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Mr. Letwin: Indeed, of every Cecil--the vision goes back a very long way in our history. Palmerston was perhaps its greatest exponent, but it is a very long-running theme.
The theory and reality of the United States of Europe are based on the vision, and that theory and reality are meant to convey to Europe its ability to be a great power--with the United States, possibly Japan, probably China, and, militarily, Russia. The case for being part of the United States of Europe is characteristically weak for a reason--which obviously needs vastly more expansion than I can give it today, and perhaps than I am capable of giving it--that perhaps resides in the strange historical fact that there is no evidence whatsoever that the citizens inhabiting great powers have led more pleasant, more fulfilled, culturally richer or economically more prosperous lives than citizens inhabiting very tiny powers.
Today and for most of my adult life, Switzerland has had the highest per capita gross domestic product, the strongest social cohesion and the greatest stability. It is a very tiny power, and almost gave up being a power at all. It is not a unique example; on the contrary. Throughout history and around the world, there have been large powers of which it has been unpleasant to be a citizen and small powers of which it has been pleasant to be one, and vice versa. I do not think that there is any evidence that being part of a great power or a small power is material to how its citizens live.
I do not personally--others may differ--buy the thesis that the fact that there will be a great power means that it will be to the advantage of the citizens of a small power to
join it. Therefore, I think that the geopolitical argument--which is meant to be the positive argument for joining the United States of Europe--is weak.I do not think that, by itself, that would be enough to decide to answer in the negative, because there is also a positive strand.
I should characterise the positive case as one of risk. The question that we have to ask ourselves as we face the choice of whether to obliterate the United Kingdom and absorb it within a United States of Europe is: what will be the character of the United States of Europe? Like other hon. Members, I do not have a crystal ball and cannot say for sure whether the United States of Europe will be a flourishing great power, beneficial to its citizens. However, there is a risk--I put it no higher than that; it is extremely important not to overstate it--and it is difficult for other people to challenge the existence of that risk. I describe it as the risk of the United States of Europe becoming an Ottoman empire.
There are three parts to that; I do not have time to elaborate them. The first is an institutional risk. Those who have the vision must admit that the United States of Europe will be created against the background of institutions that are at best immature. They will have some difficulty establishing themselves with the democratic legitimacy and universal acceptance that is required of a stable Government.
Secondly there are cultural problems. I do not rate them too highly. I am not saying that people of different cultures cannot get on in a single state. Belgium proves that they can, as do Switzerland and the United States. However, it is difficult. It is more difficult when the political, legal and other cultures are particularly rich and strong. The great glory of Europe is that the individual cultures of the nation states are stronger and richer than those in any other part of the world. That creates a particular difficulty in forging a United States of Europe.
Thirdly, there are economic and social risks, many of which have been mentioned this evening, including the creation of what one of my hon. Friends called an economic hot spot problem. I doubt that anyone can honestly deny that there is a danger that in the course of forging a United States of Europe, it would be difficult to produce sufficient economic and social homogeneity--or, in the jargon, cohesion--to avoid severe tension.
Because my argument is very weak, it seems to me the stronger. On those three grounds of institutional immaturity, real and profound cultural difference and serious economic tension, there is a risk that a United States of Europe would turn into an Ottoman empire rather than a successful parallel of the United States of America. I accept that some might think that unlikely, but I wonder whether even the Minister, who, we hear, is a great proponent, can argue that there is no risk. If there is a risk, we, the citizens of the state that beyond all other states has delivered to its citizens across hundreds of years economic, social and cultural stability and freedom under the rule of law, must ask: if the positive case for the United States of Europe from the point of view of the effect of the geopolitical argument on its citizens is weak, why take the risk? We ought to have the courage to admit that we face a question of whether to become part of a United States of Europe by sublimating and obliterating the United Kingdom. I am persuaded that we should not.
Mr. Howard Flight (Arundel and South Downs):
This country will have to face reality in the next 15 months. There is a practical issue of a common European withholding tax. Europe desperately needs that from its own perspective. People do not pay tax on some interest. There is a need for a new source of taxation for transfer payments, which will need to be increased with a single currency.
This country's interests are clear. Harold Wilson and Governor Richardson of the Bank of England spotted that the interest equalisation tax in New York was driving away international deposits, enabling them to be taken in London. That prompted the growth of the European markets and the recovery of London as an international financial centre over the past 30 years.
The issue is not just about bonds, but about deposit taking, foreign exchange dealing, derivatives and all that goes with being the world's leading international banking centre. If a withholding tax is stopped, all that business will go to New York and Hong Kong. That is not a small matter. At least 100,000 of 600,000 jobs are at risk, and 3 or 4 per cent. of gross national product and 6 per cent. of our total exports are involved.
Mr. Michael Trend (Windsor):
The Foreign Secretary patronisingly urged us all to behave like adults. That was as uncalled for as it was discourteous. We have heard many excellent speeches this evening. My hon. Friend the Member for Arundel and South Downs (Mr. Flight) has just made a brief but cogently argued point about the withholding tax, and the various speeches from hon. Members on both sides of the House have shown a that a great deal of thought is being given to the European question.
My hon. Friend the Member for West Dorset(Mr. Letwin) kept his eye on the rhythm of dialectic and the big questions that may one day be asked about the European Union. My hon. Friend the Member for Teignbridge (Mr. Nicholls), in a characteristically ebullient contribution, rightly said that if others want to create a supranational state, that is their business. At the moment, the evidence is strong that that is the direction in which many senior politicians in Europe want to go.
My hon. Friend the Member for Reigate (Mr. Blunt) also spoke on that theme. He described the overwhelming tide that is sweeping through the European argument, leading member states to ever closer integration. My hon. Friend the Member for Vale of York (Miss McIntosh) has
a different experience of the European Union from that of the rest of Conservative Members. She made an important and detailed speech, raising a number of questions that I am sure the Minister will want to follow up.
Especially welcome was the speech of my right hon. Friend the Member for Haltemprice and Howden (Mr. Davis). He spoke from his experience in government of the difficult realities of negotiating in the European Union. The Government are now learning about those hard realities at first hand.
The contributions from Labour Members were 50:50. Of the four speeches, two were on message--one of them alarmingly so--whereas the other two expressed anxieties about the Government's position, although for different reasons: at least I think that they were different reasons. The hon. Member for Crewe and Nantwich (Mrs. Dunwoody) was right to say that we should explain the implications of where the European Union is going. We shall soon have that opportunity; in the referendum on the single currency, we shall be able to put the case to the country, as my hon. Friend the Member for West Dorset also said.
At the start of the debate, my right hon. and learned Friend the Member for Folkestone and Hythe(Mr. Howard) made a most telling contribution. He characterised the Government's position as one that faced in two directions at the same time--one for our European partners and the other for the domestic market. We have heard much this evening about the yawning gulf between the Government's rhetoric at home and what they endorse abroad.
We have heard how the Government are getting into difficulties on both fronts. They draw up carefully crafted positions but, especially on tax harmonisation, their proposals are being rejected both at home and abroad. Oskar Lafontaine will not put up with the British Government trying to have it both ways any more than will the Conservative party, the British press or the British public.
The Labour party hopes that the phrases in the Party of European Socialists' beloved document, "The New European Way", will also strike its different audiences--the left-of-centre Governments in Europe and the voters at home--differently. However, that did not seem to please the hon. Member for Nottingham, South(Mr. Simpson), for curious reasons entirely of his own. Many hon. Members have spoken about tax harmonisation, and it would be tedious and unnecessary to go over the issue again.
I have enjoyed one particular moment in the last few days, which makes the point, raised by my hon. Friend the Member for Reigate, that there is a great sense of deja vu about the Government's position. I had a fantasy--I do not pretend that it is the truth--about the scene in the Foreign Office yesterday. Ministers and their civil servants were trying to decide what to do after the Chancellor had come back, having been mugged at ECOFIN. How best were they to give the impression that the Foreign Office was not trying to lie low--although, of course, that was what it was trying to do?
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