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Lord Hoyle: My Lords, perhaps I may draw the attention of the noble Baroness to the intervention by my noble friend Lord Williams of Mostyn to clarify to the House that the matter of the requested extradition of Senator Pinochet continues to be sub judice. Under the rules of the House no reference should be made to the case in the debate.

Baroness Williams of Crosby: My Lords, I apologise. I thought that I was addressing the economic situation in Russia. So far I have said nothing whatever about Pinochet and do not intend to do so. I always take the greatest possible notice of the highly thoughtful remarks of the noble Lord, Lord Williams of Mostyn.

Lord Williams of Mostyn: My Lords, I am sorry for the intervention. I think that a piece of paper probably went astray. It was not the fault of my noble friend Lord Hoyle, and was certainly not the fault of the noble Baroness either.

Baroness Williams of Crosby: My Lords, I am more than delighted invariably to pick up pieces of government paper which go astray, and I shall watch carefully for the next one!

Without boring the House--I believe this matter to be not only of great importance but one that will overshadow the next six months--I return for a moment to the economic situation in Russia, about which I was speaking.

I quoted from the stabilisation programme. I might have made one other comment: that Russian taxation revenues are now running at 6 per cent. of gross national

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product; and the minimum required simply to keep going the functions of the state is estimated by Russia to be between 10 and 12 per cent. According to my most recent information--I should declare an interest as President of the Britain and Russia Society--population movements from the east and north of Russia are already occurring because the Russian Government believe that they will be unable to supply even the basic necessities of life to some parts of their huge country. I fear that by the end of this winter we may be looking at starvation in parts of Russia, and a situation much closer to the terrible situation in the 1920s than most of us can bring ourselves to believe.

I make one final point about the international global crisis. I quote the words of the Chancellor of the Exchequer Mr. Gordon Brown, at the Birmingham Summit of last spring. He said:

    "It is essential to limit the impact of economic crisis on the poor and the vulnerable".
Let me echo those words. In recent bail-outs, in particular in Indonesia and Russia, most of the funds from the international financial institutions have not gone to the poor and the vulnerable but to commercial banks which are themselves corruptly run and in many instances have simply absorbed the taxpayers' money from the Western world.

In the gracious Speech, I note the reference to reform of international financial institutions as one of the objects of Her Majesty's Government. Nothing is more important than to reform those international financial institutions and to put the needs of ordinary human beings first. Indeed, those people must be given a much higher priority in IMF bail-outs. Those bail-outs should not be in the form of money from the World Bank. That money should rightly be spent on restructuring economies and on long-term development.

Secondly, I turn to the Prime Minister's speech in the North Atlantic Assembly to which the noble Lord, Lord Gilbert, referred. The Prime Minister came out very clearly in favour of a much stronger approach to a common foreign and security policy for the European Union. In that, certainly on these Benches, we strongly echo what he said.

But of course, unless we pursue sensibly, honourably and reliably the process of enlargement of the European Union throughout central and eastern Europe, the common foreign and security policy will be seen not as an object for further integrating European defence, but rather as an alternative route to that of enlargement.

Many of our colleagues in countries like Poland, Hungary and the Czech Republic have come to depend on enlargement and have made huge transformations of their own internal structures, civil services and laws in order to meet the European Union's requirement with regard to the acquis communautaire. If those countries believe that we are slowly slipping away from any reasonable timetable, I fear that we shall feed great insecurity and concern in their midst.

I say that primarily because the budget that was drawn up for the transitional costs of enlargement--that is, 3 billion ecus per year for pre-accession work and 40 billion ecus for structural and regional funds over

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the six years from 2000 to 2006--was based upon the assumption of a 2.5 annual rate of growth in the European Union for the next six years. We are already falling below that figure, down to about 2.1 per cent. Therefore, I ask the Government whether they consider the better approach, should we not be able to meet that budget, is to lengthen the period in which we consider enlargement to be achieved or whether they would consider the possibility of some additional resources being transferred for the purpose. The Government may not yet be ready to reply. However, since the gracious Speech makes specific reference to the high priority given to enlargement by Her Majesty's Government, I wish to flag up the difficulties which may arise if the rather optimistic scenario is not realised.

I wish to say only a few words about two current crises since the noble Lord, Lord Moynihan, dealt with them in great detail. I wish to ask one question about Kosovo. The noble Lord, Lord Moynihan, mentioned that monitors are being slow to be deployed. My latest information is that so far, virtually none has been deployed. They are still being trained. I fear that many of them appear to be not very experienced at all in the work that they will shortly be called upon to do. Will the Government tell us what they regard as the probable timetable for deployment given that, as the noble Lord, Lord Moynihan, said, already there are considerable signs that the Kosovo Liberation Army in some areas and Serbian police in others are beginning to go outwith the bounds of what was agreed in the Holbrooke agreement? In that context, it is particularly worrying that as far as I can see, no progress has been made at all in relation to the prospects of a long-term political settlement based on the recognition of the autonomy of Kosovo by the former Republic of Yugoslavia.

I wish to follow what the noble Lord said about the Democratic Republic of the Congo. This weekend, there will be a Franco-African summit. That summit will address the problems of the Democratic Republic of the Congo. But many of the governments involved in that summit are members of the Commonwealth rather than members of the French-speaking community. I share the view of the noble Lord, Lord Moynihan, that the situation is now shaping up to become, prospectively, a major war in Africa. It is capable of destabilising the remarkable achievements of South Africa, one of the few countries on that continent genuinely trying to give a constructive lead towards peace as well as destabilising our Commonwealth friends in Tanzania, Kenya and Uganda. What steps, if any, are the Government taking to try to involve in particular the United Nations Security Council in finding a solution based upon peace talks in that region of the world? Are Her Majesty's Government prepared to assist, through the Commonwealth Secretariat, in providing the resources, whether for peacekeeping or other requirements, which will almost certainly be needed?

Lastly, I turn to the issue touched upon by the noble Lord, Lord Gilbert. I listened carefully to what he said about nuclear weapons. In particular, he referred--and this is very important--to the probability that the United States will now review the level of its own nuclear missile holdings and is even considering taking those

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missile holdings below the levels required by the SALT regime. I believe that that is 6,000 missiles on either side.

In view of Russia's serious economic position, she may well follow suit. Indeed, she would have a great interest in doing so. Following from what the noble Lord, Lord Gilbert, said, will the Government be prepared to give a guarantee that there would be no increase of any kind in our own holdings of nuclear weapons should Russia and the United States both agree to move below the SALT levels? In view of the fact that India and Pakistan are both nuclear powers, I believe that it is of vital importance that we, as an official nuclear power, should not at any point be able to be presented as a country which is slowing down nuclear international disarmament on an agreed basis because, in the end, I believe that that is the way to try to control the dangerous potential of other nuclear powers in our very dangers world.

3.57 p.m.

Lord Bramall: My Lords, I should like to concentrate on defence because, sadly, I shall not be able to speak in the defence debate which has just been organised for early next month. Sadly, too, I deeply regret that other duties will take me away before the end of this debate and for that I apologise sincerely to noble Lords.

There is nothing in the gracious Speech to indicate that the Government do not want this country to play its full part and punch its full weight in international affairs; indeed, just the reverse. There is mention of strong defence arrangements and a determination to maintain the resolutions of the Security Council. In recent crises in the Balkans and in the Gulf, both the Prime Minister and the Foreign Secretary have gone out of their way to talk this country into the centre of international action or, at least, the threat of such action, even to the extent of incurring some criticism that constant repetition of threats, without the action itself, risks some loss of credibility.

Be that as it may, in the world as it is, positive diplomacy and aspirations to deter or correct aggression or other forms of international evil-doing are meaningless without viable and balanced forces which are seen to be capable of making a military contribution to the international good at the appropriate moment. The Government clearly realise that. As I have said previously, both inside and outside your Lordships' House, the Government are to be congratulated on the way in which, in a well-handled strategic defence review, they have given this country a realistic defence policy. That has been somewhat lacking in the past. With one proviso and one possible exception, this country will have viable armed forces which, incidentally, are as much as those forces themselves could possibly have hoped for.

The proviso is--if the efficiency savings of 3 per cent. compound over the next three years, imposed by the Treasury as a Parthian shot, do not, after all the similar exercises over the past 14 years, cut too deep into SDR's aspirations and intentions. I fear that it is a

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rather big "if" and will need careful watching. But the Strategic Defence Review was a much better exercise than earlier ones and approached the problem strategically from the top downwards rather than, as so often in the past, from the bottom line financial restraints upwards.

Having given those sincere compliments, I wish that I could be as enthusiastic about the possible exception I mentioned; that is, the reserve forces and, in particular, the Territorial Army. I am not criticising Ministers for the outcome. I certainly do not blame the last Minister for the Armed Forces, Dr. Reid, now moved to other things. He realised only too well the vital quasi-social as well as military role of the Territorial Army throughout the nation, the chronic shortages in the regular infantry, now between 5,000 and 10,000, and thus the heavy reliance on the TA to make up the numbers in Bosnia and elsewhere. He realised also the fact that in such an uncertain world and a declining regular strength, the Territorial Army is virtually the only reliable and enthusiastic reserve we have for whatever emergencies come along.

As a result Ministers have consulted and, up to a point, listened. They have done their best to counter some of the departmental advice they were receiving, based, over-simplistically in my judgment, on the passing of the so-called home defence role and pushing up significantly the numbers from the original 30,000 or even less to the present 41,200. That is very good. The question is whether it is good enough.

The home defence role, such as it was, may have gone. But the need to encourage a volunteer adventurous spirit; to have a trained body of patriotic disciplined manpower as a general reserve for any emergency, natural or man made, expected or unexpected; and to provide a framework for any future expansion are as necessary as ever. In some cases they are being weakened by the new arrangements. Moreover, when we go in detail into how the greatly truncated Territorial Army is to be deployed throughout the country, it is difficult to see how the well-meant and totally unexceptionable principles, capabilities and aspirations with which Ministers found it necessary to justify the new arrangements will be achieved any better than at present. In a number of cases the result will not be as good as it is now.

The improvement in call-out legislation has already made reserves more usable in emergencies, as in the Falklands and in Bosnia. There has been a steady improvement over the years in equipment, though the claim that there can now be greater integration with the regulars is highly questionable. The term "one army concept" was invented many years ago.

The nub of the problem--this must be recognised--is that in the latest exercise, having at one fell swoop cut the Territorial Army establishment by at least 15,000; the infantry (the heart and soul of the Territorials) by 50 per cent.; and, in that truncated infantry, having removed all regimental battalions, only loosely but inflexibly linking cap badge companies into 15 or so regional groupings based in some cases on nothing more inspirational than administrative tidiness

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in arbitrary and probably only temporary TA brigades, the Government, whatever their good intentions, will have disrupted links with the regimental system which Ministers purport to support--those with the Regular Army which the TA plans are meant to foster. We will be left, in relation to combat arms, with no more than token forces scattered throughout the country. That constitutes a far greater blow to morale than certain TA units not having a defined home defence role.

When one adds to all that the closure of 80 TA centres, many of them new, including the possible complete alienation of the Duke of York's, the flagship for the Territorial Army; the extraordinary abolition of no less than five Royal Engineers regiments with all their most appropriate skills for national emergencies and humanitarian operations abroad--I was always brought up to believe that there were never enough sappers--and the extra impact that that will have on morale, motivation, recruiting and links from the Armed Forces into the civilian population, there is a real danger that the stuffing will be knocked out of the Territorial Army.

It will be knocked out just as the last government, despite warning after warning, also with plans hatched in the Ministry of Defence, justified with exactly the same exhortations about modernisation and relevance in the modern world, virtually destroyed the Armed Forces' Medical Services with disastrous consequences which this Government are now desperately trying to tackle. I only hope that I am wrong. I hope that the analogy will not prove to be too close. But that will only be if Ministers do not consider the matter of the Territorial Army to be completely closed and if they have the courage to show some flexibility in the implementation of the new arrangements. If not, in certain areas, they must think again, as many of the responsible newspapers seem to be urging them to do.

Most importantly, whatever is now going to be the new establishment must be fully funded so that commanders are free to recruit right up to their establishment and receive the money to train everyone they recruit. In the past--this is one of the reasons why the Minister has been able to say that he is only cutting 12,800 and not 15,000--establishment has been steadily eroded both by imposed under-implementation and, further, by only granting enough funding for a limited number of those recruited. That inexorably forces the strength down. I hope Ministers will at least give a firm assurance on the valid and vital point of full funding.

Finally, it would be sad if this Government were to spoil the good ship SDR and the goodwill and plaudits that it rightly generated for a ha'p'orth of tar when, with little extra money, perhaps only 2,000 to 3,000 extra men and greater flexibility in real estate organisation, much of the damage that so many of us fear can at least be mitigated. Without that flexibility the damage caused may be found to be irreparable and leave us with too little for any sudden expansion that the future may demand.

If any Ministers or other noble Lords are tempted to say that as president--which I am for the next two to three weeks--of the Greater London TAVRA, "I would

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say that, wouldn't I?", I say only that my support for the Territorial Army has equally as much, if not more, to do with my own experiences with them in peace and war over 50 years and my study of military history which tells me of the invaluable, sometimes incalculable, part that those reserve forces and their predecessors have played throughout this century in South Africa, in two world wars, and, more recently, in the Gulf and in Bosnia. I would not want the lessons of history, which seem to have been taken into account in the rest of the SDR, to be forgotten in this case, especially when the remembrances of the eleventh day of the eleventh month are so recently in our minds and when yet again conflict may be looming in the Middle East.

4.9 p.m.

Lord Tomlinson: My Lords, with your permission I shall confine my remarks during the debate this afternoon to those aspects of the gracious Speech that relate to our membership of the European Union. Early in the gracious Speech was the statement of belief that,

    "the historic decision to give the Bank of England the power to set interest rates has been crucial to the meeting of its inflation target and credibility in the system".

I applaud that sentiment and assert that independence of the European Central Bank is equally necessary for very much the same reasons: for the reasons of maintaining our treaty obligation to meet price stability--itself an imperative basis of competitiveness, growth and jobs--and also of maintaining credibility in the European monetary system. I note that the Government, in the words of the gracious Speech,

    "will encourage preparations in the United Kingdom for the introduction in other member states of the euro".
Such a statement is patently sensible. However, I hope that the Government will also regularly monitor the progress that we are making against the criteria laid down by Mr. Gordon Brown, so that we can make a judgment about the desirability of our joining the euro and perhaps being able to do so sooner rather than later.

While I have every confidence in the Government, I must confess to a slight nervousness when I hear of promises such as that which appeared in the gracious Speech,

    "to promote with their European partners the economic reforms which will help to create growth and higher employment".
If those reforms are to be the essential structural reforms in the labour, product and financial markets I warmly welcome the commitment. But I believe that we must resist any attempt to use the limited European Union budget as some kind of state supplementary benefit to industry and I am sure that I can rely on Her Majesty's Government to do so. In order to create growth and higher employment, the Government must both promote the structural reforms to which I have referred and resist as firmly as possible the current fashions which seem to be constantly demanding the harmonisation of both personal and corporate taxation.

I turn to the enlargement of the European Union. I believe that this Government have a most applaudable record as regards their role during the period of the

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British presidency. In March alone we saw the opening of the European Conference; we secured an agreement on the accession partnership regulation; and we saw the launching of the accession process and the accession negotiations. All that occurred in fewer than three weeks.

However, enlargement is going to be an extremely costly process and unless the European Union budget is to expand exponentially--and I do not believe that it should--then agricultural reform must move from the area of rhetoric to that of reality and budget discipline must be strengthened within the framework of the 1.27 per cent. ceiling. Unless that happens, the imperative resources for the priority of enlargement will not be available. Enlargement will require not only substantial resources, but substantial institutional reform. That reform needs to be in place as a prerequisite of enlargement in order to prevent decision making in the European Union grinding to a halt.

Enlargement also demands a continuation and an expansion of the programmes of applicant countries in order to help them to consolidate their economies, on the one hand, and to buttress their institutions on the other. I strongly commend the Government's approach to the enlargement process; an approach which I believe can heal the divisions of the 20th century and make us all stronger as we approach the new millennium.

Finally, I want to turn to one aspect of the gracious Speech that was tacked on at the end of a sentence. It referred to the United Kingdom's abatement of its European Union budgetary contribution. The gracious Speech makes it clear that the abatement will be maintained. To change the abatement requires change to the own resources decision. As a change in that decision requires unanimity the abatement is secure as long as the Government wish to maintain it. But what we need to be doing while asserting the need to maintain the abatement is to pursue the policy of diminishing its significance. Those changes are clearly in the area of agricultural reform. Despite the fact that people can point to the diminished proportion of the European Union budget that now goes on agriculture--it has dropped to just under 50 per cent.--in real terms the increase in agricultural spending is 34 per cent. higher than it was at the time when the Fontainebleau agreement was negotiated.

We have to prepare for that reform by finding the resources in the European Union budget for an imperative such as enlargement. We must also prepare ourselves properly for the next WTO round, where even if the European Union has not adequately focused on agricultural reform the WTO will force it so to do. In relation to the rebate, we must make it quite clear that we are a significant net contributor, and despite the rebate we remain a significant net contributor. We are more significant in that regard than some countries with a larger capacity to pay. The best way is to keep the net contribution down by keeping spending under control. In that regard, agricultural reform is imperative. As I have said, in that area of agricultural reform we must move from rhetoric to reality; otherwise our rebate, if it continues, will dominate the European Union budget.

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On the basis of the remarks made in the gracious Speech concerning our membership of the European Union, I warmly welcome it. I believe that its positive and pragmatic approach to Europe and to our European partners should be welcomed not only in your Lordships' House and in the country, but far beyond. It should be welcomed throughout the European Union and of course in the wider world, including those countries whose aspirations to join the European Union we wish to see come to fruition.

4.17 p.m.

Baroness Young: My Lords, I should like to take the opportunity presented by this debate today to raise once again the issue of the Caribbean and consider some of the great political and economic problems that that region faces. The situation is, if anything, far more serious today than it was even six months ago. As I have observed before, small islands, when things go wrong, have the capacity to cause quite disproportionate crises. I think particularly of the Falklands and, more recently, of Montserrat. The Caribbean is a part of the world which can easily be forgotten in the course of considerations of all the other big issues which have been touched on this afternoon.

I should like also to touch on the role that Cuba can play in the region and the development within that country. I speak in my capacity as president of the West India Committee. In the foreword to his book, The History of the People of Trinidad and Tobago, Eric Williams, the late Prime Minister, set out clearly a theme which has been an abiding preoccupation throughout the region. He said:

    "Separation and fragmentation were the policy of colonialism and rival colonialisms. Association and integration must be the policy of independence".

Today it is possible to look back and recognise that legal independence was not an end in itself but a very first step on the difficult road to political and economic self-sufficiency. Indeed there are some who would argue that the period from independence to the end of this millennium was simply a false dawn, during which time the Caribbean came to recognise that its destiny was in its own hands. The negotiations for a successor arrangement to Lome IV may be proof of this.

At the end of September this year Ministers representing the EU and the ACP states met in Brussels to open formally the negotiations for a successor arrangement to the Lome Convention. These negotiations will continue through 1999 and probably as far as post-2005 when the EU/Caribbean relationship is fashioned. But it will be made much more complicated by the need to take account of the World Trade Organisation millennium round, the reform of the common agricultural policy, the enlargement of the EU and the Generalised Scheme of Preferences review in 2004.

As if all this was not difficult enough, the background against which the post-Lome negotiations will take place is not encouraging. The old certainties have gone. The Far East, which has already been referred to and

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which was regarded just months ago as a powerhouse for global economic growth, is now in a much more uncertain state. Moreover, the priorities are changing in Europe, with the existing countries of the EU looking much more at economic integration. Many thought that the original Lome Convention and its forerunners were conceived as a way over time to redress the imbalance caused by colonial history. With hindsight it is now clear that those then at the highest levels in Europe and the West were concerned with different issues. Their overriding concern was more focused. As a result, a system evolved whereby colonies and dependencies were replaced by what might be described as sovereign nations in a state of dependency on Europe or the West. Political independence was underwritten by linkages through Commonwealth preference; for example, the banana regime in anglophone Caribbean, or, at a later stage, more complex arrangements with Europe through the Lome Convention.

However, this time around, Europe's negotiators are likely to be thinking about very different issues. In the final EU negotiating directive the logical conclusion is that, some time after the year 2010, the EU expects to re-order its priorities in a way that removes any distinction between ACP and non-ACP countries. The fact is that the end of Lome IV may mark a real turning point in the history of the Caribbean.

If one looks at the very long road down which the Caribbean has to tread, it will be seen that the idea is being promoted by a number of small Commonwealth states that there are alternatives to a free trade world, but that it will require the smaller countries to convince the United States, the European Union, the World Trade Organisation and the nations of the G7 group of industrialised states, that vulnerability should be recognised as requiring special and differential treatment. Today's trade negotiations, both in the Americas and with Europe, will make urgent the need to determine whether small states are to have a special place in the global trade environment or will simply be written off and lost.

In all this, the Caribbean negotiators will have to attain, both from Washington and Brussels, viable arrangements that will ensure a secure economic transition period. Perhaps I may voice my concerns. The first is that the United States and, to a much lesser extent, some of Europe's member states, have not recognised that their present approach may not facilitate this transitional period but rather create further problems. These may result in high levels of economic and political instability, especially in the Organisation of Eastern Caribbean States, and the more so if policies are developed and implemented on the basis of short-term trade advantage. If instability occurs in the Caribbean region as a result of poorly thought-through measures aimed only at encouraging trade liberalisation, this may lead to a direct threat to all our interests and may make some of the smallest island states in the Caribbean economically unviable.

It is simply not rational for the US administration to try to bring to an end the EU's banana regime while at the same time placing an ever-increasing demand on the region for co-operation on narcotics interdiction. The

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consequences of the collapse of the banana industry in the eastern Caribbean as a result of actions at the WTO will lead to an upsurge in the use of these islands as centres for the trans-shipment of drugs. The new industries which will be required will need stability. Tourism, the single largest industry within the Caribbean region, the financial sector and information technology can only flourish and attract investment against a background of economic certainty.

My second area of concern is that a precipitate end to existing arrangements may cause the region's economies to fail before they can change to these newer industries. My third area of concern relates to the continuing isolation of Cuba. The integration of Cuba into the region and into the global economy on terms acceptable to the people remains, in my view, the most challenging question facing the Caribbean, Europe and North America in this region. The decision by the Cuban Government to seek, first, observer status and then to become a signatory to a successor arrangement to Lome IV is far-sighted. While no one should underestimate the difficulties of integrating the Cuban economy first with the Caribbean and then with the ACP, or underestimate the political conditionalities that some EU member states may seek to place on Cuban entry, it is an important step forward. As Sir Shridath Ramphal said at the Eighth European Caribbean Conference last December, it is an essential step in completing the Caribbean. I also welcome the closer links between Cuba and the anglophone Caribbean countries.

However, the US attempts to isolate Cuba are not, in my view, likely to bring about change. Dialogue, investment and the development of new forms of co-operation are more positive ways to draw a nation into the international community and towards international norms, something which all friends of Cuba must surely wish to see.

Perhaps I may conclude by touching on the visit that I made to Cuba last month--my fourth visit. I should like to say, first, how very grateful I was, as always, for the tremendous help that one receives from the staff of the British Embassy there. I should like to place on record my thanks for the great help which I believe all of us who travel round the world receive from our embassies, wherever they may be. I was delighted that the noble Baroness, Lady Symons, who is to conclude the debate, has paid a visit to Cuba; indeed, the first one by a Foreign Office Minister for many years. I was also delighted to note that her colleague Mr. Brian Wilson, the Minister for Trade, was able to go to the opening of the Havana International Fair.

The most important issue outstanding between our two countries is that of debt. It will be very difficult to increase trade between Britain and Cuba until something can be done on that issue. I hope that through the Cuban initiative we may make some progress on the commercial debt. The discussions that I had during my visit were promising. I also hope that now Ministers are visiting Cuba--and I believe that others will be doing so shortly--there will be a much greater understanding as regards the need to deal with the other official debt. I found it very puzzling that the French and Italian Governments and, I believe, the Spanish Government,

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are able to make an arrangement with Cuba while we seem totally unable to do so. I very much hope that that may be put right.

There is also an opportunity opening up for a great many exchange visits. I am very glad that representatives of the Cuban National Assembly are to visit London next Spring. It will be the first such visit and is certainly much welcomed by the Cubans. I hope that it will be of real value to both countries in coming to a greater understanding of our respective political systems and that there will be the opportunity to discuss some of our common problems.

In the context of today's debate, this is perhaps what must often appear as a relatively small part of the world, but it is a part of the world that is very important to us in Britain. If anything goes wrong there I believe that it could have the most serious consequences. In the context of considering all the great and difficult issues of the world I hope that this area will not be forgotten. We owe it to our long links with the Caribbean to do what we can to help and support it. I hope that we shall continue to do so.

4.30 p.m.

Lord Owen: My Lords, I apologise to the noble Baroness and to the House that I shall not be in my place tonight when she winds up the debate. Today is Thanksgiving Day. As many of your Lordships will know, I am married to an American, so there is no alternative but to be at home with the family.

I personally am very afraid that it will not be a matter of more than a few weeks before we are once more engaged in conflict with Saddam Hussein. I cannot myself believe that the latest challenge that he has mounted in the United Nations can be left unchallenged. We have discussed this issue before in this House. On the last occasion I mentioned my hope that we would look very seriously at dealing with the opposition parties in Iraq and helping them far more than we have done hitherto and, in particular, at the whole question of the Kurds.

I am very pleased that both the United States and the United Kingdom Government have clearly made considerable strides in that direction. I note that Congress has made an authorisation of money, not yet appropriated, for help to Iraqi opposition parties, particularly the Kurds. The State Department has brought together two of the Kurdish leaders, who must co-operate far more than they have done hitherto if there is to be any sensible policy in Northern Iraq. I note, too, that Turkey put considerable pressure on President Assad to expel the PKK leadership from Damascus.

It ought now to be quite clear that, if we have to take action against Saddam Hussein, the moment we do so we should extend the "no-fly" zone in the north to cover all military and vehicle movements there which have not been authorised. We should effectively begin to create a "no-go" area in the area where there is a "no-fly" zone. This time we must learn from the mistakes that we made between 1991 and today. There can be no helicopter gunships going into the north, or Saddam Hussein's forces.

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I believe that there is an historical issue that we must reopen: the question of the commitment made in 1919 to search for a homeland for the Kurds. It cannot be in Turkey or Iraq. That is the reality. It can only take place in Northern Iraq. The Kurds must discipline themselves and come together to co-operate in order to achieve that which is feasible and possible. I believe that that would be one of the most significant things that we could do, in addition to military action, to destabilise Saddam Hussein's regime. Military action on its own, particularly from the air, will be insufficient. We saw that in the way he treated the marsh Arabs as well as the Kurds.

It is regrettable that the European common and foreign security policy has been unable to hammer out a consensus on how to deal with Iraq. It is a great tragedy. We should bear in mind in this House, when we hear constant demands for qualified majority voting in foreign policy, that on quite the most dangerous and serious challenge to the world at the moment--the necessity to grapple with Saddam Hussein's relentless pursuit of chemical, biological and nuclear weapons--we cannot get agreement. It would be absolute folly if we did not remember that lesson. We must never accept qualified majority voting in the pursuit of a common foreign and security policy. We should pursue consensus at every step and try to get agreement on a common foreign and security policy among 15 members at all stages. I agree with what the noble Baroness, Lady Williams, said about the need to extend co-operation and enlarge the European Union to 20 or even 25 or more states. But we must never surrender the sovereign right to make decisions in rare cases where consensus cannot be reached and where one can decide for oneself.

I pay tribute to the Prime Minister's determination and strength in giving his full support to the United States, not in a relationship of total subservience. Of course, there is a massive difference between the military strength of the United States and our own, but in consistent and coherent support for a firm policy he has been able to demonstrate that our voice is listened to in Washington. We have had considerable impact on the political problem in the Security Council. The Russians have very different interests in Iraq. Its Prime Minister has always made that quite clear. He has been much more open in his dealings with the Americans and the British in the Security Council than some of our European colleagues. But there is no option but to take this stance.

There are other constitutional implications that need to be considered when we look at a common foreign and security policy. I have been a supporter of this Government's constitutional changes throughout. I have always believed in an assembly for Scotland, Wales and Northern Ireland. I argued in the previous Labour Cabinet for the European Convention on Human Rights to be made justiciable in the courts. I was supported in that by the noble Baroness, Lady Williams.

We have made significant and important constitutional changes. Quite frankly, we are in danger of constitutional indigestion. We have to take it steadily and step by step. We need to be very wary when we

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hear references to creating a new defence structure in Europe. I have always called for a strengthening of the WEU. I do not believe that one can have a coherent common foreign and security policy without being able to add the stiffening of a security element. Had we had that in place in 1991 the EC diplomacy over the break-up of the former Yugoslavia would have been much more effective. The fact is that the WEU could not intervene credibly in 1991. But when one looks at what has happened in the WEU and the relationship that has now been established, particularly for sharing key equipment in NATO when the WEU is undertaking a peace-keeping operation in which the United States does not wish to be involved, we are talking about a far more effective WEU in 1998 than existed in 1991.

I want that military capacity, particularly in circumstances where the United States does not want to make a military contribution, particularly perhaps in peace-keeping, on the European continent or elsewhere. But we should be very wary about creating a new defence organisation completely sui generis without the WEU. For example, its treaty contains one of the strongest commitments--stronger than the North Atlantic Treaty--to come to the defence of a member state under attack. The WEU also has an organisation for bringing together parliamentarians from the national parliaments. It is inconceivable that we could enter into a defence organisation associated with the European Union, or even incorporated within the treaties of Europe, where democratic scrutiny lay with the European Parliament. The democratic scrutiny for defence must lie with the national parliaments. It is a very good thing to tie them into some European initiatives and not abdicate everything to the European Parliament. The two have to work together. That is important, particularly in a case where the foreign and security pillars are inter-governmental for they are not under the Commission, the European courts or the European Parliament. It is extremely important that that should remain.

But the WEU needs to be brought much closer to the European Union. When we consider appointing now a senior individual to speak for the common foreign and security policy, there is a very strong case to consider that that person should be double-hatted and also have the role of Secretary-General of the WEU or at least some greater linkage, But a new defence organisation I view with great concern.

As for Kosovo, many have mentioned it and I will not speak long on it. All through the spring and the summer I watched exactly the same inability to act as we saw in 1992 over Bosnia. It was as if we had learned no lessons. The honest answer, I believe, is that the UK Government did want to take more action but they could not reach a consensus on it. It is not an easy issue. In many respects it is the hardest of all the problems that we have had to deal with in the break-up of the former Yugoslavia.

The agreement made by Richard Holbrooke with President Milosevic has, I believe, saved us from an appalling humanitarian disaster. Just as we needed the UN in Yugoslavia in September 1992, especially in the case of the French and the British--and undoubtedly

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that UN force prevented a humanitarian disaster in the winter of 1992-93--so it is to be hoped that this agreement and the presence of OSCE verifiers may help to avoid this crisis.

That is not going to solve the political problems. Although I like to see OSCE used--and I understand why OSCE is being used--it is a difficult organisation from which to get a large number of verifiers on the ground. It does not have the infrastructure of NATO or the European Union, or, if I may say so, even the WEU. We have already seen a tragic delay in the introduction of people on the ground. In my view, a force similar to the stabilisation forces in Bosnia should have gone into Kosovo. I think that we will live to rue the day that we ended up with this extremely inadequate compromise.

There are tremendous problems in Kosovo. We often talk about the Kosovo-Albanian leader, Rugova, as a moderate. He is moderate in the sense that he has been utterly consistent in not wanting to use force, and I greatly admire him for that. In that sense he is a Gandhi-like figure. But, just like Gandhi, he is no moderate. He is absolutely adamant that they should have independence. Almost every single one of these people--particularly after the events of the summer--are adamant that there will be independence. We can go on hiding away from this for another two or three years and postponing the question, but we have to face the fact that there comes a moment when people will not live within the international rubrics that you cannot ever have independence.

We see this in Bosnia. The Bosnian Serbs--particularly those in eastern Bosnia, in Pale and elsewhere--have simply refused to accept being integrated into Bosnia-Herzegovina. It is as clear as daylight that they are going to go on refusing. There will come a time soon when we will have to open up the question of the boundaries of the former regions within Yugoslavia.

The Dutch Government, during its presidency in 1991, asked the European Union to look at the question of making changes in the boundaries of the former regions in Yugoslavia. Foolishly we said that those regions should suddenly become internationally agreed boundaries of nations. Thereby we sowed the seeds for most of the fighting that has taken place ever since. We must be prepared to look again at this question. In my view, at the end of the day, there will be a hectare for hectare exchange, Kosovo going independent and some parts--not all by any means--of Republica Serbska being given independence. For example, Banja Luka in the West would be integrated into a viable Bosnia-Herzegovina. There will have to be real European Union pressure on the Croatians to co-operate fully in Bosnia-Herzegovina and not, as at present, keep themselves apart from the integration process.

I shall speak no further on those questions. On the constitutional issues, yesterday the world looked at this House, many people perhaps for the first time, and understood the significance of the House of Lords as a judicial chamber. This House is a very delicate mechanism. We need changes in the composition of the House. Changes may now have to be made in two

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stages. All I can say, as a politician who spent 26 years in another place, is that this House must tie down all governments, of all political persuasions, so that if they change the composition of the House in one stage they will be bound hand and foot to make changes in a second stage. I do not know if it is possible, but there will need to be a legislative amendment that insists that, at least within ten years, the issue of the composition of the House of Lords comes back to both Houses of Parliament for legislation, even if a government had the audacity to come forward with the proposition that the House of Lords should continue to be an entirely appointed House. Your Lordships should not miss the opportunity to impose your ultimate sanction of ensuring that this issue of a wholly appointed House of Lords cannot be swept away for years, decades or maybe centuries.

4.45 p.m.

Lord Thomson of Monifieth: My Lords, after that fascinating and wide-ranging speech from the noble Lord, Lord Owen, like the noble Lord, Lord Tomlinson, I want to concentrate on the relatively narrower issues of the Government's policy towards Europe as set out in the gracious Speech. For my part, I start from a conviction that an effective European Union--and by that I mean a European Union that is effective not only in terms of economic integration but also in terms of political integration, a common foreign policy and a common defence policy--with the United Kingdom playing a leading role, is the best way forward, not only for British interests in the years that lie ahead but for the countries of Europe. It would enable us to play the solid role that we should play in international affairs.

The shape of the century that lies ahead of us is already very clear. It was described in grim and absorbing detail by the noble Lord, Lord Gilbert. We now have a hi-tech world on the economic side that has produced a global, almost seamless, economy so that what happens in Malaysia, Mexico or Moscow has an immediate impact on us. Moreover, we have a hi-tech world of international politics that produces the very reverse of a global situation. It is a world that we have had a glimpse of in the speech to which we have just listened--a world of ethnic revolts, bloody civil wars, famine and menacing leaders such as Saddam Hussein and Milosevic in Serbia. There is only one superpower--and thank goodness it is the great American democracy. Alongside that is the United Nations which is simply crying out for reform.

For my part, I believe that a European Union that can make sound progress in the ways that I have mentioned could provide a much more equal partnership with the United States. Between us, in terms of the industrial democracies of the world, we could play an important role in world affairs. I was much struck by the figures which the noble Lord, Lord Gilbert, gave. If I remember rightly, he said that broadly the defence expenditure of the European Union and the United States are comparable.

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