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Earl Ferrers: My Lords, may I ask the Minister an even simpler question? He said that the British manufacturing industry was coping well with the strong pound. Can he say how British agriculture is coping with the strong pound and what, if anything, the Government propose to do about it?

Lord McIntosh of Haringey: My Lords, British agriculture has much the same difficulty and for much the same reason. I acknowledge those difficulties, but as regards future government policy it would be unwise for me to venture comments just before the Budget Statement.

Lord Pearson of Rannoch: My Lords, bearing in mind the Minister's answer to the noble Lord, Lord Stoddart of Swindon, will he go further and agree that, as some 60 per cent of all world and British trade is conducted in dollars, and as the pound has been the most stable of all world currencies against the dollar for the past six years, he will do his best to persuade his colleagues in government and others of a Europhile

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tendency that they must stop referring to the strong pound and talk instead more accurately about the weak euro?

Lord McIntosh of Haringey: My Lords, I thought that I had answered that question by acknowledging that the pound is particularly strong against the euro and stronger than against the dollar or the yen. That was the thrust of my first Answer as well as of supplementary answers.

Lord Lea of Crondall: My Lords, does my noble friend agree that, contrary to what has been stated from the Opposition Benches, when the euro was introduced as the ecu in 1979 it was at parity with the dollar and that today it is at parity with the dollar? Does he further agree that that means that in a broad sense these two great currencies have been equal to each other for 20 years and that the American and European economies are equal with each other? The only difference is that the American economy has a deficit of 200 billion dollars a year whereas Europe's is in surplus?

Lord McIntosh of Haringey: My Lords, my noble friend rightly identifies the beginning and the end of his statistical series. He will agree that the dollar/euro, or dollar/ecu, parity has varied considerably at different times in the intervening period. However, in terms of the original Question, it is true that the euro has depreciated against sterling by around 12 per cent since its introduction at the start of 1999. That was a particularly high period for the euro, when at the end of 1998 it rose in anticipation of the creation of the single currency. The longer term trend had been much closer to the present position than it was at the beginning of 1999.

Lord Saatchi: My Lords, can the Minister say whether the House should attach the same weight to his denials about European tax harmonisation as it does to his earlier denials about the domestic tax burden? In case, by some mischance, the Government do not live up to their promises on vetoing European tax harmonisation, will he tell the House the amount of extra tax that the average British family would pay if Britain's tax burden was the same as that of Euro-land?

Lord McIntosh of Haringey: My Lords, there has been no change in the answers that I have given about tax harmonisation, and I have no intention of announcing further tax policies this afternoon.

Lord Boardman: My Lords, does the Minister agree that the increased interest rates which have arisen since 1997 and the extra burden of taxation which has been imposed during the same period are making it particularly difficult for industries which are dependent largely on exports to survive?

Lord McIntosh of Haringey: My Lords, all higher rates of interest make it harder for exporters in

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particular and, indeed, for any business to finance its own operations. That is a matter of fact. However, the relatively narrow bands within which interest rates have changed since May 1997 have been very much smaller than those experienced in the years of the government of the party that the noble Lord supports.

Iraq: UN Sanctions

2.50 p.m.

Lord Hooson asked Her Majesty's Government:

    What benefits accrue to the people of Iraq from United Nations sanctions; and whether they will take steps to get the sanctions lifted.

The Parliamentary Under-Secretary of State, Foreign and Commonwealth Office (Baroness Scotland of Asthal): My Lords, sanctions have contained for almost 10 years the threat that the Government of Iraq pose to their neighbours and to their own people, including the Kurds and the Shia. Resolution 1284, a British initiative which was adopted in December 1999, provided for the first time for the suspension of sanctions if Iraq co-operates with UN weapons inspectors. It also unconditionally makes major improvements to the UN humanitarian programme which Kofi Annan said last week has already provided substantial assistance in addressing the pressing humanitarian needs of the Iraqi people.

Lord Hooson: My Lords, I thank the Minister for that reply. Does she and do the Government appreciate that there is great public concern about a policy which seems to inflict an enormous amount of hardship on the common people of Iraq, particularly the children, and which at the same time seems to have entrenched Saddam Hussein and his entourage in power and prosperity? Surely, those cannot have been the objectives of this policy. Therefore, is the policy not only flawed but, after all these years, has it not also failed? Should not the Prime Minister now take the initiative and seek to negotiate with President Clinton in the United States and other international leaders to have the policy reviewed urgently?

Baroness Scotland of Asthal: My Lords, first, I acknowledge the concern expressed by the noble Lord. We must be absolutely clear as to who is responsible for the suffering. Resolution 1284, which was a British initiative, was pressed hard and was successful in assisting the suffering people in Iraq. Iraq now has the advantage of 8 billion dollars' worth of aid which it can use for humanitarian processes if it so chooses. It is a matter of deep regret and highly reprehensible that Saddam Hussein has chosen--that is what it is; he has chosen--to allow his people to suffer when the means for their relief is immediately available. Sanctions have contained him for a period of 10 years, and because of the way in which the Kurds and the Shia people have suffered, we know that he needs containment. The resolution of this issue is in his own hands. The most

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recent resolution enables him, if he so chooses, to obtain suspension. I regret to say that it is a matter for him.

Lord Moynihan: My Lords, pursuant to that answer, and given Iraq's rejection of UN Security Council Resolution 1284 and Saddam Hussein's track record of nearly nine years of violation, can the Minister envisage a scenario in which he will comply with UN Security Council resolutions? If he does not, as I anticipate, does the Minister agree that it will be essential to find ways to lift the burden of sanctions from the Iraqi people so as to prevent Saddam Hussein from using them as political pawns, while maintaining sanctions on his regime so as to deny him simultaneously the ability to reconstitute his weapons of mass destruction and to rebuild his armed forces?

Baroness Scotland of Asthal: My Lords, we have looked at those issues very carefully. The current resolution enables him to do that. We cannot legislate for his behaviour. We cannot push him to behave properly. One has to ask how the suffering of the people of Iraq would be relieved if the sanctions were not in place. Saddam does not care for his people. That is the reality of the situation. I draw your Lordships' attention to the way in which the northern part of Iraq, which is not under his direct administration, has prospered as a result of the resolution in comparison with what has happened in the south. Before the war came about, Saddam's subjugation of the people in the north caused acute suffering. As a result of the sanctions and the liberalisation of the situation, the position of the northern Iraqis, who are in control of their administration, has improved steadily. We have looked at this matter carefully again and again. The resolution which is currently in place is the best that can be devised, and it keeps pressure on the administration, which must change.

Lord Islwyn: My Lords, will the Minister recognise that the oil quota is inadequate for humanitarian needs? That is why many thousands of children are dying in Iraq. Is that not a terrible tragedy? Is that not also the reason why two senior United Nations officials resigned over this sanctions policy? Is it not time for the Government to recognise that sanctions, which have now been in operation for 10 years, simply will not topple Saddam Hussein and his regime?

Baroness Scotland of Asthal: My Lords, I say again that the purpose of sanctions is not to topple Saddam Hussein's regime. However, it is effective in containing him. He has not been able to develop his weapons of mass destruction over the past 10 years. He has not been able to visit the kind of horror on the people of Iraq and his neighbours that he did previously. Sanctions have been mitigated by virtue of the new resolution. We care passionately about the people who are suffering in Iraq. For that reason, we put all our energy into making sure that the most recent resolution was passed successfully. There are opportunities for humanitarian aid to be delivered,

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and it is being delivered. If Saddam Hussein wants to ensure that that happens, he can do so. We know, for example, that one-quarter of the medical supplies sent to Iraq are not distributed. Therefore, although I empathise deeply with and share the concerns of noble Lords, regrettably the resolution of the problem is not the removal of sanctions.

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