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Lord Bach: My Lords, it is called at the present time the European Defence Agency, not the European arms agency. I do not think that it will end up being called the European Defence Agency, but it certainly will not be concerned, as I understand it, with exports. It will be concerned with capabilities.

Lord Wallace of Saltaire: My Lords, I was referring to the noble Lord's commendation of British success in arms exports.

I turn to the United States. We need to be realistic about the limits of British influence over the current Republican Administration. There is in Washington intense admiration for Tony Blair, but this does not translate into British influence. Just before President Bush's state visit I read a Heritage Foundation briefing that started by saying that Britain was America's most important ally and that Tony Blair was the most important leader supporting President Bush, but then went on to say that under no circumstances should any concessions be offered to British positions during the Bush state visit.

After all, our Prime Minister's strategy over Iraq was of public support and private criticism intended to extract from the United States, first, an active American commitment to the road map for reconciliation between Israel and Palestine and, secondly, a central role for the United Nations in the reconstruction of Iraq. We have gained neither of those. There are strict limits to the special relationship. As the noble Lord, Lord Gilbert, remarked, it is an intelligent relationship with mutual and reciprocal benefits on both sides and occasional mutual misrepresentation, as over the question of who did or did not buy uranium from Niger. However, that does not overcome the different drift of the American debate on foreign policy and, indeed, on values in recent years. Certainly we need to engage actively within the Washington debate and to do so as far as possible in consultation with our European partners to amplify our voice.

The excellent FCO strategy paper published yesterday notes as British priorities: an international system based on the rule of law; a greater emphasis on the real dangers of climate change—both areas in which we are now pushing in a very different direction from Washington—and a commitment to an open and

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expanding world economy. Protectionist forces within Congress and the US Administration are currently pushing us away from an open world economy.

I turn to NATO. We should be careful not to be left exposed as more loyal to NATO than the US Administration. Europe is no longer the centre of American global strategy. NATO is written about in Washington as a tool kit out of which to build coalitions of the willing. If that is the case, it is perfectly natural to accept that NATO is adapting and that the pursuit—as several noble Lords have said—of a transatlantic partnership of equals between the overwhelming majority of members of NATO who are also members of the EU and the United States is an entirely proper goal to pursue.

Let me say a little about relations with the Muslim world, which I am glad to see was flagged and emphasised in the FCO strategy. We are in some danger of drifting towards a clash of civilisations between the United States and the Muslim world. I was reading an article by Norman Podhoretz the other day that talks about the fourth world war, between the West and the Muslim world, in which we will have to force wholesale regime change across the entire Middle East. That is not in Britain's interests or the interests of the stability of the world. I agree with everything said by the right reverend Prelate the Bishop of Liverpool about the need for inter-faith dialogue, and for closer relations between Christians and Muslims for the cultivation of the moderate Muslim voice.

There are real problems of development across the Muslim world. I have just read the second Arab human development report, which is excellent, particularly as it is written by Arabic economists and intellectuals themselves. We clearly need a long-term strategy, working with and through the leaderships of Muslim countries and the 15 million Muslims who are citizens of European Union states. However, that also requires us to finish the job in Afghanistan, Iraq and, of course, Israel and Palestine.

We have heard a little today about the glimmers of hope again that, after the depressing events in Israel and Palestine in the past few months, some on both sides are returning to the only possible solution, which is and has to be a two-stage solution. Her Majesty's Government, in co-operation with all their partners, should push as hard as they can to get back to that route.

Lastly, let me say a little about international order. The international institutions under which we live are, after all, one of the great legacies of the United States of President Roosevelt. One thing that worries me most about the current mood in the United States is the extent to which those on the neo-conservative Right wish to tear down every aspect of the edifice that FD Roosevelt left, including international institutions and international law. As the noble Lord, Lord Hannay, said, surely it is in our interests to strengthen the United Nations. I am very glad to know that he is on Secretary-General Annan's panel, and I hope that he will keep us well informed of its progress in discussing potential reform of international institutions.

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It is in our interests to maintain the World Trade Organisation talks. I welcome the latest proposals by European Commissioner Pascal Lamy to relaunch the discussions after the failures of Cancun. It is in our interests to maintain international law, whatever the noble Lord, Lord Gilbert, may say. Guantanamo is still an offence against international law. I agree strongly with the noble Lord, Lord Alexander, that Iraq has fractured international law.

We need international institutions to combat global disease. The first person to die of SARS who was a member of an international organisation was a World Health Organisation doctor who played a large role in bringing that epidemic to light. We need international institutions and co-operation against the AIDS epidemic, about which my noble friend Lady Northover spoke very eloquently. We need them to manage global migration, one of the major challenges of the next 10 years as, again, the FCO strategy rightly points out. We need them to grapple with global inequality and the corruption and civil conflicts that make inequality worse.

We are in a highly inter-dependent world in which the British Government have to share their responsibilities. The problem for British foreign policy is that we have high ambitions but very limited resources. It therefore makes sense to share so far as we can with our European partners, as part of a stronger Europe with the United States and, where we can, with others through NATO, the Commonwealth and the United Nations. That is the right direction for British foreign policy.

9.59 p.m.

Baroness Rawlings: My Lords, it is my great privilege to respond to the debate on behalf of my colleagues on these Benches. I consider it a great honour to do so, although it is a somewhat daunting challenge. This has been a long and fascinating debate. I hope that your Lordships will forgive me if I do not refer to all the excellent speeches that have been made, but I shall try my best.

Before I begin, I want to mention in particular the help and guidance given by my noble friend Lord Vivian in preparing for this debate. I, too, join other noble Lords in congratulating the right reverend Prelate the Bishop of Liverpool and the noble and gallant Lord, Lord Boyce, on their remarkable and outstanding maiden speeches. We are most fortunate that they contributed to this important debate today and we hope to hear much more from them both in the future.

While the world is undoubtedly a better place following the end of the Cold War, it is also, in many ways, more dangerous and more unpredictable. My noble friend Lord King of Bridgwater stressed that clearly in his excellent speech, concentrating, too, on the importance of people. We welcome the Government's commitment in the gracious Speech to tackling the threat of global terrorism. It is the most dangerous international threat that we face today—a threat that must be pre-empted. Indeed, almost everything that we have debated today falls within that context.

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Many noble Lords, including the noble Lord, Lord Judd, and the noble Viscount, Lord Craigavon, welcomed the good intentions to reduce world poverty and bring about effective debt relief for developing countries committed to reform. There is also the challenge of the millennium development goals, which, I am afraid, the Government are way off meeting.

Two weeks ago, we witnessed the tragic events that unfolded in Istanbul. This House was very sorry to hear of the loss of our Consul-General, Roger Short, and two of his staff, Lisa Hallworth and Nanette Elizabeth Kurma. We pay tribute to all those who lost their lives and we offer our thoughts and prayers to those who are injured or left behind.

If we are to tackle such threats effectively, we must have a clear understanding not simply of what we seek to achieve but also of the resources available to achieve it and whether the two match up. It is in this context that I now turn to address the matter of the military resources available to us.

In response to the closing remarks of the noble and gallant Lord, Lord Guthrie, I must assure him that both our new leader and our party take the defence of the realm very seriously indeed. We on these Benches have always argued that, above all, the first duty of any government is the defence of the realm, both at home and abroad. That includes protecting British interests from military threats as well as the current threat of international terrorism.

I take this opportunity to pay tribute to the bravery, courage, dedication and professionalism of our Armed Forces. As we speak, British troops in different parts of the world are playing vital peace-keeping roles. I also pay tribute to the families of our troops, who have steadfastly supported them. It is vitally important that our troops continue to receive all the support and resources that they need from Her Majesty's Government in carrying out these often dangerous duties.

Given the threats that I outlined a few moments ago, it is vital that we allocate sufficient resources to defence. The Strategic Defence Review stated that 2.5 per cent of GDP should be reserved for defence, but the figure has fallen to 2.3 per cent. In her reply, can the Minister explain why that is the case?

Our Armed Forces are stretched to capacity. Indeed, they are over-stretched, as we have heard today, with operations ongoing in both Iraq and Afghanistan and with little sign of an immediate reduction in our troop commitments in either of those countries.

As at 1st September, the Army was 5,000 below strength. In June, 55 per cent of the Army was deployed on, recovering from or training for military operations. The picture is no better in other branches of the military. Navy warships now routinely take to the seas without their full complement and it is reported that the RAF has cut the number of flying hours devoted to training. Furthermore, since 1997

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our forces have been heavily deployed but currently there are 12,000 fewer regulars than we had six years ago.

I am sure that noble Lords on all sides share my concern at those worrying statistics. Such cuts are particularly serious at a time of essential change, especially with the introduction of new technologies. As my honourable friend the shadow defence secretary, Mr Nicholas Soames, said:

    "the Opposition most earnestly warn the Secretary of State that, in the present circumstances. . . it would be an act of cardinal folly to use the Army's strength as a peace dividend if normalisation were to occur in Northern Ireland".—[Official Report, Commons, 27/11/03; col. 218.]

The forthcoming defence White Paper is expected to include proposals for restructuring the Armed Forces. We hope that the proposed restructuring is not used as a smokescreen for further cutbacks to our military capability.

Given the situation that I have outlined, we call on the Government to allow sufficient time for the White Paper to be debated properly in this House. I listened, as I always do, with great respect to the noble and gallant Lord, Lord Guthrie, and to the noble Baroness, Lady Park of Monmouth, and their pleas to HMG against more cuts. We on this side of the House will continue to press Ministers on how they plan to meet our growing commitments and the ongoing threat of terrorism with fewer ships, fewer aircraft and a smaller Army. How can we carry out our foreign policy effectively if we risk being denied the tools with which to do the job?

My noble friend Lord Astor of Hever spoke with great sense and wisdom on the importance of the Territorial Army and possible cuts. He raised certain questions and we look forward to hearing the Minister's answers to them.

I turn briefly to the situation in Iraq. We on this side of the House continue to believe that the action that we took in Iraq was right. It is a fact that the regime in Iraq was in clear breach of no fewer than 17 United Nations resolutions. The Government's actions and the actions of our allies and our brave Armed Forces have brought about the end of a vicious reign of terror and have removed a potent threat to regional and international security and stability. We welcome the genuine progress that we have recently seen being made in Iraq, as mentioned by the noble Baroness, Lady Ramsay of Cartvale, in her lucid and informed speech. We continue to press for the establishment of a representative Iraqi administration, but the haste with which that is achieved must not be at the expense of security and stability in the country.

We should be wary of demanding and expecting instant transformations. I remind the noble Lords, Lord Redesdale and Lord Campbell-Savours, who were so worried about the aftermath of the war in Iraq, that it took four years from 1945 through to May 1949 for democracy to flower and a new country, the Federal Republic of Germany, to emerge from the ashes of war, despite the fact that by May 1949 a generous American Government had poured in vast amounts of economic assistance through the Marshall

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Plan. I was recently reminded of that five-year transition period after attending the memorial service of the late Lord Wilberforce, who had served on the commission and who did such good service in this House. The noble and gallant Lord, Lord Inge, put this debate into the necessary historical context. I agree with him.

It is not new for public opinion to judge America to be found wanting. The eminent writer William Shawcross pointed out to me an article in Life magazine written about the US occupation of Europe by the novelist John Dos Passos in January 1946, just a few months after the end of the Second World War. It states:

    "Never has American prestige in Europe been lower . . . All we have brought to Europe so far is confusion backed up by the drumhead regime of military courts. We have swept away Hitlerism but a great many Europeans feel that the cure has been worse than the disease . . . Before the Normandy landings, liberation meant to be freed from the tyranny of the Nazis. Now it stands in the minds of civilians for one thing, looting".

It is of course the easy option to adopt such a position, but it is worth remembering that it was that American-led occupation that created the rich, comfortable, modern society from which we all benefit today.

We welcome the many improvements that have taken place in post-war Iraq but are saddened that many aid agencies have left the country, as we heard from the noble Earl, Lord Sandwich, in his moving speech concerning Afghanistan too. This can only prolong the time that it will take to return Iraq to a level of normality.

We share, too, the alarm expressed by the aid agencies over the diversion of funds away from humanitarian projects around the world, particularly in middle income countries such as those in Latin America and central and eastern Europe, to help with the reconstruction in Iraq. While it is vital that we support the reconstruction in Iraq, this should not be at the expense of our commitments in other parts of the world.

Our membership of the European Union represents a vital strand of our foreign policy, hence I now turn to the proposed European constitutional treaty. I shall not go into the report of the noble Lord, Lord Grenfell, at this late hour as we shall be debating that in detail next Wednesday, but the noble Lord, Lord Wallace of Saltaire, exaggerates about any paranoia on these Benches.

We, as a party, have always supported enlargement of the European Union. I agree that it needs a good treaty not made in haste. It makes sense from both a moral and an economic perspective. Everyone recognises that enlargement brings with it the need to reform the European Union institutions to accommodate the new member states and to enable it to function effectively.

At Laeken, it was recognised that the European Union had lost touch with the peoples of its member states. The Convention on the Future of Europe was a reaction to this disconnection and the need to

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"reconnect" in some way, and also the need to adapt the European Union to operate effectively post-enlargement.

Sadly, it has proved an opportunity wasted. The proposed European Union constitutional treaty which has emerged addresses neither of these key issues.

As my noble friend Lord Howell of Guildford said in his forceful opening speech, far from simplifying matters, the European Union constitution is wordy and complex. Indeed, it has even left the Government confused. First they said that it was only a tidying up exercise; then it was vital to the enlargement of the European Union; and now it is not necessary to have it at all and the Government may even use their veto. Perhaps the Minister could enlighten noble Lords on all sides by clarifying the current position of Her Majesty's Government in relation to the proposed treaty.

Noble Lords, including the noble and gallant Lord, Lord Boyce, warned us about the proposed European defence project, as did the noble Lord, Lord Gilbert. This project appears thus far to duplicate and compete with the structures of NATO and no doubt to dilute it. I fully support the noble and gallant Lord, Lord Inge, in his tribute to the noble Lord, Lord Robinson, and NATO's importance, especially for the new members from eastern and central Europe.

More importantly, this project could eventually lead to the disastrous decoupling of the United States from the defence of western Europe. We must never underestimate the vital role that the United States plays in providing intelligence and essential transportation, and the contribution that such a commitment makes to our security. That was stressed, quite rightly, by the noble Lord, Lord Gilbert. We are determined that no agreement is entered into that might jeopardise that relationship.

We welcome the Government's commitment to releasing oppressed people from dictatorship and the restoration of democracy around the world. As I set out earlier, that commitment has been realised in the case of Iraq; and we readily pay tribute to the Government for their stance. However, we are disappointed to see absolutely no reference in the gracious Speech to the situation in Zimbabwe, a matter touched on by my noble friend Lord Blaker.

Noble Lords are well aware of the disastrous land reform policy in Zimbabwe, which has contributed to the current food shortage—and has compounded the spread of Aids, as mentioned by the noble Baroness, Lady Northover—in the country through the displacement of farm workers. Zimbabwe is in the midst of a humanitarian crisis.

The Government have taken the opportunity to reaffirm their commitment to restoring democracy around the world, taking decisive action in both Iraq and Afghanistan. Yet, as the people of Zimbabwe look to us to lead the international response to their brutal regime, we appear afraid to take any decisive action, either through sanctions or the Commonwealth.

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Yesterday the Foreign Office produced a White Paper on its priorities for foreign policy; still no mention of Zimbabwe.

In 1997, the Government were looking for the third way but now they seem to have lost their way. Their foreign policy is incoherent and inconsistent. The Government are tough on dictatorship in Iraq but do little about the situation in Zimbabwe. This is a government which is divided with only one way to go. The gracious Speech shows a government on the way out. We shall do all we can to help them find the way.

We have heard many powerful speeches, which included numerous important questions posed by noble Lords. I have every confidence in the Minister. I look forward to her answering and winding up for the Government in her usual stimulating and effective way, which will certainly do justice to all noble Lords' contributions.

10.17 p.m.

The Minister of State, Foreign and Commonwealth Office (Baroness Symons of Vernham Dean): My Lords, I thank all noble Lords who have participated in the debate today. It has of course, as many noble Lords have remarked, been very far ranging in terms of the geography of the countries covered and the nature of the issues discussed.

The over-arching themes of this year's foreign defence and development agenda have been Iraq, the Middle East, Israel/Palestine, Afghanistan and the continent of Africa. We have had, too, our great international institutions—the United Nations, NATO and the EU. Furthermore, the enormous issues in terms of defence capability, the pernicious effects of international terrorism and the efficacy of international aid have all been raised.

We have also enjoyed two notable maiden speeches. We heard from the noble and gallant Lord, Lord Boyce, who was characteristically modest about his own career. I was grateful to him for his remarks about the relationship between foreign policy and defence policy. He spoke, characteristically too, about the importance of valuing properly our Armed Forces. He spoke as only someone who knows our Armed Forces can—with expertise, with commitment and with great affection. We look forward to hearing more from him.

The speech of the right reverend Prelate the Bishop of Liverpool was remarkable too. It is good to see that he is so proud of being a good Celt, although I should warn him that some of my Welsh friends might take exception to his remarks about the versatility of the Welsh language. He spoke with great conviction about the contribution of our faith communities. I believe he was right to do so. I look forward to hearing more of his very human blend of wisdom and gentle humour, a matter remarked on by the noble Lord, Lord Mackie of Benshie.

I begin my response with the subject that concerns so many of your Lordships; that is, Iraq. It was touched on by the noble Lords, Lord Howell of Guildford,

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Lord Redesdale and Lord Mackie of Benshie, the noble Baronesses, Lady Ramsay of Cartvale, Lady Northover and Lady Nicholson of Winterbourne, the noble Lord, Lord Alexander of Weedon and my noble friend Lady Turner of Camden.

The noble Lord, Lord Howell of Guildford, reminded us of his party's support for the Government's action in Iraq. We agree with his remarks about the courage, dedication and sheer professionalism of our Armed Forces, who have served us so well in Iraq and continue to do so.

The noble Lord, Lord Redesdale, struck a somewhat different note. He challenged the legal basis for what the Government undertook, as did the noble Lord, Lord Alexander of Weedon. In one respect, the noble Lord, Lord Redesdale, was right: the legal basis for the war in Iraq was not the removal of Saddam Hussein. But let us be clear: for many Iraqis—the people affected most in that conflict—that was exactly the point. That was why so many of them, then and now, supported what we did. Of course, the noble Lord avoided the question of my noble friend Lord Campbell-Savours. I realise why; those issues are very difficult. The legal base was not the humanitarian argument, but the noble Lord must know that for many in Iraq and elsewhere the humanitarian argument was and is, as the noble Baroness, Lady Nicholson, made clear, the compelling argument.

The noble Lord, Lord Alexander of Weedon, supported by others, presented us again with his unshakeable conviction that the military action against Iraq was not only wrong politically and in principle but, as he claims, unlawful. We have been over that ground on several occasions, not least in a lengthy debate in this House earlier this year.

Let me make our position clear again. Authority to use force against Iraq existed from the combined effects of Resolutions 678, 687 and 1441. All those resolutions were adopted under Chapter 7 of the UN Charter, which allows for the use of force for the express purpose of restoring international peace and security. In Resolution 678, the Security Council authorised the use of force against Iraq. In Resolution 687, the terms of the ceasefire were set out, but Resolution 687 suspended—it did not terminate—the authority to use force under Resolution 678. A material breach of Resolution 687 revived the authority to use force under Resolution 678, and in Resolution 1441, the Security Council determined that Iraq had been and remained in material breach of Resolution 687. That was and remains the legal basis for the Government's action.

The noble Lords, Lord Alexander of Weedon and Lord Howell of Guildford, want the advice of the Attorney-General to be published. The noble Lord, Lord Howell of Guildford, said that there were "ample examples" of the Law Officers advice being disclosed. I was interested in the use of that word, "ample", because my noble and learned friend the Attorney-General made clear in answering a Question on 6th November that he was aware of only two cases in

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which the Law Officers' advice was disclosed: both disclosures being made for the purposes of judicial proceedings.

There are three other cases in which the views of the Law Officers were disclosed, but not their advice: once in February 1971; once in 1993; and, of course, once by my right honourable friend earlier this year. The noble Lord's argument about disclosure is not strengthened or enhanced by over-egging his pudding. Both the noble Lord, Lord Howell, and the noble Lord, Lord Alexander, make life somewhat difficult if they insist on adopting the maxim: "Don't do as we did when in power; do as we tell you now".

To my noble friend Lady Turner, whose convictions I understand and respect, and in response to her remarks about those who died in conflict, I say, what about the deaths of those whom we have found in the mass graves—the 300,000 bodies? What about the women beheaded in front of their children? What about the children fed into mincing machines in front of their parents? What about the horrors of the possibility of that continuing today?

The noble Lord, Lord Redesdale, raised questions about the Iraq Survey Group. The group produced an interim report on 2nd October, but no date has yet been set for the final report. The interim report was a highly classified document and not published in full, but an unclassified version of the testimony of David Kay to the Congressional Oversight Committee was published, and I understand that it is likely that a similar approach will be used again.

Let us turn to the here and now. A great deal has already been achieved in Iraq and despite recent terrorist attacks good progress is being made. We know that for a very large number of Iraqis life is considerably better now than it was under Saddam's regime. As one man who I met in Baghdad last month said to me, "I can sleep now. I am no longer lying awake at night waiting for the knock on the door". Today, Iraqis can read what they want; they can watch what they want; they have more than 200 newspapers; and they have satellite dishes—all of which were illegal under Saddam. There are 14,000 reconstruction projects going forward; electricity has surpassed pre-conflict levels; clean water supplies are improving every day; almost all of Iraq's 240 hospitals are now functioning; and most schools have newly printed text books.

I must tell the noble Lord, Lord Redesdale, and many other noble Lords that in the most recent Gallup poll in Baghdad two thirds of Iraqis said they believed the hardship they had endured since the removal of Saddam Hussein was worth while. In a poll undertaken by Oxford Research in October and November this year, out of 3,244 responses the most common response to the question, "What is the best thing that has happened in Iraq in the last 12 months?" was, "The fall of Saddam Hussein". That response was made by 42 per cent of those polled.

I take issue with the remarks of the noble Baroness, Lady Northover. I do not know how extensively she has travelled in the Middle East region recently. I have

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visited the region 10 times in the recent past. But if she will not believe me or other Ministers, perhaps she will believe her noble friend Lady Nicholson about what is happening on the ground. The noble Baroness, Lady Nicholson, has travelled extensively—as extensively as my honourable friend Ann Clwyd—and I must tell her that in all the countries I visited the response on this issue is unequivocal support for what we did in Iraq.

The noble Lord, Lord King of Bridgwater, said that what really matters is what we are going to do next. The real challenge was identified by the noble Lord and by my noble friend Lord Campbell-Savours and it is a real challenge of security. The security situation has, indeed, to be got under control, whether the threat comes from the old regime or from terrorist organisations. But I remind your Lordships that 80 per cent of the attacks are in the Sunni triangle and throughout the country as a whole the security situation is improving.

We hope to see the progressive hand-over of power by the end of June 2004. We hope to see that the legislative authority from the Coalition Provisional Authority turns over to the Iraqis completely by then. But during the next seven months, the CPA, including the 150 UK advisers, will have to work very hard to ensure that. I heard what the right reverend Prelate the Bishop of Rochester said and his views about the balance between coercion on the one hand and influence on the other. I agreed with much of what he said, but I hope he will also acknowledge that the Iraqis themselves must settle the question of their fundamental law. It is the Iraqis who must decide on their constitution and what will be best for them when they are in government.

Let me turn to another country where reconstruction is so important and the remarks of the noble Earl, Lord Sandwich. I really do not believe that the picture in Afghanistan is as gloomy as he painted. There are now 4.2 million children who have returned to school this year. There are 2.5 million refugees who have returned to the country and 9 million children have been vaccinated against measles, preventing an estimated 30,000 deaths. Most remarkably of all—and I hope that the noble Earl will note this—the economy of that country grew by some 30 per cent in the year 2002–03.

Many of your Lordships remain concerned about what is happening in the Middle East. My noble friend Lady Ramsay of Cartvale spoke about her reviving hope for an eventual peace settlement. Both she and the noble Lord, Lord Gilmour, remarked on what has been said by the Israeli chief of staff and the former Shin Bet officers. I believe that all noble Lords want to see a comprehensive settlement of the Arab/Israeli conflict for compelling humanitarian reasons and in the name of justice. It provides a focus for anti-western sentiment and it impedes progress on political and economic development in the wider region. The quartet road map remains the way to achieve this vision and we remain actively involved with leaders in the region and the wider international community in helping to translate that into reality. I remind the noble Lord, Lord Gilmour of Craigmillar, that the United

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States has supported the road map, even though Israel was not happy with it, and has criticised targeted assassination and the security fence in terms unprecedented for a US president addressing a prime minister of Israel.

The ratification of the new Palestinian Cabinet is, of course, a welcome step forward, but we are disappointed that responsibility for security has not been passed to a Palestinian interior minister. Of course, the priority is a visible effort to stop violence and dismantle terrorist capabilities, but, in parallel, the Israelis must freeze all settlement activity and dismantle settlement outposts, re-route the wall and relieve the economic and human suffering caused by the wall and the restrictions on freedom that it implies.

We are gravely concerned about the prospects for peace, and we fear that the window of opportunity for the two-state solution may be closing. We are under no illusions about the efforts needed from all parties. Progress will be difficult, and there will continue to be setbacks. However, we will continue to do our utmost to facilitate a lasting peace.

Many of your Lordships talked about the terrible scourge of international terrorism, including the noble Lords, Lord Howell of Guildford, Lord Gilmour of Craigmillar, Lord Holme of Cheltenham and Lord Hylton, my noble friend Lord Judd and the noble Baronesses, Lady Northover and Lady Rawlings. I have just returned from Istanbul, where I saw for myself the carnage and chaos and spoke to many of those directly affected by the attacks on 20th November. It was a harrowing experience, and I know that your Lordships will wish to reiterate the sympathy expressed to all who suffered. It was a terrible crime, committed by fanatics with no interest in negotiation or accommodation and with no qualms about killing the innocent of whatever faith. I pay tribute to our diplomats from the United Kingdom and our local staff, who have been so heroic in the way in which they have dealt with the horror.

In Turkey, people asked me, "Why us? Why here?". The answer is that such terrible events might happen anywhere that terrorists think that they can make an impact. The terrorist threat that we face is truly global, linking New York with Casablanca, Bali with Mombasa. The appalling truth is that more than 60 nations, on five continents, have been affected. In the past five years, 4,000 people have died at the hands of terrorists. The broader impact is enormous. The dreadful attacks in New York and Washington on 11th September, 2001, are estimated to have cost the world economy 350 billion. Over 200,000 jobs were temporarily lost or relocated. A UN report showed that average income in Bali fell by 43 per cent after those bombings.

Terrorism affects us all, irrespective of race, religion or nationality. It affects men, women and children. It affects those of strong ideology and those of no ideology. It affects those among the most powerful and wealthy in the world and those who have nothing. That is why we have made a point of tackling terrorism as one of our top priorities. Alongside the proliferation

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of WMD, it is among the main threats that we face. Unprecedented co-operation in intelligence and law enforcement has resulted in the capture of many senior terrorist figures. We should continue those efforts, but the threat will remain.

To have any chance of success, we must use the full range of tools at our disposal—law enforcement, intelligence, diplomacy and military means—and work closely with other countries and international organisations to defend the homeland, which, as the noble Lord, Lord Holme of Cheltenham, said, is our whole fragile planet.

One of the issues that has struck me most forcefully in the past two weeks is the way in which terrorism seeks to exploit any division or any doubt in our international relationships. We often ask ourselves why such terrible events happen, and it is right that we should. However, I say starkly to the noble Lord, Lord Gilmour of Craigmillar, that we must be careful and that we should never, for one instant, transfer the responsibility—the blame, if your Lordships like—for acts of murderous wickedness from where such responsibility rightly lies. It lies with those who plan the attacks, place the bombs and watch the bodies blown apart, the buildings torn down and the hearts and lives broken.

We should remember, as the noble Baroness, Lady Northover, and the noble Lord, Lord Gilmour of Craigmillar, seem to have forgotten, that the terrorists were increasing their activities well before any military action in Iraq and well before any military action in Afghanistan. The noble Lord, Lord Holme of Cheltenham, was right to confront the issue of how we must deny support and succour to terrorists, while addressing vigorously the injustices that allow terrorism to exploit and recruit young people.

The noble Lords, Lord Holme and Lord Judd, and the noble Baroness, Lady Northover, raised questions about aid. The Government are committed to making progress towards the UN target on official development assistance to create a national income ratio of 0.7 per cent. The boost given to international development funds in the 2002 spending review will lead to a 93 per cent increase in development expenditure in real terms between 1997 and 2005–06. By 2005–06, at 4.6 billion, official development assistance will reach 0.4 per cent of gross national income, up from just 0.27 per cent in 1997.

The noble Viscount, Lord Craigavon, made a very important contribution on reproductive health. He also scored a first: he found the one topic on which I have no briefing and on which we were unable to contact any officials. So I hope that he will allow me to write to him.

The noble Lord, Lord Hylton, raised important questions about UN reform. I assure him that the UK supports the UN Secretary-General's decision to set up a high-level panel to look at how the UN tackles threats to international peace and security.

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The right reverend Prelate the Bishop of Winchester and the noble Lord, Lord Holme, also raised their concerns about Africa. The problems of Africa remain immense but the landscape is changing and there is good news. Ghana, Senegal and Kenya have all seen peaceful transfers of power in the past four years. For all the problems that the right reverend Prelate enumerated, Uganda is among the 10 fastest-growing economies in the world. The recovery of the South African rand is a tribute to the strength and the sound management of Africa's largest economy. Angola is at peace. Sierra Leone is rebuilding itself. The DRC and Burundi are both making fresh starts.

Africa's leaders are making good progress. They have made it clear that they will not wait for the rest of the world to solve the continent's problems. NePAD, the New Partnership for African Development, demonstrates this approach.

I turn to the questions raised by the right reverend Prelate the Bishop of Winchester about the final report of the UN panel on illegal exploitation of the DRC's natural resources. It contains a number of important recommendations on how both the Congolese people and the international community should do better in the exploitation of resources. We are working with the transitional national government in the DRC on these issues and I shall write further to the right reverend Prelate on the important points that he raised.

The noble Baroness, Lady Cox, raised points about North Korea. I congratulate her and the noble Lord, Lord Alton, on establishing the new group. I found some of the contribution by the noble Baroness, Lady Flather, on Burma a little disquieting. However, she can rest assured that we continue to call on the regime to release the political prisoners including Aung San Suu Kyi.

I turn to the important questions on Europe raised by the noble Lords, Lord Grenfell, Lord Norton of Louth, Lord Radice, Lord Howell, Lord Williamson of Horton, Lord Blaker, Lord Harris of High Cross and Lord Wallace of Saltaire, and the noble Baroness, Lady Harris of Richmond.

The noble Lord, Lord Howell, says that the statements of government supporters are rightly ridiculed because we have not said that the convention is a fundamental shift in the constitutional relationship of Europe and its citizens as he believes it to be. I ask him whether he similarly thinks that it would be right to ridicule the noble Lord, Lord Hannay, whose expertise is unchallenged and who sits on the Cross Benches and is politically objective, who said on 9th September that it was not in any way the most significant of the European treaties. Or perhaps he wants to ridicule our own Lords Select Committee, which said in paragraph 134 of its report of 31st October:

    "The extension of EU law in this Treaty seems relatively limited by comparison"—

with other treaties. It continues:

    "we repeat our earlier conclusion that 'it is clear that the balance of power is going to shift from the Commission to the Member States'".

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Indeed, the noble Lord, Lord Grenfell, reiterated that point again today in his excellent contribution to our debate, a contribution on behalf of our own committee, not prompted by party politics but by a clear-headed and objective view of what the treaty may cover.

In particular, I should like to turn to the questions on European defence. European defence issues have exercised many of your Lordships. In addressing them, I must also address the issues around NATO. Like the noble and gallant Lord, Lord Inge, I pay tribute to the noble Lord, Lord Robertson, for his excellent leadership of the NATO alliance. The Government's position remains clear: NATO is fundamental to the UK and European Union security policy. As the noble and gallant Lord, Lord Boyce, said, it is the heart of our defence and the vital hinge between Europe and North America. I agree with the noble Baroness, Lady Ramsay, and the noble Lord, Lord Howell of Guildford—nobody disputes NATO's pre-eminent role. The Prime Minister made that clear very recently, but so have our friends in Germany and France. The German Foreign Minister, who spoke to the UK and France recently, said that it is the "alliance par excellence".

Those comments have not just been made in press conference statements. The UK, France and Germany have jointly proposed language for a new EU treaty that removes any reference to a group of EU states operating a collective defence commitment. Instead it states clearly that NATO remains the basis of collective defence. I hope to reiterate the Government's commitment in that respect when I represent the Government at the NATO ministerial meeting in Brussels tomorrow.

The IGC issues have been addressed by the noble Lord, Lord Skidelsky, in a thoughtful and innovative speech, the noble Baroness, Lady Park of Monmouth, and the noble Lord, Lord Blaker. I shall address, not the IGC issues, but those of defence planning, which lie at the heart of most of the concerns that have arisen. The agreed framework has been that EU-led operations are considered only when NATO as a whole is not engaged. Secondly, when the EU considers options for an operation, it has automatic access to NATO's facilities, in particular to those that shape. Any substantial military operation, such as an EU-led operation in Bosnia, would be planned through NATO. But, thirdly, there will be cases where it may make sense for an EU-led nation to lead the planning of an EU mission. We have been over that ground before.

What is now under discussion in the EU is how to develop the EU's capacity for planning. That includes looking at how the EU carries out longer-term planning to anticipate crises, particularly in operations including civilian and military elements. We are discussing those ideas with allies and partners. President Bush has said that he backs the Prime Minister's judgment on that. I note that the SACEUR said this morning on the radio that what matters here is not the principle of developing EU capacity but how it is done. I agree. When the Government are in a

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position to make an announcement, we shall do so. But I assure noble Lords that we will do nothing that undermines NATO.

Noble Lords raised issues about defence personnel retention. Over the past 12 months, there has been a 4.3 per cent reduction in overall outflow from the Armed Forces. That is good news to add to the record recruitment figures. On capabilities, the noble and gallant Lord, Lord Boyce, said that however clever technology was, it did not deliver the ability to be in two places at once. He is quite right, but I can tell him that, as of 17th November, 38 per cent of the Army were committed to operations, of which 20 per cent were actually deployed on operations, by comparison with 50 per cent committed and 54 per cent deployed in late April. The figures are improving. We remain committed to achieving a balance of commitments and aim to commit personnel to operations for no longer than is absolutely necessary to achieve our military aims. Personnel are withdrawn from operations at the earliest opportunity.

I was grateful to my noble friend Lord Burlison for his comments about the importance of procurement to our regional industrial base. That is a very important issue, and I am very pleased that the MoD has now adopted a defence industrial policy.

I wish to address the questions on defence budgets raised by the noble and gallant Lords, Lord Guthrie, Lord Inge and Lord Boyce. The MoD's budget has not been cut. It remains as agreed with the Treasury and as announced in the spending review of the 2002 settlement in July last year. I remind the noble Baroness, Lady Rawlings, that it is this Government, a Labour Government, who have promised the biggest increase in defence spending period over the next three years—the biggest increase for 20 years. Three billion pounds are to be added over the next three years.

The noble Lord, Lord Astor of Hever, raised questions about the size and shape of the Territorial Army. I can reassure him that the enhancements in home defence outlined in the SDR new chapter will add about 700 TA posts. The new chapter in the Strategic Defence Review 1998 remains the foundation. The shape and size of the capability of our Armed Forces will remain as we said.

I will not address the points made by the noble Lord, Lord Mackie of Benshie, about the Black Watch. I will write to the noble Lord about that matter. Like the noble Lord, Lord Blaker, I was hugely impressed this evening by the breadth of the important issues covered. A number of your Lordships asked questions about specific countries and, when those were raised by only one or two Lords, I undertake to write to them, because we all deserve to go home at some point this evening. Perhaps noble Lords will forgive me if I beg that indulgence.

I end this evening with four conclusions about the foreign policy environment in which we now operate. I do that drawing from my experience as a Minister

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dealing with foreign affairs and defence since 1997. I dealt with the events of 9/11, the war in Afghanistan, the events in Bali, the Iraq crisis and now, of course, the most recent difficulties that we have experienced with our own staff in Istanbul. First, international terrorism and weapons of mass destruction present potentially catastrophic threats to our security, especially if those two threats come together. They are and will continue to be our top concerns. We must continue to tackle them assertively using every means at our disposal. The security threats cannot be viewed in isolation, however. They are part of a wider global agenda which includes economic development and tackling poverty and diseases such as HIV/Aids—as the noble Baroness, Lady Northover, said—malaria and tuberculosis, environmental degradation, conflict and state failure.

That leads me to my second conclusion. By their very nature, those issues affect collective international interests. There are so many of them and they are on such a huge scale that no one country can deal with them alone. We have to work with others. The challenge is to make the collective effective. For that we need strong international institutions. The United Nations is at the heart of our international system. We need a strong world forum to permit strong collective action. As the noble Lord, Lord Hannay, reminded us, we need the WTO to create a global open trading system and the international financial institutions to bolster economic stability. We also need to move on those issues soon, as the noble Lord, Lord Williamson of Horton, made very clear.

We also need the political will to act, so my third conclusion is that, above all, we must get the United States and Europe to work together. Together, we represent over 50 per cent of global exports. We provide about 70 per cent of total overseas development assistance and nearly 80 per cent of global foreign direct investment outflows. We own over 70 per cent of the world's foreign direct investment stock and we are indeed the liberal democracies who have the same fundamental values. Therefore, I strongly agree with what my noble friend Lord Radice said, and I strongly disagree with what my noble friend Lord Gilbert said. I believe that the choice between Europe and the United States is not a real one. We face the same problems and we need to work on them together. We have complementary assets to bring to the table. Over the past 12 months, the concept of transatlantic co-operation seems to have slipped from view in some quarters. Let us face it on both sides of the Atlantic. We must now restore that mutual political confidence.

My final conclusion is not only that our international agenda is increasingly interlinked, but that foreign and domestic policies are also inextricably intertwined. They are linked on the issues of faith and culture and on the importance of dialogue in this country and overseas with those who share our beliefs and cultures and with those who do not. The Foreign Office and the Home Office have made huge efforts on

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those issues. I do not share the apocalyptic view quoted by the noble Lord, Lord Wallace of Saltaire. I know that he did not share that view either, but I do think that we have a great deal of work to do on the issue.

That means that international policy is a task for the whole of government. It does not involve just the Foreign and Commonwealth Office, the Ministry of Defence and the Department for International Development. It involves the domestic departments, too. They are the Department of Health on AIDS; the Department for Education and Skills on improving standards in poor countries; the Department for Culture, Media and Sport on archaeological issues; and Defra on the environment; and, yes, the Church should be involved as regards interfaith relationships.

The new Foreign and Commonwealth Office strategy paper laid before Parliament yesterday analyses the new international context in more detail. I thank the noble Lord, Lord Wallace of Saltaire, for his kind remarks about it. It sets out our operating assumptions about how the world is likely to change and identifies the United Kingdom's international priorities over the next decade. It is intended to encourage a clearer, more strategic approach across government to the challenges that we face. I commend it to your Lordships.

Baroness Crawley: My Lords, on behalf of my noble friend Lord Whitty, I beg to move that the debate be now adjourned until tomorrow.

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Moved accordingly, and, on Question, Motion agreed to, and debate adjourned until tomorrow.

European Union Constitution: EUC Report

10.50 p.m.

Lord Grenfell : My Lords, I beg to move the Motion standing in my name on the Order Paper.

Moved, That this House takes note of the report of the European Union Committee on The Future of Europe: The Convention's Draft Constitutional Treaty (41st Report, Session 2002–03, HL Paper 169).—(Lord Grenfell.)

On Question, Motion agreed to.

European Union Constitution: Constitution Committee Report

Lord Norton of Louth : My Lords, I beg to move the Motion standing in my name on the Order Paper.

Moved, That this House takes note of the report of the Select Committee on the Constitution on The Draft Constitutional Treaty for the European Union (9th Report, Session 2002–03, HL Paper 168).—(Lord Norton of Louth.)

On Question, Motion agreed to.

        House adjourned at nine minutes before eleven o'clock.

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