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Lord Mackay of Ardbrecknish: My Lords, I am not often accused of being more generous than I should be. My noble friend makes the point that the date I have chosen would take us beyond the next election. But I am more interested in pinning down whoever will be the government then--I hope that it will be this side and not the other side--to an obligation to produce a report about the position of the euro. I am not sure that I agree with my noble friend that the position will be clear within three years. Much of the business as regards euro coins, notes and so on, will not come fully into play until, I think, 2002. Therefore while I understand my noble friend's point--I should look sympathetically at any further amendment he wished to put to my new clause--2003 seems about the right time. It accords with the Select Committee report. I commend this new clause to the House. More importantly, I commend it to the Government.
Lord Mackay of Ardbrecknish: My Lords, if we passed this new clause, and the government in 2003 decided that they did not wish to implement it, they would have to come forward to both Houses of Parliament with fresh legislation to rescind the legislation that we had placed on the statute book. The same argument could be made for every piece of legislation that we pass. I suspect that it would be a pretty brave government who would say, "We are not going to bother with a report". It might be clear by that time that there was no point in our joining the euro and we could not possibly join it, and therefore from that point of view a report was unnecessary. But in those circumstances a government would have to come before the House and bring forward new primary legislation to repeal any legislation passed in this Bill. I hope that answers the noble Lord's question. I shall not be drawn into whether or not the Chancellor will be Gordon Brown. Indeed, if the Labour Party cannot do better than the Scottish Nationalists in Scotland in the polls, shortly, Chancellor Brown may not even be a Member of Parliament for the United Kingdom.
Lord Howell of Guildford: My Lords, I support this amendment tabled by my noble friend, in spirit at least, if not in its detail. I shall shortly explain to your Lordships why I have some reservation on the detail.
It is extremely timely that we should debate this matter again, although we debated it in great detail in Committee. A great deal has happened since then to affect the evolution of the whole gigantic euro project. Therefore it is right to return to the matter again, as we shall have to do many times in the future.
The spectacular part of the weekend meeting which reached certain decisions on the launching of the euro and the participation of member states was the argument referred to by my noble friend as to who should be chairman of the ECB and for how long. Whether that means that there will be a soft or a hard euro is not very significant. Both the candidates, Mr. Duisenberg and Jean-Claude Trichet, are extremely hard-line, tough, experienced, sound money-men. Whoever is actually at the helm of the ECB, it means that the euro will be administered and underpinned by a very strong
The more worrying aspect is the way in which the matter reflects a much deeper flaw and fault-line in the entire system. What it indicates should chill us all. It has been very well and successfully hidden for many years. I refer to the continuing underlying irritation, if not worse, between the French outlook upon European development and integration and the German outlook. That is a matter that we should all pause to consider. In the past, that irritation has grown to more than irritation and turned into some of the most ghastly consequences of the 20th century. That the French and the Germans should not irritate each other, and that they should work together, is a fundamental requirement for making the euro a successful currency in due course. If there is indeed a flaw in the system and that irritation is allowed to grow into a real division, then the euro is in trouble and the whole of Europe is in trouble. This country will be in trouble too. So the real worry is that it reflects a deeper difference of perspective as to what the whole euro project is about.
Is it about the French gaining control of their monetary destiny, as they always say in Paris, or is it about Germany finally submerging itself in a greater Europe and cutting itself off, or purging itself, of its past historical guilt, as is the basic story put forward by Chancellor Kohl--and very understandably? He wants never again the experiences of his youth. We do not know the answer to that question. It is not resolved. The events of the weekend before last proved that the matter is certainly not resolved but will continue, and will return to haunt the euro system in the future.
The second development since then--although it has in fact been going on all the time--is one that leads to my having doubts as to the precise wording of my noble friend's excellent amendment. I rather agreed with the intervention of my noble friend Lord Renton. Not only is 2003 a very long way away, but I would go further than my noble friend: it seems that the whole issue is knocking at our door, and coming in through the back-door of the British economy at a rate which many people did not foresee. It is already becoming daily more visible.
The truth is that already more and more countries are moving over to managing their entire debt in euro-denominated bond issues. The old currency-denominated issues of Europe will probably have disappeared altogether by this time next year, and the entire business will be conducted in euro-denominated issues. I am not talking about euro bonds; I am talking about euro-denominated bond issues, which are quite different. Luckily, the City of London appears to have the major role in managing those issues. I declare an interest: I work for an organisation involved in these matters. That is coming at a pace--it means that a great deal of the debt market will be denominated in euros, not in five years' or three years' time, and not when the currency finally appears and the individual denominations disappear, but long before then, almost before the official fixed date for the currencies of 1st January next year.
Secondly, it can only be a matter of time before our financial system and our bank statements all come, as they already do in France, in euros as well as in the local currency. Thirdly, a great many corporations will move over to parallel accounting in the local currency, the pound, and the euro currency. Fourthly, let us wait for the first take-over bid by a big European euroland corporation of a corporation or company on UK soil outside the euro zone. That will almost certainly be couched and put forward in terms of euros. There is no way in which we can pass a law saying, "No, that's a terrible thing. We can't have a take-over bid made in euros for a corporation in the sterling zone". We cannot stop that. It will happen; and the entire debate and bid process will have to be conducted in euros. Therefore I suspect, far from having to wait five years, we shall find, probably by this time next year, May 1999, that the pound has already become a parallel currency, and will continue to circulate but that the euro will circulate as well--albeit not as legal tender or underpinned by any law of this House or another place; nevertheless it will be there. The euro will have come in by the back-door.
That does not mean to say that there are not tremendous difficulties ahead for the euro system. I for one have grave doubts about what we--that is, we, the Europeans--have committed ourselves to in moving at this political speed into the euro project. But that is quite different from the point I am making; namely, that the euro has arrived, and has already arrived in the UK, and it will therefore be necessary for the two Houses of Parliament to have very detailed reports before them as from possibly this time next year about the impact on our own affairs, which will be very considerable indeed, and very massive, and will lead to all sorts of consequences for our own monetary system and our own economic and social progress, to use the words of the amendment.
Nobody, of course, knows how all this is going to work out. I said a moment ago that Mr. Duisenberg and Mr. Jean-Claude Trichet between them, if Mr. Duisenberg does move aside--which he does not look like doing before eight years--will run a very tight ship and a very hard currency. But other political and market forces may undermine their ranks. However much the ECB continues to raise interest rates, this is a system, an animal, as it were, the like of which has never walked the earth before. It is a single currency which cannot be compared to the Maria Theresa dollar or the gold standard; it has a single monetary authority but 11 budgetary authorities--allegedly bound together, as it were, bound round their legs by the stability pact, but no one knows exactly how that will work. Never before in history has such a system been attempted. It is a colossal experiment and, ironically, at just about the time when the present Government may be talking about Britain wanting to join, there could possibly be the most colossal crisis. My guess is that everything will happen very much faster than anyone realises, and long before we reach the next general election, the end of this Parliament or other matters, we shall find the maintenance of this position, of hoping one
My regret is not only that it is a huge and dangerous experiment--and one that we could have managed without; although there are those who have said that the European Union could not go forward without a single currency, which I have never fully understood. My greater regret is that it has taken energies away from the real project of Europe. That project is the one for which our forebears and many in this House fought in a world war. It was to unite the whole of Europe in free republics and monarchies from Lisbon to the River Bug and from Calabria to the Orkneys. That was the dream of the united Europe. It was all destroyed after 1945 by the Soviet occupation. We had to wait 45 years, then the Berlin Wall came down and everyone thought, "That's fine, now we'll get on with the real project of Europe, embracing the new democracies of east and central Europe". But we did not. Seven years have gone by and we are still waiting.
Desultory negotiations have begun. We shall come to that at a later point in the debate, I know. It will probably be 15 years before any of those countries joins the Community. That was the main purpose; that was the dream. Instead, all energies have gone into the alternative project of EMU. It is interesting. No doubt many people will get rich and many new and fascinating economic developments will occur, but to my mind it is not in the main stream of what being a true European is about. It is, of course, irrevocable and irreversible, as noble Lords have pointed out. It is underpinned by a law which is superior to British law, so that we cannot go back.
I have enormous respect for the noble Baroness, Lady Williams, but she said something with which I am afraid on this occasion I disagreed most profoundly. She said that EMU was not very different from NATO or global capitalism. In other words, interdependence and trans-governmentalism are not different from the supra-governmental nature of the whole undertaking. It has a system of superior laws; superior to the laws of this House and the House of Commons and superior even to the judgments of the British courts which can be overturned.
With great respect to the noble Baroness, Lady Williams, it is not intergovernmentalism; it is not interdependence; it is a supra-national project. It is irrevocable and irreversible--or so the great leaders of the European Union say. Of course, when the irrevocable and the irreversible meet the contrary irresistible forces of market intentions--as will happen one day--we shall be in for the most almighty bust up. That is why we shall be swept in early; but later, perhaps by 2003, we shall just about be in the middle of the first tremendous crisis.
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