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Denzil Davies: Some have fixed their exchange rates and others have not. I do not know enough about Estonia's economy to say whether that has been good for the country. If the accession countries have to fix their exchange rates and they get it wrong, considerable problems will arise in their economies.
Mr. Kelvin Hopkins (Luton, North): Does my right hon. Friend agree that Argentina is a good example of a weak economy linking its currency to a strong economy with disastrous results?
Denzil Davies: I thank my hon. Friend for that.
Let us consider interest rates. It is extraordinary that the European Central Bank will fix one interest rate for an area that extends from Portugal to Estonia. How can
one rate take into account the diversity of those different countries' economies? Some of my left-wing friends may worry about me, and I do not want to sound like Professor Hayek, but why do we need a European Central Bank? Why cannot Lithuania or parts of that country—or parts of Britain—have their own interest rates? Why do we need a monolithic, bureaucratic, huge central bank, which supposes that it can fix exchange rates for the whole area? The movement towards monetary union could have a deleterious effect on the accession countries.
Llew Smith (Blaenau Gwent): How will people in the accession countries feel when they realise that, under article 107 of the Maastricht treaty, it will be illegal for their political representatives to influence the European Central Bank? Will they conclude that they have reverted to a position whereby they have politicians who cannot represent them and cannot influence the decision makers? What is the point of elections if the people for whom we vote no longer have the right to influence the decision makers?
Denzil Davies: Those may well be matters of concern for those people.
The real problem is that the whole monetary policy of the European Union was designed for a period of inflation—that was entrenched in the system at the time—which results in a lack of flexibility. Major economic problems will arise when the system has to try to adjust to the deflationary trends that are occurring not only in Europe, as a result of the common policy, but in many other areas of the world. Those problems will affect the countries that we are discussing and existing member states.
Recently, a prestigious French research group—I suppose that all French research groups are prestigious; this one is called, in English translation, the French Institute of International Relations—tried to forecast economic developments in the European Union over the next half-century. Frankly, its conclusions do not make happy reading. It is a long report. I have not read it all, but I shall quote two sentences. The Minister has obviously read it, probably in the original French. One of its conclusions was:
- "The enlargement of the European Union won't suffice to guarantee parity with the United States".
- "inexorable movement onto 'history's exit ramp'".
We have talked about foreign policy and diplomacy, but there are real economic problems in the European Union, which will not be solved, and may be made worse, by the countries that are coming in. The accession countries clearly believe that their economies will be better off in than out. I trust and respect their judgment, and I hope that they are right.
3.57 pm
Mr. Ian Taylor (Esher and Walton): The right hon. Member for Llanelli (Denzil Davies) has made similar speeches in all the years I have been listening to him since I entered the House in 1987, but one development in the course of that long period is that the euro now exists, and we have to face up to that. Indeed, the costs of not being a member of the euro are greater than some of the problems of being part of it that the right hon. Gentleman described. That is not the subject of the debate, and I shall try to steer away from it, but I am sure that we will pick it up on another occasion.
I am delighted to welcome the Bill, which I support, not least because it gives me a unity of purpose with my own Front Benchers on a European matter. I am also delighted that there is cross-party agreement that the accession of the new countries is an extremely welcome development. I joined the Conservative party in the 1960s precisely because it was positive about Europe. I felt that one of the great challenges for my generation was to build together what was then western Europe after the fragmentation that occurred on three occasions in 100 years—in the 1870s, during the 1914 period and from 1939 to 1945—and that it was lamentable that we were out of one of the most exciting political and economic constructs available.
I was also aware of the devastation on the other side of the iron curtain. I was in Prague in 1968. I left just before 21 August, when the Soviet troops came out of hiding and occupied the city, but I was able to sense the excitement and hope that were in the minds of the Czechoslovakian people before it was cruelly crushed. In 1988, when I went back with the Select Committee on Foreign Affairs, we had a private dinner with Havel, who was partly beaten up by the police on his way there, and who told us of all the problems that he and the people who worked with him faced. The following day, he was arrested and taken out of Prague because it was thought that he might be the focus of attention. That was in 1988, shortly before the rapid movement to freedom that emerged in Czechoslovakia. Whereas my generation saw the challenge of bringing western Europe together in a political and economic union, the challenge for this generation is to realise the hopes and aspirations of those who were previously under communism—eight of the applicant countries in this accession round—and to ensure that they can benefit as well.
It is important to bear in mind the fact that one of the strengths of the European Union was that we acted as a magnet for many of the people who tried to resist communism and who eventually brought down the Berlin wall. Of course NATO provided a military strength in the west, of which those people were aware, and which to some extent kept the Soviet Union at bay, but the positive side was the magnetic strength of the European Union. People could see and talk about its economic stability and the way in which countries could come together and form institutional arrangements while retaining their own identity; those things made the challenge worth while.
The European Union has much to be pleased about in terms of its achievements in securing the accession treaty that we are celebrating today. Of course, the applicant countries are entering voluntarily. I sometimes read some of the more scurrilous British papers—and I do
not blame Lord Black for all of them—but the reality is that this is a union that people voluntarily wish to join. That seems remarkable when we read those elements of the British press that concentrate only on the negatives. Those negatives inevitably exist; there are negatives in this country, for heaven's sake.
Mr. Mark Lazarowicz (Edinburgh, North and Leith): Is it not worth remembering that, as well as entering the European Union voluntarily, those countries are doing so having achieved overwhelmingly large majorities in the referendums that have so far taken place?
Mr. Taylor: I am enthused by their enthusiasm for joining a political, institutional, legal and economic union. Incidentally, it was all of those things when we joined, although some of the more Eurosceptic commentators try to rewrite history. There has always been primacy of European Union law over British law where that has been agreed.
There will need to be changes to the current arrangements within the European Union. I admire the clarity and eloquence of my right hon. Friend the Member for Wells (Mr. Heathcoat-Amory), but not always the conclusions that he reaches. The reality is that, to accommodate its almost moral obligation to provide a settlement to the east, the European Union will have to change the way it does things. We do not yet know how constitutionally devastating these matters will be, so it is premature to say that we should have a referendum.
I have voted against holding referendums in the past, and because of comments that have been made in this debate, I shall share with the House something that perhaps ought not normally to be shared. By the way, in the past, it always used to be "referendums", rather than "referenda". [Hon. Members: "It still is!"] Well, I noticed the rewriting of history by the Treasury Bench. I opposed the holding of referendums in a debate in the House—in 1992, I think. My views on the matter were already set and I was perfectly happy to express them in the debate. The opportunity to express them was, however, drawn to my attention by the Whip on duty at the time, who said, "Wouldn't it be a good idea if you participated in the debate on referendums, because we've got a few nutters on our side who think it's worth having one on Maastricht." I do not wish to be drawn on that, because history has shown that that was a very shrewd move if one wanted to lead the party, and I did not.
I have not yet seen a reason why this House should be usurped by an instrument of which I am not in favour, in principle, in a parliamentary democracy. There may be a case for a referendum, but it is interesting that the people who talk about the primacy of the House of Commons are the first to rush to the instrument of the referendum, which is a populist move, when they think that they might not get their way through argument in this House. Let us not assume that there should be a referendum, but not rule it out, which would be equally foolish. However, if we jump to a conclusion now, we will do so using bogus arguments. Perhaps the reason why we are using those arguments is much more about
whether we wish to be associated with the European Union in its entirety. So let us have some clarity about that, please.When we look at the Convention proposals, which may or may not be accepted by the intergovernmental conference, let us bear in mind one important rule. The purpose of being in the European Union and the European Economic Community dramatically changed in the 1980s, when it was realised that, in order to drive forward what we wanted—a single market—we had to make concessions. In other words, the rules had to be such that decisions could be reached to ensure that tariff and non-tariff barriers could be broken down.
The situation was eloquently summed up by the noble Lady Thatcher, then Prime Minister, in this House in 1989, when she said that the reason why we accepted qualified majority voting was to overcome the protectionist instincts of any one member. I agree with that; indeed, it is at the heart of what the European Union is all about. We give up our independence, veto or so-called sovereignty to gain something of greater importance. The prospect of gaining something important is exactly what the applicant countries now see. Of course they are not saying that everything in the acquis communautaire is wonderful, although in the context of some earlier comments, I point out that the acquis communautaire has been a phenomenally effective way of helping those countries to adapt to what was a system with no rule of law at all at the beginning of the 1990s. The ability to meet the acquis communautaire has been one of the great abilities.
In 1994, I attended as a Minister one of the first face-to-face meetings in what was then the single market Council. The meeting was held in Frankfurt an der Oder, which is on the border with Poland and is obviously situated in what had been the eastern Lander. All the hopeful aspirants came to talk to us. Although the progress that they have made since that day has taken longer to achieve than many of us, such as my right hon. Friend the Member for Horsham (Mr. Maude), would have liked, it has nevertheless been made largely because of the help that has been provided, and the framework and acquis communautaire against which they have measured themselves while they have developed. We have helped them to do that.
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