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Lord Garel-Jones: My Lords, I am sure the noble Lord will be interested to know that only one country voted for the Dutch draft.

Lord Shore of Stepney: Only one?

Lord Garel-Jones: My Lords, only one country, apart from the Dutch presidency itself, actually voted for that draft.

Lord Shore of Stepney: My Lords, it was due to a rather desperate British plea to other friendly countries not to hideously embarrass us and imperil the process of securing acceptance of the Maastricht Treaty once they got back home.

One must consider what the commitment to a single currency and EMU involves. It denies a nation its own currency; it denies it its use of its own national, central bank; it has no control over the domestic money supply, and it loses, or has seriously curtailed, its right to borrow. I maintain that under those conditions a nation state can no longer function as an independent entity. At

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the same time the European Union, with its newly acquired single currency, its central bank in Frankfurt and its control over interest rates and exchange policies, besides its treaty control over public borrowing, takes on the power of a separate sovereign state.

The Amsterdam Treaty says nothing new about a single currency and EMU--yet there is an important addition, which is the adjacently negotiated Stability and Growth Pact. Under that pact it has now been agreed what punishments, mathematically computed, are to be inflicted on offending nation states which dare to borrow too much beyond the 3 per cent. GDP limit. Such a penalty would have had considerable significance for the UK if these arrangements had been in place and we had been a member of the single currency during the last parliament. Indeed, on the best calculations that I can make, Britain would have been fined £14 billion for its efforts to escape from the desperate difficulties in which we found ourselves after the collapse and withdrawal of the pound sterling from the ERM.

As it has been said, the Amsterdam Treaty itself advances further in the direction of a European state, particularly by strengthening the federal institutions of the Union, but also in its extension of treaty control over virtually the whole of the third pillar of the Maastricht Treaty.

Perhaps I may return to the main point that I am putting. The big picture is indeed the creation of a state. The ruling circles--the class politique--in the majority of the member states of the European Union are now openly committed to the creation of such a state. But we are not. Indeed, the whole idea of absorption into a European state is repugnant to the vast majority of British people. More--and very interestingly--political leaders of all parties who are broadly friendly and Europhile in their attitudes do genuinely recoil from the prospect of our absorption, via EMU and the single currency, into a European state. I would cite among others the former Chief Secretary to the Treasury, Mr. William Waldegrave, and, in the light of his recent statements, the noble Lord, Lord Owen, who was certainly an enthusiast during many stages of the development of the European Union. I would include in that category of basically friendly pro-Europeans who cannot stand the idea of being absorbed by a single currency into a European state the present Prime Minister and his predecessor.

The European state is, indeed, the dividing issue. So, what are we to do now that our European partners are clearly set on a different course with a different goal? Frankly, I think that our first requirement is to be honest about the whole development. There is a suspicion in the minds of many of our people that politicians of all parties find it difficult--and have found great difficulty over many years--to speak frankly about Europe and its true destination.

I recall two quotations which are worth citing. One was Prime Minister Edward Heath's assurance in the White Paper of 1971:

    "there is no question of any erosion ... of essential national sovereignty".

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I am afraid that that has been wholly disproved by events. The second quotation, to maintain a balance, was the assurance given by Prime Minister Harold Wilson in the 1975 referendum campaign that it was safe to remain within the European Community because:

    "there was a threat to employment in Britain from the movement in the Common Market towards an Economic and Monetary Union. This would have forced us to accept a fixed exchange rate for the pound, restricting industrial growth and so putting jobs at risk. This threat has been removed".

I do not claim that there was any deception--I do not think that it was deliberate--but I do think that both of them misread and failed to anticipate the power of the thrust towards a single state in Europe.

Now that the issues are so much clearer, there can be no excuse for not telling the British people the whole truth about what is involved. I cannot abide--and the British people will not forgive--those often covert federalists who deny that the EMU/single currency project has any significant political or constitutional implications. We heard that statement solemnly made despite the overwhelming evidence to the contrary not long ago by the highest authority in another place.

Next, we must be honest with our European neighbours. We have been reluctant to be so, but since we are now pursuing different goals and since we are in a minority, we are obliged either to negotiate opt-outs in increasing numbers for ourselves or to hinder, obstruct and delay the rest of the European Community. The previous government found themselves in precisely that position over both the Maastricht and Amsterdam Treaties. Needless to say, it was not the only reason, but it was a powerful underlying reason, why our relations with our continental neighbours so markedly deteriorated. Those relations have somewhat improved, and I am glad of it. But I hope that we shall be able to sustain that position, but we shall be able to do so only if we have an open and honest understanding that we have reached the point where we can no longer go further into the project which the majority of our continental neighbours have set for themselves.

We must also be honest with ourselves. It is no good now for British Prime Ministers and Foreign Secretaries to say that they wish to "lead Europe" or that they want Britain to be "at the heart of Europe" when the majority of European states are now clearly heading for a very different goal--a European state--from that which we want for ourselves.

I do not want to end my speech on too negative a note. I am very much in favour of the most friendly relations and the maximum co-operation in the economic and political field with our European neighbours. My view of the future of Europe is indeed of a continent of democratic self-governing nation states working together to achieve greater prosperity for all their peoples and for peace and harmony in their interstate relations.

It is inevitable with so large an area being brought into the compass of the European association that some member states will wish to go for the goal of total integration, the creation of a new state, while many others will wish to hold back. For the first time--this may be the most significant part of the Amsterdam

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Treaty--the treaty itself, in its clauses on flexibility and "enhanced" co-operation, envisages the possibility of some states, the majority of states, moving forward in one direction while others remain permanently outside and do not share that endeavour. I do not think that flexibility is yet sufficiently well defined in the Amsterdam Treaty for us to be able to build on it, but the treaty gives us a new opportunity to achieve something more satisfactory for all of us--those who want to go forward into a European state and those who do not--than has so far been offered us.

I am not one of those who fear a strong new continental power on the other side of the Channel. If that be the wish, not only of their political leaders but of their peoples, we should not stand in the way of a European state. I see no reason why we should feel any more threatened or disadvantaged by its existence than Canada today feels anxious or threatened by its great neighbour to the south.

After the disintegration of the Soviet Union into 15 separate nation states and the collapse of Yugoslavia into five new sovereign republics, this is clearly not the age of the giant state--not even of the large but rather artificial federal state. It is in fact the age of the democratic nation state--over 200 of them now occupying all the different continents of the world. I believe that the United Kingdom and its people have the will, the self-confidence, the resource and the alliances to remain a leader and an exemplar to those states.

6.6 p.m.

Lord Cockfield: My Lords, I am always intrigued in this and similar debates by the constant reference to "the nation state". The one thing the United Kingdom is not is a nation state. Its very name indicates that it is a union of four nations: the English, the Scots, the Welsh--indeed, not so very long ago a Bill on the Welsh language passed through Parliament--and the people of Northern Ireland. We are a union. This has nothing whatsoever to do with the present debate, but it is a matter which constantly comes to my mind.

One of the interesting points about debates on Europe is that divisions do not follow the usual party lines. In that respect, I am happy to say that tonight, in relation to the Amsterdam Treaty, I agree neither with the uncritical eulogy of the noble Lord speaking on behalf of the Labour Government, nor entirely with the root-and-branch condemnation of my noble friend Lord Moynihan in his attractive and well presented speech.

The Amsterdam Treaty is important not for what it does but for what it fails to do. This is the one and only point that I propose to raise this evening. The task that the Government were set was set out clearly in the Maastricht Treaty in Article N, referring back to the fifth indent of paragraph 1 of Article B. That remit was to make whatever changes were necessary to secure-- I now quote the words of the Maastricht Treaty:

    "the effectiveness of the mechanisms"--

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your Lordships should note that reference to "the mechanisms"--

    "and the institutions of the Community".

I repeat the reference to the "mechanisms and the institutions". That was what the Amsterdam Treaty was supposed to do; and that is what it has singularly failed to do.

The treaty has done all kinds of other things that it was not asked to do. One can understand this. The Union was subject to all kinds of pressure from special interest groups, lobbies, the European Parliament and individual governments, all of whom had their national agendas. One government in particular in its earlier manifestation pursued diversionary tactics; in its later manifestation it pursued its own domestic agenda. While all of this no doubt pleased or angered the special interest concerned, it frustrated the whole purpose of the exercise defined in the Maastricht Treaty, which was to secure the effectiveness of the institutions and the mechanisms of the Community.

Before I explain why this point is so fundamentally important, while I regard the treaty as a failure because it has failed to do what it was supposed to do, nevertheless I believe that we should ratify it and pass this Bill simply to get it off the agenda in order to turn our attention to what really matters.

We must be absolutely clear what is at stake. My noble friend Lord Moynihan dealt with this point in some detail. I follow what he said. Enlargement is by common consent the greatest challenge and opportunity that faces the European Union. Unless one succeeds with enlargement, the immense opportunities opened up by the collapse of the Russian empire and the liberation of central and eastern Europe will be squandered. Unless one deals properly and effectively with the effectiveness of the mechanisms and institutions of the Community--incidentally, it is the Community to which the Maastricht Treaty refers; it is the first pillar, not the second and third pillars--one will not have enlargement within any realistic period of time, or if one does it will fail. That is what is at stake, and we had better recognise it. The issue was dodged in the run-up to the previous enlargement; it was dodged again at Maastricht; and it has been dodged once more at Amsterdam. We simply cannot go on dodging it.

I do not propose to debate the merits or demerits of enlargement. It rests upon a political decision already taken and reaffirmed on more than one occasion. I also leave on one side the immense task that the candidate countries themselves face. Because we are debating the Amsterdam Treaty and what it has done or failed to do, I deal only with the task that faces the European Union. The abiding trouble with the European Union is that it tries to advance on too broad a front and do too many things all at once. This is understandable. It is subject to so many pressures from special interest groups, national governments, the European Parliament and every conceivable lobby, but it simply does not have the resources to respond. It does not have the collective will. The bureaucracy is too small judged even by British standards.

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The Council of Ministers, which is the nearest thing to a government that the Union has, has no sense of collective responsibility. Its members are more interested in pursuing their national interests than serving the common good. The European Parliament can spend money but has no responsibility for raising the revenue that is required to finance the policies that it advocates. As a result, many projects are started, few are properly finished and some not at all. Those that are finished take far, far longer than they should.

Let us look at the present position. The single market programme launched in 1985 and due for completion by 1992 is still not complete, due not least to the fact that attention was switched to the single currency as early as 1988 before the single market had got properly on its feet. As a result, we have to cope with the launch of the single currency at the same time as we struggle with the single market. We have now embarked upon enlargement, but look at what it involves. If enlargement is to proceed not only do we have to complete the single market and launch the single currency successfully but we have to reform the common agricultural policy and the structural funds. There is a need for a drastic overhaul of the finances of the Union. There has been a great deal of talk but little action. A vast amount of paper has been produced but no results.

As at present the omens are not good. The reform of the common agricultural policy is in the hands of the Council of Agricultural Ministers. It will be within the recollection of many noble Lords that the Ministry of Agriculture in this country was always defined as "n'but a farmers' lobby". I assure noble Lords that the Council of Agricultural Ministers is far worse than that. Its only remit is to protect the interests of the farmer. I have nothing whatever against the interests of farmers, but unfortunately every reform of the CAP that has been undertaken so far has cost more money.

As far as concerns the structural funds, some of the major beneficiaries have already staked out an intransigent position and hostages have been taken. The anodyne and comforting assurances given by the Commission that enlargement can be encompassed within the Edinburgh ceiling of 1.27 per cent. of GNP are complete rubbish, which is the mildest description that I can think of. There is no hope whatever of this immense series of tasks being completed in time for enlargement to take place in any acceptable time-frame unless drastic action is taken on the very matter that the Amsterdam Treaty was supposed to deal with but did not; namely, the effectiveness of the mechanisms and institutions of the Community. All we have is a weak-kneed protocol postponing once again a decision on two--and frankly the least important--aspects of this problem; namely, the size of the Commission and the distribution of votes in the Council of Ministers until the next enlargement takes place. But on the crucially important issue of majority voting and the use of the so-called veto there is virtually nothing. That is to be postponed until the next enlargement takes place. We have had one, two, three and now a prospective fourth postponement of a critically important matter in relation

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to enlargement. On the crucially important issue of majority voting and the use of the so-called veto there is virtually nothing in the treaty.

What are we to do about this, at least if we are serious about enlargement? I look back to what we did about the single market programme. Its success--to the extent that it was a success--rested upon two matters: first, the introduction by the Single European Act of majority voting for single market issues. I ask noble Lords to note that particular qualification. Secondly, it rested on the personal commitment of the heads of government themselves, not just their Ministers or officials, to the single market programme. The commitment was not only that of the major countries--France, Germany and the United Kingdom--but the smaller countries. Sometimes in those discussions people tend to be somewhat critical of the smaller countries, but from my experience Belgium and Luxembourg played a crucially important role in conducting the Council of Ministers during their presidency on the specific issue of the single market programme.

The adoption of majority voting on enlargement issues--I refer again specifically to enlargement issues--will raise the most bitter of nationalistic hackles but it is the price we will have to pay if we seriously want enlargement: if we seriously want to create a united Europe bringing together all the peoples of Europe from the Atlantic to the borders of the now defunct Russian empire.

Nor can that job be left to the Council of Ministers. The Council is the nearest the Union comes to having a government. But unlike national governments the Council does not represent the general interest: it represents the national interests of the individual member states. Leadership must come from the heads of government meeting in the European Council and they must impose their authority on the Council of Ministers--something they do not always do.

There is a price to be paid for enlargement and it is a very heavy price indeed--not just a financial price but a price in terms of subordinating the national interest to the common good. That is the real challenge we and the European Union face.

6.21 p.m.

Lord Grenfell: My Lords, I am sure that no one was more embarrassed than my noble friend Lord Whitty by what one might call the "Love-in with Larry" that followed the curious demarche of the noble Lord, Lord Beloff. The praise was well deserved, and I shall say only that I believe that my noble friend is the right person in the right place on the right occasion.

I share the disappointment of a number of other noble Lords, including my noble friend Lord Whitty, that the clock ran out on the treaty negotiations before there was time to agree on the reform of the European Commission or on vote re-weighting--two very important issues. But I do not share the view of those who say that that has endangered the enlargement of the Union. The question of voting weights, and the number of Commissioners, will be on the table in any case in the accession negotiations.

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If, as is possible, the next enlargement involves six or more countries, then of course there will, a year ahead of the enlargement accession, have to be another IGC. With fewer than five, those issues will still have to be addressed in time for the next enlargement, but given the priority attached to enlargement by all member states, the necessary reforms should not be unattainable.

The noble Lord, Lord Moynihan, speaks as if the loss of one Commissioner would be a tragedy to be visited exclusively on the UK. He must know that the second commissioner would be lost only were satisfactory vote re-weighting achieved. I find getting the voting weight for the large states correct is far more important than having a second commissioner.

The Amsterdam Treaty, as many noble Lords have said, enshrines the results of a long and tortuous process of negotiation in the IGC. Those results, as many noble Lords have said, are modest, and that is all to the good. It is a sensible, workmanlike treaty which eschews the more radical ideas and aspirations that were being promoted by some member countries, and embraces some undramatic but highly practical steps, as described by my noble friend Lord Whitty, which will help smooth the path to enlargement. I shall touch on just a few of those in a moment, but, first, let me endorse what has already been said about getting this treaty into proper perspective.

I listened to the noble Lord, Lord Moynihan, and noted the ferocity with which the Conservative Opposition have been attacking the treaty here and in another place. One might have been led to suppose that that was an earth-shaking treaty with the seismic force of another Treaty of Versailles, instead of the modest, though important, stepping stone towards a more efficient and people-friendly European Union.

I suppose that by now we should not be surprised that as soon as the European Council agrees a series of practical, undramatic, timely and necessary amendments to existing Community treaties, the sceptics accuse the Council of stepping on the federal accelerator. The noble Viscount the Leader of the Opposition described the Amsterdam result in your Lordships' House as:

    "a substantial further step towards European integration" ".--[Official Report, 28/7/97; col. 16.]

When Conservatives use the word "integration" in the EU context, it is usually laden with dark meaning. But for the life of me I have not been able to read that into this essentially unradical and modest treaty.

While the Conservative Opposition may have abandoned their absurd call for a referendum on the Amsterdam results, the airwaves still crackle with the "Save our Sovereignty" SOS distress calls of the sceptics--these clause-by-clause Cassandras, claiming to see the end of Britain as we know it as the certain aim and inevitable result of every modest treaty reform. They have of course convinced themselves that a great federal European state lurks just beyond the portals of the Millennium. I cannot subscribe to that fearsome figment of their imagination, for the good reason that the future of the EU lies in the hands of a majority of countries which want no such federal superstate. My

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noble friend Lord Shore of Stepney seems to communicate only with people who are hell-bent on creating such a unified European state. I have come across a few of them in my time, but I have met far more people who embrace no such aspirations.

If the Amsterdam Treaty tells us anything, it tells us, in the modesty and pragmatism of its results, that the Union, in its development, is not so far now from the boundaries beyond which further integration would run into the quagmire of political unacceptability. I am confident that we are not going to be dragged across that boundary because Britain now has a strong voice to add to those who have no intention of crossing that boundary either. That is the influence that an engaged Britain can bring to bear on the future of the Union. And that is just what a sidelined Britain under the Tories could not do.

I listened to the noble Lord, Lord Tebbit, who I am sorry to see has already had to take his train to the West Country, and I feel moved to remind him that the "The Unimportance of Being European"--that dreary tragi-comedy about a policy found in a handbag--has now run its course. The public brought down the curtain on it on 1st May last year, and the prospect of reviving it is mercifully remote.

To be frank, I find it wholly risible that anyone should claim, as some do--among them the Shadow Foreign Secretary in another place--that a Tory government would have delivered an Amsterdam Treaty that was both better for Britain and better for Europe. Official Tory policy on this nation's place in the Union would have rendered those two results mutually exclusive. By contrast, the Labour Government were able to put their signature to a treaty that was good both for Britain and Europe. In the negotiations the Government were able to ensure that our essential interests over immigration, foreign policy and defence, were protected, as my noble friend the Minister pointed out this afternoon.

It is of course the sceptics' cry that the limited and sensible extension of QMV (qualified majority voting) was just a sell-out, a capitulation, another nail in the coffin of British sovereignty over its own interest and affairs. How self-deluding can they get? For example, can they suggest a better way of ensuring that no one country can block Council action where fraud is perpetrated against the Community budget? Conservative voices have been vociferous in their condemnation of fraud in the Community, and rightly so. But when it comes to extending qualified majority voting in order to strengthen the Council's hand in its fight against fraud, and the powers of the Court of Auditors to investigate the use of Community funds, the same old dreary save-our-sovereignty distress call echoes around the Chamber.

And while we are at it, may we assume that a Conservative government, in keeping with their total hostility to any extension of QMV, would have fought at Amsterdam against the extension designed to improve the transparency of the Union's decision making? How totally inconsistent with their traditional protestations about a lack of such transparency. And how fortunate they were not at Amsterdam to wreck that one. They hang the millstone of no extension of QMV about their

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necks, all the while complaining about the conditions that only extension can effectively change for the better. And where is the logic in the Conservative argument that qualified majority voting was necessary to create the Single Market, but not in relation to anything else?

I am delighted that the principle of subsidiarity is strengthened by the treaty. Article 3b in the Maastricht Treaty has rightly been criticised as too vague in its guidelines on when and how it is to be applied. The Conservative Opposition cannot credibly object now to the protocol's insistence that the subsidiarity principle does not affect the primacy of the acquis communautaire. It was already there in the Maastricht Treaty negotiated by them. What is of great importance in Protocol 7 is that it requires the reasons for concluding that a Community objective can better be achieved by the Community to be substantiated by qualitative and, where possible, quantitative indicators. And what is also good for Britain is that we can challenge the Commission in the European Court if we feel that it is wrongly treating a matter at Community level when it ought to be a matter for subsidiarity.

That is a big advance, as is the provision that the Court will also have the authority to intervene, if asked to do so, to ensure that the rules on flexibility have been properly applied. In my view, yet a further major advance is the treaty provision under which the European Parliament gains the power to approve the appointment of the Commission president, and that the nominee for the Commission presidency gains the right of common accord with member states over the appointment of commissioners, and subsequently on their replacement.

The very mention of an increase in the powers of the European Parliament sends many sceptics up the wall--

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