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Lord Selsdon: My Lords, before the noble Lord sits down I remind him that the party he supports flatly refused to send any Members to the European

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Parliament in the early days and therefore rejected it at that time. The turnaround is healthy and the open debate is desirable.

Lord Grenfell: My Lords, I thank the noble Lord for those comments. I am glad that he included the words "in the early days" which we are now beyond. The delegation we now have in the European Parliament, particularly those who represent the party of which I am proud to be a member, comprises extremely hard-working and effective Members, fully engaged in the business of the Parliament.

Lord Howell of Guildford: My Lords, before the noble Lord sits down, I forgive him his comment but reassert that there is a vast range of proposals for furthering European unity built on the European Union which some of us have sought to bring forward but have obviously not communicated effectively yet. But to imply that there are no possible alternatives to the path on which the European Union is stuck, and was stuck at Nice, is to close one's mind to real possibilities for genuine European advance.

Lord Grenfell: My Lords, I agree with the noble Lord that there must be alternatives. The point I was making is that it is difficult to know what those alternatives are if one relies on the party which he represents to tell us what they are because we do not hear from them on that.

8.24 p.m.

Baroness Hooper: My Lords, I fear that everyone is taking the opportunity to stretch their legs by hopping up in that altercation as this is a long debate. I admire the fortitude of the noble Baroness, Lady Symons, and her colleagues in sitting it out.

As a former member--and one of the first directly elected members--of the European Parliament representing the Conservative Party, I should have liked to discuss the European Union and its future and in particular the enlargement issue which I have always supported. I welcome the Government's positive approach to that matter.

I also have an interest in the Overseas Territories. I deplored the omission of a Bill to rectify the citizenship anomaly in the previous gracious Speech last December. I am therefore delighted that I can now welcome a Bill on the subject. Its Second Reading next week will give us an opportunity to consider its provisions further and raise any questions with the noble Baroness, Lady Amos.

However, once again I shall concentrate my remarks on British interests in Latin America, largely because I do not think that anyone else will. I have listened like a hawk to the debate so far. I believe that I am the 21st or 22nd speaker. With the exception of a passing reference of the noble Earl, Lord Sandwich, to Argentina, not a single person has mentioned this vital part of the world. I find it dispiriting that in this country there appears to be so little interest in

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improving and enhancing our relations with a part of the world which has a present and a future unrivalled in global terms.

Your Lordships may remember that we had a splendid debate on Latin America and the Caribbean on 28th February this year. Therefore, I do not propose to repeat all the facts and figures that emerged in the course of that debate. Suffice to say that we are talking about countries with a combined population of some 450 million people; that the economies of Brazil and Mexico are among the top 10 in the world; that these countries are rich in resources such as petrol, coal, gold, silver, copper, precious stones and, most important of all, human resources; and that there is tremendous goodwill towards the United Kingdom based on our historic links.

We are also talking about countries with established pluralistic democracies and countries which by and large have overcome the problems of hyperinflation and have turned their economies around. The noble Lord, Lord Bach, in opening the debate, said that as a country we export more than the United States and Japan and that we are the fifth largest trading nation in the world and the second largest investor abroad. Why is it, therefore, that we have a trade imbalance with Latin America of some £1.2 billion and that the United Kingdom's exports have deteriorated in recent years?

I fear that this country is becoming so inward looking, self-absorbed and, dare I say, quarrelsome over Europe and our position in Europe that we seem to forget that we became a country of world significance only because we were outward looking.

I realise that having a particular enthusiasm for Latin America myself--I declare an interest as president of the Hispanic and Luso Brazilian Council and of Canning House and as a non-executive director of a Latin American investment trust--I find it hard to believe that there appears to be so little interest in Latin America. I wonder how we can do more in Parliament, in Canning House, in our universities and in the special Latin American institutes to change that position. I am slightly worried by the feeling that the powers-that-be see Latin America as America's backyard. Perhaps they have made some secret deal to leave the United States to it so that we can have preferred status in some other part of the world. I hope and believe that that is not the case. I believe that it is more a question of apathy and inertia. I mention as an example of that lack of interest a visit made to Parliament yesterday by 10 members of the Argentine Congress who were in England to attend a seminar on the regulation of utilities.

A notice of a round table discussion with those visitors was circulated in last week's all-party notices to 659 MPs and to all Peers--I think that there are about 680 at present. I wrote personally to a few dozen people I knew would be interested. Admittedly, certain Members of Parliament who would normally have attended, including the new Father of the House, Tam Dalyell, found it impossible to be present for very good reasons. But apart from myself, there was the noble

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Lord, Lord Lea of Crondall, my noble friend Lady Gardner of Parkes and a former Member of Parliament, Jacques Arnold. Clearly no one reads the all-party notices. I did not expect dozens of people but half a dozen out of so many would have been nice.

We had an interesting and useful discussion but it was disappointing. Where were all the people who go on IPU visits to Latin America? The IPU makes every effort--I hope that it will increase its efforts--to improve contacts between parliamentarians and it does an excellent job. But I find it hard to accept that there can be so little interest in following up those visits and meetings.

Perhaps I may refer to the British Council as another example of this apparent lack of focused interest. Mention has already been made of the British Council. As I have stated on many occasions in your Lordships' House, I have great admiration for the work of the British Council. I, too, attended this morning the inaugural independent lecture in the Royal Gallery. But in the British Council's strategy document for 2001-05 the only specific reference to Latin America is the fact that it intends,

    "to remove their physical presence from Ecuador".

If, as the strategy document states, the British Council's role as a cultural relations agency is central to the United Kingdom's diplomatic effort, independent agency as it may be it still works closely with the Foreign and Commonwealth Office. If the new strategy is,

    "to shift resources to countries undergoing fundamental economic and social change where the British Council can achieve significant impact for the United Kingdom",

and if,

    "the use of self-financing services such as English language teaching is a key feature",

why is it proposed to close down the British Council centre in Quito, Ecuador, which was just becoming self sufficient? The centre in Guayaquil on the coast had already been closed.

The new ambassador from Ecuador to the United Kingdom is the distinguished former president, Sixto Duran. I feel sure that he will not object to my quoting him. Ambassador Duran is a former British Council scholar who learned his English and about England via the British Council. He told me that he very nearly declined the appointment to London when he heard of the proposed closure of the Quito centre. Many others have also contacted me. Many have written to the noble Baroness, Lady Kennedy of The Shaws. It seems a particularly unfortunate moment to take this decision. Ecuador is going through a sticky patch in its democratic institutions and its economy.

If the British Council has such limited resources that it is forced into this type of cheeseparing decision, and if the British economy is in such an excellent state as we were led to believe during the recent election campaign, why is the Foreign Office--perhaps I should say the Treasury--so stingy in its support of the British Council? In saying that, I realise that the grant

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in aid has been increased but it is still not enough to continue the important role played by the British Council.

Funding is also a pain in the neck for smaller organisations such as Canning House and the various regional and bilateral chambers of commerce which do great work in arranging trade missions and other trade enhancement activities to Latin America. But such modest financial support as they formerly received is being reduced. That means that even fewer small and medium-sized businesses will be exposed to the opportunities that exist. They will be following the fate of the manufacturing industry to which my noble friend Lord Selsdon referred.

Perhaps I may take the opportunity to ask this question again. When will the Prime Minister visit this important part of the world? We have had state visits and official visits from the presidents of several Latin American countries in the past four years but no reciprocity at the same level or at Foreign Secretary level. In that respect I have high hopes for the new Foreign Secretary. But that situation is not good enough. Unless the Government want to see opportunities for our health and education services, our financial institutions and other areas being lost to our competitors, they must not only say fair words but do fair deeds.

It is not a party political issue. Too many people are playing politics who are not interested in being statesmanlike or in considering our role in this rapidly changing world of global economy. We talk a great deal about the virtues of free trade. Yet we do not always take the opportunity to take action. We moan about the common agricultural policy. If we are serious about reforming the common agricultural policy, why do we not take advantage of the negotiations between the European Union and Mercosur, the European Union and the Chile bilateral agreement or the European Union and the Mexico agreement? Those countries are primary agricultural producers. When they raise questions about the European Union's failure to comply with world trade order rules, surely that gives up the opportunity to press for the reforms to the common agricultural policy that we want. I have said before--I shall not go over the ground again--that we have a role to play in the European Union and its relationship with the countries of Latin America.

My remarks seem rather a lament. However, I am not totally discouraged. I believe that there is a glimmer of hope in the fact that large numbers of our young people are studying or spending a gap year in Latin America. The numbers of young people from Latin America who choose to do the same in the UK are increasing. That is a signal for hope in the future. My other hope for the future lies in the interesting new job of the noble Baroness, Lady Symons. I hope that we shall hear more from her about the way in which she expects her role to develop, embracing as it does the overseas trade aspects of the Foreign Office and the DTI--in effect being British Trade International. I trust that the Minister will accept and respond to my remarks in the spirit in which I make them.

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8.39 p.m.

Lord Desai: My Lords, in congratulating my noble friends on their new offices, let me also commiserate with them. It may be difficult to believe, but dawn will come after a long night. The debate will end--perhaps not before the favourite restaurant to which my noble friend Lord Bach and I often retire; I think that it will have shut by then--but at some time.

The Government made a commitment in the gracious Speech to support,

    "a more modern and representative Security Council, and work to make conflict prevention and peacekeeping more effective".

I shall start with that point because I have not heard anyone mention it so far. I apologise if some noble Lord talked about it when I was not here. Making the Security Council a more effective body--and right now it is not effective--is very important for peacekeeping and conflict prevention. I have said before that I would like the Government to press for a qualified majority voting system for the Security Council. I recognise the criticism made by my noble friend Lord Grenfell of the revision of the QMV weighting at Nice, but the principle of qualified majority voting--with safeguards, but not a veto, for the permanent members--would be a very good thing. A coalition of at least two permanent members should be needed to block a motion. It is important that the Security Council moves on by expanding its membership, downgrading the role of the permanent members and replacing the veto with some form of qualified majority voting.

The gracious Speech raises other related issues, which I shall deal with quickly. There was a notable absence of any discussion on foreign affairs during the election campaign, apart from the crazy discussion on the euro, and there was no mention of international development issues. That was very sad. The Department for International Development has been a success story of the 1997-2001 Labour administration. My right honourable friend Clare Short has done an excellent job in establishing a philosophy for international development that combines a recognition of the benefits of globalisation with an understanding of the problems that it may cause. That balanced approach has been very useful.

I was also pleased to notice my right honourable friend's robust remarks during the HIV/AIDS conference at the UN the day before yesterday. She was quoted in the Guardian as saying:

    "It is my strongly held view that we waste too much time and energy in UN conferences and special sessions ... We use up enormous energy in arguing at great length over texts that provide few, if any, follow-up mechanisms or assurances that governments and UN agencies will carry forward the declarations that are agreed".

The problem affects the whole UN, not just the Security Council. Equipping the UN with an effective implementation mechanism and a quick decision-making mechanism should be a major task for the Government as they seek to play their role on the world stage.

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The Government have already done a very good job in bringing the theme of debt cancellation permanently into public debate, including at G8 level. They are to be congratulated on that, although more progress has to be made. I also welcome their commitment to poverty eradication, which was reiterated in the gracious Speech.

My noble friend Lord Grenfell graphically illustrated the problems of the institutions of the European Union and the G8. There is a great distance between global society and the leadership meetings. The G8 is an ad hoc arrangement with no legitimacy. It is simply a group of powerful countries that have decided to meet together. Their meetings and decisions are outside the UN framework.

People have a right to feel that they have no way of influencing G8 decisions. It was remarkable that at Gothenburg not one political leader thought it proper to address the crowd. It was not full of anarchists. There were many people who were interested in reform of the global system, or at least a discussion of it. It is wrong to characterise them all as anarchists and to expect a police or army response to what is only a minor riot. I confess that in my youth I took part in the 1968 Grosvenor Square demonstrations. Demonstrations can be quite fun and very creative. I mention parenthetically that women in this country would not have got the vote without the suffragettes' extremely violent campaign. There is a lot to be said for riots--but I digress.

However, there is a problem, because the leadership in the G8 and the councils of the European Union are shying away from confronting the people where they are, reasoning with them and arguing the benefits of globalisation, if they are so confident that globalisation is beneficial, as I believe it to be. Running away from the people is not the right response. Rather than running away and meeting on the high seas or behind closed doors with an army barrier, they should make arrangements to have a dialogue with the people on the streets, as happened at the Prague meeting of the IMF and the World Bank. That is very important.

That leads to the related problem of the democratic deficit in the European Union, which was mentioned by my noble friend Lord Grenfell, and no doubt by other noble Lords. In his Warsaw speech some time ago, the Prime Minister raised the issue of a second chamber for the European Parliament. Leaders in other European countries have also advanced that notion. It is worth exploring the possibility of having an assembly of national parliaments as a second Chamber in Brussels so that national parliaments do not feel so cut off from the European Parliament and European political procedures. Regardless of whether people want a federal solution, we must have another tier of representation in Europe so that people do not feel that there is a large democratic deficit.

I should like to respond to the comments in the excellent speech of the right reverend Prelate the Bishop of Oxford about the benefits of the World Trade Organisation. He rightly pointed out that, although a number of third-world countries had felt the benefits of free trade, those benefits had not spread

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universally. The power of some corporations and the inequitable distribution of wealth within and between countries have caused problems.

No doubt the right reverend Prelate was very encouraged, as I was, by the outcome of the legal action taken by the pharmaceutical industries against the South African Government over their legislation. There were various factors involved. First, civil society protested strongly that, whatever the legal rights under the intellectual property rights legislation, they did not like what was happening and wanted to challenge it.

Another issue, which has not been noticed, is evident in the comments of an Indian manufacturer, who said that, if competition were opened up, it could manufacture the drugs at one tenth of the price charged by the big pharmaceutical companies. An element of open competition is an important part of the WTO process. We should do everything possible to reinforce the idea that, in as much as the WTO process guarantees intellectual property rights, we will not deflect from the need for a very strong competitive environment. The result has been that drugs for the treatment of AIDS are now being sold at one-tenth of their former price. That has come about from a combination of the power of society and the market. That is the type of solution that I hope the Government will seek and advance.

8.50 p.m.

Lord Bruce of Donington: My Lords, it is, as ever, a very great pleasure to follow my noble friend Lord Desai. He always gives me considerable grounds for thought. My thoughts this evening are first directed to congratulating my noble friends on their presence on the Front Bench in a comprehensive variety of functions. I wish them well.

I do not imagine that I am alone in believing that over the past two years time for the opportunities afforded not only to Members of the other place but also to Members here for discussing in informed detail the affairs of the European Union, or European Community--by whatever title it is from time to time known--has diminished. Of course, we have good Select Committees here, particularly on European matters. But curiously enough, the Government, who are responsible for the allocation of time, for some strange reason always ensure that the occasions on which we discuss European matters in any great detail are a Friday morning or perhaps a Thursday afternoon--the fag-end of our meetings. That does not make for any continuity of study of what is going on in Europe or of the Government's latest thoughts.

Similar observations apply to the other place. Over the past two years, I have noticed that informed discussion by the full membership of another place on European questions is diminishing rapidly. Particularly in view of the fact that out of the British Exchequer we contribute some £3 billion to £4 billion every year towards the European Union, one would have thought that there would be some interest in the European budget. Two years ago some perfunctory notice was taken of it, but this year the other place has

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not even bothered to discuss the European budget. A whole series of laws which are binding upon us seem to go through both Houses of Parliament without any great examination, discussion or criticism by a Parliament which, I believe, is widely acknowledged as one of the oldest parliamentary democracies in the world.

Why is that? There must be a reason why the Government are so modest about these matters. I shall suggest to your Lordships that there is a reason and that it concerns congestion. The Government and their members, in common with ordinary Members of Parliament, have less and less time in which to think, less and less time in which they can develop argument, and less and less time in which to engage in the more detailed aspects of policy which it is possible for parliamentary democracy to undertake.

I regard that as unfortunate. But there is a reason for it. One reason, of course, is that the British Parliament, particularly in its relations with the remainder of the European Union, is so deluged with legislation proposed by the European Commission in particular that it does not have time even to think about it. Last year 3,000 regulations of one kind or another were sent here from the Commission. It is quite impossible for Ministers to read them. They may find themselves initialled in the Ministers' Red Boxes at night, but I doubt whether they have time to read them. I am a fairly assiduous reader of most material that comes out of Europe, but I, even full-time, cannot cope with it, let alone a Minister.

There must be something wrong here. I do not believe that anyone in their right mind disputes the necessity for an association to develop between countries, whether on this side of the Channel or the other. Pollution is no respecter of boundaries, and it is quite clear that close co-operation among member states is desirable for that purpose. There is a whole series of matters which it is common sense to assert should be the subject of closer and closer collaboration, whatever form that may take, between members of the European Community. No one is in dispute about that.

However, the quantity of regulations now begins to make the mind boggle. I am not suggesting that one should have wicked suspicions in the matter, but it is not entirely unknown for bureaucracies to get their way simply by swamping people with legislation in the hope that they will throw up their hands and allow it through with the minimum of scrutiny. Certainly that applies in our relationship with the European Union.

Our scrutiny committees, particularly in the House of Lords, are extremely efficiently conducted, as are those in another place. However, there are limits to the information that can be elicited and the conclusions that can be drawn from a round-the-table routine of interrogating witnesses. That is not always the best way. However, that is what I believe is happening and we must do something about it.

If Her Majesty's Government feel that a closer association with Europe is desirable and, indeed, vital to the nation's interests, surely they should pay some

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attention to the institutions of the Community and, in particular, to the Commission. We all know that the Commission rigidly insists on holding a monopoly of the formulating proposals for submission to the Council of Ministers. It repeatedly assert that monopoly. Why should it have that monopoly? What divine wisdom is disposed among the gentlemen and ladies who are appointed to the Commission that puts them above all ordinary mortals? They are selected; they are not elected at all. Yet they seem to be able to rule the roost.

I suggest to Her Majesty's Government that if they are intent on making Europe work together as a unit under the law, they should take control themselves. Responsibility for the initiation of legislation should not be left to the Commission. What particular qualities does it have? It should rest with the Council of Ministers, who derive their democratic power from the people who elected them, first, as Members of Parliament. Those people, who are at the apex of parliamentary government, should propose laws for their colleagues, and the Commission should be their executive instrument. That is the only correct approach. What objection could there possibly be to it?

What currently happens is this. We get sheaf after sheaf of papers, which are listed in publications that are available to us all. Documents, which can appear as proposals, recommendations, draft decisions or draft directives, come from the Commission and they are distributed down to the relevant Ministers. The Ministers concerned cannot possibly read them--they have not got the time. Such documents come up for discussion at Council level and the Ministers who are delegated the task of dealing with them at meetings in Brussels probably first see the proposals when they are sitting in the plane with their papers in front of them. It is not entirely unknown for Ministers to be so tired when they arrive, after having had the refreshments to which they are entitled, that they leave the committee work under the presidency-in-office in a condition that does not make any consideration worth while. In fact, many of them are merely informed, after a meeting with their delegated officials has taken place, of what has already been decided. Some of them do not even bother to read the documents. It is not entirely unknown for Ministers of the Crown not to read the treaties that they have signed--there have already been two or three examples of that. That cannot be right.

We should take seriously the job of being in Europe. The first thing to do is to divest the Commission of its monopoly over making proposals for the Council of Ministers. That will obviously mean the appointment of more Ministers, but why not do that? What is wrong with having more people in office who believe in the construction of Europe and its purposes? They would have their own civil servants who work and think in their own way and, if the Commission were merely the executive instrument, they would have the time to think. Such an approach should be considered.

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There is currently a pretence that there are all kinds of legal difficulties with enlargement. Enlargement will be difficult because of the acquis communautaire, with which every new state is required to comply. We had to do so after the Heath negotiations. The morning after we signed up--this is recorded in the official history--we received 30 volumes of the acquis communautaire, with which we thereafter had to comply in order to be a member. Various member states and our Government are troubled by the fact that the main question in this context involves negotiating not about various points of principle--although they need to be discussed--but about the acquis communautaire that each new member state has to accept. Mind you, there are hardly cases in which that could be circumvented.

One of the ways in which the Commission succeeds in getting its way is by postponing the operation of a particular directive. In order to get agreement, it says, "This provision need not come into force for another six years". The politicians who are there want to get home to sleep, and they say, "Well, that is all right". However, six years later, we suddenly find--this happened with the metric system--that we agreed to the proposal six years previously.

If we are serious, all of that will have to change. There are compelling reasons for examining the whole structure of the European committee system and we have to make changes. We should also bear in mind the results of the investigation by the wise men into the affairs of Europe following financial scandals. We should remind ourselves that they did not get a clean bill of health. If there is any doubt about that, one simply has to read the speech that the Prime Minister made after the matter was discussed--it is sufficiently damning.

We have to think again. We have to think radically and we have to get a democratic institution at the top. We should not accept the dictatorship of a Commission which is not elected by anyone--but which is appointed according to one kind of merit or another, with which we are not always fully acquainted.

9.7 p.m.

Lord Vivian: My Lords, I congratulate the noble Lord, Lord Bach, on his appointment as a Parliamentary Under-Secretary of State at the Ministry of Defence. I also thank the noble Baroness, Lady Symons, for the courtesy she has shown me when dealing with all of the defence matters that I have raised.

The armed services have been deployed operationally on no fewer than six different occasions during the previous Parliament. On each occasion, they excelled in their missions. The Sierra Leone operation and the deployment of the SAS will be recorded as one of the most successful operations that the armed services have undertaken.

Those combat operations are not achieved without hard, tough training and excellent leadership by all ranks. It is essential that they continue to train for the

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more traditional types of combat which involve killing the enemy and, regrettably, on some occasions, the death of some of our own servicemen.

It is the duty of Parliament to ensure that nothing damages the combat effectiveness of the armed services. To ensure combat effectiveness, the basic principles of the Armed Forces must not be interfered with by the Government. Political correctness, the scourge of the services, which I shall come to in more detail in a moment, should not be implemented into service life and much that has already been incorporated should be eradicated forthwith.

Political correctness threatens combat effectiveness and that has come about by a mass of new legislation. The Human Rights Act, health and safety, the working time directive, equal opportunities and sexual discrimination have all had their parts to play in weakening the military ethos, morale and service of the Armed Forces, which are all major factors on their own relating to combat effectiveness. That legislation has enabled servicemen and women to sue the MoD over many matters, which has cost the taxpayer enormous sums of money which could have been spent on new equipment, training or improved conditions of service. There are many occasions when team spirit comes above the needs of the individual if training and operations are to be successful. I am convinced that some elements of that recent legislation have already damaged the Armed Forces.

There is also a subject known as risk aversion, which has stemmed from that political correctness. That could totally destroy the combat effectiveness of the Armed Forces by breeding cautious leaders who may not make courageous decisions for fear of being pursued through the courts afterwards. For example, will an officer or an NCO be prosecuted in the courts when he orders a soldier to continue with a patrol, knowing that he may be killed? Is it possible that orders issued in the heat of battle, when under enemy fire, in retrospect may not turn out to have been the best orders and will the officer who issued those orders find himself being prosecuted in the courts? That is an intolerable stress and strain to place on our Armed Forces and I am convinced that a way must be found to remove that culture of damaging political correctness from them.

It is wrong to impose political correctness from civilian life on our Armed Forces as the military way of life differs from the way of life of civilian counterparts and it can only weaken that essential combat effectiveness.

I turn now to the European Defence and Security Initiative. I have found statements about that force made in the press and by the Government both confusing and sometimes contradictory. I read very carefully the official translation of the French Presidency Report to the Nice Council, which was placed in the Library on 26th January.

The first sentence of the first paragraph of that report states:

    "The aim of the efforts made at the Cologne, Helsinki and Feira Councils is to give the European Union the means of playing its role fully on the international stage and of assuming its

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    responsibilities in the face of crises by adding to the range of instruments already at its disposal an autonomous capacity to take decisions and action in the security and defence field".

I believe that it is those three words--"an autonomous capacity"--which have provoked such disagreement between, on the one side, many of us and the USA and on the other, the European Union. It is agreed by all that NATO is the foundation for the defence of Europe and must remain so. It is agreed that nothing must weaken or undermine NATO. NATO, the USA and the European Union are all agreed that Europeans should do much more to increase their defence capability, but not at the expense of the cohesion of NATO.

It was shaming to Europe that the USA had to fly about four-fifths of the missions during the Kosovo air campaign because the Europeans did not have the technical ability to do so. And it was shameful to the rest of Europe that it was unable to supply the intelligence, the transport, the command and control and the radar jamming and much else, which all had to be provided by the USA.

The mechanisms by which NATO has the first right of refusal to become involved in any threats to Europe still have to be resolved. It has also been stated by President Bush that the European Defence Force must be properly integrated into NATO. But it is not properly integrated yet. It has recently been agreed that there is a need for the European Defence Force to have access to NATO's planning capabilities, ensuring that the force is firmly linked to NATO.

So why has the European Union set up on its own initiative a policy and security committee, a military committee and a military staff organisation, duplicating much which exists in NATO itself, damaging the relationship with the USA and wasting public money?

The European Defence Force will not be credible for at least 10 years. Why should that be the case? First, European defence spending must increase significantly now and for the foreseeable future and a real, rather than a rhetorical, commitment to defence spending needs to be demonstrated. European defence budgets continue to fall by five per cent a year in real terms, and that defence spending has dropped to 110 billion in 1997 to a predicted figure of about 99 billion this year, despite the claims by NATO that defence budgets have stabilised.

The recent spectacular cut in Germany's defence budget and the announcement that it cannot afford to buy the 73 transport aircraft to which it was committed are alarming and may set an example to the other European Union countries that there is no real need to increase defence spending.

Without increased spending by European countries the European defence force cannot be effective. Another problem to grasp is that the European Defence Force cannot be effective until the quality and the quantity of the troops, with the exception of those of the United Kingdom, are dramatically improved. Currently, the USA provides 80 per cent of the manpower and the European Union only 20 per cent.

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The only two countries within NATO that are capable of fighting wars are the United Kingdom and the USA. Forces allocated must be properly trained to fight wars and it will take many years to train the other European countries to similar standards as those of the United Kingdom and the USA.

There are other important aspects without which the European Defence Force will be unable to function. They are the lack of command, control, communications, computerised systems, battlefield surveillance and reconnaissance assets; intelligence facilities without which it would be impossible to make the correct decisions in a crisis management situation; the need for a reduction in the deployment time for the force from 60 days to around 14; the requirement for a minimum of 180,000 troops; the need for interoperability within the force; the need for more transport aircraft to include heavy lift, and more ships; and the force itself must be sustainable. For those reasons, even if European defence budgets were dramatically increased now, which is highly unlikely given the recent example by Germany, it would take at least 10 years before there would be anything approaching a realistic force.

The European Defence Force should be subordinate to NATO, as it does not have sufficient capabilities of its own. It could use NATO planning facilities and if the force is ever deployed it should come under the command of the Deputy Supreme Allied Commander Europe. That would avoid duplication, avoid upsetting the USA and would cease to be seen to undermine NATO.

I now turn briefly to the situation in Northern Ireland. As your Lordships are aware, the political situation is grave, with the extremist parties Sinn Fein/IRA and the DUP confronting each other. The Belfast agreement hangs by a thread; violence has escalated between the two extreme factions; and there is a possibility that direct rule may be imposed once again. There is little chance of any decommissioning of weapons, as in IRA terms that means surrender. Unless Sinn Fein/IRA fully decommission their weapons there is every likelihood that Mr Trimble will resign as First Minister.

The threat to the security forces is high and too often our Armed Forces in Northern Ireland are forgotten because I have the impression that there is a misguided feeling on the British mainland that little happens over there. In fact, that is far from the case, as we have seen in the past two weeks, when once again the Armed Forces have been in high profile. Throughout June there has been public disorder and rioting in North Belfast and Portadown, and in the past three months there have been five murders, 41 bombings, 40 shootings, 27 assaults and 164 RUC casualties.

The marching season, which is soon to start, will require careful action by the Army and the RUC in monitoring and dealing with situations. The Armed Forces make a very large contribution with the Army providing three brigades with some 15,000 troops, the Royal Air Force providing about 1,000 personnel controlling a large joint helicopter force found from

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the Royal Air Force and the Army Air Corps, and the Royal Navy providing around 170 people with a number of Hunter class patrol craft and rigid raiders.

Our Armed Forces in Northern Ireland had nearly become a forgotten army as far as the general public and some politicians have been concerned. It is wrong that that should be so as they face more danger than those in the Balkans. They are particularly well trained and commanded and are highly successful in all their many different operations.

I now turn to the Defence Medical Services, which are in a critical state. In order to illustrate how serious the situation is, perhaps I may point out that at December last year there were shortfalls of 55 per cent general surgeons; 61 per cent orthopaedic surgeons; 59 per cent general physicians; and 77 per cent anaesthetists. Such is the shortfall of trained doctors and nurses that currently only one and a half of the three field hospitals could be operationally deployed using regular personnel. To make that up to the three field hospitals required by the Strategic Defence Review reservists and ex-service personnel with recall liability would have to be called up. If further capability were required, TA field hospitals would have to be mobilised, which was being planned for Kosovo.

The Army is some 8,000 troops below strength, but there were a further 9,000 servicemen and women who were fit only for light duties and could not be committed to operations until they had been medically upgraded. That is a disgraceful state of affairs, reducing the deployable strength of the Army by about 17,000 personnel. That situation must be put right as soon as possible.

Perhaps the Minister would write to me on the three issues I raised in the debate on the National Health Service last May. First, I asked what had happened to the need for the fast-tracking of servicemen and women requiring hospital treatment and operations. Secondly, I pointed out that the removal of service families from waiting lists every time they are posted to new stations within the UK caused frustrating delays. Thirdly, I pointed to the immediate need for instant physiotherapy when Armed Forces personnel damage limbs in training and sport.

Finally, I want to pay tribute to the men and women of the Armed Forces of the Crown. They are highly professional and exceptionally well trained. They are determined to achieve success and to protect our liberty and freedom. They are brave and courageous and they are always prepared to make the supreme sacrifice. It is our parliamentary duty to look after these men and women, who are such an outstanding example of loyalty to their country and dedication to duty.

9.22 p.m.

Lord Bramall: My Lords, it will not have escaped notice that defence and the Armed Forces scarcely received a mention during the whole of the election campaign and certainly not by any of the party leaders.

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The gracious Speech, apart from a brief mention of NATO and the European capability, shows similar reticence.

Many noble Lords will recall that not long ago defence was considered to be one of the primary responsibilities of government, the Secretary of State of a great department of state usually ranking fifth or sixth in Cabinet precedence, instead of 15th as he is today. I wonder what the men and women in the Armed Forces make of that.

But of course times have changed. This country is not for the moment under any direct threat. However, as has been made clear, the importance--indeed, the indispensability--of the Armed Forces both in supporting the Government's foreign policy and in acting after natural disasters in areas as diverse as the Falklands, the Gulf, the Balkans and West Africa, to say nothing of Cumbria and Devon, must be obvious for all to see. Therefore, this jewel in the Crown still needs constantly to be nurtured and supported if the quality, efficiency and effectiveness of the Armed Forces are to continue to be taken for granted. And, for obvious reasons, support and funding cannot be turned on and off as crises come and go.

The noble Lord, Lord Bach, paid the Armed Forces a handsome compliment, as much appreciated as I believe your Lordships will agree it was deserved. But it is by action, not by words, that the Government will in the end be judged. The Government, as I and many other noble Lords have frequently said, have made a very good start with a soundly based Strategic Defence Review.

However, those of us who are comparatively wise in, and certainly wary of, the ways of Whitehall have few illusions about what is likely to happen with the election safely out of the way. Even discounting the persistent rumours, the whole government emphasis on the delivery of better public services--sometimes conveniently forgetting that reliable Armed Forces may be one of the most important public services that a country can have--will require a great deal more money from a reluctant Treasury. It is not difficult to guess where its eyes are likely to alight to recoup resources. This is an area not covered by any specific election promises and unlikely to cause a ripple on the electoral pond.

Should that happen, it will no longer be possible to fudge the issue by sheltering behind claims of better value for money or efficiency savings. We have been round that buoy not once but umpteen times in the past 15 years or so. No, if there are to be cuts in the promised marginal real term increase in defence spending over the next three years, albeit from a very low baseline--as so much of the programme is already under-funded--it is bound to affect the already seriously depleted and fragmented Territorial Army, the only reliable reserve now left to us, and the longer-term equipment programme on which the whole future effectiveness of the Armed Forces depends. It will also affect the accommodation programme, some of which is in a disgraceful state, and the number of cap badge units, which would both seriously increase overstretch

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and strike a body blow to the regimental system on which the morale, recruitment and retention in the Army depend.

I sincerely hope that I am wrong. The best start that the new Parliamentary Under-Secretary of State, the noble Lord, Lord Bach, whom I also warmly welcome to his new post, could have made would have been to give a categoric assurance that what I have outlined will not happen and that, as in other areas, the Government intended to deliver the Strategic Defence Review in full, with the necessary funds to make that implementation possible. But it seems that the noble Baroness, Lady Symons, is to wind up. I am delighted about that because it means that our sadness at her departure to her bewildering, varied, new and important jobs will be assuaged just a little longer. Of course, the noble Baroness knows the whole background intimately. I only hope that I can persuade her to try to reassure your Lordships' House on some of the matters that I have raised. If not, I fear that overstretch and manning will get worse, training will become further restricted and things will start to go wrong so that for the first time for many years the British people will discover that they can no longer take the effectiveness of the Armed Forces for granted when new crises emerge, as they are bound to, particularly in the vital Middle East and, as the noble Lord, Lord Vivian, said, perhaps, sadly, much nearer home. But by then it may well be too late and too expensive to put things right, as has occurred in relation to medical services, a situation which the Government inherited from an earlier administration.

The effectiveness and future of the Armed Forces must depend on getting the right people to join, giving them the right equipment, training them properly for real combat and, most important, achieving a proper balance between operational commitments and time with their families. It is on these matters that defence expenditure should be both based and justified, not merely (in the current Whitehall jargon) on whether the Armed Forces can be said to be contributing to the national agenda and pan-government initiatives and showing greater media agility for the benefit of the image of the Ministry of Defence. These may be a bonus but they are certainly not the be-all and end- all.

As to the one thing in the defence field on which the gracious Speech did touch--taking steps to enable the European Union to act when NATO chooses not to--the Government have only themselves to blame that it attracts criticism both in Parliament and the country. The language in the gracious Speech is unexceptional enough. Perhaps less so than other noble Lords, I can find no objection to it at all. However, knowing how the French see the initiative as an alternative or even a counter to NATO, the Government must come clean and make clear exactly how they see this desirable improved European capability being integrated into NATO's overall political command and staff structure without undue and unnecessary duplication; what size additional headquarters within the NATO umbrella they foresee as necessary to command European forces, should that be necessary; and, most

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importantly, what extra funds they propose European countries, including this country, should be contributing towards making this concept a reality?

As was pointed out by the noble Lord, Lord Vivian, without such additional funding a force's exclusive capability will be so deficient of so many things as to make it virtually unusable. All that will happen is that the United States may have been made suspicious and NATO somewhat destabilised without having anything to show for it at the end. Perhaps the noble Baroness can show some light on those points. Otherwise suspicion will persist, and it will be the French plan that will be adopted.

I believe that your Lordships' House is looking for reassurance that, for reasons of political expediency and the omnipotency of the Treasury, the Government will not be diverted from full implementation of the Strategic Defence Review which, only a very short time ago, they thought essential in the national interest.

Finally, there is one aspect of the Government's handling of defence on which the noble Baroness will be pleased to know I can find no reason to criticise or even harbour suspicion; that is strategic missile defence. If ever a subject cried out to be kicked into the long grass until we can be sure that we are enhancing rather than damaging strategic stability, that is it. Clearly, a great deal of work needs to be done first on East/West co-operation before the matter is taken further.

On the other hand, the shorter range, more tactical missile defence, such as was needed in an earlier generation form in the Gulf War, is a much more urgent matter to which I hope the Ministry of Defence is giving some consideration.

9.32 p.m.

Lord Inglewood: My Lords, in the recent debate in your Lordships' House about its composition and its future, a number of references were made to the fact that "of course this is a part-time House". As a number of your Lordships know, I, as a hereditary peer, have the slightly surprising outside job of being an elected Member of the European Parliament. There I represent a number of noble Lords on the Front Bench and the Benches opposite. Indeed, the right honourable Member for Blackburn is one of my constituents.

Ten days ago, as part of my work in the European Parliament, I went with the delegation of the Legal Affairs Committee to Poland to talk to the administration there and the Sejm--the Polish House of Commons--about preparations for and progress towards Poland's joining of the European Union. Clearly, everyone recognises that there is a very big mountain to be climbed before it does, but the Poles were buoyed up by the conclusions of the Gothenburg Summit and encouraged by progress in recent months over the accession negotiations. Of course they recognise how much more is to be done. Equally, there was recognition on both sides of the negotiations that

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perhaps the best way to reach a satisfactory outcome in certain circumstances is to go right up to the wire. If one looks at the progress in enlargement generally over the past few months, one sees that progress has been made.

On a previous occasion I explained to your Lordships' House that I consider the enlargement of the European Union to the East to be the most important geo-political project we are currently engaged on. Moreover, it was so well described by Commissioner Patten just before lunch no distance from here in the Royal Gallery that I do not think that I could put the matter any better myself.

Given its importance, what is it that we need to do? First, we have to complete the pre-accession negotiations; secondly, a number of European Community and Union policies need to be reformed; and, thirdly, we need to see changes in the system of Europe's governance.

I have already touched on the matter of the accession negotiations. As far as concerns policies, the most obvious policy that needs to be addressed for all kinds of reasons is the common agricultural policy. It is important that when new member states join, they become full members right across the board and that they themselves become integrated into the common agricultural policy, whatever it may be at that time. Reform will be expensive, but, as we all know, pressures are building up all around Europe--the outbreak of foot and mouth disease in this country and the political ramifications of BSE in Germany--which mean that the time is probably better for reform than it has been for a very long time.

Equally, there is real poverty in a number of the applicant countries, which inevitably means that money that channels through the various instruments of regional policy to this country and to other countries like it will be directed elsewhere.

Europe is not principally about money. Indeed, I do not believe that the European Union and Community requires a large budget at all. For my part--it is a purely personal observation--I should like to see the rebate obtained by my noble friend Lady Thatcher for this country at Fontainebleau applied equally to all member states.

Everyone recognises that the common agricultural policy is ripe for reform. It is an almost unbelievable policy. It is bad for farmers, bad for the environment, bad for taxpayers and bad for consumers. The only saving grace is that if one were to reform it, one would almost certainly find some money to redeploy. In the event, we are seeing increasing development of policy within national envelopes and we shall see more co-financing. Indeed, as the situation develops, perhaps we shall see even 100 per cent national financing for agricultural projects. As for regional policy, if less money comes to this country, I hope that we shall see a complete recasting of state aid rules, which will enable national policies for regional aid to be developed in a different way from how they have been developed in recent years. It will cost money, but stability, whether economic, political or military, on our eastern borders is worth paying for.

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I turn to systems of governance. The rationale behind the Treaty of Nice was that it was necessary to replace the systems designed for a Europe of one dozen member states with systems that would work for a Europe of two dozen. Now that we have a treaty, I am not sure I have heard of anyone, with the possible exception of Jacques Chirac--I am not even sure that I believe him--who is positively happy with the outcome. In an ideal world, I should like to see it changed and improved in a number of respects. But it should be remembered that the pre-Nice debate and the Nice conference set the limits of what may be politically possible. If one wants enlargement, one has to create the necessary conditions in which enlargement can be carried out.

In his remarks, the noble Lord, Lord Bach, commented on the outcome of the Irish referendum. I am not quite sure of its significance. It can be seen--probably rightly seen--as proof of certain aspects of democratic shortcomings in the way Europe works. It also suggests that intergovernmentalism is flawed, because the great argument for intergovernmentalism is that one can strike a deal and then be relied on. The one thing we cannot do in progressing Europe is to have a system under which deals are made and then cannot be delivered. I am increasingly coming to the view, which I suppose is obvious if one thinks about it, that the Treaty of Nice, the Treaty of Amsterdam before it, and the post-Nice agenda are part of the same single process, which is to bring Europe into the third millennium and to double the number of member states it contains. That will require a very great deal of work and, just as the whole basis of this enterprise is the interdependence of the member states, so the nature of the way in which decisions are taken means that national political parties themselves will require an equal interdependence in determining outlook and future policy.

That is the reason why I and my Conservative MEP colleagues sit with allies from other countries in the Union, in a European political group which, by its nature, is a much looser organisation and grouping than is the case for domestic political parties. It is my view both as a Conservative and as a citizen of this country that we are absolutely right to be doing that. I say that not only because the EPP/ED group in the European Parliament--of which I am a member--while it may not have an overall majority is nevertheless the largest political grouping and, as such, is the principal player in that arena. Thus I find myself in the slightly unusual circumstance where, in this Chamber I sit on the Opposition Benches, but when I attend the European Parliament, I am a part of the dominant team.

Although no one should harbour any illusions--the European Parliament is an organisation nothing like as important as the Council of Ministers in the overall scheme of things--it is nonetheless a place which is important for both legislating and forming policy at the European level.

I do not believe that the institutions of Europe are perfect; far from it. However, that is also the case for the institutions in this country. Very little in this world,

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in one way or another, is incapable of improvement. What we need to try to do--I use the pronoun "we" in a very general sense--is to develop ways of doing things at the European level which relate and are complementary to the ways in which things are done here and, I hasten to add, to the way things are done in other European member states. We will then become comfortable with what is going on, as will all the others affected.

It is self-evident that that will not be easy to achieve. A great deal of lateral thinking and imagination will be required to bring it about. But it is no good simply paying lip service to the European Union and then complaining that it is not working as it should, if one is adopting an approach to change which is perceived as not being delivered in good faith. It follows, therefore, that noble Lords on these Benches must do more than simply adopt the traditional United Kingdom opposition perspective on these matters. We need to tackle the task from a set of premises and with a set of policies which our allies in other member states will find consistent with our commitment to the underlying project. If we do that, we may find that we shall lose the battle in Westminster, but that that opens the possibility of winning the war in Brussels. I believe that to be a very considerable challenge.

Not only will that be a challenge under ordinary circumstances but if, as I believe, we have to proceed speedily with the task of enlargement, that will make it so much more difficult. We should remember a comment made to me by a Pole during my visit to Poland 10 days ago, "There is only a certain amount of time that you can keep the bride waiting at the altar. If you leave her there for too long, she will go off with someone else".

9.43 p.m.

Baroness Turner of Camden: My Lords, I welcome the opportunity to speak in this important debate on foreign affairs. I should also like to take the opportunity to congratulate my noble friends Lord Bach and Lady Symons on their new positions. Furthermore, perhaps I may express my admiration for their fortitude in sitting through this lengthy debate.

I am particularly glad to learn that the Government have not departed from the aim of pursuing an ethical foreign policy. Unlike the noble Lord, Lord Howell of Guildford, I think that it is quite important to restate that commitment. Apparently, legislation is to be introduced--perhaps more far-reaching and radical than any since the Second World War--seeking to ban the export of weapons to areas where there could be human rights abuses. There is to be a ban on the sale of torture equipment and on the sale of landmines; increases in the penalties for offenders; and, apparently, there is to be an annual report on strategic export controls. I should like to see cluster bombs and weapons containing depleted uranium added to the list as both threaten civilian lives and health.

Britain is responsible for a quarter of global weapon sales and British companies are leaders in the field. It therefore requires some courage to embark on such a

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policy, which could mean job losses. However, the policy is right and the Government are to be commended on their stance.

We heard little about foreign policy from any of the major parties during the election. The media informed us that the electorate was concerned only with public services; with health, education, transport and welfare. Except for the emphasis by one party on the euro, the important role of Britain in world affairs received little attention. Many of the comments about the euro appeared to go beyond that issue and to challenge our continued membership of the EU. This was particularly the case with some members of the main opposition party, although not, I am glad to say, of its leaders.

Years ago I was inclined to Euroscepticism myself; so were many trade unionists then--but no longer. Many of us began to realise that, in the EU, trade unions are social partners rather than the "enemy within". Moreover, many directives in regard to working conditions, non-discrimination and the like have been of benefit to working people. My noble friend Lord Lea of Crondall, in an excellent speech last Monday, spelt out just how beneficial the directives received have been. I know that some of my noble friends may not agree with me, but I believe what I have just said to be the majority view of the trade union movement. No doubt reforms are necessary, but I believe that the Government understand that and I am sure that they will pursue the issue.

The European social model appeals a great deal more to me than the American one. Moreover, it would appear to be more in line with the electorate's view, with its concern about public services. The United States model, with its individualistic, entrepreneurial culture, results in prosperity for some people but also produces a large, resentful and sometimes dangerous underclass, and a large prison population. That is not the road for us.

Then, of course, there is the matter of EU enlargement, to which the noble Lord, Lord Inglewood, referred in an interesting speech. The Government are keen on this, as are other governments in the EU, and, apparently, the governments of eastern European countries which were formerly under communist rule. No doubt the process of enlargement will continue despite the problems arising from the results of the Irish referendum.

There are, however, aspects which should concern us. In these eastern European countries there has been a rapid transition from centralised, state-owned monopolies to privatised, free-market economies. This has been at the instance of the West, notably the IMF. The results have often been dire. A few people have got very rich, but the bulk of the population has become increasingly impoverished. A recent poll in Romania indicated that more than 60 per cent of people believed themselves to have been better off under Ceausescu. Bulgaria appears to be similarly situated, with high unemployment and no adequate welfare net to protect the vulnerable.

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Similar situations exist in other countries which have emerged from communism and have been encouraged down the path of privatisation and the free market. Why reform should always mean massive unemployment I really do not understand. In such circumstances, it is hardly surprising that the more adventurous individuals in such societies believe that they should try to join the tide of economic migrants, taking enormous risks to get into EU countries, including Britain.

So these countries joining the EU will need help, but so far the emphasis seems to be very much on the free market and privatisation, as though these were the hallmarks of democracy. But the human rights of citizens, which include the right to basic living standards, are surely most important. That also is a part of an ethical approach to foreign policy.

Perhaps I may return to a more contentious issue. Before the House rose prior to the general election, I and several other noble Lords raised the matter of sanctions and the bombing of Iraq. My noble friend Lady Symons was kind enough to write to me at length and to place a copy of the letter in the Library. I am grateful to her for setting out in some detail the background to government policy.

I want to make it clear, however, that my intervention was not prompted by Iraqi propaganda, which I have not seen. I am concerned about bombing. I am old enough to remember what prolonged aerial bombardment is like. It is just not possible to drop thousands of tonnes of high explosive from a great height on populated areas and not kill and injure civilians.

It is clear from the Minister's letter that the Government have no idea of the number of civilian casualties. It is said that the bombing campaign is necessary for the protection of Kurds--although Kurds are, regrettably, repressed not only in Iraq. Saddam Hussein--now demonised, no doubt justly--was yesterday's man with whom the Americans "could do business". He was encouraged and covertly armed in the long and disgraceful war with Iran, merely because at that time it happened to suit United States foreign policy.

Similarly with Milosevic, he was the "OK guy" when he was needed for the Dayton accord but is now regarded as responsible for all the Balkan ills--a ridiculous assertion. The Serbs have also been demonised, but others were responsible too, particularly the Croats and the Bosnian Muslims to some degree.

Despite the Minister's helpful letter, I really do feel that it might be appropriate to review our policy on Iraq. It clearly does not command full support among our EU partners, and it is possible that the new President of the United States might be willing to look at it all again, particularly in the light of recent changes in the Senate. I should also like to hear from the Minister a little more about the so-called "smart sanctions". A recent report suggests that if they were implemented, it could give Jordan some economic problems. Since Jordan is a friendly country, one would not want that to happen.

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As to the Balkans, I opposed the bombing of Kosovo and Serbia--and I still believe that it was wrong. It now seems that we shall have to commit forces to remain in Bosnia, in Kosovo and perhaps in Macedonia for a very long time. Ethnic wars are not simply a matter of leaders. It would be much easier if they were. The bitterness that is engendered lasts, and there are no quick fixes. In Macedonia, the Albanian rebels--probably funded from abroad and apparently amply supplied with weaponry--appear to be making demands that the Slav government find difficult to accept. NATO assistance has been sought by both sides. But it appears that large numbers of Slavs regard NATO as taking too favourable an approach to the Albanians. However, NATO's policy appears to be to attempt to negotiate a peaceful settlement, and we should all support that approach. Intervention carries with it considerable risks and does not always produce the hoped-for result.

Yes, the world is a more dangerous place than most of us would like. But I question whether the missile defence project--"son of star wars"--is an appropriate response. It is not widely popular even in the United States and it would appear that our partners in the EU are not particularly keen on it either. Russia is hostile, and it may have the effect of driving Russia closer to China in a defensive bloc. The rogue states to which President Bush refers are scarcely in a position to challenge the world's only remaining superpower; and the abandonment of the ABM Treaty is bound to be regarded as hostile by the present Russian Government.

We should advise President Bush against this course. In particular, we should not make Fylingdales available. Why should we give our fellow citizens who live around it the impression that they are expendable; that President Bush regards them as the USA's first line of defence? It is unacceptable, and we should say so.

I am reminded by some of my noble friends who were there at the time that during the Vietnam War Harold Wilson was pressurised by the then United States President to send a force--even a token British force--to Vietnam in support of US forces. He absolutely refused to do so. He was right. Yet the special relationship continued. We have nothing to gain by supporting this latest US project and possibly a great deal to lose.

9.55 p.m.

Lord St John of Bletso: My Lords, I was pleased that the gracious Speech focused on the need for a more effective global effort to reduce poverty, as well as on crime prevention. Certainly in Africa, where I have spent most of my life, the battle against poverty is the new byword in the fight against AIDS.

With so many speakers and such a broad spectrum in tonight's debate, I do not envy the task of the Minister in winding up our deliberations. Like other noble Lords, I should like to take this opportunity to congratulate the noble Baroness, in the words of the

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noble Lord, Lord Howell, on her "triple crown". I should also like to congratulate the noble Lord, Lord Bach, on his well-deserved appointment.

I want to focus my remarks on the challenges facing southern Africa--more specifically, the battle against poverty and AIDS and the need for a resolution of the political, economic and social problems that face Zimbabwe. I agree with the noble Lord, Lord Howell, in that the situation in Zimbabwe has had a terrible knock-on effect on the rest of the region. As I initiated a three-hour debate just three months ago on the challenges facing Southern Africa, I shall not regurgitate that speech this evening. However, I should like to touch upon some of the recent developments and immediate challenges facing the region.

Before I do so, I should speak briefly on the WTO. The gracious Speech also referred to the commitment of Her Majesty's Government to work for an early and comprehensive World Trade Round. Clearly, if that is to be achieved, a very firm timetable will need to be set for agreeing the scope and objectives of the round. When the WTO members met just a few days ago, they agreed that further work was needed to clarify the WTO's intellectual property accord. I hope that this can lead to more focus on an integrated policy on pharmaceutical research and distribution which will promote public health and make treatment for AIDS, malaria, tuberculosis and other diseases available to the developing countries at an affordable cost. I certainly agree with the noble Lord, Lord Desai, who said that it was a good idea to promote competition in the pursuit of cheaper drugs. It is encouraging to note that members of the WTO appear determined to ensure that the Trips Agreement is part of the solution, not part of the problem, of meeting the public health crises in poor countries.

The noble Baroness, Lady Whitaker, and my noble friend Lord Sandwich both covered the AIDS crisis in Africa. In addition to the statistics that they listed earlier, I read today the rather startling facts that Sub-Saharan Africa will have 71 million fewer people by the year 2010 because of AIDS; that life expectancy in Zimbabwe will fall to 27 by 2010; and that Tanzania will lose 14,500 teachers, with its share of orphans increasing from 2 per cent to 10 per cent.

While South Africa has an admirable record over the past 10 years in fiscal and economic discipline, the fight against AIDS continues to undermine the country's full potential. President Thabo Mbeki appears to be in a state of total denial of the AIDS crisis that is facing his country. Nkosi Johnson, the orphan with AIDS in South Africa who, sadly, died earlier this month--appropriately on "National Children's Day" in South Africa--gave a child's face and voice to AIDS in Africa when he spoke last year at the World AIDS Conference.

According to a recent report by the Nelson Mandela Children's Fund, many South African children whose parents have died in the AIDS epidemic are neglected, starving and ill, while some are turning to prostitution to survive. Will the Minister, when she winds up

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today's debate, elaborate on what measures Her Majesty's Government are taking to fight this pandemic, not just in terms of financial contributions but also of practical measures to raise more awareness of this disease in southern Africa?

The noble Lord, Lord Bach, mentioned in his opening remarks the Government's White Paper on eliminating global poverty. I simply want to draw attention to chapter three of that excellent document, which covers the extent to which the Internet revolution could potentially facilitate enormous breakthroughs in providing better education and other vital services to developing countries. In his state of the nation address at the opening of the South African Parliament, President Thabo Mbeki announced an ambitious plan to ensure that South Africa rides the information super-highway and exploits that medium for education, health, commerce and government. I hope that his example will be followed in the rest of the region where there is certainly a digital divide.

Finally, there has been much concern about the deteriorating economic and political situation in Zimbabwe. That matter has been comprehensively covered by the noble Lord, Lord Blaker, all of whose concerns I entirely endorse. While I support as much international pressure as can be brought to bear on Robert Mugabe, I believe that the most constructive chance of a breakthrough will be through pressure from other African Heads of Government. I entirely agree with those noble Lords who have embraced the importance of the Commonwealth as an effective intermediary in conflict resolution.

Whether it be as a result of the ever increasing economic collapse in Zimbabwe or the imminent Commonwealth summit in Brisbane, or even the presidential election in March next year, I was encouraged to note that earlier this month President Mugabe travelled to Kenya and signalled his readiness at long last to co-operate with the Commonwealth initiative to solve the land question. I hope that the planned forthcoming Commonwealth Ministers' meeting with President Mugabe will yield a similar positive response. As one diplomat recently put it,

    "we are dealing with a proud man, who is perhaps a little senile. It is clear that to get to a position of constructive negotiation, we will have to allow Mugabe to appear to have initiated a so-called African solution".

I believe that on the whole there need to be African solutions to African problems but I wholeheartedly support Her Majesty's Government's commitment to facilitating and resolving the challenges that face southern Africa and the rest of the continent.

10.3 p.m.

The Earl of Dundee: My Lords, no doubt we are well accustomed to classifying economic and social development as an attractive product and outcome of sustained peace. What might be less obvious, perhaps, is that economic and social development levels should themselves become the means as well as the desired

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ends of European stability, let alone the key ingredients and instruments for achieving lasting peace in Europe.

Yet that proved to be the case between 1948 and 1989 in terms of the Cold War. The 1949 NATO alliance could not have been formed had it not been preceded by the economic disbursement of Marshall aid in 1948. The Cold War would not have ended as it did in the 1980s had the arms race not come to exert an unacceptable level of pressure upon the economies of the Soviet Union and Warsaw Pact states. Nevertheless, right up to 1989, and in spite of promising signs to the contrary, many of us, including myself, still believed that Soviet communism would remain entrenched for a long time. However, it did not and for that an enormous debt is owed to the forging of the North Atlantic alliance in the first place; to the planning and development of that organisation; and to the balance achieved by its membership in terms of deterrence, diplomacy and economic stability. As we recall, it took much effort and persuasion to form NATO at all.

In that connection, it is fitting to pay tribute, as has the noble Baroness, Lady Ramsay, to Ernest Bevin, who as Foreign Secretary, was chiefly responsible for guiding the Americans towards NATO; and in association with this House I pay tribute to Roger Sherfield, Derek Inshyra and Gladwyn Jebb who as diplomats within the British Foreign Office played a significant part in forming NATO and whom we now remember with gratitude and affection.

There is a striking contrast between the successful handling of the Cold War by 1989 and the inept handling of the former Yugoslavia during the 1990s. The contrast is also paradoxical. The former, although it threatened nuclear world war, produced no major disaster in Europe; while in the latter civil war between non-nuclear armies in south-eastern Europe killed more than 250,000 people and made more than 3 million homeless. With hindsight, the catastrophe could have been avoided if the prescription of July 1991 of the European Union Dutch presidency had been implemented. This prescription was for two expedients: first, an immediate deployment of NATO and United Nations troops to keep the peace following the outbreak of hostilities between Serbs and Croats; and, secondly, the continued deployment of the troops while the European Union presided over an orderly secession of states from the former Yugoslavia. As we know, that proposal was rejected and our western security system remained divided over the former Yugoslavia until the intervention of the Dayton peace plan in October 1995.

Many of us believe that ironically enough this division within western defence security was a product of the very success of the management of the Cold War by NATO states. For 40 years NATO's focus had been the containment of the Soviet Union and the Warsaw Pact states which formed its satellites. The containment of regional instability had thus not been a priority or even a necessity. As a result NATO states, distributed over the European Union and including the United States, were unused to confronting regional

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instability in the 1990s and were divided over and unsure of the best way to do so with regard to the former Yugoslavia.

Yet although division within western security prevented timely containment, we would all wish to acknowledge that western governments behaved honourably and responsibly, if inadvisedly. The measure of that is the commitment of those states to peacekeeping forces and to the shared cost and burden of reconstruction. During the 1990s wars there has also been the impressive disbursement of humanitarian aid by member states within the United Nations.

In those contexts, therefore, we can be proud of our own British contributions and, as a number of noble Lords have stressed today, in particular the commitment of our servicemen.

So the first theme is that post-Cold War European defence security must depend upon agreed methods for pre-empting and combating regional instability at the outset before it develops and takes hold. It must also depend upon economic and social development not just as the fruits and rewards of peace but also as the best means of engendering stability in the first place.

That leads to my second theme: the present scope to assist, through a variety of expedients, lasting peace and rehabilitation within south-eastern Europe. Can the Minister say what part our own Government are now playing? To which collective actions and remedies do they subscribe in order to end fighting within the minority area including Macedonia and Albania, where that is still threatened, and to consolidate peace within the majority area where violence has now ceased? Within a collective international policy for south-eastern Europe what individual initiatives or forms of leadership of its own do the Government propose to offer?

My third theme is on how lessons learnt from the former Yugoslavia now stand to assist the future handling of any regional and local instability both there and elsewhere in Europe. In that context the simple key considerations must be the prevention of war and the maintenance of peace. Regarding the former, no doubt a rapid reaction force deployed within NATO is desirable and long overdue. However, its concept, let alone its deployment, reflects a welcome recognition from the United States and the European Union countries that instability must be dealt with early on.

However, as the noble Lord, Lord Wallace of Saltaire, reminded us earlier, equally called for is an improved working relationship between the European Union, the United States and Russia over the protection of human rights and the containment of instability in all regions, including eastern Europe. What steps are the Government taking to achieve such co-operation?

There are also lessons for the rest of Europe from the former Yugoslavia about the management and consolidation of peace. Within the Balkans and elsewhere, current endeavours already reveal pragmatic partnerships of all kinds to address social

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and economic development on different scales. Such joint ventures may include governments, the World Bank, the Council of Europe, the Organisation for Security and Co-operation in Europe and a number of other institutions whose purpose is social and economic development. They should and do also include non-governmental organisations and voluntary and charitable bodies.

The remit of the UK All-Party Parliamentary Group for Social Development in Europe, of which I am the current chairman, is to encourage the growth of partnerships and initiatives to achieve a measure of social development within European regions and communities on a variety of scales. One of the group's methods is to encourage the parliamentarians of the 41 Council of Europe states to embrace that focus and to advocate in their Parliaments the added value of European social development from all kinds of initiatives, some of which may operate convincingly on very small scales.

The potential of and benefit from all such endeavours is to consolidate peace and security within European regions and localities. That in turn emphasises the post-Cold War role of social and economic development as a means towards that end. Its implementation brings together a variety of institutional and less formal expedients.

Following from that is the connection between this varied and flexible approach to assist European regional stability in particular and what should be the Government's broad policy to improve European security in general. Arguably, those two aspects will naturally coincide anyway if, as already contended, social and economic development has become both a means for enhanced European security and an end product in terms of human rights. Nor, of course, within international democracies, is its pursuit in any way in question at all as a necessary means or as a desirable end product. That has become so not least following the end of the Cold War by the late 1980s and the end of the civil wars in the former Yugoslavia by the turn of the century.

Ironically, the more that there may be consensus on that assessment, the more that the Government are presented with a challenge. Do they simply go with the present trend, or do they set out to give leadership? For the task of promoting social and economic development in Europe, will the Government stick to those channels conveniently presented by the European Union, the stability pact and other means, or will they supplement those with additional efforts and projects of their own? Are they also prepared to lead by example rather than through institutionalism?

Proper evidence that the United Kingdom had effectively addressed social problems within its own communities would greatly assist European stability through its example of good practice. However, as we are all well aware, much better practices are called for in this country to improve motivation and opportunities for young people, to deal far more effectively with young people and others who have fallen foul of the law and to reduce the unnecessarily

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high levels of prison recidivism. At the same time, far greater investment should be made in law and order and the police force to deter crime and protect communities in the first place. Clearly, a combination of those policies will enhance the security and health of our communities. We should demonstrate the evidence of that both in our domestic interest and to contribute by example to improved European security.

Many of us will wish to urge the Government to draw those connections and to be prepared to meet the challenges that they present. If they do, then we in this country may all hope to be able to engender a degree of confidence in a balanced form of security as an agreed priority for Europe, as we can also seek to make a reality that, at least in Europe, peace and stability will become a guaranteed human right for all.

10.15 p.m.

Lord Powell of Bayswater: My Lords, I gladly join other noble Lords in congratulating the noble Baroness, Lady Symons, and the noble Lord, Lord Bach, on their new and demanding appointments and in wishing them every success.

I shall restrict myself to some remarks on transatlantic relations and a very brief comment on China. I should declare that I am a founder member of Atlantic Partnership, a non-profit body dedicated to sustaining public support for good transatlantic relations, and president of the China-Britain Business Council, the government-supported industry body which promotes trade and investment with China.

There are a worrying and unusual number of problems troubling transatlantic relations at present on trade, on the environment and on defence. None is individually insoluble but, taken together, they amount to a burden which should flash some warning lights for the Government. One such issue is the widespread grumbling and opposition among European governments to America's plans for missile defence. I believe--in this I disagree with the noble and gallant Lord, Lord Bramall--that President Bush is absolutely right to commit himself to achieving missile defence. However, I do not want to argue the merits of it on this occasion; I simply want to make four observations.

First, the Americans are now making a much better job of explaining their views to their European allies, as well as to Russia and China, than in the recent past. That is very welcome and I hope that it will continue.

Secondly, European governments need to understand that missile defence will go ahead and they need to adjust their thinking accordingly. Of course, it will take longer than predicted. There will always be technical problems, although America's record of solving engineering difficulties since the Manhattan Project onwards surely means that those problems will be overcome. Decisions still have to be taken about the nature of the system to be adopted. All that will cause delay. But the inescapable fact is that, once an effective system is available and in prospect, the American people, whether they vote Democratic or Republican,

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will expect their President to provide it. And he will because it would be irresponsible not to do so. European governments which continue to contest the whole concept of missile defence are simply hiding their heads in the sand.

Moreover--my third point--those governments underestimate the very real potential for further sharp reductions in nuclear weapons for which introduction of missile defence opens the way. That simply does not seem to feature in the calculations of these European critics and it should do so.

Fourthly, if I am right that the Americans will go ahead anyway, it must be in the interests of Russia and President Putin to reach an accommodation with them--to reach an agreement to limit the size of a missile defence system so that it does not threaten the viability of Russia's own deterrent. That has to be far better from the Russian point of view than a unilateral decision by the Americans to go ahead. That would leave the Russians both humiliated and facing the unbearable strain of having to expand greatly their own nuclear forces. They cannot want that, and they certainly cannot afford it.

Therefore, my concern is that fractious European opposition to missile defence may encourage some in Russia to believe that they can split NATO and whip up opposition on the scale of the demonstrations against the stationing of cruise missiles in Europe in the 1980s. In other words, gratuitous European criticism of missile defence may simply make it harder for agreement to be reached between America and Russia without in any way changing American plans.

I am glad that our Government have shown a more sophisticated awareness of the merits of missile defence than many others. However, the comments of the noble Lord, Lord Bach, were, to my mind, excessively timid. I hope that the Government will use their influence with the French and Germans in particular to bring home the realities to them. My guess is that the introduction of missile defence will in practice be a gradual process, starting with the upgrading of existing systems and with agreed amendments to the ABM treaty, which has already been modified on three occasions. In the longer term, the ABM treaty will have to go. There is provision for that in the text of the treaty, which permits either side to withdraw from it with six months' notice.

Another current transatlantic issue is Europe's proposed rapid reaction force. The implications of that are being studied by Sub-Committee C of the European Union Committee and I do not want to pre-empt our conclusions. However, having met some very senior members of the American Administration in recent weeks, I can confirm that there is genuine concern about the risks of dividing NATO and of duplicating well-tried NATO procedures. Those concerns are amplified by ambiguities about the role of the European Union's nascent military staff, small as it is in relation to NATO's.

The single most important issue in American eyes is whether Europe has the will to provide additional defence capabilities. If that can be achieved other

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concerns become manageable. President Bush's recent statements have indicated that. The worst of all possible worlds would be to create new European structures that would weaken NATO but at the same time fail to provide extra capabilities. However, there is no reason why that should happen. We must in particular resist the sort of thinking associated with France which sees European defence co-operation as a means of turning Europe into a rival centre of power to the United States rather than a partner.

As the main originator of the recent moves forward on European defence, it is for our Government to set an example through defence spending and to do their best to ensure that other European countries also deliver extra capabilities and full integration with NATO. I very much hope that they will succeed. If they do not, they should be ready to walk away from the project altogether rather than involve Britain in a fruitless enterprise that would weaken NATO.

In the interests of time I shall not dwell on Kyoto or some of the trade issues that are currently burdening transatlantic relations. I hope that the Government will maintain close consultation with the United States about the pace of NATO's enlargement. That should proceed as candidate countries prove their democratic credentials: we owe them that. We cannot allow the Russians to dictate which countries can or cannot join NATO. Equally, we have to recognise that enlargement will greatly change the nature of NATO and the European Union. I should go so far as to say that the NATO that we know will, by the end of the process of enlargement, no longer exist. It will be a broader, looser grouping; it will find security in the fact of association but it will do so without the close-knit strategy, integration of forces or credible nuclear guarantee from the United States that hitherto characterised NATO. That evolution is inevitable and we must take account of it.

Lastly--and briefly--I turn to trade with China. British exports reached record levels in each of the past two years and this year they are currently running ahead of even those figures. However, with the economic downturn in the US economy, that may not last. Our success is primarily due to the efforts of exporters, although the dedicated staff of the China-Britain Business Council and of Trade Partners UK also deserve credit.

We in the China-Britain Business Council are grateful for the excellent support we have received from Ministers. We most recently received support from the noble Baroness, Lady Symons, whose first public engagement in her new role was with that council. Relationships at the very top have a vital part to play with regard to doing business with China. I urge the Prime Minister to consider paying a further visit to China before long. That would follow his extremely productive visit with a large business delegation in 1998. Nothing would do more to encourage British exporters and to draw attention to the huge potential of the China market, especially with China on the verge of entering the World Trade Organisation. I hope that the Minister will relay that request to the Prime Minister. Indeed, now

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that No. 10 Downing Street staff numbers have been still further enlarged, they are now presumably working shifts and the Minister may even be able to get an answer in time for her winding-up speech this evening.

10.24 p.m.

Baroness Rawlings: My Lords, it is always a privilege to follow the noble Lord, Lord Powell of Bayswater, and to hear his wise words.

I welcome the last paragraph of the gracious Speech, which concerned the reintroduction of the International Development Bill. That was discussed by the Minister at the start of this debate--which was a very long time ago!

At this late stage, I shall confine myself to only two areas, both currently urgent concerns: the first was highlighted last week by the distinguished United Nations Secretary-General, Kofi Annan, and is the very serious worldwide problem of HIV/AIDS, as mentioned by the noble Earl, Lord Sandwich. In the Secretary-General's words:

    "HIV/AIDS is the world's biggest public health challenge, and in some countries, the biggest single obstacle to development.

Secondly, there has been an extraordinary election held this month, not in this country--which had an unprecedented result--nor the one held in Peru, nor Iran, nor Albania, nor Uganda, all held in June, but one of the most unusual of modern times; that is, the one that was held in Bulgaria. Many will have read the headlines announcing that the former king--the first in recent times--leading a political party formed less than six months ago, had won 120 of the 240 seats, only one short of the majority needed to form a government.

What does that mean? Why, apart from my interest in Bulgaria, do I feel that it is important today to say a few words about that often forgotten European country? King Simeon's victory is a breakthrough in contemporary politics. He will effectively, regardless of whatever position he takes in the future government, be responsible for a country which may find itself forced to play a major role in the very fragile situation which we are tragically witnessing yet again in the Balkans. I refer to the present unrest in Macedonia. I shall not go into the details of that as my noble friend Lord Howell of Guildford has covered the main points concerning Macedonia so clearly in his speech.

I return to the elections. The Bulgarian National Assembly will open on 5th July. People are speculating as to who King Simeon is. He is now addressed as Mr Saxcoburggotski. That is according to his own wish. Who will he recruit into his new government? There are few clear indications as to what will be the priorities of that new government. On the election night, the king said that his main goal would be to fight corruption and to build on the country's economic prosperity. Many people, however, would have liked that to be supported by something rather more specific.

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What will Britain's role be? It is quite clear. It will be to encourage the new government, when formed, to build on the foundations built by the UDF, the former government, rather than to make some kind of fresh start. I hope that the Prime Minister will be welcoming President Stoyanov on his visit to this country next month. That could be an important opportunity to urge the UDF to work with the king's new government and to make certain that the achievements of the past four years are not lost; for example, there should be no deliberate undermining of the king's people unless and until there is concrete evidence that they are taking a very different direction.

We have a huge and strategic interest in Bulgaria having a stable and effective government, given the turmoil in Macedonia. That has been timidly eyed already by the Russians. The former Prime Minister, Mr Kostov, has resigned. The new Ministers will probably be announced on 12th July. Mrs Mihailova, the former Foreign Minister, is now the head of the UDF parliamentary party. She has said that,

    "the UDF could consider entering into a coalition only if there were guarantees that foreign policies remain the same".

President Stoyanov clearly supports a coalition. There is also mounting speculation that the results of the elections could pave the way to restoration of the monarchy by legal means, even though the king rigorously denies that.

In a recent interview in the Spectator, the King referred to himself as the new Nelson Mandela. However, he is clever enough to know that he has been elected in the hope of a miracle--an 800 day cure--and he will remember what happened in February 1997: that the presumedly passive Bulgarians swept away Zhivkov's successor, Zhan Videnov and his thugs.

Nobody knows whether the King will decide to be prime minister. Some wise people say that he could well follow Ronald Reagan's model, which was to be prime minister but, in practice, with massive delegation of his powers.

Whatever the emotions, the fact remains that the King was legally elected and if Bulgaria is to go forward, it will need the support and understanding of what are habitually called the Great Powers. Bulgaria will have to strive to avoid civil unrest. That can be achieved only through economic measures that cannot materialise without foreign investment. That new government will herald enormous change. We all pray that it will bring progress. A N Whitehead, in Process and Reality, wisely said:

    "The art of progress is to preserve order amid change, and to preserve change amid order".

I return to my first point, which is the tragic plight of millions that was recently highlighted by the United Nation's Secretary-General, Kofi Annan. In several recent speeches, from which I draw substantially, he has put the point with great conviction and clarity of thought, far better than anything that I have read on the subject. Twenty years ago few of us had even heard of AIDS; 10 years ago, few of us had any notion of the scale of the disaster; and even two years ago most

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people in western countries still thought of AIDS as a mainly domestic problem and believed that it was being controlled. But, for much of the international community, the magnitude of the crisis is only now beginning to sink in.

More than 36 million people around the world today are living with HIV/AIDS. The vast majority are in sub-Saharan Africa. However, the pandemic is spreading at an alarming rate in Asia and Eastern Europe. Last year alone 3 million people died from the virus, the highest annual total to date, and 5 million people became infected, which is an average of 13,000 people a day. That is indeed a catastrophe.

We have the power to do something. Around the world there are many people working on ways to combat this public health challenge. The Secretary-General set out five clear objectives that are reasonable and, I hope, acceptable. The first is that prevention has to be the first objective. Anyone who is not infected must know what they need to do to avoid infection. Young people need to have the knowledge and power to protect themselves. They need to be informed, inspired and mobilised through awareness campaigns such as the world has never seen, using the wireless, television and professional marketing techniques as well as the conventional tools of education. Once the knowledge is available, young people will need the means. As Maurice Maeterlinck so wisely wrote:

    "To the sage the road is long that leads from grief to despair. It is a road untravelled by wisdom".

The second objective is family and community support, access to voluntary counselling and testing and, when appropriate, condoms. Thirdly, care and treatment must be put within the reach of everyone. The fourth objective is to deliver scientific breakthroughs to find a cure for HIV/AIDS--which is none of the present drugs--and a vaccine against it. At King's College London we have a highly successful department in that area. I declare an interest as Chairman of Council.

We have succeeded in the past year in recruiting the international HIV expert Professor Michael Malim from the University of Pennsylvania, together with Professor Adrian Hayday, himself recently recruited from Yale, and Professor Philippa Easterbrook. They are undertaking an extensive programme in infection and immunity that demonstrates the determination and commitment of the scientific community in this country to confronting the disease.

Finally, as we all know, money is constantly needed. We all know that, most important of all, money needs to be in the right hands. Too often it goes astray, as we heard in the speech of the noble Baroness, Lady Whitaker. I welcome the Secretary of State's proposals to find more money to help these projects. Even though HIV/AIDS poses a huge economic threat, it is first and foremost a humanitarian imperative.

I hope that the Minister, with her many new important and influential hats, will relay these messages to the powers that be. The role of your Lordships' House has been under much discussion arising from the proposals in the gracious Speech.

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It still has, however, an important responsibility in the legislative procedure and possibly still a certain influence in society. Therefore, I hope that all the interesting ideas in the many eloquent speeches we have heard in this final debate on the gracious Speech will not just be a charade but will be carefully listened to and carefully read and even acted on.

10.37 p.m.

Lord Dubs: My Lords, I want to speak briefly on European enlargement, but first I want to comment briefly on the situation in Northern Ireland. It is very difficult there at the moment and David Trimble's resignation may take effect within the next two or three days. I understand that the Prime Minister and the Taoiseach have been to Belfast today, so it is not appropriate to say more than a little about the situation there.

I am concerned that with the marching season about to begin a period of political instability, or indeed a political vacuum, could be highly dangerous. We have already seen rioting at interface areas in North Belfast and the situation is clearly dangerous. It always is during the marching season but given the situation relating to the Ulster Unionist Party, it is more so at the present time.

The general election results were bitterly disappointing both for the SDLP and for the Ulster Unionist Party. Clearly, the difficulties David Trimble faces have been exacerbated by the recent election results. Therefore, there is an urgent need for calm. I am well aware that on past precedent Sinn Fein and the IRA do not respond to outside pressures. Even if the Irish Government are leaning heavily on the IRA for decommissioning, I doubt whether anything will happen by 1st July. I do not think it is appropriate to say anything more about the situation there. We must wait to see whether the Prime Minister, together with the Secretary of State and the Taoiseach, has been successful in his endeavours.

I now turn to the Irish referendum which has a direct bearing upon European enlargement. I happened to be in Dublin on the Monday following the referendum. I do not want to stand in your Lordships' House and criticise the Irish Government. They have been most helpful to the peace process in Northern Ireland and we must be careful before we stand and criticise another government's conduct of its own affairs in a referendum. However, on the basis of the "sample polling" one does on a one-day visit--that is, talking to taxi drivers and the like--it seemed to me that people were not clear what the referendum was about. They said that they were well aware of the arguments against but had heard very little about the arguments for.

I cannot make a judgment as to whether that is an accurate statement of how much effort was put into the case for the referendum. All I know is that people were under misapprehensions, which the "anti" campaign engendered, as to the significance of the referendum. For example, it was said that the EU would insist that nuclear power stations could be built

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in Ireland and that Ireland would be forced to be part of the rapid reaction force, which had nothing whatever to do with the referendum. It was even said that abortion would be allowed in the Republic, which was again a totally erroneous view that had nothing to do with the issue in the referendum.

All of that was exacerbated by what appeared to be a very active campaign by Sinn Fein in the Republic to oppose the referendum. I am not clear why it did so. The only argument I have heard is that Sinn Fein did not believe that, in relation to the argument about the rapid reaction force, Ireland should be part of a military pact. It is a little odd that the IRA and Sinn Fein should be so keen to be part of a demilitarised structure. However, Sinn Fein put a good deal of effort into the campaign in the Republic. That is a matter of concern because it means that it was testing its electoral machine with a view to the forthcoming elections in Ireland. I do not know how the Republic gets out of that dilemma. I do not believe that it is helpful for us to suggest what the Government should do, but clearly that is a matter of major concern to all of us who believe in European enlargement.

I am chair of an all-party group that is concerned with promoting European accession. Therefore, I particularly welcome the Government's support for enlargement which is clearly stated in the gracious Speech and other contributions from government Ministers. It is very clear that for those countries which seek accession this is the most important political issue that they face. As the arguments continue and difficulties emerge, there is a sense that public opinion in some of the enlargement countries is becoming a little uneasy. It must be of concern to all of us if we do not send out proper signals to those populations that we want them to be part of a wider Europe and help them to do so.

I also draw the wider conclusion, which is not based solely on the Irish referendum, although that is part of the evidence, that the European Union must be very careful not to appear to send out the message that it takes ordinary people in Europe for granted. If I had to make a judgment about the Irish referendum, it would be that people felt that they were being taken for granted by Brussels and they did not want that to happen. There needs to be a very strong effort by all EU countries and Brussels to ensure that the ordinary people of Europe are kept fully informed as to the issues and are brought along with the prevailing policy of enlargement so that that becomes acceptable and can go forward smoothly.

Of course there are difficulties about enlargement. At this late hour I do not want to take up time spelling out the difficulties in too much detail, but clearly the problem of the CAP, the European budget and the large agricultural sector in Poland are matters of concern. There are others; for example, what will happen to the countries which now benefit from the regional and structural funds if the emphasis of those funds moves to some of the accession countries? I believe we all agree that we should seek to avoid a large increase in the overall EU budget. I do not believe that either this country or other EU members

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want that. There must be changes in the CAP which all parties in Britain have wanted for a long time. The Government sought to do that in the discussions in Brussels a couple of years ago but achieved only some of their objectives.

If there are to be transitional arrangements to ease the way for accession countries, it is clear that they must be limited. Accession countries do not want to enter Europe with second-class status for themselves, their industries or any of their industrial sectors.

As part of the arrangements for these countries to join, in terms of environmental standards, we are making strong demands. I have a concern that we are asking for higher standards of the accession countries with regard to that than those which apply to some existing members of the EU. It is important that we are aware of the possible difficulties because there may well be voices in EU countries, including this one, arguing against accession when these issues come more to the fore, which they will do in the not too distant future.

Therefore, I should like to finish by saying that there are a number of important arguments why we should support wholeheartedly the cause of European enlargement. First, most of the countries concerned have suffered enormously under communism and it is right that we who advocated democracy and freedom should want to enable them to be part of a larger European set-up which believes in democracy and freedom. Secondly, there will be a larger market which will provide opportunities for British companies. That will be especially true in the financial services sector where we have a dominant position in Europe and where, if we manage things well, we should be able to increase business enormously for some of the financial services companies that are now in the City.

Of course it is right that a large Europe, of the kind envisaged, is directly in the interests of this country. I believe that the enlargement of the European Union is not only good for Europe but is particularly good for the future of Britain.

10.46 p.m.

Lord Marlesford: My Lords, as tail-end Charlie I shall focus my brief remarks on Russia. I have just returned from Moscow. I was there not in any parliamentary role but as a member of the board of the Baring New Russia Fund. I am rather glad to declare that interest as I believe it underlines the synergy which is desirable for those of us with outside interests in this House. I mention that because I know that next week we shall discuss that matter in greater detail.

I had not been to Russia since October 1997. What a change there has been in those three and a half years. In 1997, Yeltsin had been in charge for five years. That period saw the consequences of the political anarchy that replaced Soviet communism and also the rise of gangsterism, corruption and commercial oligarchy. New Russia was being born. What a painful birth it was.

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In August 1998, Russia nearly went up the spout economically and then it would have gone up the spout politically. A market indicator of that was that the 11 per cent Russian dollar Eurobonds, issued at 100 dollars, went down to 20 dollars. That meant that there was a running yield of 60 per cent, and a considerably higher yield, of course, on redemption.

Russia was saved by the increase in the price of oil. In August 1999, Putin, plucked from an obscure KGB past, became Prime Minister. In less than two years he has become master of Russia with 70 per cent public support.

New Russia is as different from old Russia as new Labour is from old Labour. It is, of course, a vast improvement, in both cases. Further major reforms are under way. These reforms are not known well enough. So far as concerns the media they are all too often masked by political news.

Perhaps I may say one or two words about the political issues. Russia is well aware now that it is a minor world power. But it feels it deserves to be a major world power, and in politics, as we all know, perception is reality. But even the old Soviet Union was never really more than a third-world country but with a first world military force. That is why the Russians are so sensitive about the proposed American anti-missile programme. They may indeed genuinely fear it. After all, Friday of last week was the 60th anniversary of Hitler's treacherous invasion of Russia, an event which, to coin a phrase, "will live in the Russian annals of infamy for ever".

I agree with the noble Baroness, Lady Park, that the idea that there could conceivably be a European anti-missile shield in which the Russians participated is pure fantasy. It is a pity that Mr Solana appears to have encouraged the belief that it is worth discussing it. Little remains of the former Soviet military. Moscow itself is dotted with boarded-up buildings which previously were occupied by part of a military-industrial complex.

For a while Russia had no parliament worth the name. But now I believe that the Duma is becoming a force to be reckoned with. It is true that President Putin still has the means of controlling it, but it does have influence and is doing much of the nuts and bolts of reform. On Monday I had the opportunity of meeting Alexander Zhukov, who is head of the budget committee of the Duma. He and his colleagues have achieved a lot. The budget was balanced last year. It will be balanced this year, assuming that oil remains at 22 dollars or more a barrel. Budget surpluses are being put into a stabilisation fund. Last year, GDP grew by 7 per cent. This year it is expected to grow by 4.5 per cent.

In spite of a high rate of inflation--it is still about 25 per cent--the rouble, which floats freely, has remained stable against the dollar. That of course means that the competitive advantage which Russian industry had following the collapse of the rouble in 1998 is being eroded. Most senior executives in Russian industry now have their remuneration packages denominated in dollars or, as they are

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euphemistically known, "relative units". There is still a problem with capital outflows--some 30 billion dollars in the past 12 months. But there is strong inward investment. Those dollar eurobonds are now back to par.

But perhaps most important are the tax reforms passed by the Duma. They have received very little attention. Corporation tax in Russia is now 24 per cent. VAT is 20 per cent on most things and 10 per cent on food. Most remarkable, there is now a standard rate of income tax of 13 per cent. Russia has effectively become a tax haven. Even the communists in the Duma voted for this! As a result taxes are being paid. Mr Zhukov told me that previously under 50 per cent of the tax that should have been paid was collected. The amount is now thought to be running at over 90 per cent.

Huge structural problems remain, particularly in agriculture where land ownership has not yet been tackled. There is a feeling among many Russians in the rural areas that if land were to be bought by foreigners they would revert to being serfs. That is a major limiting factor on their preparedness to accept reform in agriculture. The standard of living of many workers is very low. The average wage in the metal-bashing industries is about £15 a week. But Russia is a huge, relatively underpopulated country with enormous natural resources and a relatively insulated economy. It does indeed have the scope to act to some extent contra-cyclically if a recession does strike America and the EU.

President Putin is, I suspect, no democrat. It is restoring the power of the state that motivates him. By "power" he probably means the old Soviet word vlast, which really means state authority: rather in the Louis XIV sense of "L'etat c'est moi". But he is a pragmatist and he is a patriot. I think he recognises that Russia needs closer links with the West. I very much agree with what the noble Lord, Lord Powell, said about the importance of encouraging a proper solution between the Russians and the Americans. That is something that we, too, should encourage.

I am an enthusiast for the European Union, but for the widening rather than the deepening of it. I shall not go into detail, but the economic argument against the early adoption of the euro in place of our national currency is, I believe, overwhelming. At the most basic level, we shall retain the freedom of economic management that goes with the ability to use exchange rates to adjust the differences between the economies of different countries. But I hope that enlargement as envisaged at Nice will go ahead and that, by the end of the decade, we may see the possibility of Russia as a candidate entrant.

10.55 p.m.

Lord Redesdale: My Lords, I should like to welcome the gracious Speech. I believe that at this point it is traditional to remark that we have had a wide-ranging debate, moving from the detailed remarks of my noble friend Lord Avebury on Afghanistan through to the noble Baroness, Lady Hooper, on Latin America.

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Europe was mentioned by almost every noble Lord. Finally, I touch on The Hague, which is in the news at the moment. As we speak, news reports have announced that former President Milosevic is being delivered to be indicted as a war criminal, which perhaps should have happened some time ago.

The gracious Speech has set out the Government's plans. Noble Lords on these Benches are overjoyed to see certain Bills reintroduced and new legislation being brought before Parliament. We are especially pleased to see that the International Development Bill has returned. We would have supported that measure had it gone through during the wash-up period of the last Session, but now we shall have an opportunity to look at it again.

Another Bill which is to come before us shortly is the British Overseas Territories Bill. I have one or two questions to put to the noble Baroness, Lady Amos, on that measure, but first I should like to congratulate her on her new position. In the round of congratulations I felt that the noble Baroness was rather left out. International development should have been first on the list of subjects covered in our debate, but it appears to have been sandwiched in the middle.

I shall raise two issues on Second Reading of the British Overseas Territories Bill. The first is the question of uniforms. It seems amazing that, just as a Bill which has been so eagerly anticipated and will do so much good for the dependent territories is brought forward, the Foreign Office has picked this week to release a story that the dependent territories are to be asked to pay for their own uniforms. It may not represent a massive financial expenditure, but the timing of such a statement might be questioned. I understand that the Government are seeking to institute a cost-cutting exercise which might well backfire. I have read a report from the well-known tailor, Gieves and Hawkes, which in financial terms will be badly affected by this. The company has stated that it would be inappropriate to stand underneath the Union Jack in a suit.

Secondly, I wish to raise the issue of the British Indian Ocean Territory. The lease on the American air base on Diego Garcia is to come to an end in 2015. The plight of the Ilois, who were forcibly removed from the island to make way for the Americans, is an issue that will be raised in our debates.

I have been given a strict time limit by my noble friend on the Front Bench. He said that I must stick to it because no one else has done so. I shall charge straight into Europe. Noble Lords on these Benches are well known for their Europhile sympathies and therefore it was with great joy that we listened to the remarks of the noble Lord, Lord Bach. His approach to Europe was extremely positive. During the general election I campaigned in London and the North East. Although Europe was not a question I encountered every day on the doorstep, it is on people's minds. I believe that we need to hold a debate. If we are to have a referendum on adoption of the euro--something that these Benches wish to see held as soon as possible--then there has to be a degree of understanding of both sides of the argument.

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Perhaps I may indicate just how little this argument has been aired at the detailed, nitty-gritty level. I have asked many noble Lords around the Chamber what is the euro equivalent of the penny? Most people know the euro equivalent of the pound, but I have found only one noble Lord who knows its equivalence in pence. That was the noble Lord, Lord Grenfell. I shall not mention which Minister had a stab at "eurettes", but that is not the correct answer. The importance of the question is that if you have to ask what it is, that perhaps underlines the point about the argument not being expressed properly.

This is important because of the recent situation in Ireland, where local matters affected the result of the referendum. Most people did not understand the issue and were not prepared for the referendum. I believe that it came as a shock to many of the people of Ireland that the referendum was lost, with all the implications that that will have for Ireland, a country which has benefited from much largesse from Europe.

As this is a defence debate, I should perhaps use a phrase that was quoted repeatedly to us at Sandhurst--that is, that failure to prepare is preparing to fail. I believe that those of us who will be on the "yes" side of the campaign need to get our message across.

The issue of turn-out is also raised by the Irish referendum, and similarly by our own general election. As we are about to head down the road of referendums, we should question what level of turn-out will give a referendum electoral legitimacy.

I should like to use the euro analogy in regard to national missile defence. The euro has five test criteria; I shall suggest five test criteria that we should look at in terms of how we view missile defence.

Although it is not one of the criteria, I believe that the name "missile defence" gives an indication of the direction the policy will take. It is obviously an American initiative designed to protect the land mass of the United States. However, we have to look at missile defence in a different light.

The first question is whether it is feasible at all. There have been three test firings and interceptions, two of which failed. The first test was successful. However, it was stated in the New York Times that the missile that was intercepted, surprisingly enough, had a global positioning system inserted into the nose cone. Although the Pentagon stated that this had no bearing on the success of the test, it is surprising that a missile that is about to be destroyed should have a GPS in its nose.

The second question is whether it will actually happen. It has been put forward in America that the cost of the system will be between 200 billion and 300 billion US dollars. It is claimed that the system is designed to make the world a safer place. If that 200 billion to 300 billion US dollars was spent on poverty reduction, the world would be a safer place. That, perhaps, is a prime consideration.

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The third consideration is whether it will make the world a safer place. Those who are supporters of the NMD programme have drawn comfort from the fact that President Putin did not attack the system with the same vigour that probably would have been the case a few years ago. The simple answer is that Russia is not in a financial position to attack on this issue. Russia is in great financial difficulty and, therefore, had problems in putting forward its case. However, this will do nothing for the feeling in Russia that this system is for its benefit. If the cost is to be 200 to 300 billion US dollars, I very much doubt--although it has been offered--that a significant system would ever be set up in Russia.

Another consideration, of course, is that if America had a working system it would have a first strike capability against Russia and China. This is very worrying indeed. Obviously it will not lead to a feeling of security throughout the world.

The fourth question relates more to these shores. Will such a system make us safer? It will break the anti-ballistic missile treaty, and that cannot be a good thing. The unilateral destruction of an international treaty is not to be encouraged. Another consideration is that, whether or not the system works against missiles, it works only against ballistic missiles. The delivery of a nuclear warhead does not necessitate the use of a ballistic missile. In fact, a ballistic missile is probably one of the least effective delivery systems. One of the best means of delivery would be to put the warhead in a crate and deliver it by boat to New York. No system is perfect--as was demonstrated when a German flew a light aircraft through one of the most heavily defended anti-aircraft missile corridors and landed it in Red Square.

The fifth criterion is whether national missile defence will be popular in this country. It is an issue that arose on the doorstep during the election campaign. There are those who are very unhappy about the idea that Fylingdales will be used in the make-up of the system.

I have probably gone over the time that I set myself. I should very much like to have gone into the subject of AIDS, addressed by the noble Baroness, Lady Rawlings, and the noble Lord, Lord St John of Bletso. However, I believe that all I should be doing would be to rehearse the Second Reading speeches that we shall hear in the remaining weeks before the recess.

I conclude by highlighting points raised in the fine speech made by my noble friend Lord Alderdice relating to the problem of internal conflict, which is by far the most devastating recent phenomenon; namely, that wars are not fought between states but within states--usually the poorest states. The weapons that are used are not tanks, aircraft or the aircraft carriers that we have heard are to be given the go-ahead; they are the Kalashnikov, the land-mine and, in Africa, the machete. On that basis, anything that reduces the all too prevalent flow of small arms around the world must be a good thing. I particularly welcome the proposed legislation relating to the export of small arms.

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11.8 p.m.

Lord Burnham: My Lords, it would be a little grotesque at this stage of the evening for me to congratulate the noble Lord, Lord Bach, on his new post--particularly as I did so yesterday. It would be particularly inappropriate as in a few minutes' time the reply to the debate will be given by the noble Baroness, Lady Symons, who has been pronouncing and explaining defence policy for the past three years. I should like to pay tribute to the noble Baroness for the way in which she has done so, and for the co-operation that we have enjoyed. I believe that I can speak for the Liberal Benches as well. The noble Lord, Lord Bach, accosted me outside the Chamber--guess where!--almost as soon as he was appointed, and I am confident of similar co-operation in the months to come. That is not to say that we shall not make the Government's life difficult on many military issues. I intend to outline some of them in my remarks. However, it can be only an outline because times do not change. As soon as I sit down, the noble Baroness will rise to her feet to respond and to criticise me, just as she has done throughout these years--

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