Uncorrected Evidence 114

CORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 114-ii

HOUSE OF COMMONS

MINUTES OF EVIDENCE

TAKEN BEFORE THE

FOREIGN AFFAIRS COMMITTEE

GLOBAL SECURITY: UK/US RELATIONS

16 DECEMBER 2009

MR IVAN LEWIS MP and MR JOHN RANKIN

Evidence heard in Public

Questions 147 - 209

USE OF THE TRANSCRIPT

This is a corrected transcript of evidence taken in public and reported to the House. The transcript has been placed on the internet on the authority of the Committee, and copies have been made available by the Vote Office for the use of Members and others.

The transcript is an approved formal record of these proceedings. It will be printed in due course.

Oral Evidence

Taken before the Foreign Affairs Committee

on Wednesday 16 December 2009

Members present:

Mike Gapes (Chairman)

Sir Menzies Campbell

Mr. Fabian Hamilton

Mr. Eric Illsley

Andrew Mackinlay

Mr. Malcolm Moss

Sir John Stanley

Examination of Witnesses

Witnesses: Mr Ivan Lewis MP, Minister of State, and Mr John Rankin, Director, Americas, Foreign and Commonwealth Office, gave evidence.

Q147 Chairman: Minister, welcome. This is your first appearance before this Committee and we appreciate your coming along on the day of the Christmas Adjournment. Mr. Rankin, I don't think you've been before the Committee before, so welcome. As you know, we're doing an inquiry on Global Security: UK/United States. It's one of a series of global security inquiries we've done throughout this Parliament. We've touched on a number of other areas of your ministerial responsibility. We've looked at South East Asia, the Far East, South Asia, Afghanistan and the Middle East. We haven't looked at North Africa specifically, but we've looked at most of the issues that you seem to cover. In fact, your ministerial responsibilities seem to be very wide ranging. Have you ever estimated how much of your time you're able to devote to this role as the Minister dealing with North America?

Mr. Lewis: First, Chairman, I thank you for the opportunity of appearing before the Committee, although I accept it's not an entirely voluntary arrangement. I look forward to having, as long as I have this job, a positive, constructive and full and frank dialogue with the Committee. The Committee fulfils a crucial role in terms of improving our foreign policy and has done over many years.

In terms of my respective responsibilities, I guess you could argue that if you look, for example, at the core of my responsibilities, which is the Middle East and the Middle East peace process, our relationship with the United States in that context is absolutely crucial. If you look at my responsibilities with regard to the political elements of our mission in Afghanistan, our relationship with America, in terms of development, politics and security, is again at the heart of our being able to move forward successfully in terms of those issues. If you look at the work that I'm engaged in on nuclear proliferation, President Obama has taken a very important lead in trying to have a new push, particularly with the NPT review coming up next year and the nuclear security conference that he has called for the spring of next year. If you look at most of the responsibilities that I have, the relationship with America is pretty pivotal in terms of achieving our foreign policy objectives, our national interest. And therefore, in different ways, that relationship is absolutely crucial.

Q148 Chairman: Have you any idea percentage-wise how much of your time it takes?

Mr. Lewis: I cannot really put a specific percentage on it. For example, I intended to visit the United States only last week, both to talk about the Afghanistan-Pakistan issues and also to major on the Middle East. Because of parliamentary business, I was not able to make that visit. I hope to be able to do so in the new year. I was recently at the annual G8-Arab League conference, at which Hillary Clinton was present, to look at the question of human rights, but inevitably that conference was dominated by debates and discussion about the Middle East peace process.

I wouldn't like to put a percentage on it, but our relationship with the United States is pretty central to a significant part of my responsibilities, and us being able to move forward and achieve our foreign policy objectives.

Q149 Chairman: Over the years, it has become very clear that our relations with the US, as our most important ally, are quite often dominated by the Prime Minister-President relationship. That is topical in terms of the Chilcot inquiry; it is also clearly important in terms of Afghanistan. In reality, does the role that you and the other FCO Ministers play act as a kind of second-tier relationship to the US, when in fact No. 10's and the Prime Minister's relationship with the United States is more important?

Mr. Lewis: I hear that the Foreign Secretary and Secretary Clinton are very fond of each other. But it is a serious point. Given some of the big issues that we face right now-whether it be Afghanistan or the Middle East peace process-that relationship, as well of course as the relationship between the Prime Minister and the President, is pretty crucial. If, for example, you look at some of the work that we do that is US-EU, the relationship between Secretaries of State can be very significant and important-as important in some ways as that between Prime Ministers and Presidents. And it's on a more operational day-to-day basis.

Q150 Chairman: How much does personal chemistry matter in this?

Mr. Lewis: You and I have always got on rather well, Chairman. No, the serious answer is that I had not had any experience of international relations until I was appointed to a development position in DFID about 18 months ago. I was the Minister for Africa in DFID for 10 months, and I have been a Minister in the FCO since June. My experience was entirely in domestic policy.

What I learned was that personal chemistry, in terms of diplomacy and foreign policy, is absolutely crucial. If you can form a relationship of trust, respect or friendship-although that is perhaps less important-then you can achieve objectives based on that trust and respect. But if that is absent from the relationship, it can be a major problem-a major obstacle-to achieving some of your objectives. It does matter. It's not the most important thing, but it can make a significant difference.

If people feel able to speak freely and frankly, sometimes that can move situations forward, where in a more formal engagement people have to be guarded, have to be defensive, have to some extent to be careful about what they say in the public arena. That private dialogue, that sense of confidence and trust between individuals, is a far more powerful factor in terms of foreign policy than is often given credit for.

If you look at history and the relationships between different leaders, from what I hear, the relationship between Kennedy and Macmillan was a close one, and that made a significant difference. We are all aware of the relationship between Prime Minister Blair and President Clinton and later President Bush. I also believe that the relationship between Prime Minister Brown and President Obama is strong and largely based on shared values. If you look at the new American Administration and the policies of this Prime Minister and Government, there is a very common set of values, which, these days, binds us together. The way we responded to the financial crisis was an important illustration of the mutual respect that exists between President Obama and Prime Minister Brown.

Q151 Andrew Mackinlay: I entirely agree with much of what you've said, Mr. Lewis, particularly the things about personal chemistry. Two things occur to me. Since 1997 there has been an enormous turnover of Ministers in what is broadly your portfolio. I know that there has been a case of somewhat shifting sands, because Prime Ministers Blair and Brown would have probably added a few things here and there, but for the core part of your duties, there must have been numerous Ministers. In fact, on the law of averages, you must be halfway through your period of office. How many Ministers have there been?

Mr. Lewis: Ministers of State?

Andrew Mackinlay: Yes, covering your broad portfolio, the North America portfolio.

Mr. Lewis: Since 1997?

Andrew Mackinlay: Yes.

Mr. Lewis: I don't know.

Q152 Andrew Mackinlay: Could you let us know? It would be helpful because we are talking about the machinery of Government.

Looking at this long list, you would have an interface with not one person in the Administration, but a number of Under-Secretaries or whatever. So, in a sense, you, or whoever holds your portfolio, are having to pedal twice as fast. Would I be correct in saying that in the State Department you would not have just one opposite number?

Mr. Lewis: If you went through my responsibilities, you would look at the Middle East as being an area of responsibility, Afghanistan, nuclear proliferation, Asia and you could go on. You are right, there would be a number of people in the Administration who would be my equivalents, but some, without being totally close, would be politicians and some would be diplomats.

Q153 Andrew Mackinlay: Point taken, but you are the office holder and the North America man. In terms of developing the important personal relationships that you referred to, you are, at different times during a week or a month, having to interface with different people of an equivalent rank to yourself. You are not dealing with just one.

Mr. Lewis: That's true. To be fair, that has brought together Foreign Secretary, Secretary of State, Prime Minister and President, and we should not forget that. They have a corporate relationship that looks at all the issues in the round. You are right, though.

Q154 Andrew Mackinlay: What I haven't understood, and I don't think we hear about this, is that in No. 10, certainly since Tony Blair came in and probably in Margaret Thatcher's time, there has been-to use a shorthand-a White House created. Among all the policy departments, there are people whose names I do not know, who deal with transportation, defence and foreign affairs. At your level as it were and the level of your colleagues who give you support, what is the mechanism, the modalities, of a thing that you might want to do or say? How and to what extent does this have to be cleared with No. 10? How is it done? I will be candid with you. I get the impression that there are some people in No. 10 who, across the range of Whitehall including the Foreign Office, have to be consulted. Can you explain how that works?

Mr. Lewis: I'll be very honest in answering this question. I have been around Government quite a long time now. I was in Education for a parliamentary term, the Treasury for a year, Health for two and a half years and Development. In this role in this Department, the attempt by No. 10 to intervene in decisions that I or others have sought to make has been minimal. Bear in mind, though, I have been in this Department since June. Relative to other Departments and other portfolios, it has been minimal.

Q155 Chairman: Is that because the Foreign Office does not have much legislation?

Mr. Lewis: No, I think there is a healthy relationship between No. 10 and the Foreign Office. I think there is a great level of confidence and trust in the work and the respect that the Foreign Secretary has built up around the world in terms of leading Britain's foreign policy issues. Where appropriate, clearly the Prime Minister takes the lead, for example, in terms of the recent G20 issues and the requirement to respond to the international crisis. It seems entirely appropriate that in those circumstances the Prime Minister and the Chancellor were in the lead.

On other issues, the respective roles and responsibilities of No. 10 and the Foreign Office are at an appropriate level. The Foreign Office feels that it is an organisation that is empowered, enabled and respected to get on with job that it is charged with doing, but there will be big strategic national interest issues where it would be totally irresponsible of a Prime Minister not to want to have a very significant role. We have all seen in recent times that the Prime Minister's leadership, for example on Afghanistan, has been very important, in terms of saying that we need complete clarity about the mission in terms of the security, political and development issues, as I have said. The appropriate balance of responsibilities between No. 10 and the Foreign Office currently feels to me to be about right.

Q156 Sir Menzies Campbell: There's a question of equivalence here, isn't there? If President Obama is leading on the issue of multilateral nuclear disarmament, it would be very peculiar indeed if the British Prime Minister wasn't responding to that. So, to some extent, I guess you would agree that the level of engagement may be set by others outside the UK.

Mr. Lewis: Absolutely. President Obama made it very clear that one of his priorities was going to be nuclear proliferation. He also, early in his Administration, made it clear that the Middle East was going to be important, and of course he has had very difficult choices to make about American engagement in Afghanistan and where that goes in the future. You rightly say, based on many years' experience, that it would be slightly bizarre if on those big issues the Prime Minister did not have a very intensive bilateral relationship with the President of the United States.

In terms of operational responsibility-daily attempts to veto and interfere in decisions-I am trying to say that the relationship is a very healthy and positive one. I say that in the context of experiences in other Departments over a number of years. There is a healthy respect, and I mean that in a positive, not a cynical, way, between No. 10 and the Foreign Office.

Q157 Sir Menzies Campbell: You used an interesting expression: you said that there was a healthy relationship now. Without being overly legalistic, I infer from that that you may think that, in the past, the relationship hasn't been that good. We are not conducting a parallel inquiry to Chilcot in this Committee-

Mr. Lewis: That's a relief to hear.

Sir Menzies Campbell: But there are certainly some who argue that, in and around the decision making in relation to military action against Iraq, the relationship between No. 10 and the Foreign Office was perhaps not as complementary as it ought to have been.

Mr. Lewis: In some ways it would be easy to say that what I have said was a criticism of the previous Prime Minister, but I would refer you back to your response to me-that where Presidents lead, there is an inevitability about Prime Ministers having to engage. It was absolutely clear, wherever we all stood on the decisions that were made on Iraq, that the President of the US was making the decisions and taking lead responsibility, so you yourself, by the helpful comment you made in response to my question, underscore the reason why Prime Minister Blair was so heavily involved in providing the leadership on the whole Iraq war question.

Q158 Sir Menzies Campbell: I don't want to take this too far, but one would normally expect that, while the decision making may rest in No. 10, No. 10 would want to rely comprehensively on the informed and experienced advice that you would expect to get from the Foreign Office.

Mr. Lewis: I think that that is true. We've had this debate over many years, and it will never end. The officials' and advisers' job is to advise, and the Ministers' and the Prime Minister's job is to decide. Sometimes, the critical mass of advice will be reflected in the decisions that are made, and on other occasions, it won't. I think we've got to be careful: we could rewrite the history about Iraq and say that all foreign policy analysts and experts were against the decision to go to war in Iraq, but that would, of course, be an inaccurate presentation of the situation.

Sir Menzies Campbell: I'm not suggesting that for a moment.

Mr. Lewis: A lot of people are running away from the fact that they were part of that decision, because subsequently it has been seen to be highly unpopular in many quarters. I think we've got to be quite careful. Of course the decision to go to war in Iraq was a political decision at the end of the day-we shouldn't forget that Parliament also voted for it-but, equally, to say that foreign policy advice was ignored in that decision would be unfair.

Sir Menzies Campbell: You tempt me with that answer, but the Chairman's beady eye forces me to resist that temptation.

Chairman: I think it would be wise if you did. We could spend the whole time talking about history, but we're trying to look at UK-US relations, where we are now, and where we will be going forward.

Q159 Mr. Hamilton: Minister, a number of witnesses in the past few weeks have told us that British politicians tend to talk up our relationship with the US-not officials, but politicians in particular. Do you accept that that's the case?

Mr. Lewis: The reality is that the United States is a superpower-the only remaining superpower in many ways, in the round, even though there are emerging superpowers. The reality also is that we have had for a very long time, and continue to have, a special relationship with the United States. Often, our foreign policy interests and objectives and the national interest are best pursued by our engagement with the United States of America. I don't know whether we talk it up-it's for others to make that judgment-but it is an incredibly important relationship. Is it to the exclusion of other relationships? Clearly it isn't. The US has important relationships with many countries, including other European countries, and so do we; but it is our key strategic partner, and it is the superpower in today's world.

Q160 Mr. Hamilton: How would you respond to the claim that we've heard that some American officials, and indeed US politicians, get very frustrated with the claim that we have the special relationship and therefore we should be spoken to first? Actually, we've been accused of being infantile in the way we push this special relationship to the exclusion of all others.

Mr. Lewis: I think what's infantile is when the press report that "Britain was snubbed yesterday" because President Obama visited Germany or France, or because a meeting between the Prime Minister and the President didn't happen on day one of a summit, but day three-those are easy headlines. What is certainly true is that we should not think of ourselves as the wise old head and the Americans as the new kids on the block, who need the benefit of our wisdom in terms of the decisions that they make. I think they find that quite offensive.

Q161 Mr. Hamilton: Have you, in your role, felt any sense of frustration on the part of American politicians in particular, or even officials?

Mr. Lewis: No.

Q162 Mr. Hamilton: You don't think that they believe we're obsessed with the special relationship?

Mr. Lewis: No.

Q163 Chairman: In your earlier remarks, Minister, you talked about the economic crisis and the role that President Obama and Gordon Brown were playing together on those issues. We've had written evidence from the Atlantic Council that talked about how New York and London are sometimes portrayed as rivals, when in fact they are mutually dependent financial hubs. In the world we're living in today, in what way are we, as the UK, benefiting from this economic relationship-I will not use the term "special relationship"-between our two countries, with their respective Governments investing $400 billion in either direction? Is that a great advantage to us at this time? Or, conversely, given that the global meltdown started in America, is our relationship with the United States causing us more damage than would have been the case if there was less of an interrelationship?

Mr. Lewis: I think it's a good question, but there isn't any evidence to support the contention. Our financial and trading relationship was incredibly important-I shall explain why in a second-and will be so going forward. We should not use the economic crisis as a justification for saying that the relationship is unhealthy.

Chairman: I did not say that.

Mr. Lewis: That we have suffered disproportionately as a consequence of the relationship is not a contention that I accept.

Let me just give some important facts about the nature of our economic and trading relationship. The US is our top export destination and our second-largest trading partner overall. The UK is the United States' sixth-largest trading partner overall, and we are the United States' largest partner in trade specifically in services. The UK is a major destination for US foreign direct investment. American capital stocks in the UK totalled nearly $400 billion in 2007, employing approximately 1 million British people. In 2008-09, 621 US foreign direct investment projects meant that there were 13,000 jobs, and that represents 36% of total inward investment projects and 37% of new jobs from FDI. The UK is the largest foreign investor in the US. At the end of 2007, the UK had an investment stock of nearly $411 billion in the US. In 2006, American affiliates of British companies supported, it is estimated, over 900,000 American jobs. All those statistics demonstrate the strength of the economic and trading relationship.

Q164 Chairman: But, getting back to my question, is there a danger that the relationships have become unbalanced because of the financial links? I understand that there is a big trade relationship and foreign direct investment, but what about the financial institutional relationships between London and New York?

Mr. Lewis: I don't think that a lesson to learn from the recent financial crisis is that the institutional relationship between London and New York was inherently the problem, or will be a problem in the future. There are many lessons to learn from the recent economic crisis, but I don't think that the Committee necessarily wants to go through them; a Committee that is meeting next door will probably want to go through them with the Chancellor of the Exchequer. I don't think that one of the lessons to learn is that somehow the institutional relationship between ourselves and the United States was a cause of that problem.

Q165 Chairman: But would you accept that the measures that we take to deal with problems need to be co-ordinated with those taken by the US Administration and that, when dealing with this problem, we need to ensure not only that our economy retains its vitality, but that we have effective regulation on both the trade side and the financial side?

Mr. Lewis: I totally would accept that, but we have to be careful. Our Prime Minister was calling for more effective global regulation for a very long time. One of the major obstacles to that was not the current American Administration, but the previous American Administration, because there were serious ideological differences. Again, we often don't talk about them when we discuss the special relationship; there are sometimes very different political and philosophical views, and very different values in play.

Do I agree with you that one of the lessons we need to learn is that we need global regulation that is far more effective than was the case in the run-up to this financial crisis? Most definitely. Did the concerted agreement that fiscal stimulus was the best way to go make a significant difference, and the fact that that was done at a global level? Absolutely. The United States and Great Britain, in a sense, decided that the G20 would be the most appropriate organisation to take forward our response to the financial crisis. Those are some of the lessons that have been learned. However, in a sense, they are about political choices and political decisions; they are not necessarily about the weakness of the institutional relationship.

Q166 Chairman: May I conclude on this? You referred to the US Administration, but one of the big problems-people in this country often fail to recognise this fact-is that the President is actually far less powerful than a Prime Minister of this country with an effective working majority. Are you confident that we will be able to get our reform agenda agreed by the US Congress, as opposed to simply by the Obama Administration?

Mr. Lewis: I am not sure that I can predict the outcome-nor would you expect me to-of senatorial and congressional elections in the future. But, I hope there would be a sufficient critical mass in terms of consensus to realise that business as usual is neither acceptable nor desirable, and that politicians who advocate that will earn the ire of their electorate and their population. We know there are people on the far right who almost seem to articulate business as usual in response to the financial crisis, and who continue to resist the need for more global regulation and greater levels of responsible behaviour by those in financial services. There are some people in our own country who do not really agree with the notion of fiscal stimulus through these difficult times. So, of course, there are people with different ideological positions, but I would hope there is a mainstream majority consensus that will support the frankly clear lessons that need to be learned from the financial crisis. Those lessons should be learned by people of all political persuasions.

Q167 Mr. Moss: Minister, may I return to the special relationship? We were told by Sir Jeremy Greenstock, "British officials do not use the term 'special relationship.'" It seems to be the Americans who deploy the term more frequently. For example, when the Prime Minister visited Washington, the President's official statement spoke carefully about a special partnership. Later in the year, Secretary of State Hillary Clinton spoke of the historical importance of the special relationship. Do you think that this term is overused and raises unreasonable expectations of its importance?

Mr. Lewis: I think it's a reality for political reasons, trade reasons, reasons of defence, security, intelligence, and in terms of the respective people, the culture, language, media and history. It's a special relationship. Now, the key is how you define it. As I said earlier, is it an exclusive special relationship, or do Britain and the United States have a special relationship with other nations and institutions? Clearly, the answer to that is most definitely they do.

Q168 Mr. Moss: So you don't believe the Americans are using it because they think that is what we would like to hear on our side?

Mr. Lewis: Let me try to look at some of the issues very quickly. Look at the history-two World wars and the Cold War. Look at the more recent developments. Again, I am not going down the Iraq route, but consider the way we responded after 11 September-forgetting what subsequently happened. The shock of that incident in America and the fact that Britain identified with the way that Americans felt in the immediate aftermath of 11 September was very significant in terms of the special relationship. We can debate Iraq and subsequent events, but there was tremendous appreciation by ordinary Americans that Britain stood shoulder to shoulder with them in the immediate aftermath.

I have talked about the G20 already. There are also the issues of Iraq-for good or for bad-Afghanistan, the threat that Iran poses to the world, the nuclear proliferation matter that I referred to earlier, Middle East peace and climate change. Arguably, Britain has played a very important role internally in the United States in helping to change the nature of the public debate about where America needs to stand on climate change. In all of those issues-both historical and contemporary-the relationship between the United Kingdom and the United States is very important.

Q169 Mr. Moss: In an earlier reply, you were slightly disparaging about the press and the writing up of the so-called relationship. Does that affect the Foreign Office's work in any way? Are they simply reflecting in their commentary what the Foreign Office actually believes?

Mr. Lewis: No. What I was disparaging about was the way that the press seek at moments, somehow on a random basis, to decide that because a meeting did not take place-

Q170 Mr. Moss: It took place in the kitchen, for example.

Mr. Lewis: Yes. That the special relationship was no longer special, or that there was a conflict in private. It is the way it is characterised-the way it can be bastardised from time to time-that is the problem, not whether there is a special relationship or not. There is, so we should not be in denial about reality. We can have an intellectual debate-we could probably go on for hours, days or months, and it would be great fun-but there is a special relationship, for good or for bad, and I think it is largely for good.

Q171 Andrew Mackinlay: I want to ask you about areas such as the Mohamed court case and the litigation that is now going on about whether or not there should be disclosure of intelligence and so on. How fragile and difficult is this area of work? What sort of pressure are you under?

Mr. Lewis: You know more about intelligence matters than I do, Mr. Mackinlay, I suspect. To give you a very straight answer, we were given intelligence in confidence by an ally. It is very clear to us that, for whatever reason and in whatever circumstances, for us to release that into the public domain would be a breach of trust and confidence that could seriously damage our relationship not just with the United States, but with others who give us intelligence in confidence. The second issue is that, frankly, it is a responsibility of the United States if it wishes to make public its own intelligence. It is not our job to make public intelligence gained by another country.

Q172 Andrew Mackinlay: On this narrow issue, am I not correct that there is an international rule-it might be a convention? It is not just the United States that gives intelligence; you get intelligence from other states. Is there not a convention on the ownership of that? Isn't there a case for the ground rules of this to be dealt with either by a treaty at some stage, and/or with legislation in the United Kingdom? It seems that this case has left an unsatisfactory situation. It would appear that our courts diligently are going to say, "This should be disclosed". There is the political dimension to which you referred-it is a matter of fact. Isn't it time, both in relation to our bilateral relations with the United States but also internationally with allies, for treaty agreements supported by legislation to codify what can or should be disclosed?

Mr. Lewis: I would say to you that the specific case is not concluded, so it is very important that we do not prejudge the outcome. As you know, the Foreign Secretary has made it clear that we intend to pursue this. If you are asking me that if, at some stage in the future, a court made such a decision, would that raise the potential need for a different regime or set of rules around the passing and transfer of intelligence, the honest answer is yes, it might well do. We also do not want to make assumptions about where this court case is going to end.

Q173 Andrew Mackinlay: No. Can I go on to a related area? I shall cite two examples, but not with a view to arguing them. There is the McKinnon case and a case I noticed at the weekend of a high-profile Iranian, who had been Iranian Ambassador to Jordan. He is in the United Kingdom, obviously, and the United States wants him extradited. Aren't these fraught areas? Clearly, the United States feels it should have people "on demand"-I don't use those words in an emotive sense-under the treaty. It might well again be that our courts-as neither case is concluded-take a different view. Are we going to keep running into some of these troubles? Obviously, the United States feels very strongly about both cases.

Mr. Lewis: Chairman, can I quickly use some statistics to try to address as honestly as I can the true situation?

Chairman: Briefly.

Mr. Lewis: Very briefly. Since 1 January 2004, 30 persons have been surrendered from the US to the UK, and 53 have gone the other way in the same period. These figures show that more people are extradited to the US than vice versa. Fair enough, but that merely illustrates that more US fugitives flee to the UK than happens in the opposite direction. Those disparities are not at all unusual in extradition. Far more people are extradited from Spain to the UK than vice versa, to give an alternative example to the United States of America. At the heart of the argument is the notion that the treaty we have signed with the Americans is inequitable and unfair.

Q174 Andrew Mackinlay: I haven't said that yet; I was going to come on to it. I think that you have slightly missed my point. If, for instance, the United Kingdom courts say no, you will come back to a similar situation as you have even with intelligence, as it were, with the United States Administration tearing their hair out and saying, "Why do the Brits do this?", but our courts probably might say-

Mr. Lewis: Hold on a minute. I would say that one of the cases is still in court, so we have to be very careful. We have agreed an extradition treaty. If a British court decides in the context of the British legal system that it is not appropriate to extradite somebody-I am not talking about an individual person at the moment, because that is not appropriate and the Home Secretary has given very full information to the Home Affairs Committee on the issue-clearly the American Administration will have to respect that decision.

Andrew Mackinlay: One final thing, if I may just change gear-

Mr. Lewis: They might not like it, but they will have to accept it.

Q175 Andrew Mackinlay: Thank you.

It is a bit of history now, but it is in the lifetime of this Committee. When the United States-United Kingdom treaty was signed by Home Secretary Blunkett, it was enacted in the United Kingdom because it was done by royal prerogative. I think that there was some supporting legislation, but basically the treaty was signed and enacted. However, it took another two and a half years for it to go through the Senate, which is again part of its perfectly legitimate process. A number of issues were raised by that, one of which was the fact that there was immediate disparity for some period of time because it was definitely one way.

That also raises the issue of our stewardship in our Washington mission. It struck me that either it was not geared up, or that it did not understand that a United Kingdom mission to the United States is not just to the Administration, but to the other arm of government-Congress. There was not sufficient lobbying. They were not saying to the Senators, "Here, look, this is grossly unfair. It is unacceptable", but there was an inordinate period of time-I think it was two and a half years-when the US extradition treaty was applying only one way. I don't know if any lessons have been learned from that.

Mr. Lewis: I suppose the one lesson that is slightly churlish is that our mission doesn't control the decisions that are taken by the US Senate or Congress. As for influence, that is totally unfair. I shall give you an example from recent times. For a start, we regretted the fact that it took them two and a half years, but we did try and influence them to move quicker. We failed-if you like-to win that argument, but the idea that we did not even try is not fair. We did, but in the end-you are a politician-there was realpolitik playing in their Senate for whatever reason. I was not involved in this in those times, but there were clearly issues.

I shall give you an example of how our embassy has been massively influential in terms of the Congress in America: on climate change. We have worked on Capitol Hill on making the case, building a coalition and explaining. Only last week, our Ambassador was given the platform to write an article about where we stood on climate change policy in the run-up to Copenhagen in the Senate's major publication that all Senators read. It is very unfair, in a sense, to say that we didn't try to influence and that we didn't use all the capacities that we had. We did try but in the end, for whatever reason at the time, it took two and a half years.

Q176 Sir Menzies Campbell: The reason is well known: it is that the Irish lobby descended upon the Senate, which is, as we know, very susceptible to the Irish lobby in the United States, as indeed are all elected politicians.

Can I come back to the mechanism? As Mr. Mackinlay has quite properly pointed out, we had passed the domestic legislation, so we were giving effect to a treaty which the United States had not ratified. Would it be possible in future simply to put a provision in any such legislation to say that it should not come into effect until such time as the contracting party to the treaty has ratified the treaty and brought it into force?

Mr. Lewis: I would have to take legal instruction on that. I imagine that the answer to your question is, I guess, it would be possible. It depends whether you take the view-it depends where you're coming from-that this extradition treaty was an example of Britain caving in to the wishes of the Americans as an acquiescent partner, or that we entered into the treaty because we thought it was right and proper, fair and equitable. A lot of the subsequent allegations and criticism have been that we signed up to an extradition treaty that demonstrated that we were somehow acquiescent to America, rather than an extradition treaty that we judge to be fair and equitable in the context of a relationship with the United States of America.

Sir Menzies Campbell: I have never made that charge. I made the charge-indeed, to Prime Minister Blair-that these treaties are supposed to exemplify the principle of reciprocity; and in this case, because of the different standards of proof required, that principle was not observed. That, I think, is the continuing issue, which will, I suspect, reassert itself until such time as the obligations of each country are put properly into balance.

Q177 Chairman: Minister, the evidence that we have received so far in our inquiry into the relationship between the UK and the US has been a little bit contradictory. Former Foreign Secretary Lord Hurd referred in a written submission to Britain being "a junior partner" of the United States, but our former ambassador, Sir David Manning, said that he didn't like that idea; he thought that we should simply say that we worked in our own national interests. Where do you come down in this debate?

Mr. Lewis: I think that we are a smaller partner-that is pretty clear. I think we always attempt to pursue our own national interest in our foreign policy objectives in the context of our relationship with the United States of America. In terms of the equity and the power relationship, the question really is: can we provide evidence or examples where, as a consequence of our position and our objectives, or partially as a result of our influence and our position, we have been able to shift the United States' position?

Q178 Chairman: Give me some examples.

Mr. Lewis: I can give you some examples. On the response to the economic crisis, I think our Prime Minister took arguably the lead role on the decision that the G20 ought to be the appropriate body, and on the fiscal stimulus. On climate change, there is absolutely no doubt that we have played a significant part in influencing American public opinion, as well as American political opinion. Where we stand on matters such as Iran is taken very seriously by the Americans. The new American Administration have taken very seriously Britain's views on the Middle East peace process. Finally, to give an example that is not often used-I know it does not strictly fall within your Committee's remit-America is pretty keen to adopt the British aid and development model, which represents quite a significant shift from the aid and development model that the previous US Administration adopted. There is a number of examples where we, as a result of the special relationship, can say that we have moved, or contributed toward moving, American policy.

Chairman: That is helpful.

Q179 Sir John Stanley: Minister, we will come a little later to the defence and intelligence dimensions of the special relationship, so the question I'd like to put to you is: leaving those two on one side, do you think there are any aspects of the British Government, whether at ministerial or at official level, that we could honestly say are truly valued by the US Administration? Are there any particular aspects of which the State Department or the White House say, "My goodness, yes, the Brits have really got something right here. We'd better pay attention."?

Mr. Lewis: I thought that I had just read out a long list.

Q180 Sir John Stanley: Those were specific policy areas. Are you saying that the Americans value the levels of expertise that we have or that they value our judgments? What are you saying?

Mr. Lewis: I think that the State Department has a massive amount of respect for the intelligence, capacity and expertise that exist in our Foreign Office-yes, I do. I think that you know better than most that the defence establishment in the United States has respect for our security and intelligence services and our defence forces, too.

Sir John Stanley: We will come to that in a moment. Thank you.

Mr. Lewis: There is the development issue as well. They are very taken by our successful development models.

Q181 Sir Menzies Campbell: The perception is that the United States wants a relationship with a Europe that is more co-ordinated than it has been in the past. The Lisbon Treaty has at last been ratified and the appropriate appointments have been made in relation to the presidency and the High Representative. Do you think that Britain has a particular role to play in Europe's presenting to the United States a more cohesive front than it has in the past? If you do agree with that proposition, how would you see it being carried through?

Mr. Lewis: I suppose that Britain's role depends on who is in government in Britain at the time. But the serious answer is that, of course, Britain has an important role in saying that it is important that Europe, as often as possible, can speak with one voice on some of the biggest challenges that the world faces.

We know, though, that even under Lisbon that will be done through consensus and not through qualified majority voting. Therefore, I think that Britain does have an important role. Equally, I do not accept the model that Britain is the only bridge between the United States and the European Union; I think that that is mistaken. Because we have a special relationship, clearly America will look to us to give an analysis of where the European Union is, its direction of travel, the challenges and the issues. Equally, America has important relationships with many other member states-France, Germany and others.

We do have a role to play. We think that on the big global issues Europe's speaking with one voice wherever possible is a healthy and positive thing. Our analysis of whether the Americans welcome that is that, on balance, they do.

Q182 Sir Menzies Campbell: This goes back to what was attributed to Kissinger, although no one is quite sure that he actually said it-"If I want to find out what Europe thinks, who do I phone?" Are you confident that the Lisbon Treaty will make the answer to that question more easily obtainable?

Mr. Lewis: I do not think that that will happen overnight; I think that it is an evolutionary process. There will be issues on which the European Union will continue to struggle to achieve consensus because different nation states will judge that they have different national interests or national perspectives at stake. But I think that over time there is absolutely no doubt that Lisbon will lead to more co-ordination in terms of foreign policy and to more integration. As the Foreign Secretary has said, there are centres of power in the world, going forward-China, the US-and if Europe is to sit round the top table and be big hitters it will be very important that Europe can speak with one voice on many crucial issues. It won't come overnight; it will take time and be evolutionary. Lisbon is an import step in the right direction.

Q183 Sir Menzies Campbell: Two particular issues-Iran and how we deal with Russia. Would you apply your guarded optimism, if I may so describe it, to either or both of those?

Mr. Lewis: Over time, but the first thing to say is that we know that for many of the accession states, there are realpolitik and historical reasons why their relationships with and feelings about Russia will be quite different from others for some considerable time. You cannot be in denial about the reasons for that.

If you look at the threat of Iran, what people say on the other side of the argument to ours is that what they need is more time, that we should give Iran more time and that we need to engage. My argument is that we do. We want engagement, diplomacy and a political solution. That is where E3+3 stands. But having offered that, there reaches a point, when Iran has not responded in any shape, way or form, and has not demonstrated any sense of a willingness to respond positively, at which we have to consider what further action we need to take. We cannot keep being told by the backmarkers that they need more time. With more time, the clock is ticking on their capacity to develop nuclear weapons.

Yes, over time I am optimistic that even on those issues we can have a more unified and integrated approach. I think it would be very na�ve to pretend that there aren't some incredibly difficult issues to get through before we have complete unity of purpose on these issues.

Q184 Chairman: Can we now move on to the defence relationship, which John Stanley touched on? Given that the United States is a major producer of military equipment and the most important world military power, isn't it clear that it doesn't really need allies to bring much in terms of effectiveness or military components to what it is doing, but that it really wants allies to give legitimacy, international status and support to what it wishes to do?

Mr. Lewis: With the new American Administration, we have seen a massive shift to a commitment to multilateralism. The thread running through all of Obama's foreign policy pronouncements, initiatives and decisions has been a complete shift from unilateralism to-

Q185 Chairman: My question is not about negotiations, diplomacy or multilateralist approaches, but about military effectiveness and military alliances. It is a separate point. I accept entirely what you said about the Obama Administration's approach and their multilateralism. My question is what added military value the UK gives to the US, which it does not have itself?

Mr. Lewis: I am not a defence expert, but I certainly know enough to think that one of the challenges in Afghanistan, for example, is the very local, community work of trying to peel off those people who don't want to associate with the Taliban and don't want to be a haven for al-Qaeda. If we can work with those people at a very local level, we can persuade them to take a different course and we can offer them alternative economic hope. Our troops have a tremendous track record in that kind of local, community-based work. That does not suggest that the Americans don't or can't do that, but I know that our troops and forces are particularly respected internationally for that kind of work. I would argue that that is one example of where we add value. It is not just about military might.

Q186 Chairman: But isn't there a problem that we will increasingly confront, and which we are confronting today? Because of budgetary pressures and the growing technological gap, although we are the United States' leading military ally, to sustain that role, we get to a big problem. We have had witnesses who have said that to us already. We are not able financially to sustain the level of expenditure and commitment that will mean that we will forever be able, if you like, to keep up with the main focus of where the United States is going in military terms. The budgetary pressures mean that unless there is a significant increase in military spending, and clearly that is not going to happen and the statement yesterday by the Defence Secretary is a clear indication that it is not going to happen, our influence at the military level, and therefore associated political influence, is likely to decrease in future.

Mr. Lewis: That depends on a whole range of factors. It is absolutely true to say that there is no doubt-you mentioned the statement by the Secretary of State for Defence yesterday and we all know the economic climate that not just Britain functions in but other countries function in too. I think that it depends on a range of factors. It depends on the strategic review of the future of NATO. What will the implications of that review be in terms of the future role of different countries and their armed forces? It depends on the direction that the UN takes in the future. It depends on US foreign policy; we have seen a massive shift in terms of the US's approach to foreign policy, just by virtue of a change in Administration. I think that it depends on a whole variety of factors as to what that will mean for the future. I think that it is very difficult to be sure.

Q187 Chairman: You know very well Minister, and the Foreign Secretary confirmed it last week when he spoke to us, and Peter Ricketts also, that the Foreign and Commonwealth Office has got rid of all the fat and is now cutting into the bone. In the circumstances where we are the United States' closest ally, could we not be more effective as an ally if we were to put resources into those areas where we can really make a difference, that is, the diplomatic, intelligence and foreign policy side, rather than pretending that we can keep up with the quality, in sufficient quantity, of military innovation? In a sense, we face a choice. We cannot do both effectively because we have not got the resources to do it. Shouldn't we be arguing that the money should be put into the, if you like, soft power aspects to a greater extent, because we are able to then play, and you yourself have said so, an influential role through our diplomacy and through other means?

Mr. Lewis: Yes, but we equally have to maintain strong defence forces, which have the capacity to respond to the challenges of a changing world.

Chairman: I am not denying that.

Mr. Lewis: It is that balance that we have to get right. It is difficult to know where you draw the line though, Chairman. When you talk about proportion of spend or resources, where do you draw that line and how do you make those judgments?

Q188 Chairman: Perhaps we need, as when the Labour Government first came in and George Robertson was the Secretary of State at the time, a foreign-policy-driven defence review.

Mr. Lewis: I certainly think that we need, in the decisions that we make about our future defence, foreign policy considerations at the heart. If you look at some of the biggest challenges that the world faces, I think that we are all increasingly aware of the link between security, governance and development, and therefore we need to look at that in terms of how we have a more strategic approach.

Mr. Hamilton: In fact, former Defence Secretary and Foreign Secretary, Malcolm Rifkind, said exactly that on the radio, Chairman: that we need a foreign-policy-driven defence review pretty quickly. When we were in the States in October, we were told by some of our interlocutors that there is concern within some parts of the US military that the UK operation in Afghanistan in particular has been hampered by lack of resources. Do you attach any importance to these claims, or are they not really based on much?

Mr. Lewis: I do not accept them. I can give you alternative quotes if you want me to, or I can pass them to the Committee.

Q189 Mr. Hamilton: Please do.

Mr. Lewis: Very quickly, Brigadier General Nicholson, following his first visit to Lashkar Gah said, "We will be seeing a lot of each other in the summer months. I think we"-the US and the UK-"will be extremely closely co-ordinated because if we co-ordinate our actions we will have a significantly greater effect". That was back in May. In August, General Petraeus praised British troops. He said, "I have always been impressed by the courage, capacity for independent action, skill and exceptional will of your soldiers. It's what sets forces in the UK and I'd argue the US and a handful of other countries apart from others in the world".

Q190 Mr. Hamilton: Let me interrupt you for a minute. I do not think anybody suggested that our forces weren't brave, weren't excellent fighters, or weren't brilliantly trained soldiers. The perception was, and some people actually made this very clear to us when we were in the States, that because of the economic crisis and the clampdown on public spending-as we heard yesterday in the Secretary of State's statement in the House-we simply did not have the resources to support our excellent quality troops. There was no criticism of our troops at all.

Mr. Lewis: If you look at the statistics, the figures that the Secretary of State for Defence announced yesterday, that the Prime Minister and Foreign Secretary have spoken about over the past few months, helicopters, tanks, armour, equipment-

Q191 Mr. Hamilton: But at a huge cost to our ability in the future to go to other theatres.

Mr. Lewis: With all due respect, you said that a lack of resources had hampered our ability to do the job. You did not talk about the future. The Chairman asked me about what the financial crisis meant for the future in terms of soft power, hard power and the balance of spend on military versus civilian. I would not want to give the impression that we have not made the resources available to support the tremendous courage and professionalism of our people on the front line in Afghanistan. Today I believe that we have got those resources.

Q192 Mr. Hamilton: Are you not worried that there is this perception in some quarters in the US military? How are we going to overcome that? Is it damaging to our relationship in Afghanistan with the Americans? I know you have quoted some very important figures, General Petraeus particularly, but is it not damaging that certain people within the US military have this perception?

Mr. Lewis: I think it is quite damaging that there are some people in Britain who are highly anti-American, but they do not represent the British Government or the highest levels of the British Government-or, I think, most mainstream parliamentarians. So, no, I don't think we should respond.

Q193 Mr. Hamilton: To be fair, those critics are not determining our policy or our relationship in Afghanistan.

Mr. Lewis: But I think that the General Petraeuses of this world are rather respected figures, and maybe we should listen to them rather than to some unnamed, anonymous individuals-without being too disrespectful.

Q194 Mr. Hamilton: That's fine. You might hope then that General Petraeus makes that view known among his own people as well.

Mr. Lewis: I think they ought to speak to the American troops who work alongside the British troops on a daily basis, and talk to them about the tremendous mutual respect for the professionalism and the expertise.

Q195 Sir John Stanley: Minister, you probably agree that across the whole of the special relationship, the most special element is the intelligence relationship. If you have something very special and if you are prudent, you ask yourself, "What are the risks to which it is exposed and how can I protect myself against those risks occurring?" What do you see as being the main risks to which our special relationship on intelligence is exposed?

Mr. Lewis: Can you give me some examples?

Sir John Stanley: Well, you might say that it could be at risk if we were unable to continue to finance the particular individuals of the requisite experience and capacity; you might say that we cannot finance the necessary physical equipment; you might say that, if there was a serious breach of security, that could put it at risk; or you might say that the way in which litigation proceeds might put it at risk. It is for you to answer my question.

Mr. Lewis: Okay. I think the first responsibility of any Government is the security of their citizens. However difficult the financial climate, I would imagine that one of the last things that responsible Governments would seek to reduce is their intelligence capacity, particularly when we face the real threat from al-Qaeda and associates in terms of fundamentalism. Undoubtedly, the greatest threat would be that there are going to be some very tough decisions, which politicians are going to have to make, in the years ahead in relation to finite public resources, but it would be short-sighted if those politicians were to take the view that intelligence was an easy target, especially as in recent years we have spent-as you are probably aware-more than most. We have significantly increased the amount of money that we have spent to protect ourselves domestically in the intelligence system. In my view, the biggest threat would be to do with finance. Any Government needs to remember that their first responsibility is the security of their citizens. In a modern world, one of the most important front lines, if not the most important front line against that threat, is the intelligence services.

Q196 Sir John Stanley: As you know, we have been to Washington quite recently and we have had a very full explanation of the extreme financial pressures that are coming on our post in the US. Can you give the Committee any assurance that those financial pressures will not extend to those who are an integral part of our defence relationship with the United States?

Mr. Lewis: I can give you guarantees that we will do nothing to undermine the intelligence capacity that we have in the context of that relationship. Can I guarantee you that in any future spending review no changes will be made to any individual budget within the Foreign Office or any other Department? Of course, I can't give you that guarantee. The Government said in the Pre-Budget Report that there are certain overall global budgets that will be protected at a certain level-that is in the public domain, in the Pre-Budget Report-but when you get to individual budgets and individual missions, those decisions will have to be considered in the period ahead. But we will not make any decisions that compromise our fundamental intelligence capacity.

Q197 Sir John Stanley: Do you see any risks to our intelligence relationship arising out of legal proceedings and how human rights might be interpreted in the UK courts, to the detriment of our relationship on intelligence with the States?

Mr. Lewis: Of course, if the courts make decisions that raise new questions that have never been asked before on the nature of the transfer of intelligence, we will have to act on that and reflect-as parliamentarians and as Government-on what that means. Are we satisfied with rulings of court that may, in our view, undermine and jeopardise the protection of our citizens? If we are concerned about such rulings, do we wish to change the law? On reflection, do we believe that those court rulings were fair and reasonable in the context of protecting people's human rights? We will have to have a grown-up and mature response. Also, the United States is a mature democracy. There are times in the United States when its courts make decisions that are unhelpful and inconvenient to its Government, but that means that you either change the law or you decide that the courts, on balance, have it right.

Q198 Sir John Stanley: Would you agree that the fundamental principle underlying intelligence co-operation between sovereign states is that, where a sovereign state agrees to share intelligence information with another sovereign state, it is done on the basis that that material remains wholly confidential, usually to a very limited group of people. Do you agree that that is the fundamental crux of any intelligence relationship?

Mr. Lewis: I totally agree.

Q199 Chairman: Can we get back to this question about our ability to influence the American debates? From what you have said in your earlier answers and from what we have received in evidence from a number of people, including academics who gave evidence to us in previous sessions and some of the written submissions, the way in which we try and influence the United States has now moved into a wide variety of areas. You have talked about the economy and climate change, and Mr. Mackinlay referred to extradition matters-there is a whole host of issues. Given the resource pressures that we are under, do we have sufficient resources on the ground in the United States, which means principally our Washington Embassy, to be able to shape the debates not just with the Administration but with Congress? Do we have enough people able to engage with the Governor of California or the Governor of the State of New York or whoever else on some of the issues that affect us? Because the agenda is constantly becoming broader and more technical, do we have enough specialists able to deal with this? Do they get sufficient support when they go there? We had some disturbing evidence. Lord Wallace referred to the Chief Scientific Adviser going to Washington and not being allowed to see classified material. Are we moving into a situation where we have not got enough people actually in the US who will be able to really influence those debates?

Mr. Lewis: The question of whether we have enough people is a difficult one. Clearly, our Embassy does an excellent job in the United States. It punches above its weight-it is incredibly effective. If you look at, for example, its use of modern media, it is one of the most watched embassies in the entire world, because it chooses to be very open.

Q200 Chairman: Do you mean officially watched or unofficially watched?

Mr. Lewis: Probably both, Chairman. To give a tangible example, the work that was done in the States-not so much in Washington, but outside Washington-on trying to influence states when the American Administration were very negative about climate change, was massively important in terms of some of those states providing leadership. Governor Schwarzenegger is the most well known example, but there are others. That is an example of where we clearly did have the resources and we clearly did have reach and we clearly did influence policy in a very significant way. We decided that, clearly, we were not going to shift the Administration's position, so we needed to find other ways of influencing American policy makers and American public opinion.

To turn the question on its head, one of the things we will have to ask ourselves as we enter this very difficult period of financial constraint is how we can be smarter and more strategic about how we use our resources. You have already spoken about defence and intelligence resources; the same applies to our use of soft power. As we look at these difficult financial times, we will have to become a lot more strategic and a lot smarter. To be fair to the leadership of the Foreign Office, a tremendous amount of work has already been done to achieve that in recent times. As you said, it is not as if there is a lot of fat around the system to start with. Like any Government Department, we will have difficult decisions and choices to make. There is no way of ducking those decisions.

Q201 Mr. Hamilton: Two weeks ago, Sir David Manning, our former ambassador in Washington, gave evidence to this Committee and he said, "I was the ambassador who had to preside over closing four posts in the United States and I was very unhappy about doing that... I think that a much greater threat to our impact is to cut back on key people, particularly those who are working in areas of real interest to the United States-not just the political and military areas, but science, crime and international terrorism. We have really got something to offer. If we are forced to continue closing our network across America, or cutting back in salami slices, so that it is almost a virtual network, we will find it very much harder to influence the Americans in the ways that we want". My first question is: how damaging has the removal of the overseas pricing mechanism been to the work of our US network?

Mr. Lewis: Well, it has had an impact-there's no point in pretending otherwise. It has an impact on that and on other elements of our work as well. First of all, it is important that, when you have to make reductions, you make those reductions in a strategic, considered way. You do not just make them in the context of the short term; you plan ahead for the challenges that you can see over the next decade in terms of those strategic decisions. We have made difficult choices and we will have to make further difficult choices in the period ahead.

Q202 Mr. Hamilton: The Foreign Office is currently reviewing a strategic review of our US network, isn't it? Can you tell us a bit about the rationale behind that, when you think it will be completed and what sort of post closures are being contemplated?

Mr. Lewis: No. There is no formal strategic review under way as far as I am aware, specifically in the US anyway. What I am referring to is-

Mr. Hamilton: I am clearly misinformed then.

Mr. Lewis: Or I am misinformed. One of us is.

Q203 Mr. Hamilton: If there isn't, there isn't. [Interruption.] Mr. Rankin has confirmed that. That is absolutely fine. If we had to cut back further on the network-our presence in the US, including personnel-given what you have said and given the reality of the situation, do you think that that would have the effect of reducing our influence, in Washington, on the US Administration?

Mr. Lewis: That depends on the decisions that were made. To an extent, we depend on our ambassador, we depend on our senior management, we depend on the people who work in the Foreign Office in London to advise us on making difficult choices-how do you make those choices and do the least damage to your capacity to exercise influence? That is the challenge when you have to make difficult budgetary decisions. We cannot look at our American mission or network in isolation from our activities elsewhere in the international community. We have to make considered and balanced judgments.

Q204 Mr. Hamilton: The US is clearly looking away from Europe, given demographic and economic shifts in the world, and perhaps putting more of their resource in terms of diplomacy into other parts of the world. Is there not an argument that we should put more resource into our network in the US to actually be able to shout louder and get their attention, given that their attention is moving away from Europe quite dramatically?

Mr. Lewis: There is an argument, but which other part of our activities in the Foreign Office would the Foreign Affairs Committee like to recommend we take those resources from?

Mr. Hamilton: I think we need to have a bit of time and get back to you on that one. That is not a decision for us to make.

Mr. Lewis: That was not a churlish response.

Chairman: We are not arguing for you to have a smaller budget, we are arguing for you to have budgets from some other Departments.

Mr. Lewis: Absolutely. I hear what you say, Mr. Chair. Your contention is that in terms of the importance of America and the nature of our relationship with America, it should have a greater share of the overall budget.

Andrew Mackinlay: The scale and the fact that it is federal-there are states.

Mr. Lewis: It's not just about Washington.

Mr. Hamilton: And because their attention is being diverted elsewhere, inevitably, because of the shifting polarity of the world economically and politically.

Chairman: Have you finished?

Mr. Hamilton: Yes, thank you very much, Chairman.

Q205 Chairman: Can I ask you, finally, how the Foreign Office tries to influence public opinion? We understand that you have four priorities in the US: the global economy, which you have already referred to; Afghanistan and Pakistan, which you have touched on; the Middle East, which you have also mentioned; and climate change. How do you measure, in terms of shifting the debate or changing the decisions in the US system, how effective you are with that public diplomacy in the US? Is there a way that you rate your performance? Do you have those awful boxes with red, amber and green and decide if you've met them or not?

Mr. Lewis: I do not think that it is as scientific as that. I am sorry to bore the Committee by keeping on coming back to climate change, but that is the most contemporary example of where clearly Britain has had significant influence. Are you talking about public opinion?

Q206 Chairman: Well, it is think-tank opinion as well. It is the US public opinion as well as informed opinion.

Mr. Lewis: We have done a lot of work and made a lot of progress on climate change. I also think another area is the Middle East peace process, where we have really pushed and pushed the argument for the urgency of a two-state solution. While we are all very concerned at the lack of progress in recent times, the fact that in a sense it is now conventional orthodoxy in America to believe that the only way forward is a two-state solution, with a viable Palestinian state alongside a secure state of Israel-that that is no longer a source of debate and is the policy position of the mainstream majority-is an important change. So I would say that climate change and the Middle East are two examples of where I think we have significantly affected public opinion, or certainly insider opinion-former opinion as well.

Q207 Chairman: So if we get into a position where locally engaged staff in the United States have to go on unpaid leave, where you are drastically cutting your entertainment budget and you are unable to host receptions at the Embassy because you have run out of money, that would seriously undermine the public diplomacy work of our Government in the USA.

Mr. Lewis I am not sure that many British people would say at a time of financial hardship that cutting back on the odd reception is a bad thing for Governments to do when ordinary people are having to make difficult choices too. It is a difficult balancing act, but I take what you say about staff. Of course it is regrettable that we have had to take this course of action in terms of local staff. It is not something that any employer should or would want to do.

All I can say to contextualise the matter without lessening its significance is that it is fairly usual in America, when seeking to reduce spend, to give staff unpaid leave. Culturally, in America that is not as, maybe, bizarre as it would be in Britain or elsewhere in the world, but that does not lessen the impact on the staff or the service. Of course it is regrettable, but if we have budgetary, fiscal responsibility, we must find ways of exercising that responsibility and staying within the allocated budget. We ask people to make difficult choices.

Q208 Chairman: Okay. Can I now take us to the long term? Over the years, we have tried to build up networks, such as through the Marshall scholarships and the work of the British Council. There is clearly an important relationship between UK Universities, with which the British Council assists, and partners, programmes, schools and so on. Is there not a need to boost that in the US, because the demographics of the United States are changing significantly with the large rise in the Spanish-speaking population, and immigrants from all over the world? If we are to retain this long-term relationship, we are no longer talking about a relationship with the East coast and the Atlanticist view of the world. We are now dealing with a country that looks more and more to the Pacific-to Asia-and which internally has a population with global connections rather than mainly European connections.

Mr. Lewis: We know that a number of eminent people were part of the Marshall scholarship programme, and that as a result of that they are often commentators in America about the importance of the relationship between our two countries. We also know that, interestingly, a high proportion of the new Obama Administration studied in the United Kingdom. Therefore the answer to your question must be yes. We must reflect, in our educational relationships, the changing nature of America, as well as of the world. I would like to see more investment in future, but I must be frank. Those decisions would have to be taken in the context of tough financial decisions, but strategically you are making a very good point. It is a powerful way of cementing and strengthening our relationship on a long-term basis, and it should not be seen as a minor matter, or a side show.

Chairman: We have a final question.

Q209 Andrew Mackinlay: I do not want to open up a new front at all, but when I first got elected to the House of Commons, I was on the Transport Select Committee, which was talking about open skies, and it is still apparently talking about open skies. Although it is a matter primarily for Lord Mandelson's Department, I guess, in that commercial area there seems to be a major cultural and business difference between us still, which we do not seem to have any influence over. Although we have rightly focused on foreign policy, open skies is such a big trade issue that it has a foreign policy dimension, doesn't it?

Mr. Lewis: Mr Mackinlay, you will understand if I decide not to tread on Lord Mandelson's shoes. I do not have a detailed response.

Chairman: Perhaps you can write to us.

Mr. Lewis: I can write to the Committee on that issue.

Chairman: Minister and Mr. Rankin, thank you very much for coming along today. This has been a valuable session, and we have covered a great deal of ground. Early in the new year we will produce our report, so we found this session extremely useful.

I thank all the officials in your Department who helped us with this inquiry, both those in the United States, in Washington and New York, and the people we deal with daily here in London. I wish them all a very happy Christmas.

Mr. Lewis: May I return the favour, and wish all Members of the Committee a very merry Christmas and a happy new year?