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6 Dec 2006 : Column 370

I am pleased to note that after some alarming messages from the German Chancellor about her view of the current crisis in Turkey’s negotiations, she has accepted that a dialogue with Turkey must continue, however difficult that is. She has accepted the view of the European Commission, which is probably far too tough. At least she is not going further, as she previously seemed to be indicating. The attitude in Germany and France is not driven by an important geopolitical consideration of the future of Turkey and its relationship with the EU. It is driven by domestic attitudes and politics, which in my view is wrong.

The EU Commission has frozen eight out of the35 chapters for negotiation. Those are the free movement of services, the right of establishment and freedom to provide services, agriculture and rural development, financial services, fisheries, transport, customs union and external relations. There are huge demands on Turkey and all derive from the difficulty of creating an adequate customs protocol.

As several hon. Members have noted, one of the barriers to negotiations is the key Turkish demand that the isolation of Turkish north Cyprus be lifted. On a strict legal interpretation, Turkey is in the wrong and should admit Greek Cypriot ships to its ports. However, there are powerful domestic reasons why that is not happening and the issue remains a flashpoint.

I am proud of the fact that in the House there is almost universal recognition of the importance of Turkey’s membership of the EU ultimately. I agree with the Prime Minister, who said in Latvia recently that it would be a “serious mistake” to send a negative signal to Turkey over its EU membership. There are presidential elections in Turkey at the beginning of next year and parliamentary elections at the end of the year. In 2008 there are European elections in a number of countries, notably Germany. So there is a window, but not a large one, for us to consider Turkey’s future.

Because of all the to-ing and fro-ing over the future of Turkey’s accession, there is waning support for it in Turkey itself. Some polls suggest that a majority would wish to break off accession talks altogether, and there is certainly a considerable decline in the number of those who favour joining the EU at all.

At this critical juncture, when there are so many huge problems in the middle east which wash up on to these shores, Turkey has a unique role to play. It has excellent relationships with Israel and with Arab countries. It has committed its troops to Lebanon. There is a Jordanian-Turkish initiative known as the neighbourhood forum which could at least be the basis for countries in the region coming together to consider the terrible problems that are besetting it.

I hope that a clear message goes out from this House and from this Government that for all Turkey’s difficulties we need to support its accession and to encourage it to overcome those difficulties in a proper, constructive dialogue with the European Commission.

Mr. Clifton-Brown: My hon. Friend mentioned next year’s elections in Turkey. Does he think that it would be deeply regrettable if Turkey were to move from being a secular state towards becoming an Islamic state because it felt snubbed in its membership negotiations with the EU?

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Mr. Spring: My hon. Friend is absolutely correct. Turkey is a secular nation. For all its human rights and religious minority difficulties, it is moving in the right direction. A snub at this point may well have that effect, with awful consequences not only in Turkey but in the surrounding Islamic countries, which would draw a clear message from it.

I should like to refer to another country on the borders of the European Union—Ukraine. Many of the states of central Europe were offered the prospect of membership of the EU and NATO as an ultimate reward for their diligent pursuit of democratic and market reforms, but Ukraine received no such serious offer after it had declared independence. That has rendered its transition that much harder and given political ammunition to those in Ukraine with a deep mistrust of the west. Western scepticism may thus have become a self-fulfilling prophecy.

The orange revolution constituted a critical point of departure in the EU’s new relationship with Ukraine. Over the past year, there has been a concerted effort to upgrade the EU-Ukrainian relationship, despite persistent political instability in Ukraine. That includes pressure on it in terms of creating a market economy, making progress on anti-dumping legislation, efforts to simplify visa rules, and a feasibility study on an eventual free trade agreement. The idea that this should, in stockbroking language, be “all or none” is irrelevant. In relation to a country such as Ukraine, which is of huge geopolitical significance given all the pressures, particularly from Russia in the north, we should have flexible arrangements that enable it to participate in aspects of life within the EU in order to encourage it to make progress on democratic practices, human rights and opening its markets without ultimately requiring full EU membership. Such flexible arrangements would work much more satisfactorily in the globalised world that we inhabit.

The EU considers Ukraine a priority partner country and calls for an increasingly close relationship. Indeed, an EU-Ukraine summit took place in the autumn of this year. It is very important that the country be stable and successful. For example, a large amount of the energy supplies that come westwards from Russia comes through Ukraine. Regardless of the outstanding problems, we should extend the hand of friendship to Ukraine at this time and try to develop these relationships. Ukrainians look to this country to lead on the matter. Many have contributed to the economic life of this country and listed some of their companies on the London stock exchange. They feel comfortable in this country and look to us to take a more pragmatic view than some of our European partners of the European Union and its future.

Let me consider two other countries that have been especially problematic. Other hon. Members have commented on Croatia and the western Balkans. However, I should like to consider the problem of Moldova, which is a close neighbour of existing EU countries. In February 2005, the EU and Moldova adopted a bilateral action plan. It is a political document that sets out strategic objectives to be fulfilled over a time frame of three years. It covers strengthening administrative and judicial capacity, respect for freedom of expression and freedom of the media. Furthermore, there are issues linked to border management and the fight against
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trafficking and organised crime. Of course, it is a poor country with a low standard of living, yet we need to encourage it to undergo reforms.

Moldovans are in a difficult position because they are so dependent on the Russians. We should assist them through opening up our markets and encouraging investment and other reforms so that their dependence on Russia lessens and they become more integrated with the more sophisticated economies to their west.

The same applies to Belarus. That country is in a difficult position through an unsatisfactory political process. Again, the assistance that the EU pledged through social and economic development needs tobe provided in a future European neighbourhood partnership agreement. We have learned in the past few years that we cannot escape the problems of our neighbours. If there are problems in those countries, we get migratory flows and all the attendant difficulties.

Trying to find a way forward in the western Balkans, trying to find a way of securing Turkey’s accession to the EU and stretching out the hand of friendship to Ukraine to involve it more in the western side of Europe and our conduct of our national lives is in our interests. From a strategic, security and economic point of view, those countries will be increasingly dependent on us. We should encourage them to undertake the reforms that will enable them eventually to have a much improved standard of living, give their people hope, and, in doing that, underpin democratic standards in their countries. The people of these countries would welcome that.

4.32 pm

Kelvin Hopkins (Luton, North) (Lab): I apologise for being unable to be here for some of the early part of the debate.

It is a great pleasure to participate in such debates, which always constitute a learning experience for me, and possibly for others, because we always hear something new. However, we inevitably have to say some things more than once, and I regret to say that I wish to repeat some points that I have made previously because they bear restating.

I support the comments of my hon. Friend the Member for Birmingham, Edgbaston (Ms Stuart) on her concern about the lack of sceptical voices at European Commission level and in the European institutions. It is as though the structures are organised in such a way that no dissenting voice is heard. My party introduced proportional representation on a regional basis for elections to the European Parliament. One of the effects was to eliminate all the Eurosceptic voices from our delegation. I do not know whether our leaders intended that, but that was the result. We now have universal Euro support among the Labour Members of the European Parliament, and that is worrying.

Many millions—sometimes majorities—of people in European Union nations are sceptical about the European Union’s actions, what their leaders do on their behalf and, especially, what the Commission does. They should have a voice. If the current position continues, deep disillusion could set in with the idea of co-operating in Europe. That would be damaging even for those who, like me, oppose the European Union as such. I have always believed that we should have a looser association
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of member states, co-operating voluntarily but retaining our national democracies, so that we can retain our distinctive choices about how we govern ourselves and how we are governed while working in a brotherly—I would personally say comradely—way with people in other member states. I have contact with representatives of political parties of the left in Scandinavia, Germany and elsewhere. We have some very productive discussions, but we are sceptical about the European Union.

With the election of Angela Merkel as the new German Chancellor, we have seen another federalist obsessive taking significant power and driving towards a future for the European Union about which I have profound doubts. She seems determined to bury the independence of member states and the democratic rights of their citizens in a much more bureaucratic, authoritarian state of Europe. She also wants to revive the European constitution. Some months ago, a parliamentary colleague clapped his hand on my shoulder and said, “Now that we are not joining the euro and the European constitution is dead, nothing divides us.” He said that with a smile on his face. I replied that I hoped that that was the case, but unfortunately it does not seem to be because there are people—Angela Merkel is one of them—who are determined to revive the constitution and to drive everyone to join the eurozone, which would be absolutely disastrous.

The system of different countries having the European presidency for six months gives each country its moment of glory and influence, and that is fine. However, in relation to our discussing how strong borders should be, or whether they should be porous or almost non-existent, Finland has the presidency at the moment, and it does not worry about borders. Finns have told me that people do not want to go to Finland because it is a very cold country with an extremely difficult language—that is what Finnish politicians say. However, people do want to go to other countries in the European Union. The countries that are affected by changes in the strength of borders need to have more influence in the debate; they should have a bigger say in what goes on than those who are either unaffected or keen to have less policing on their borders because they want to move away from the poorer countries towards the richer countries. It is understandable for the people of those countries to take that view.

The next country to hold the presidency will be Germany, which seems determined to revive the apparently dead parrot—this one might still have some life in it—of the European constitution. I urge my right hon. Friends on the Front Bench, who will be negotiating on our behalf, to uphold the traditional British position of saying no to a federal state and yes to an association of independent member states, and to ensure that that is what the future of Europe is all about.

Mr. Cash: Much as I admire the hon. Gentleman, I have to say that what he is saying is not exactly accurate. Labour Members went straight through the Lobby voting in favour of the European Union and its treaty a few months ago, on Second Reading of the European Union Bill.

Kelvin Hopkins: There are sceptical voices across the Chamber, and some of us are seeking reassurance.
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There have been occasions on which I have not supported my party in some votes on European matters. One of the reasons why I speak in so many of these debates is that there are many others in the party and in the broader Labour movement who take a similarly sceptical view of the European Union—not on a narrow, nationalistic basis, but on a socialist basis. They want to see a democratic, socialist and egalitarian Europe, not a free market Europe that drives inequality rather than equality. That is a legitimate position, and it is certainly one that I hold.

Apparently, Germany is determined to press ahead and to try to revive the European constitution. I want to make sure that my right hon. Friends on the Front Bench tell those in Germany that the constitution is dead. I hope that the French, Dutch and other European nations, which have either not made the decision or were due to have a referendum, will say the same. I also hope that the constitution will not be slipped in by the back door and effectively implemented without a formal decision.

Some Commissioners take an even stronger line. Margo Wallström, for instance, said that we should not depart too much from the constitutional treaty, even without ratification. Actually, she wants to go further by taking out some of the provisions for unanimity that remain in the draft treaty, so that everything is decided by qualified majority voting and the European Union is much more centralist. We must say to her and others that Britain does not support that view, and that we want to retain unanimity on crucial matters, which must be decided at national level. I am sure that other nations feel the same.

The hon. Member for Stone (Mr. Cash) was almost praising the Chancellor for his management of the economy, as we have benefited from being outside the eurozone—

Mr. Cash: I said that being in it would be over his dead body.

Kelvin Hopkins: I note the hon. Gentleman’s comment from a sedentary position. Nevertheless, the economy has done well in recent years, and we must give credit to the Chancellor for presiding over that success. His greatest success, however, is that he and the Treasury kept us out of the eurozone—a splendid decision that I fully support. In doing so, he has saved the British economy an enormous amount of difficulty— [Interruption.] Well, it is at least possible that he may soon be the Prime Minister, and I hope that he can continue with his splendid views on such matters in that new office.

Those who want to join the euro do not appreciate the importance in managing an economy of having control of the value of one’s currency relative to other currencies, and of having control over interest rates. If macro-economic policy cannot be controlled at member state level, inevitably, states will be tied to a policy that is not necessarily in their own interests. We have seen that inside the eurozone already. Some countries joined the euro at a parity that was too high for their economy, and some joined at a low parity, which has been advantageous. Ireland and Spain have benefited tremendously from that as they were forced to reduce their interest rates.

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According to studies of the appropriate interest rates in countries given the state of their economies, the Spanish and Irish interest rates should be higher and the German interest rates much lower. It is no surprise that demand is constantly depressed in the German economy, as Germany cannot reduce its interest rates to stimulate demand. It does not do too badly in terms of trade but, internally, it is constantly in near recession as it cannot reduce interest rates and therefore raise domestic demand.

Fortunately, we have careful control of our interest rates, which we adjust monthly when necessary. We might argue about whether they should go up or down, but at least we can adjust them according to our own economy and our own needs. If we chose to do so, we could also take steps to adjust our exchange rate in relation to the currencies of our trading partners, such as the dollar or the euro. Every major economy ought to be able to do that, and if they cannot they will get into deep trouble at some time or other.

The best example of that is Argentina. It tied the peso to the dollar and made it completely exchangeable, and the middle class sold all their pesos and bought dollars, which almost destroyed its internal economy. After 10 years of a nightmare, it broke away from the dollar, devalued and started to rebuild its economy. Fortunately, it produces splendid wine, of which it now sells a lot, which is helping its economy grow again. For 10 years, however, the madness of tying a weak currency to a strong one almost destroyed what used to be the strongest economy in south America. We do not want to go down that route. Any country that chooses to bury its currency in that way would make a big mistake.

I would draw a distinction between a stable exchange rate system like the one that we had after the war and a single currency. With a stable exchange rate system, in extremis a country can change the value of its currency relative to others. We have done that a couple of times in our history, and it has had a tremendously beneficial effect on our economy. At present, of course, the euro is suffering greatly from the fact that the dollar is being devalued, and I expect it to have yet more problems because of the inability of individual member states to adjust their own currencies relative to the dollar. It is too rigid, too inflexible.

Ms Gisela Stuart: The problem with the eurozone is not just its inability to set its own interest rates, but the fact that if it is to be effective as a single currency, much deeper political integration will be required, along with much greater transfers of funds collected centrally to parts of the zone. We will have to face up to that problem sooner or later.

Kelvin Hopkins: My hon. Friend is absolutely right. McDougal’s report about 30 years ago pointed out that without the capacity for major fiscal transfers between member states, it would be impossible to run a single currency without a single tax and benefits system allowing standard benefit and tax rates throughout. The system would not, in the end, work, and there are those who think that, in the end, the eurozone will fail for that reason.

A few weeks ago, the danger arose that citizens of our country would be able to buy alcoholic drinks on
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the internet without paying the duties and taxes that are due here. No doubt that would have been tremendously attractive to heavy drinkers, but it would have caused mayhem. It would have destroyed the alcohol licence and retail trades in Britain—and at a time when we are grappling with the problem of excessive drinking among young people and the binge-drink culture, an ocean of rock-bottom-cheap alcohol would have suddenly flooded the country. It would have been a nightmare.

Interestingly, however, the European Union backed off. It did not press its case. There must have been some pretty heavy lobbying behind the scenes by the Treasury, and rightly so. I assume that the Treasury said, “If you do that, the European Union will be in serious trouble with us”, and as a result the EU backed off from the mad idea of allowing people to buy cheap drinks in Latvia. I believe that Latvia was the country that would have benefited: it was to be the warehouse providing cheap drinks for the British—indeed, for the whole of Europe.

It is significant that when a point is reached at which the European Union might be seriously damaged—might start to fall apart because it has done something utterly and totally daft—it backs off. It has backed off over this issue, and I hope that it will continue to do so when the daftest ideas arise. I certainly hope it will do so when it comes to pressing the case for the European constitution and forcing countries to join the eurozone, because that would cause serious difficulty for Britain and many other countries.

I support my right hon. Friend the Foreign Secretary and her Minister for Europe in their negotiations. I hope that they will adopt the position they have adopted in the past and will represent Britain and our view effectively in Europe next week.

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