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Lord Bridges: My Lords, I am grateful to the noble Lord for giving way. I think the difference between us is rather less than he makes out. The point that I sought to make was that in the German experience that country's federal system has worked very satisfactorily. The Germans give a certain word to that. They are therefore inclined to feel that when the same word is used in connection with a wider European construction, that must have some good points too. We have not had that experience, so we approach it from a different angle and therefore have this misconception. I am not sure that the noble Lord is saying anything different from what I said.
Lord Beloff: My Lords, I believe I am. The Germans might say, "Look, we do frightfully well under a federal system; why don't you have one United Kingdom? Why don't you have Scotland, Wales, Mercia and Northumbria like the German Lander? It's a much better way than having a centralised government". It would be a piece of advice which we might or might not take. But they do not say that. They are saying that the United Kingdom as a whole must have the same experience and the same position as a German Land, and that is a very, very different matter.
It might work, let us say, three or four centuries from now. Economic and cultural intercourse between the states of Europe may develop such links across the borders that all feel themselves to be Europeans, as all Americans feel themselves to be Americans. But at the moment the idea that the Danes are willing to be taxed to support the social services in Greece is rather far-fetched. It is essential now that this subject be properly debated. One of the great difficulties is that, while in this House we have a chance to discuss it once or twice a year, there has never been an issue of such importance to the future of this country that has been so little debated in public. That is perhaps because the
Baroness Blackstone: My Lords, before the noble Lord sits down, will he accept that while I do not particularly mind being patronised by him and told that my position is one of an innocent, I do rather dislike being misrepresented? Will he accept that my only reference to M. Chirac was to say that we on this side of the House support the stance he took in relation to the building of further Jewish settlements on the West Bank? I made no comments about his motivation, nor about any European initiative in the Middle East and whether it would work. The position I took was the position of the Labour Party. It is one that is also taken by the Government which the noble Lord, Lord Beloff, from time to time supports.
Lord Beloff: My Lords, I am very deeply affected by the thought that I could have intentionally misrepresented the noble Baroness. I can only say that the trouble with these debates is that even when they are not time-limited we feel that there is a time limit. My point is that, had it not been the intention of France to re-establish its position in reference to Syria and Lebanon, the question of Jewish settlements on the West Bank, important though it is, would not have figured much in M. Chirac's pronouncements.
Lord Wallace of Saltaire: My Lords, I rise with some hesitation to follow the noble Lord, Lord Beloff, since much of what I first learnt about British foreign policy--learnt, I hope, as well as I could--was from the then Professor Beloff at Oxford. I also learnt much about federalism from the then Professor Beloff, who was at the time chairman of the Liberal Party's "machinery of government" panel. As I recall, he was in favour of a federal structure for Britain. I still look forward to a time when Scotland may have as strong a position as Schleswig-Holstein in a federal European Union. I indeed look forward to the time when a partnership of nations may apply as much to a United Kingdom of several nations as the British, or English, Government that we now have wishes to apply to the European Union itself.
I wish, however, to follow the noble Lord's suggestion that the exam question set was that we should discuss the Queen's Speech. I shall confine myself to several of the statements made therein. I wish to discuss in particular the commitment to the enlargement of NATO and of the European Union.
I read the reports of the Bergen NATO ministerial meeting with some puzzlement. It seemed to me that the US Secretary of Defense acted remarkably unilaterally not only in his dealings with the Russians but also in his announcement to the representatives of the Baltic states as to why they were not to be considered as members, at least not within the foreseeable future. I was relieved to see in the article in The Times last week by the Secretary of State for Defence that he sees more than one round of NATO enlargement. The fear of other east European states is that Poland will come in with one or two others and that will be all. I hope that the Minister will reassure us that it is indeed the commitment of this Government that NATO enlargement will not stop with the first two or three to enter.
I was also relieved to see in the Secretary of State's article a strong commitment to partnership with Russia. If the enlargement of NATO is to involve at the same time a negotiation of partnership with Russia of the sort which Bill Perry was talking about, perhaps involving a treaty, then we are indeed talking about the transformation of NATO. We need to talk about the way in which NATO and the OSCE combine together in the
However, I see the enlargement of the European Union as much more fundamental, important and difficult. It is clear that the Baltic states will come into the European Union. As we advance towards the first enlargement, it is important that we think about how we can take into account the more difficult states which are unlikely to join immediately. It would be extremely easy to leave Romania and Bulgaria outside. Many of us would happily leave them outside for a very long time. Albania, Slovakia and Croatia also create real problems for us all. But, if we are talking about the future security and prosperity of Europe as a whole, then we need a concerted policy towards all of them. That is not something which Britain can do alone. It is something which any British Government must work out in the closest possible concert with its partners--Germany, France, Italy and other countries.
The second point I wish to raise is what seems to me to be the illusions in the Queen's Speech about Britain's role in Europe. It suggests that what Britain wants to see is an outward-looking, economically liberal and flexible union based on a partnership of nations, implying that the continental countries are inward looking, economically protectionist, corporatist and deeply inflexible. As it happens, the European Union has in the last two or three years been edging much more firmly towards economically liberal policies and further away from corporatism. I welcome that. It seems to me to be something which a British Government ought at the very least to acknowledge. I regret that one still hears portrayed in Conservative circles the image of a corporatist Europe versus an Asian/US model of free trade, as I remember the Prime Minister saying not long ago. The idea that the United States and the east Asian economies somehow represent the same model of free trade is something I have great difficulty in grasping--as much difficulty as the noble Lord, Lord Beloff, has in grasping the concept of federalism for the United Kingdom.
We are a European country and our economy has rather more European aspects than perhaps the Government are prepared to accept. The Government are in favour of a flexible Europe. "Flexibility" is a deeply ambiguous word and, as the Government are discovering, a double-edged sword of a word. The British Government are in favour of a Europe which is flexible just so long as it does not exclude Britain from any of the things we do not want it to be flexible about. The word is being increasingly applied by other governments to a strategy in which the purpose of a flexible Europe will be precisely to exclude those awkward British.
I am sorry to have to agree with the noble Baroness, Lady Blackstone, that the reputation of Britain on the continent, not just within the European institutions but within other governments and other capitals, is currently low. British influence in the European Union is sinking and British Ministers are becoming less effective, sadly,
My wife spoke at a conference in The Hague some weeks ago on the triangular relationship between Britain, the Netherlands and Germany. One of the guiding lights of the Conservative Right spoke alongside her. After this man had finished speaking, one of the most distinguished experts on Dutch policy, much respected throughout the Netherlands, said to my wife, "Did he set out deliberately to be rude to all of us or is he slightly mad?" If British Ministers and others leave that impression on their continental colleagues, then they are not serving Britain's national interests. I make that comment very soberly and strongly. I am conscious that it is a strong criticism to make of one's Government, but Ministers have to recognise that that is the impression that is sometimes given.
I have spent time professionally in the last three years working on the question of transatlantic free trade. I should declare an interest. I was for some time employed as the research director for the Transatlantic Policy Network. I became increasingly convinced, as many of us did, that the idea of transatlantic free trade as a transatlantic free trade area, much beloved of the noble Baroness, Lady Thatcher, is a will o' the wisp. One slips very easily into the idea that somehow we white industrial nations have closer relations with each other than we have with the Asian industrial nations. At the same time the United States is investing immense effort in developing the Asia-Pacific Economic Council. Indeed, American economic interests are as strongly engaged in relations with China, Japan and ASEAN as they are in relations with us. It is very important to keep the United States economically and politically engaged with Europe, but we should not invest time and effort pursuing the idea that there is somehow an alternative to closer involvement in Europe. The three most important countries for British foreign policy have for the last 100 years been Germany, France and the United States. They remain Germany, France and the United States, and we should ensure that we cultivate good relations with all three, not attempt to favour one at the expense of the others.
Lord Bethell: My Lords, I welcome the turn that the debate has taken and in particular the speeches about Britain's membership of the European Union and the hope that we shall eventually be able to establish a partnership of nations therein. As my noble friend Lord Beloff pointed out a few moments ago, the matter is seldom debated. If it is debated, it tends to be in 500 well chosen words straight from the shoulder in a newspaper such as the Sun or the Daily Mirror. We have very few chances in Parliament, the broadsheet press or the tabloids to discuss this most crucial of matters for our country. It is good that we have a moment to do so this evening in your Lordships' House.
The Government are to be congratulated on the efforts they are making to try to build that partnership. But I am afraid that they have been swimming manfully against a rising tide of europhobia, which in some cases has reached the level of a hatred of foreigners and in particular a dislike of Germany. That point was made by the noble Lord, Lord Weidenfeld, a few moments ago and in a debate not so long ago in your Lordships' House. It used to be the French but now it seems that the Germans have taken the honoured place of the people we most like to dislike. The question of Germany is again and again to be seen on our television screens and in the media, and is discussed by various Members of another place and in your Lordships' House.
I imagine that it is very difficult for the Government to try to face that question soberly when every few weeks they see yet another explosion of anti-German feeling. I have in mind, for instance, the recent football competition which was seen by the Daily Mirror in terms of a blitzkrieg; and references to Huns and Krauts are commonplace in the tabloid press. It was seen in the recent controversy about British beef and those responsible for the crisis about British beef. The blame was laid fairly and squarely at the door of Germany, as though Germany was the first country to have banned British beef. As I am sure your Lordships know full well, British beef was banned in the United States and Canada some years ago. If it were not for the European Union we should be very hard pressed to sell any beef at all beyond our shores. The question of compensation would also be a very difficult one to try to resolve.
The question of a single currency is very important and that, too, is hardly debated, except in terms of "Are the Germans trying to abolish Her Majesty the Queen?" or "Are they trying to do what they failed to do in 1945--take over our Parliament with their tanks?" That is the message that one sees again and again in the Daily Express or indeed in the broadsheet newspapers. If my noble friend Lord Beloff wants to see this matter debated more responsibly or carefully, I hope in all honesty that he will talk to some of his friends in the broadsheet media so that a fair range of arguments can be discussed, particularly on the question of a single currency.
Like most of the British public I am simply unable to make up my mind yet as to whether we should have a single currency and whether or not it is in Britain's interest to have it. Will being inside a single currency add to the influence that Britain wields over our own economy or will it detract from it? Some say one thing and some say another. Instinctively, most British people feel that we shall lose a measure of our own economic sovereignty, but I am not sure that that is the overbearing argument on this very complicated economic point.
How important is it for us to have control over our interest rates? In the past we have used control over our interest rates to devalue the pound. We all remember that a few years ago £1 was worth 12 deutschmarks. It is now worth little more than 2 deutschmarks. We have used the "weapon" of devaluation--if that is the right word for it--in order to keep our export industries alive. But will we always need in future to be able to devalue
Would the establishment of a single currency based on the deutschmark make Germany more powerful? It seems that there are many people in Germany who feel that the opposite is the case, if the words of my noble friend Lord Beloff are anything to go by. He said that there is now a widespread point of view in Germany against a single currency. If that is the case, Chancellor Kohl will have to answer for it the next time that he seeks re-election.
I know that there are those who believe that the establishment of a single currency based on the deutschmark would tie down Germany, as the Lilliputians tied down Gulliver, making it less likely that Germany would ever again set off on some central or east European adventure into their traditional economic space. That is seen as the political argument for a single currency. Many Germans I know share that argument. They cannot stop their inward-looking concern over their recent history. But, so much of what we read and see in Britain about this question is put in simple terms of World War II, of good against evil, of them against us and of Hitler somehow managing to rise from the grave and occupy the House of Commons. Virtually all the press, with the exception of perhaps the Independent, Guardian and Evening Standard, as well as one or two specialist bodies, share that point of view and proclaim it vociferously throughout the land.
In recent days there have been serious additions to that particular paranoia from which we seem to suffer. The famous 1990 Chequers seminar on Germany has again reared its head and been given a lot of press exposure. It is shocking to think of a seminar--I am not sure whether or not the record of the seminar was accurate, and there is a separate debate on that matter--which seemed to discuss the question of whether the German people are inclined by their nature and racial characteristics to be bullies and paranoiacs. So far as I could see, that was the gist of the report and the feeling of one or two of the people who participated in that seminar. We read that the paper was circulated to Ministers.
A recent book by Dr. George Urban described the phenomenon in great detail. It was approved by the then Prime Minister and I suppose that to some extent it became government policy. I should be very grateful if my noble friend the Minister--I am sorry that I did not give him notice of this matter--could say something or write to me about this point and tell me whether the result of that seminar, the draft report, remains government policy or was ever government policy. It happened when Germany was in the throes of unification and at a very sensitive time.
I am afraid that we have to take on board the fact that all the press reports in which Germany is taken to pieces are repeated and translated into German and many other foreign languages. They make a very loud noise throughout the world. The echoes of our generalisations on such matters reverberate throughout the world and may cause us great harm in our relations with other EU countries. Some of us saw a few days ago how the Referendum Party went to extreme lengths to show its distaste for the German Chancellor. Outbreaks of hissing and booing when Chancellor Kohl's image was flashed on the screen reminded me of nothing less than a hate session from George Orwell's 1984.
I believe that this debate is valid; but the campaign of insults on questions of single currency and others is not. We do ourselves no good by insulting our partners in the European Union or the heads of government of countries like Germany. By referring to the Second World War in terms of triumphalism we do no service to those who helped us to win that war so that democracy could triumph. It is all recycled in the German press.
I suggest that it is very un-Churchillian to take that attitude. He believed in magnanimity and was one of the first who wanted to bring Germany into the community of civilised nations as soon as possible after the war was over. Such an insulting tone, if used against any other race, would be a matter for referral and possible police prosecutions. I say that in no way to conceal or diminish one's outrage at the gruesome behaviour of the German people 50 or so years ago, but it makes no sense to see this matter in terms of racial stereotypes.
There is much that we have to proclaim about our good relations with Germany today. We are the two largest contributors to the EC budget. We have an interest in seeing sound accounting and our contributions to the budget kept within reasonable bounds. For that we need good relations with Germany. I am sure that my noble friend Lord Kingsland will confirm the fact that in the European Parliament, when we were looking for allies on any specific point, it was to our German friends among the Christian Democrats that we looked and often we found that we had interests in common.
Germany is our greatest export partner; 13.2 per cent. of our exports go there--a full point higher than our export percentage to the United States--with France coming in third at around 10 per cent. Large numbers of British working people work in Germany and Germany is the most important political force vis-a-vis our relations with the Russian Federation. In short, I believe that we have achieved an end to the hatred associated with the Second World War that used to be so powerful between us; that should have been laid to rest last summer when we celebrated Victory in Europe Day together with Chancellor Kohl, and he and his country should now be our friends.
I should like to focus on one specific aspect of British diplomacy, if only because, for all its importance, it is rarely mentioned; for example, it has not been mentioned by any noble Lord this evening. That is odd, on the face of it, because it is the largest single activity of British missions overseas. I refer to the commercial and economic challenges--above all, the opportunities--which lie ahead and to the Government's decisions on the resources they deploy in the pursuit of our interests.
The assertion that the United Kingdom is and should remain a nation with global interests has often been greeted with titters of sarcasm by those who see in that statement a form of pretentiousness on the part of a small clique of foreign policy experts and practitioners who live, so the allegation runs, irrevocably in the past and who have not caught up with a changed world in which British power and influence are vastly diminished. They are quite wrong. First, they confuse power with interest; secondly, it is they who have not kept pace with change. To demonstrate that that is the case I pray in aid not theory, prejudice or surmise, but facts--stubborn, but I hope not too indigestible.
In 1995 the UK's visible exports amounted to £152.6 billion--an increase of 13.5 per cent. over 1994. For service exports the figure was £45 billion, which is 9 per cent. more than the year before. We export more per capita than either the United States or Japan, and exports account for a quarter of our gross domestic product--more than for any of our major competitors. In the past 15 years the volume of our manufactured exports has grown faster than those of France, Germany or Japan.
The United Kingdom invests across the globe. In 1995 the stock of British overseas investment was 319 billion US dollars--second only to that of the United States itself, more than half as much again as France and over 35 per cent. more than Germany. That outward investment, if we include bank lending, brought returns in 1995 of £93 billion. In the other direction no less than 40 per cent. of North American and Asian investment in the European Union comes to the United Kingdom. As the Minister said earlier, in the last financial year alone inward investment was £7.4 billion and created 48,000 jobs.
In 1995 the British financial services sector earned £20.3 billion. The London foreign exchange market is the largest in the world with a daily turnover of 464 billion US dollars, which is more than New York and Tokyo combined. There are more foreign banks in London than in any other city in the world and the London Stock Exchange handles a greater turnover of foreign equities than all other financial centres in the world combined.
The front line is in our 220 overseas missions in 188 countries. Thirty five per cent. of the staff in those missions are devoted to helping British businessmen develop their overseas activities, the largest single overseas diplomatic activity. In 19 key locations posts seek out potential inward investors. How successful are they? The figures I have already quoted speak for themselves. But it is worth noting a report by the National Audit Office in April of this year which showed for example, that in South East Asia support from the Foreign and Commonwealth Office and the Department of Trade and Industry helped stimulate exports worth almost 80 times the cost of those services; and a recent survey of 150 leading companies revealed that 80 per cent. used the assistance provided by missions overseas and that 57 per cent. confirmed that they had won business as a direct result of that help.
So far, my Lords, so good. But there is an altogether gloomier side to this picture. The cloth of our diplomatic effort--I note that the Minister described this as our investment for the future--is stretched precious thin. In places it is downright threadbare. In spite of the heavy cuts in the staffing of some of our larger missions, 108 of those posts--almost half--have four or fewer UK based staff, 22 have only one and 21 have none at all. Meanwhile, unavoidable demand-led work grows at a rapid pace. Consular work is expected to rise by 28 per cent. over the next few years and the demand for visas by 35 per cent.
But of far greater significance than any of those factors are the cuts imposed on the diplomatic vote at the last PES settlement. The total Foreign Office budget, including the BBC World Service and the British Council--which together account for around £258 million--is about £1.2 billion. That is about 0.4 per cent. of total public expenditure. In November last year in the Chancellor's Budget that vote was cut by £82.5 million for each of the three survey years. In other words, before the end of the century expenditure on our diplomatic vote is, under the Government's present proposals, to be reduced by one-fifth; and this in order to achieve yearly savings which I calculate roughly to correspond to what we spend every two working hours on social services. I understand that the closure of overseas posts has so far been avoided, but that will not be the case if the cuts imposed in 1995 are maintained; and still less will it apply if there are to be further reductions this year.
The stark fact is that we face the prospect of becoming a nation with global interests without the means to prosecute or defend them. I find it impossible to believe that any other country in a situation similar to ours would choose to act in this way. It is notoriously difficult to obtain accurate comparisons with our chief analogues and competitors. But in round terms, even before the cuts I have described, France was spending about 100 per cent. more on its diplomatic effort than the United Kingdom and Germany more than 50 per cent.
I trust that it is not simply because of my previous professional association that I find this state of affairs--this contradiction between our interests and our willingness to recognise them and act accordingly--so profoundly depressing. And I am absolutely certain that it is not out of some romantic nostalgia for the past that I insist that the United Kingdom is a country with global interests and that a large part of our wealth and fortune, as well as our levels of employment, depend upon our ability--and, above all, on our will--to fight for them. No institution is perfect; none of our systems is infallible. But in recent years our performance as a world economic actor should be a source not of complacency certainly but of a modicum--just a modicum--of modest pride. I fear, though, that unless something is done to reverse the present trend we shall deprive ourselves of the weapons we need.
I hope, therefore, that on the issues I have raised the noble Earl, Lord Howe, will be able to give your Lordships some reassurance. I confess that, for my part, I look forward to his response but with some anxiety.
Lord Pearson of Rannoch: My Lords, all three Front Bench opening speakers today emphasised the importance of our relationship with the European Union. So it is not surprising to find the Government's policy towards Europe set out in paragraph 4 of the gracious Speech, immediately after the welcome paragraphs which refer to the defence of the realm itself. That paragraph reads as follows:
These are indeed laudable and honourable ambitions, but I fear that the Government have little chance of achieving any of them. Let us take the first sentence, which suggests that the present IGC might agree to amend the Treaty of Rome so that the Europe it has created might become,
I should perhaps remind any of your Lordships who have not yet indulged themselves in the pleasure of actually reading the treaty that amendments to it require unanimity among its signatories. So, to start with, we would have to get the unanimous agreement of all the other signatories to support a union based on a
Now I know that I may be accused of semantics here and that "an ever closer union among the peoples of Europe" simply means more "inter-railing", more student exchanges--even more cocktail parties in Brussels and around the capitals of Europe. There are those who pretend that this vital phrase does not mean our governments getting together in ever closer political union. The trouble is that most of the other signatories are aiming at precisely that closer political union. If my noble friend the Minister thinks I am wrong, would he care to ask the other countries for their interpretation of Article A of the treaty; better still, would the Government table an amendment to the treaty at the IGC taking out the words "ever closer union among the peoples of Europe" and inserting instead the words "partnership of nations"?
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