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Mr. Goodman: The Minister is outlining some of the challenges facing Europe, but Peter Mandelson has said that they are so serious that it is essential that the Prime Minister stay in office for another two or three years. Has the Minister discussed the matter with Peter Mandelson and, if so, what is his opinion?

Mr. Alexander: With respect, the EU Trade Commissioner has plenty of other matters that require his attention at present, and they have a direct bearing on British jobs and prosperity. It would stretch the House's credulity to suggest that the future of my right hon. Friend the Prime Minister was uppermost in the minds of either Dutch of French voters last week.

The challenges facing the EU both within its borders and in the wider world are considerable but they can be met. Taken together, the EU accounts for a quarter of world GDP, a third of world trade, 50 per cent. of the UN budget and 55 per cent. of global development aid. It would be wrong and wholly contrary to turn away from Europe now. One in eight members of the UN are members of the EU, so the EU has a vital role to play in international security and global development.

The EU has long been a beacon of peace, democracy and prosperity. The combined skills, capabilities and knowledge of the 25 EU member states can be a powerful force to extend those values in today's world. For the security and well-being of our own citizens and of all our neighbours and partners, this Government will work to ensure that it remains so.
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Sir Menzies Campbell (North-East Fife) (LD): The exchanges in the debate so far suggest that there is a deep and perhaps unbridgeable divide on the topic of the EU. Those of us with longer memories will recall that a similar philosophical divide in respect of the EU existed in 1983. However, in those days the roles were reversed. Of course, it was the Conservative Government of the time who were defending Europe, and it was the Labour Opposition of the time who had in their manifesto for the election that year a proposal to withdraw from both Europe and NATO. I remind the House of that to point out that over time some parties have found it necessary or desirable to change their positions.

Mr. Davidson: The right hon. and learned Gentleman has pointed out that both the Government and Opposition have held different opinions at different times, unlike the Liberal Democrats who manage to hold different opinions at the same time. Does he agree with the Liberal Democrat leader in the European Parliament that the rebate should be scrapped? If not, is not that another example of the Liberal Democrats saying one thing in the European Parliament and another in the House of Commons?

Sir Menzies Campbell: Well, the hon. Gentleman has missed a career in the music hall. When it comes to the behaviour of Members of the European Parliament, he will of course recall that Labour MEPs recently voted against the Government's line on the working time directive. That demonstrates a degree of independence that the hon. Gentleman may wish to applaud.

Our position on the rebate has been set out by my hon. Friend the Member for Twickenham (Dr. Cable) on many occasions. We take a firm and unequivocal view that the Government are right in their attitude to the rebate. It is not negotiable. The position outlined by the Minister is the position that should be taken by the Government, and we will support it. The leader of the Liberal Democrats in the European Parliament is entitled to his opinion, but on this occasion he will have to accept that it has not been persuasive. Perhaps it would blunt the hon. Gentleman's ardour if he were immediately promoted to the Whip's Office, where he might find a ready opportunity for a better display of his talent.

In the aftermath of the rejection of the constitutional treaty in France and Holland, it is important to resist—as the Minister did—the temptation to neglect the value of Europe. That is why I was pleased to hear the Minister say that the European Union had been instrumental in promoting peace, stability, democracy and human rights across Europe. Alongside NATO, the EU has strengthened our security and, through the free market, has been the foundation of our economic prosperity. In an era of globalisation, states have no option but to co-operate in tackling the challenges that globalisation brings, such as cross-border crime, terrorism, weapons proliferation, the environment and climate change. Isolation, or a failure to co-operate, would undermine, not enhance, our national sovereignty, endanger our economic strength, undermine our security and diminish our influence. The best way in which to achieve our objectives is through the European Union. Others may take the view that a less formal arrangement would be more appropriate and effective, but
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that is a question of the philosophical divide that I mentioned earlier. I believe firmly and unequivocally that it is in the interests of us all to make the European Union work, and work effectively.

Dr. Fox: If the prosperity in Europe as a whole is a result of the free market operating through the European Union, to what does the right hon. and learned Gentleman attribute the structural unemployment in France and Germany?

Sir Menzies Campbell: Those are structural problems that require German and French solutions. It cannot be said, as is sometimes claimed, that it is membership of the single currency that has been responsible for those difficulties because other countries, such as Finland and Ireland, have achieved on average a higher rate of growth annually since they joined the euro. The German and French Governments have so far found it difficult to address those structural problems. Mr. Schröder has made some efforts to do so, but they have not been particularly successful, and the recent results in North Rhine-Westphalia suggest that they have been politically unpopular, to say the least.

Mr. John Maples (Stratford-on-Avon) (Con): The right hon. and learned Gentleman is right to say that Germany and France need to enact their own reforms if they want to solve those problems. However, part of the problem has been being in a single currency zone with a single interest rate. It has been impossible for the European Central Bank to set an interest rate that is appropriate for all of the members. The euro interest rates are far too high for the German economy, but too low for the Italian and Spanish economies.

Sir Menzies Campbell: The advantages of a single currency throughout a single market outweigh any potential difficulties of the kind that the hon. Gentleman describes. If we are to have a single market, it will be at its most effective when it has a single currency.

Mr. Davidson: So we should join now?

Sir Menzies Campbell: Well, we have always said that it is in the long-term interests of the United Kingdom to be a member of the single currency, but that we should not join unless and until the economic conditions were correct. We have all had some experience of that because the Conservatives took us into the exchange rate mechanism at a rate that was inadequate—

Mr. Graham Brady (Altrincham and Sale, West) (Con): And we came out of it.

Sir Menzies Campbell: Well, I am not sure that we had much choice about coming out. We chose to go in, but we came out under the pressure of events, not least an afternoon during which interest rates rose to 15 per cent. Joining the single currency in circumstances in which the economic conditions were not propitious would not be to our advantage, but in the long term, the advantages would be considerable.

We should resist the temptation to interpret too closely the reasons for the votes in Holland and France. At least, we should show some restraint in our
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interpretation. The hon. Member for Woodspring (Dr. Fox) said that the voters were voting against an elitist Europe. He should be careful about general propositions like that, because the corollary might be argued against him—that those who voted for ratification were voting in favour of an elitist Europe—and I do not believe that to be the case. We have to accept the fact of the votes and their consequences. The hon. Gentleman is right to say that the constitution cannot be revived, and we have to accept that the problems that it was designed to address remain. Some solution will be necessary to those problems. However, as I said earlier this week in the House, to hold a referendum on a treaty that cannot come into force would be quixotic at best and, to the public, it might appear an act in the political theatre of the absurd. The British people would be bound to question the circumstances in which such a referendum were promoted.

While we appreciate that the Government have to walk a tightrope on the issue, not least because Britain will assume the presidency of the EU after 1 July, the rest of us need not be subject to the same inhibition. The truth is that when countries such as France, which has been part of the engine room of the EU, and Holland, which has been one of the most European of the members of first the European Coal and Steel Community, then the European Economic Community and now the European Union, reject the treaty, it represents a profound event of which account has to be taken. The question we have to ask is how long we can run an institution of 25, or 27 if we accept the accession of Romania and Bulgaria—legislation for that purpose is foreshadowed in the Queen's Speech, so we shall come back to those issues whether we like it or not—on an organisational structure designed in the first instance for six.

It would be absurd to claim that the treaty is all bad. There are non-controversial proposals that are in our national interest and would have widespread European support. That is why I was attracted by the notion that the proceedings of the Council of Ministers should be made much more transparent, and that they should cast their votes as well as conduct their deliberations in public so that people can see exactly what individual countries have voted for. Likewise the creation of what was described as an amber light for national Parliaments in relation to EU legislation seems an entirely sensible proposal and one that could, I understand, be enacted without the need for legislation or for a compulsory referendum if something of a legislative nature was proposed.

I make one point as an example of the need to recognise the fact that 27 cannot be run in the same way as six. At present, each country is entitled to a commissioner. Each country that joins will be entitled to a commissioner, so once Romania and Bulgaria have acceded there will be an entitlement to 27 commissioners. That makes no sense whatever. There is every argument for saying that the Commission should be reduced in size, not least to deal with legitimate arguments, some of which have been made today, about the need to deal with burgeoning bureaucracy.

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