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Malcolm Bruce : I am following the right hon. Gentleman's argument closely, but was it not Conservative policy to campaign for a no vote so as to renegotiate a better agreement? Has not France adopted the same approach in an attempt to secure a better deal for itself?

Mr. Hague: The French voted no emphatically, and they no doubt had many reasons for doing so. No doubt, some people were dissatisfied with their Government, and I believe that many felt that they were losing control of their own affairs. We can all believe in a better agreement, but what better agreement is available? For a long time, we have been told that there was no plan B if any country voted no, and no possibility of anything being agreed in place of the original proposals. We shall see from the actions of the European Governments whether that was a correct statement of the position.

Many of us would like better arrangements in Europe, and I shall use the minutes remaining to me to say what I think they should be. However, I believe that three great tensions in respect of the future development and policies of the EU have been thrown into sharp relief by the no vote in France and Holland. Notwithstanding their period of reflection, the Government must be very clear about where they stand on each of those tensions.

The first tension is the one emerging between enlargement and integration. It is said that an EU of the present size cannot be run without much closer integration. There is a danger that people will say that enlargement must pay the price now that integration is not immediately possible. Yet Turkey, Bulgaria and Romania ought to be entitled to join the EU. More than most, they have suffered from disunity in Europe over the centuries. If enlargement is not possible on the current model of how the EU is run, it is time to change that model. The Government must become the advocate of a looser and more flexible Europe, as suggested by my   right hon. and learned Friend the Member for Folkestone and Hythe (Mr. Howard) and others over recent years.

The second tension is that between democracy and centralisation. Decisions in a democratic society are taken at the level at which people gladly accept governance at other people's hands, and it is often
 
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obvious what that level should be. For example, we in Yorkshire would not accept that decisions about streetlights should be taken in Lancashire, and heaven forbid that any such thing would ever be proposed in this House.

Equally, it is clear that people in France and Germany—and even more so in the Netherlands—do not want their taxes to be determined in other EU countries, but increasingly that is what is happening. We are meant to have a veto over taxation in the EU, yet some of this year's biggest decisions concerning the tax revenues of this and other EU countries have been taken not in the Treasury, but in the European Court of Justice.

The ECJ uses single-market anti-discrimination rules to expand the powers of the EU in affairs of taxation, and it rules against national laws in between 80 and 90 per cent. of cases. That shows that there is a creeping loss of democracy through the operation of the European Commission and the ECJ. It is time that the Government took a robust approach and said that the European Commission should be stripped of the right to initiate legislation as it is not a democratic body, and that the powers of the ECJ should be curtailed.

We are not going to be able to develop a single European democracy. It is almost 50 years since the foundation of the EEC, but even now the original member countries have not become a common political entity or developed a common political ethos. There is no European polity.

Mr. Mark Hendrick : Is the right hon. Gentleman saying that he no longer believes in the EU and that what he wants is a free trade area, full stop?

Mr. Hague: No, I believe in the European Union, but I wish it to develop in a new way. The opportunity to advocate that new way is now presented to the Government and to the Governments of those countries whose peoples have shown that they are seriously concerned by, and strongly opposed to, the current trends in the European Union.

The third tension is between economic reality and political goals, and the euro is the outstanding example of that. Many of us have patiently explained for a long time that a single currency area created without a true single labour market, or without massive budgetary redistribution within that area—as in the US—will not work effectively. We have been denounced over the years as little Englanders and opponents of progress, but now we see from the comments by German Ministers—and Italian Ministers—which have been well publicised in recent days, the immense pressures that are building up as a result of adopting for political reasons an economic policy that is now destroying the jobs and livelihoods of hundreds of thousands of people across Europe. As unemployment rises in Europe, we await the apology from the people who put the euro in place. When will the problem be recognised by the Government and when will we get the formal abandonment of the now ludicrous notion that it is in this country's interests in principle to join the euro?

Those are the tensions—between enlargement and integration, between democracy and centralisation and between economic reality and political goals. In many
 
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ways, the Government have started to speak the right language on some of those subjects, but they will have to be far bolder in what they advocate to win adherents in the rest of Europe, and do something other than fight a rearguard action at a series of European Councils. This weekend, the Government could put us in the vanguard of change, instead of the rearguard on every occasion. From what the Foreign Secretary said, I suspect that the Government will not take that opportunity, and it is a tragedy that they will not.

3.42 pm

Mike Gapes (Ilford, South) (Lab/Co-op): It is a real pleasure to follow the right hon. Member for Richmond, Yorks (Mr. Hague), the former leader of the Conservative party. I recall that in the run-up to the 2001 election, he said that he thought that there should be a referendum on our position in Europe. It is a pity that my right hon. Friends on the Front Bench did not take him up on that.

As a result of the votes in France and the Netherlands, we face a serious crisis in the European Union and there is no getting away from that. The European Union is a magnet not only for economic progress and prosperity, but for democracy and uniting the peoples of the former Soviet Union and of countries that were occupied as a result of the Yalta agreement in a common European home. Those countries now act as a beacon to neighbours further to the south and east, and it would be a disaster if that process were put into reverse—if enlargement were put on hold or we returned to the squabbles and conflicts that made Europe an area of war for much of the first 50 years of the last century.

It was claimed earlier by the hon. Member for Woodspring (Dr. Fox) that it would be inconceivable to have a war in Europe now. People have very short memories. In the Balkans, we still have the potential for conflict and war. If the situation in Kosovo went wrong, the consequences could spill over into neighbours throughout the Balkans. We still have an unresolved historic territorial anomaly in Kaliningrad and we do not yet know how it will be resolved. If the process of Europeanisation does not continue in Turkey, who knows what might happen in 20 or 30 years? There are still issues relating to the break-up of the Ottoman empire and Turkey's relationship with Greece.

It is all very well to assume that because there has been peace for most of us in the continent since 1945 and because there have been fantastic positive changes in central and eastern Europe since 9 November 1989, it will somehow go on for ever. There are still significant minorities in countries that are now members of the European Union of a Russian ethnic background. Such issues have been dealt with calmly so far, and due to the enlargement of the European Union and the fact that we send out signals to the east that there is hope for people in the countries of the former Soviet Union, we have been able to provide the possibility of a peaceful transformation out of the ashes of the former Yugoslavia and the former Soviet Union. However, it would be ridiculous and dangerous to assume that if we get a renewal of nationalism and a breakdown of the European institutions, it still somehow means that Europe will be a continent of peace for all time.
 
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Malcolm Bruce: The hon. Gentleman is the first person today to make the important point about countries that are not members of the European Union. In that context, does he acknowledge that the role of the Council of Europe and the European convention on human rights is increasingly important, and that the European Union cannot deliver peace and democracy to the whole of Europe because we need other agencies, too?

Mike Gapes: That is true, but organisations such as NATO—I am a member of the NATO Parliamentary Assembly—are also important, as is the Organisation for Security and Co-operation in Europe. Surely, as parliamentarians we recognise that we must maintain dialogue to help the process of encouraging good governance, democratisation and human rights protection in the wider Eurasian land mass.

I happen to chair the Westminster Foundation for Democracy, which does important work in several countries. For example, we were involved quite intimately in assisting some of the political forces involved in the changes in Ukraine. We, as a Parliament and a country, can be proud of our work on democracy building, which has been done on an all-party basis since it was established in 1992 by the John Major Government. The work has been carried on by successive Governments and we would be remiss to ignore it.

The Chinese and Indian economic boom and the fantastic impact that globalisation is having have been referred to. I agree that they are not only economic, but inherently political, which was a point made by the right hon. and learned Member for North-East Fife (Sir Menzies Campbell). India should be a permanent member of the Security Council as part of the enlargement package. However, we also need a democratic Muslim country on the Security Council because it is important that the UN is not seen as a group of countries that is somehow against the Islamic world.

A similar argument applies to the enlargement of the European Union and Turkey. We could perhaps get a democratic Turkey, with its moderate, Muslim, democratic AK party Government—or their successor if the left win the elections—in the European Union in 20 or 30 years' time, although we are currently talking about only the opening of negotiations to consider the possible terms of accession. However, we should not say as a result of the crisis that we are putting a block on the process. If Turkey is pushed out because the French Government get their way and say that they do not want to let it in, or because the rejection of the constitutional treaty in the Netherlands is blamed on globalisation or the threat of Islam, it will damage the European Union's relations with its Islamic neighbours. We are not only talking about Turkey because although the Mediterranean is clearly a European sea, there is a large number of Arab and Muslim countries on one of its borders.

We must have stable borders and security in our region, and that has implications for the movement of tens of millions of young people who live in countries in north Africa where there is mass unemployment and poverty. It is not just a matter of the economic prosperity of those countries, but of assisting democratic development, good governance, parliamentary institutions and the people of
 
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the Arab world. The Euro-Med relationship—the Barcelona dialogue—and other things in which the EU has been involved must continue. That is why the EU cannot just be about economic relationships, a free-trade area and arguments about budgets and agriculture.

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