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5.32 pm

Ms Gisela Stuart (Birmingham, Edgbaston): The Nice treaty is the latest of a number of treaties on the role and competence of the European Union. The EU has changed its name over the decades. It has evolved, but insufficiently to meet the changing world and even the objectives that it set itself 50 years ago.

For many people like me, the Common Market of the 1970s was a liberator. We could work in member states without work permits—the free movement of labour. The EU of today is too often perceived as an institution that stops people from doing things or tells them what to do.

The recent rejection of the treaty of Nice by the people of Ireland in a referendum should not be brushed aside lightly. The motives of those voting against it were no doubt mixed, but we do not have a right to interpret what voters really meant. "Comrades, there must be no compromise with the electorate", is not an appropriate response.

Three basic questions should be asked of any democratic institution. Does it solve problems? Are those affected by decisions represented? Do those affected by the decisions know who made them? The EU must improve as a democratic institution. If I were to choose just one example of how it could do so, it would be the system of weighted votes, which was one of the most contentious issues at Nice. The qualified majority threshold, the blocking minority combined with the population safeguard, cannot be explained in such a way as to argue that they bring Europe closer to the people by making European decision making clearer.

The current mood towards the EU is in marked contrast to the hopes and enthusiasm that surrounded its birth at the end of the second world war. However, it is fair to say that 50 years ago people would have been astonished by the degree of political and economic integration that has since taken place on our continent. There have been significant changes—most notably the unification of Germany, the end of the cold war and prospects for enlargement to the east. However, there are a number of issues that must be addressed now if the EU is to retain, let alone increase, the confidence of electorates.

In the debates surrounding the EU and the potentially enlarged Union, politics and economics are mixed. That has always been so, ever since the formation of the European Coal and Steel Community. In general, the path of economic integration has been clearer than the political destination of the EU. It is often not clear whether politics or economics is in the driving seat. Indeed, the priority has varied from time to time, but one thing was always

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clear: monetary union was to follow political union. The order has now been reversed, which has added to people's confusion about where Europe is heading.

I shall deal first with economics. With some justification, Monnet can be seen as the father of the EU. He was certainly a visionary, but he was always a practical man. He believed in the benefits of what might be termed liberal capitalism, and he admired America. We should note both those facts.

While there is much to learn from America, European countries are different and they do not have to become mirrors of the United States. Whatever the framework chosen to reflect different cultural and political traditions, there are certain economic imperatives to be met. In recent years it has been noticeable that the people who were most sure that Europe and its new currency would soon and easily challenge the dollar were often those most hostile to the basis that underpins the dynamism of the US economy and the dollar, particularly the emphasis on the market.

The European Coal and Steel Community was essentially a liberal market solution that could be followed as an example in a broader economic context in the treaty of Rome, the single market programme and subsequent reform agendas. Before embarking on any new economic or social initiatives, Governments in Europe would be better employed in ensuring that labour, product and capital markets function in the way envisaged in the Spaak report.

The report, tabled in April 1956, remains a key document and was the basis of the treaty of Rome. It is the main philosophical antecedent of the approach to economic integration which has been prevalent in the EU ever since, yet if we look at the progress made in the past 45 years, the Prime Minister and the Chancellor might ask their opposite numbers to stand and deliver what has already been promised. That has not been delivered. For example, there is no genuine single market in financial services, and recent German opposition to the take-over directive shows how far we still are from accepting the logic of the Spaak report.

I turn now to politics. Broadly speaking, for most of modern history there have been two alternative ways of organising society—a nation state or an empire. Neither is an attractive model for the EU. The EU is said to be a unique construction. It was a deliberate pooling of national power or sovereignty in a clearly defined area, and the placing of that power under the control of an entity that was common to the member states, but none the less legally independent.

The route followed by the EU—via the original ECSC, the EEC, then the EC—is, we are told, towards ever closer political union, which has never been tried before and which has an unstoppable momentum. It is not always clear where this momentum is taking us, but it is like riding a bike—we cannot stop, and we must keep going forward or we will fall off. That is not my experience of riding a bike. It is possible to stop. We can put the brakes on. We can put our foot down. We do not fall off. We can look around and decide where we want to go.

On the whole, the lack of precision about the political endgame and its institutional framework has not seemed to matter much up till now. At the end of the war, everyone in Europe shared a widespread feeling that things could not go on as before. A new order was needed.

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If anyone had asked what the EU, in one of its previous incarnations, was for, the answer would have been obvious: to stop Germany and France ever again going to war against each other.

That objective has been achieved and no longer provides a credible basis for taking Europe forward. To the question, "What is Europe for?", we must provide an up-to-date answer that people can support, in language that they understand. To the cognoscenti, posing such a question lacks sophistication and subtlety, but they are wrong. The question must be addressed.

The structure of the ECSE and the function of the high authority followed clearly from the answer in 1951, and I suspect that the same is true today. Providing an answer for present member states will not be easy, but I am certain that one of the purposes of the existing EU is to help to underpin democracy and economic prosperity in central Europe.

Whatever the justification for the Nice treaty and whatever its failings, it has been determined as the channel for moving forward with enlargement. The presidency conclusions of the Gothenburg Council in June 2001 state:

It does. Enlargement will test the hinge of national interest and genuine European solidarity. Often, in Eurospeak, the latter is a cloak for the former.

Enlargement is a challenge for some recent entrants, for example, Spain, Ireland and Portugal, who have been major recipients of European assistance. It is a challenge for France and Germany—perhaps particularly for France, for whom the EU is often seen as an extension of the French state. It is a challenge for us here too. In meeting all those challenges and others it will be essential to be able to state clearly Europe's basic function and purpose.

I might be seen as an example of the forces that shaped modern Europe. I am German by birth, my mother is a refugee from eastern Europe, and I am now a British Member of Parliament representing Neville Chamberlain's old constituency. I hope that no one is in any doubt of my fundamental commitment to Europe.

However, before we move to the intergovernmental conference in 2004 we, as politicians, will have to be able to answer some fundamental questions, such as what the EU does for its citizens, how those are citizens represented, and who can they hold accountable for decisions.

In other words, if we are to engage people in debate and take them with us, we need to be able to state in simple terms the direction, role and competence of the EU. In plain language, the fundamental question that we need to able to answer is: what is the European Union for?

5.42 pm

Mr. William Cash (Stone): It is a great pleasure to follow the hon. Member for Birmingham, Edgbaston (Ms Stuart) for one very good reason, which is that she asked the right question. The problem is that she came up with the wrong answer. The difficulty is that Europe's purpose is ever greater integration, and whether democracy and accountability can exist in such an

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environment is the question that we face in the House and throughout Europe. The Irish and Danish referendums clearly demonstrated that, as did I in an intervention on my right hon. Friend the Member for Horsham (Mr. Maude) earlier today with respect to the Conservative party's refusal to engage in proper referendums on the question of further integration from Maastricht onwards until the Nice treaty.

I want to deal with a broader question. I speak as one whose father, who received the military cross, was killed in the last war in Normandy. That adds a certain poignancy to the remarks made by the hon. Member for Birmingham, Edgbaston. Those of us who want a peaceful and stable Europe must ask whether that is what the arrangements will provide. Nothing would be worse than for the EU, for which I voted in 1975 in the context of that time, to implode because of the tensions that are created by going down the wrong route towards an undemocratic and unaccountable Europe. We have only to consider the low growth and job difficulties in the eurozone to understand that point.

We have only to look at what went on in Gothenburg to understand the alienation that exists between the electorates of Europe and the elite, and how the EU is embattled and imprisoned by the force of political concern about what is going on. No one who is responsible could possibly ignore that, any more than Romano Prodi could possibly argue with any legitimacy that the Irish people must have another referendum because the original referendum was undemocratic.

The first Danish referendum, in which the Danes voted no, was disgracefully overturned with my Government's connivance. In "German Comments", produced by Konrad Adenaeur Siftung, an editorial at the time said that elections had become a form of protest and must be stopped. It is incredible for such language to persist from those days until Romano Prodi's recent disgraceful remarks in Ireland. We must take the matter seriously. By renegotiating, it is possible to get the whole ramshackle, undemocratic, unaccountable and idiosyncratic kaleidoscope back in focus.

I am arguing not for withdrawal, but for a proper intergovernmental conference at which member states can, instead of making proposals such as the Nice treaty, sit down and ask themselves the question that was rightly put by the hon. Member for Birmingham, Edgbaston: what is Europe for? How will we have a stable Europe when it is perfectly clear that the direction in which it is going is being rejected by its electorates left, right and centre? I do not believe for one minute that that view is confined to the countries that I have mentioned. It is not confined to the United Kingdom, where the decision would be clear if a referendum were held now.

The same view prevails in central and eastern Europe. I have served on the Select Committee on European Scrutiny for 17 years, so I have visited the countries and met people there. Although the elites have been blackmailed into accepting the acquis communautaire—that is basically what happened—and their parliamentary processes have been absorbed for an entire year in adopting something that the people do not want, they are now signing up to join a European Union that will frustrate and undermine the democratic spirit that gave rise to the enormous burst of freedom that we saw in the

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springtime of nations. That is why I want enlargement, but not on the basis of crushing out the democratic spirit. Believe me, that is what will happen.

We must also consider a further question: the broader picture that lies behind those circumstances. It is about the balance of power in Europe. Nobody should have any misunderstanding about that. As Bismarck said, it is those who speak about "Europe" who should be most distrusted. The bottom line is that we are now engaged in a tectonic movement in the balance of power in Europe, which is being carried out through the mechanism of institutional change. The reality is the driving force of national interests, based on an apparent political union that will become a legal framework. Through the legal processes of the European Court of Justice and the European Communities Act 1972, that framework will impose upon this country and others a requirement to obey laws that are, for example, passed by majority voting.

I must differ from my right hon. and learned Friend the Member for Folkestone and Hythe (Mr. Howard) in respect of the variable geometry and flexibility that he advocated. When one engages in the concept of enhanced co-operation, as the treaty does, one should consider what happened under monetary union, which was described by the European Commission as the best form of flexibility yet produced and which led me to table 200-odd amendments to the Bill on the Maastricht treaty. We said that we would accept the framework, but not prevent the other member states from going ahead. That is the implicit basis on which the enhanced co-operation will operate in relation to all areas, including, despite the Government's denials, defence, foreign policy and all the other matters to which the Nice treaty refers, following and based on Maastricht and Amsterdam. It is an accumulative, aggregate process of an undemocratic and unaccountable Europe. Anybody who misunderstands that is missing the target altogether.

I believe that what is happening is the creation of a Europe that is based fundamentally on the predominance of Germany. The German people know and understand that. I have many friends in Germany and they tell me the same thing. The problem is not simple; it is about the aggregate of power, not only in relation to the majority voting increase that Germany has clearly acquired in the treaty, but to the countries that depend on Germany. We must be careful about the direction in which we are moving. Many people may disagree with me, but that is my judgment.

We are moving towards a more deeply taxed Europe. The functions that are being created, including those under flexibility and enhanced co-operation, are increasing exponentially. They must be paid for. That is why Hans Eichel recently said that a much more invasive tax policy is needed in Europe. That is why Romano Prodi has asked for £60 billion. All that will remove the House's ability to resist. Public services in this country are constrained by European Union monetary rules. If we subscribe to the increased functions, the whole process will continue to invade the rights and privileges of the House. We are moving dangerously further down the road of an undemocratic, European Government—that is what we are considering, not a confederation of nation states.

I wish that my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke) was here today. I shall be interested to know how he will vote. He said that

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he supported the Nice treaty. I dedicated my pamphlet to him today, and I hope that he will enjoy a little light reading matter.

We are in danger of taking a one-way ticket on a route to an undemocratic and unsustainable Europe. I shall fight against that with all the heart that I can summon.

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