfully removed the Soviet bogeymen from the world strategic map. As a consequence, Mr. Gorbachev has achieved a number of great things.

First, he has heralded the end of the second world war--I find it hard to remember that the two losers of the hot part of that war were Japan and Germany.

Secondly, Mr. Gorbachev has catapulted Europe back into the centre of the world's strategic political stage. but what sort of Europe will it be, and how far will it extend? Will it end in Berlin or in Moscow?

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Thirdly, Mr. Gorbachev has exposed a great change in the super-power structures of the world. In 1945 Great Britain was replaced as a world super-power by Russia. Today, 45 years later, Russia itself has been replaced as a super-power. The big question is, by whom? Will it be replaced by a new Europe or a new Germany? On 3 October we saw the birth of a new Germany. Some would say that we also saw the birth of a new German empire--this time, an empire that will be pushed forward not by force of arms, represented by the bayonet, but by economic measures, represented by the deutschmark. Germany is a very great nation of about 100 million people. Even the Romans failed to conquer the Germanic tribes. Much of the praetorian guard of the Roman emperors consisted of Germans. For centuries the Teutonic knights protected Europe. We have seen Germany take on the might of the world in both industrial and military ways. The German economic miracle, following 1945, was a testimony to the strength and vitality of the German peoples. All this, in my view, portends even greater German growth in the years ahead, as a fully fledged member of the European Community, lying, as it does, adjacent to the vast new markets of central Europe and of the Soviet Union. Germany has re-emerged as a major national force in Europe and in the world. The vital question for all of us in Europe is how the new Germany can best be assimilated into Europe, in the best interests of Europe in general. It is wrong to think--as, I believe, our French colleagues think--in terms of trying to lock Germany into the EEC. I believe that Germany will not for long be locked into anything. We are, therefore, at a fundamental crossroads in the design of our new Europe.

In essence, there are three major options. The first is the EEC--the European Economic Community of sovereign member states. The second is the EC, as it is now called, or the European Community of a federal European state. The third is a Europe dominated by one single member state.

With such choices, I think that it can truly be said that the times that we now live in are indeed times of legend. Now, we must decide whether Europe will move forward by means of revolution or by means of evolution. At the heart of the answer will lie our policies towards European monetary union.

These are times of great change, of enormous hope and of great uncertainty. One may almost characterise them as the fog of sudden peace. At such a time of uncertainty we are being asked to make a dramatic decision about something that is very dear to all our hearts : the future of our national sovereignty, the future of our way of life.

The hon. Member for Newham, North-West (Mr. Banks), who is not now in the Chamber, mentioned that we were going to surrender our sovereignty and that we must go for broke. I do not believe that the British people will readily accept that argument. National sovereignty is always a vital and very emotional issue. It is particularly important and emotional when it comes to jobs and the future employment of British people, and it is always important and emotional when it comes to the problem of mass immigration.

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I have the privilege of being the rapporteur of the civilian affairs committee of the North Atlantic Assembly. We have carried out some interesting studies in the human rights context both into the problem of the movement of peoples within central Europe as a result of the breakdown of the Soviet empire and into the enormous problems that face Europe with regard to mass immigration, particularly from the Soviet Union, where tens of millions of people may elect to live in the richer, western part of Europe. It is a major problem which must be faced by all EEC members.

I have no doubt that European monetary union is the back door to the creation of a federal European state. European monetary union, as a currency bloc, would effectively be dominated by the deutschmark. The exchange rate mechanism of the European monetary system is a major step towards economic and monetary union and a single European currency. Proponents of the ERM and of European monetary union argue that it would give our economy more financial discipline. Some Labour Members might argue that there is too much financial discipline already.

The ERM and European monetary union are about sovereignty. I say yes to financial disciplines encouraged by economic competition among member states of the EEC, but very definitely no to financial disciplines imposed by a federal European state. The British people will not like it, and furthermore they will not accept it. Economic domination of Europe by the deutschmark would have major implications for British industry, employment and our way of life. For decades, following the second world war, our economy almost died. Indeed, today our economy is still in a state of convalescence. It is still prone to relapse into inflation or even stagflation. As it is a convalescent economy, it is the duty of the Government to ensure that our economic health is achieved fully before--I stress "before"--taking on the full unfettered gale of German economic competition. Let there be no doubt that the exchange rate mechanism, leading to European monetary union, will open the gates wide to the full gale force of German economic competition.

We still need time, which is of the greatest importance in continuing to ensure that we achieve economic health and that our economy is strong enough to be able to adapt to the competition that we shall face from Germany--adapt so that Britain will survive and be economically strong. If we enter the exchange rate mechanism and go for monetary union before we are ready, the implications will be serious and damaging for British companies, British industries, British employment and for the British people. We need time for evolution rather than revolution. It is wrong to say that we must go for broke. It is too big a gamble, with the jobs and future way of life of our people at stake.

The speed of our early entry into the European exchange rate mechanism worried me, and it continues to worry me seriously. What particularly worries me is that it appears that the Government were pushed into early membership of the ERM and, therefore, too early down the road to European monetary union and a single European currency dominated by the deutschmark.

As I said earlier, on 3 October we saw not just the birth of a new Germany but the birth of a new super-power. Before it is too late, we must ensure that the financial disciplines that are accepted by our Government as a result

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of competition in a European Economic Community of sovereign states, a true European common market, do not mean accepting the imposed financial disciplines of a single European currency dominated by the deutschmark.

The key question before us all is how best to assimilate the might of the new Germany in the best interests of Europe in general. I therefore welcome this debate, and I thank you, Madam Deputy Speaker, for calling me.

1.35 pm

Mr. James Paice (Cambridgeshire, South-East) : I do not think that anyone can over-emphasise the importance of this debate and our incredulity at having it ; nor do I think that anyone could have envisaged, even a year ago, that we should already have moved to this momentous stage. Like many hon. Members, I have visited both East and West Germany several times. I was fortunate to visit East Germany, just prior to my election to the House, with a number of other individuals who are now my colleagues here. At that time, we would have no truck with the belief that German unification was on the political horizon. The same group went back only three weeks ago to see the incredible changes that have taken place in East Germany. What we saw will remain with us for the rest of our lives. We saw the end of the inhumanity that was the Berlin wall. We saw the change and felt the hope in the air in East Germany and the way that churches which had not been touched since the day they were destroyed by our bombers are being restored. All that is beginning to happen because of the end of the Berlin wall.

It is important to recall that the revolution in the whole of eastern Europe has been achieved largely, with the sad exception of Romania, without bloodshed. It is very different from the revolution that began it-- the Bolshevik revolution, which cost 5.5 million Russian lives. I am sorry that the hon. Member for Hamilton (Mr. Robertson) has left the Chamber. In response to my hon. Friend the Member for Mid-Kent (Mr. Rowe), the hon. Gentleman asserted that socialism and communism were not the same. One cannot forget that at the time of the Bolshevik revolution, when Trotsky's armies were in retreat and falling back to Moscow in a last-ditch stand, the British Labour party pushed Lloyd George to abandon Churchill's support for White Russia. At the very time when that revolution could have been stopped, we failed. I am not saying that the Labour party is only to blame but, as much as anyone, it must share some responsibility for the tide of communism that then engulfed so much of the world. There is now an opportunity, as part of German unification and because of the trend of the past few years, to redraw the economic and political map of Europe and, indeed, of parts of Asia. We now have to address the future of Europe as it is affected by German unification. I was interested to listen to the hon. Member for Newham, North-West (Mr. Banks), and I am sorry that he has left the Chamber. His speeches are often spoilt by too much humour, but this time he obviously made a speech from the heart. Although I did not agree with some aspects, the hon. Gentleman gave an interesting and sound perspective of one way in which the future of Europe could develop. Several hon. Members referred to the effect on the United Kingdom economy. There are those who believe that the best way to prevent Germany becoming over- dominant is in some way to handicap it. That is no

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way forward. The way to ensure that Germany does not become over-dominant--let us not forget that it starts with a fairly large handicap because of the immense problems associated with the GDR--is for us to get our act together and for other countries to build their economies into a form by which they can compete effectively with Germany. That is the surest way of having a long-term assurance against over-dominance by any economy.

There is no doubt that the German people want to expunge their past. They would like to strike the history of this century out of the books, which is a highly respectable attitude for them to take. It is reflected in their anxiety to demonstrate their commitment to peace, to democracy and to the rest of the west, and in their determination and enthusiasm for the pursuit of European political union. From their perspective, that is a highly respectable and understandable position. However, despite my respect for them, I believe that we should not all rapidly embrace that perspective. When I have discussed these matters with some of my German friends, I have found it difficult to accept their unwillingness to look favourably towards a fairly rapid assimilation of the German Democratic Republic's former trading partners in eastern Europe. We must work to assimilate them into the European Community as fast as we can. I know that there are worries about the state of their democracies, but I suggest that this is a chicken and egg problem. Which comes first? Is it a fully stable democracy, or should we assimilate those countries quickly and help them to develop and then stabilise that democracy?

We were quick to take on board Spain, Portugal and Greece as they came out of the grips of one form of dictatorship and I do not see why we cannot repeat that with the countries of eastern Europe. The development of their democracies would be one of the major benefits of their joining the Community and it would also provide them with a great opportunity to develop the capitalist market economy, which is now recognised as the only route to lead to prosperity and to proper care and attention for the environment.

When one sees, as I saw only three weeks ago, some of the incredible environmental problems, with lignite pollution and mile after mile of chemical and gas plants, some of which are unmodernised since the days when they produced Hitler's Zyklon B gas, one can understand the enormity of the challenge, which can be paid for only by the wealth created out of a market economy.

We must not forget that half the population of the GDR does not recall the war. People of my age or younger, born after the second world war, have no memories of anything other than a

communist-dominated economy. They have had the wonderful opportunity to rejoin the Federal Republic and to become part of a Germany that is again united. That opportunity does not exist in the same way for the other peoples of eastern Europe, but that does not mean that we should not set out to create a similar opportunity as early as we can.

The papers that we are discussing today deal with the immediate problems, but we need also to deal with the problem of those adjoining nations. The association agreements produced by the Commission in September are a major stepping stone towards European Community membership by Poland, by Hungary, by Czechoslovakia and by the rest. The agreements refer to the approximation

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of the laws, to the removal of customs barriers and to the free movement of people. They are clearly designed to make the final stage so much easier, although they are not a reason for speeding up the cause of political unity in the European Community.

We must not forget that the Delors proposals were produced at a time when today's debate could not have been foreseen and that they are now outdated. They need to be binned and we must start to think again about how we should now draw the political map of Europe to encourage every nation to be part of a brotherhood that allows economies and national cultures to develop in a way that ensures developing peace and prosperity.

Before we discuss political union any further I want to draw a distinction between political union and what is sometimes lumped together with it--an improvement in the decision-making processes within our present Community. Such a reform is long overdue, but the two things are not the same and should not be confused. We must look to the new economies that are now emerging, and not build further obstacles through political union, which would make their ultimate accession much more difficult to achieve.

I look forward to the day when we can consider similar papers on the terms of membership of the European Community for Poland, Hungary, Czechoslovakia, Bulgaria and the rest of eastern Europe. We have assumed-- some would say purloined--the title "European Community". Let us look forward to the day when--before the decade is very much older--it becomes truly a European Community.

1.46 pm

Mr. Harry Barnes (Derbyshire, North-East) : There is a peculiarity about this debate : technically, we are discussing documents consisting of masses of empirical detail as well as value judgments, but, more correctly, we are discussing a matter of practical political philosophy. The better speeches, including that of my hon. Friend the Member for Newham, North- West (Mr. Banks), have taken an ideological approach. However, they were ideological in a practical sense, because they referred to major developments and concerns. In the limited time available to me, I too wish to adopt that approach. We should identify what is favourable about developments in both West and East Germany and the west and east as a whole, and thereby draw up plans to ensure that we achieve the right developments both in Germany and on a pan-European scale. What are our worries, and what should we seek to avoid? The various actions that have already been performed have sometimes proved unfortunate, but there are still plenty of opportunities for us to argue the case for acting differently.

What the west had to offer the east, and what West Germany had to offer East Germany, was undoubtedly parliamentary democracy. It was the operation of a voting system, however imperfect some aspects of that system might be. I firmly believe that, in this country, our democratic franchise is being undermined by the operation of the poll tax ; I should not wish that tax to be foisted on East Germans as they moved into a new Germany.

I have not made my mind up about proportional representation, but I am aware that the German system is

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the best alternative on offer. It allows constituency representation ; it produces a fair result ; and it stops fringe and minority groups from being represented in ways that spoil the operation of the system. It has much to commend it in comparison with other systems, such as that of the single transferable vote in a multi-member constituency : that is not proportional representation, but is merely built on a metaphysical notion of PR. That is vastly superior to the East German "munipulation" of the bureaucratic structures that previously operated.

Democracy depends on more than voting arrangements. This country has recently moved towards a form of elective dictatorship. A full range of civil liberties is required to allow people to organise, demonstrate, express views and understand possible alternatives, and to allow proper checks and balances of the democratic system. The importance of western democracy is not that somebody is appointed to office and has a mandate to do things on behalf of the people ; it is that it is always subject to the next election. That fact should influence the attitude and approach of Governments. They should play the game so that they may win on future occasions. At long last, given the unpopularity of this Government, we are beginning to see signs of some moves taking place. People are saying, "They are pinching things out of Labour's programme." That is a healthy arrangement ; it should take place in a democracy. There should be to-ing and fro-ing in the market place of politics.

The east had things to offer the west. It had an ideology. Many aspects that were interesting and valuable--they were propounded, although considerably distorted--stressed collective provision and care and sometimes, even despite the bureaucratic arrangements in those societies, fed into policies on full employment and child care and a decent policy on abortion. However, unfavourable things in the west, such as its competitiveness and the capitalist free market, led to exploitation. When the walls were broken down, we saw people stream from the east to the west, but we did not see capital flooding into East Germany and eastern Europe in a way that almost knocked down all opposition.

Conservative Members speak about the value of market capitalism. They should realise that markets do not necessarily have to be capitalist. It is possible to have markets in which social forms of ownership operate and in which competition between co-operatives, for instance, takes place. There are different possibilities from those that are on the cards at the moment.

We have missed a fantastic opportunity to talk about a development in which the best from the west and from the east begins to be drawn together so that improved arrangements can be made in Germany and in Europe generally, and on a pan-European basis. Such insight influenced the speech by my hon. Friend the Member for Newham, North-West. I should have loved to have an opportunity to develop those themes.

This is an important debate and it will not go away. It is ideological in the best sense. I hope that other matters are put on the agenda, apart from a rampant movement of markets and capitalism with democracy somehow coming in and making social provision. That influences the current nature of the European Community. What is wrong with the European Community is that markets and capitalism are at the top of the agenda, with democracy, democratic institutions and social arrangements secondary to them. They need to lead the debate, not follow it.

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1.53 pm

Mr. Peter L. Pike (Burnley) : It is right and appropriate that we should have this debate on German reunification in the first week after the summer recess. As so many hon. Members, including my hon. Friend the Member for Hamilton (Mr. Robertson), have said, German reunification symbolises the most important changes in the world. We must recognise that the changes which have taken place and those that will continue to take place have, to a large degree, been made possible by President Gorbachev taking power in the Soviet Union. We must recognise that he has influenced changes not only in Europe, but throughout the world. For example, he played a behind-the- scenes role leading up to the elections in Namibia last year.

There have been major changes to what most of us have accepted as the norm. For the first time since the war, the United Nations has an opportunity to play a major role and do something that it and the League of Nations between the war years could not do before. There is an opportunity to reduce defence expenditure in the east and the west and to use those resources more positively to the benefit of mankind. On so many occasions the Opposition regret the fact that we still have a Prime Minister and a Government who fail to recognise the opportunities.

In this final decade of the century, the world must deal with poverty and hunger and face our environmental problems. If we can spend as much time and resources on those problems as we have spent on other problems in the past 45 years, they can be solved by the turn of the century. That is the way we should proceed after grasping the new opportunities symbolised by this debate following German reunification.

My hon. Friend the Member for Newham North-West (Mr. Banks) correctly referred to the efficiency of the German nation. Despite the problems facing it after the absorption of East Germany, we all accept that Germany will make a success of unification. Reunification will be successful despite the problems which exist in the old GDR. It is also important to remember that on the Friday of the week in which German reunification took place our Chancellor of the Exchequer announced that we would join the exchange rate mechanism. As has been said, ERM alone cannot solve all our problems.

The hon. Member for Winchester (Mr. Browne) and others referred to German industry. The success of German industry has depended on many different factors. The Germans have a far more regional approach than we have. German financial institutions look at industrial investment on a long-term as opposed to a short-term basis. While the people in manufacturing here to whom I have spoken welcome the stability provided by entry to the ERM, they are worried that we have probably entered at too high a price in relation to the deutschmark. They are afraid that that will make our industries uncompetitive and place them at a disadvantage.

Another major difference between our industry and that of our competitors and German industry is that when we talk of pay restraint, work and productivity we always talk about those working on the production line and we do not talk about management in the same terms. I worked in a multi- national company and in a factory before I became a Member of this House. A big difference between our partners in Europe and us is that if managers there expect

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