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Today’s spheres of influence, although different in size, are no different in character from those that determined the balance of power in mid-19th-century Europe. Spheres of influence are hewn from landscapes to produce a balance of power that is either stable or precarious. At present, it is relatively stable. The skill of Palmerston and Bismarck was to gauge the difference. My noble friend Lord Marlesford aptly quoted Palmerston on allies and enemies. Contemporary leaders should conform to this wisdom; after all, the world has not advanced to the so-called end of history, but has merely fragmented into different sides, reshaping older rivalries. In terms of the balance of power, Russia is not a strategic threat or an unceasing enemy. Nor is it brewing an ideology for export. I subscribe to the Kissinger maxim that the balance of power is a permanent undertaking, not an exertion with a foreseeable end.

The arrival of a new Administration in Washington affords us the chance to contemplate these realities and, for once, to use the past as a signpost to the future. Centuries of Russian behaviour cannot be reordered by the West. The challenge is not how to change Russia but how to manage our relationship with Moscow. We must achieve a better balance between containment and selective engagement, by testing Russia’s desire for a more harmonious relationship in the tradition of pragmatic caution. This entails modifying our tone with Moscow over democracy. It requires a pause from raising extra flags outside NATO headquarters. After all, meaningless guarantees can lead to shameful betrayals. It demands a freeze on the installation of ballistic missiles in eastern Europe and it means an acknowledgement of Russian energy dominance in the Caucasus. We should strive for a settlement with Russia, a tacit understanding of power balances, in our own interests. We share common objectives, such

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as restricting the hazards of radical Islam and persuading Iran not to develop nuclear weapons, or hampering it in its efforts to do so.

President Obama’s election is leading to a review of the West’s relationship with Russia. I hope that the Government, and in particular the Government-in-waiting, will devote extra attention to studying how the lessons of history should guide the West to a more realistic approach.

4.07 pm

Viscount Montgomery of Alamein: My Lords, like many speakers I congratulate the noble Lord, Lord Marlesford, on his brilliant introduction. It is definitely worthy of further study. His choice of title was particularly subtle: it is quite clearly a very complex subject. Having listened to many speeches, one can see the enormous variety. A good example was the speech of the noble Lord, Lord Ryder, which illustrated the complexity of the subject and what is needed to confront the various challenges that face us. My sympathies lie with the noble Lord, Lord Davies. I am not sure how he can possibly sum up this incredibly wide-ranging debate in 25 minutes. I wish him well in that endeavour.

As anticipated by the noble Lord, Lord Wallace of Saltaire, I will turn to Latin America, where my experience over many years lies. In that capacity, I follow the noble Baroness, Lady Gibson, whose vice-chairman I am in the all-party group, and the noble Baroness, Lady Hooper, with whom I have worked for many years to promote Latin American affairs.

Sadly, British influence has declined slowly since the Government decided that Latin America was no longer a priority. It was a very curious decision, since the GDP of Latin America is considerably more that that of Africa and the Middle East combined, and equal to that of eastern Europe. We are a small country on the fringe of Europe, but a very important member of the EU. The problem is that, although we trade extensively with the EU, when it comes to business, trade and investment, on which we depend, unless we are in joint venture with European companies, we are in competition with them; so we need a very active foreign service in this area. In that context I return to a suggestion made in an earlier debate, that we should close down UKTI and reinstate commercial offices in embassies and generally strengthen the Foreign Office effort in Latin America, which has been declining gradually over the past 10 years.

We pay attention to Brazil and Mexico, of course, which is hardly surprising as they are both important members of the G20. Brazil is the dominant power in South America and growing fast, while Mexico is the power in the north. We all look forward to the visit of President Calderon from Mexico at the end of March. There are numerous opportunities for trade and investment in both these countries where we already have quite a lot of investment.

Turning to more specific challenges, I want to mention Venezuela. Recently President Chavez won a clear mandate for indefinite re-election every six years, starting in 2013. The referendum was conducted with only minor infractions but was hardly a fair contest, as the Government control most of the media and used state

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funds on a massive scale to secure the yes vote, which also affects governors, mayors and other elected officials.

The second problem concerns the economy. Oil, which is controlled by a state monopoly, accounts for 90 per cent of exports and 50 per cent of the budget. With high prices, Chavez could dispense largesse to other left-wing countries such as Nicaragua, Bolivia and Argentina, but with low prices he has had to withdraw foreign exchange reserves from the central bank.

Sadly, Venezuela is showing all the symptoms that apply to Communist states: the quashing of the media, state funds for the ruling party and a cult of personality of the leader. Despite all this, Venezuela remains a fascinating and beautiful county with very talented people and a youth orchestra of international renown. There are still many opportunities for British business there, but one needs to advance with caution. I wish it well, and hope we can retain an important influence there.

Next is Argentina, where we have an excellent embassy but little direct ministerial contact from London. A number of its opposition politicians have been to London during the southern hemisphere’s holiday season. Although the presidential elections are over two years away, the Kirchners are universally unpopular and alliances and campaigns are already well advanced. I get to meet all these characters who come through London and who always deliver the same message: that it is a tragedy that the two commissions covering oil and fishing, set up years ago as a bridge-building exercise, no longer exist because Argentina has withdrawn unilaterally. Both sides would have a great deal to contribute, but the unilateral withdrawal has been more damaging for them than for us. One hopes that the commissions can be reinstated at an early date.

To end on a positive note, at the end of April this year, the four-yearly summit of the Americas will take place in Trinidad, where President Obama is scheduled to make a major speech on both Latin America and Caribbean policy. That will be a major occasion and I hope we can return to Latin America another time to deal with what will happen afterwards, because there are many parts of the continent that are of considerable interest and to which we ought to continue to pay attention.

4.14 pm

Baroness Northover: My Lords, I thank the noble Lord, Lord Marlesford, for putting down this topic of debate and for his masterly overview. As ever, this debate has shown the enormous depth and breadth of knowledge of noble Lords in this House. Now is indeed a good time to reassess foreign policy challenges, given the election of President Obama and the possible changes in direction of what remains, as yet, the only superpower.

As my noble friend Lord McNally pointed out, if we see a change in political direction in our own country, we need to know what any future government might do. The present Government’s track record is clear, and we know where we have agreed and where we have profoundly disagreed with them. The position

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of the Official Opposition is a lot less clear. Where do they really stand on Europe? I wish the noble and learned Lord, Lord Howe, very well as he so ably fights this battle within his own party.

On Iraq, the Conservatives appear to have done an about-turn but would their gut instincts have led them, perhaps even more easily, to do just as the Government did? On Afghanistan, we hear—we should pay close attention to this—comments from some Tory MPs that they regard our role there as pretty much doomed. The noble Lord, Lord Marlesford, has expressed his own doubts.

On development, do the Conservatives really have the gut commitment here? My party’s understanding of why Europe is so important to our influence in the world, our economy, prosperity and security is well known. My noble friends Lord Wallace and Lord McNally have again expressed this extremely clearly. Our internationalism and commitment to development are also well established.

We know that President Obama is committed to internationalism and dialogue. It is somewhat ironic that such an approach should be so welcomed across our own political spectrum when it was this Government, supported by the Official Opposition, who joined in setting aside what the UN might do with its weapons inspections in Iraq. As converts, however, the Government and the Official Opposition are very welcome.

There are extremely hopeful shifts in the new American Administration on the Middle East, as we have heard—on Iran, on human rights, as shown by the proposed closure of Guantanamo Bay, and on climate change. The challenges facing Obama on the economy may force him to look inwards and the challenges of his electorate may restrict what he can do.

We also know how dangerous it is to align ourselves too closely to one dominant ally where our interests can be trampled upon. The noble Baroness, Lady D’Souza, made some sobering comments on Afghanistan. Although we are the major contributor there behind the US, can the Minister say whether, in the recent review, UK participants were included in the assessments but barred from helping to frame the conclusions of that review and that it was to be a US-only exercise?

As others have said, all our decisions may be overshadowed by the current extraordinary economic firestorm. If anything proved how interlinked our world is, this does. In 1918, the flu took six months to spread round the world but SARS recently took only 48 hours to reach four continents. Thus, too, the mis-selling of sub-prime mortgages in the US and in the UK, as my honourable friend Vincent Cable warned us, has had the effect of bringing global banking to its knees. It has also brought countries, including Iceland, Hungary and Latvia, to the verge of bankruptcy, creating massive economic destruction in its wake. We have barely felt the effects yet and we know only too well the political consequences of other severe recessions in the past. We need to beware of protectionism.

We have to remember the UN High-level Panel’s dictum of 2004 that development is necessary for security. I echo the noble Earl, Lord Sandwich, and the noble Lord, Lord Joffe, and take issue with one or two other speakers. There need not be a conflict

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between the undoubted need to strengthen the SEO—I have seen how remarkable its teams are in the Middle East and Africa—and what DfID does. Indeed, DfID addresses poverty, but we know that poverty leads to instability, and instability affects us all. We surely need to see the FCO, DfID and the MoD working together. Following the comments of the noble Lord, Lord Ramsbotham, I suggest that Trident should perhaps be therefore placed in the Olympics budget.

Just as the Recess started, some announcements on the DfID budget were made. It seems that £1.65 million was transferred from DfID to DCMS for the Olympics budget. Almost £19 million was transferred to the MoD and £1 million to the FCO for the returns and reintegration fund. What is that all about? If it was always scheduled, are the amounts exactly as was originally planned? What is the effect on the percentage of income now devoted to overseas development? Are we beginning to see the effect of the black holes created by Iraq and now the financial crisis? These may be very worthy operations, but why has funding shifted from DfID to elsewhere?

As we address poverty and instability, we have to recognise the significance of climate change, as others have said. The shift in attitude of the Obama presidency is extremely welcome. If we did not realise how climate change might contribute to instability, we should look at Darfur, where the spread of the Sahara desert has played its part in displacing people so that they prey on others. The international community is then drawn in, and we take in asylum seekers displaced by the fighting. We have heard from my noble friend Lord Chidgey quite how fragile are the states in that region.

Ensuring that the international community is better able to deal with global problems is a major challenge. The UN has achieved a great deal in its historically very short life. What plans are there to try to improve its ability to protect? That ability is dependent on member states and their actions. What is being done to maintain and improve such international focus? Perhaps the Minister could comment on the situation in Sri Lanka and Zimbabwe in this context.

Problem areas of the world have been mentioned by many noble Lords. My noble friend Lady Falkner effectively highlighted the significance of instability in Pakistan and its effect on the region. A number of noble Lords have mentioned Israel/Palestine. Surely the time has come to talk to Hamas, as a letter in today’s Times, to which the noble Lord, Lord Wright of Richmond referred, from Michael Ancram, Paddy Ashdown and others makes clear. It states:

“We must recognise that engaging Hamas does not amount to condoning terrorism or attacks on civilians. In fact, it is a precondition for security and for brokering a workable agreement”.

As we know, it was not military power which in the end prevailed in Northern Ireland, but the use of economic measures, legal measures to protect against discrimination, establishment of the fact that the rule of law meant something and the slow progress of dialogue.

Other challenges have been flagged up in this debate, including dangers from nuclear weapons. The House may like to know that the Lib Dem debate day on

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26 March will be led by noble friend Lady Williams of Crosby, who is very sorry that she could contribute today. She will lead the debate on nuclear disarmament.

We have also heard about the situation in Latin America, Russia, Africa and elsewhere. There are then the challenges of tackling corruption, the arms trade and improving governance, which are all enough to keep you awake at night. However, although we may feel very pessimistic about the world today, anyone who heard Archbishop Desmond Tutu speak the other day at the British Council, as did I and the noble Lord, Lord Anderson, should perhaps take heart from his philosophy of hope. Perhaps this links back to what the noble Lord, Lord Anderson, said about the difficulty of reading the future. For Tutu, the dismantling of apartheid, the election of a black president in the United States, the comeuppance of Bush—for whom he felt slightly sorry and whom it had seemed impossible to defeat on the invasion of Iraq—all showed that change was possible, even it came very slowly.

We need only look at Northern Ireland to see what might be done in the Middle East with the kind of engagement we may, at last, be beginning to see. People used to despair of economic development in Asia. It was deemed hopeless and impossible, not least for cultural reasons—now look at it. We heard from the noble Baroness, Lady Amos, about the problems, but also the progress, in Africa now. We see major challenges in foreign policy and need to know where all the parties stand on the route forward. I look forward to the Minister’s speech.

No one can deny that change is upon us. In the middle of economic turmoil and with conflict around the world, we surely have to work with our international partners, whether in Europe, the United States or across the UN, to bring greater stability, prosperity and order into the world for our mutual benefit.

4.26 pm

Lord Howell of Guildford: My Lords, in a star-studded debate, the undoubted star has been my noble friend Lord Marlesford; everyone has agreed about that. He gave a superb opening offering for this debate. That does not surprise me—I worked closely with him a long time ago and have done since. Forty years ago, we worked together on the restructuring of the government system that was going to be required as we moved from the socialist age into the market age. From his fertile mind came such innovations as the Central Policy Review Staff, central capability and the systematic questioning of public sector and Whitehall objectives and outputs, in a way which would lead to more efficient delivery. I am afraid that particular lesson seems to have been lost. These were, in many cases, the initiatives of the noble Lord, Lord Marlesford, then under his commoner name of Mark Schreiber.

This been a good debate and I hope, as many of us have said, that it will be listened to. I am told that in a depression, a slump, super-recession, or whatever we are in, people tend to crowd into music halls and places of public entertainment, to drown their sorrows. We cannot compete with that but I hope that people will pick up some of the wisdom that we have heard this afternoon. It is setting a new tone. Although we

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have heard some clichés and demands for new narratives, which turn out to be the old narrative, we have also heard a number of new insights into what is, frankly, a totally new situation.

The foreign policy issues are completely interwoven with the enormous global financial crisis engulfing the entire planet. We are in a new situation. I know the word “paradigm” gets overworked, but the contours in relation to which we now have to think about what is happening in the world are different from those of a few months ago and totally different from those of a year or two back.

Even the assumptions of 2008 are being invalidated in 2009, while we debate these issues. At a time of almost universal concern and uncertainty about the course of economic events, financial turmoil could, at any moment, spill out into civil and political order, and it has begun to do so in many countries. Irresistible pressures for protection may lead to the downfall of the whole liberal trading order—a matter about which the noble Lord, Lord Marlesford, reminded us in his opening speech—and the need for clarity of definition in our national role and purposes becomes more necessary than ever. We cannot deliver that in one debate, but we have begun to hear the beginnings of the new outlines in this frightening situation.

I want to headline some of the major shifts in world conditions, which make our old stances and diplomacy so utterly inappropriate for the new situation that now confronts us. First, the USA is still a mighty and rich country, despite being sodden in debt, sub-prime mortgages and so on. It is a rich nation and a fine ally, and it is under a new leader who gives us all great hope. But the fact is that America is no longer the automatic leader of the world as some US officials still seem to think. Why is that so? Because we live in an age of networks, in which there is no single top-dog leader; the theme becomes not “go it alone and America will lead” but team co-operation, with America supporting. That is why my favourite phrase from Mr Obama’s excellent oratory so far is his call in his inaugural speech for humility and restraint in America's approach to foreign affairs. That is the best stance for America and a major shift from the past.

Secondly, power has shifted away not only from Washington but from the whole Atlantic axis and we are only just adjusting to the fact that western hegemony no longer “rules okay”. The rising power centres and rising markets, when we have got through the present crisis, will be in Asia—in China, India and Japan and the whole Chinese diaspora of south-east Asia—and in Latin America. That includes Brazil, as several noble Lords reminded us, including the noble Viscount, Lord Montgomery, and the noble Baroness, Lady Hooper. There are also countries such as Canada, which is emerging as a giant new energy power. This demands a new respect, as my noble friend also pointed out, and even deference in place of the somewhat hectoring and superior tone of the western powers and, particularly, the Washington powers, in recent years.

Thirdly, there is the European Union, which is our important regional zone and club in which we live, so to speak. It has achieved great things; I never denied

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that. I hope that I shall not disappoint the noble Lord, Lord McNally, at this point, because I know that he has especially come back to catch my every word—they will not be worth holding. We want to see the EU evolve in a constructive way. We make no secret of the fact that we did not think that all aspects of the Lisbon treaty delivered that, and that debate on that matter continues. But I think the noble Lord, Lord McNally, and his colleagues would agree that the EU today is already very different from the EU of the summer only a short while ago, with the difficulties in eastern Europe and the real dangers of default and civil unrest in parts of the new member areas of eastern and central Europe. That EU is in turn totally different, of course, from the EU that we first signed up to at the beginning of the 1980s. Twentieth-century visions of how we want to work with the rest of the European Union and be good Europeans are out of date, particularly the idea of the EU as a sort of old-style bloc or superpower in the kind of world that is no longer with us.

Fourthly, power has not only drained away from the Atlantic capitals but slipped away from all nation states and all Governments, because there are now more than 1.5 billion people tapped into the world wide web and making their mark on opinions and events. We live in an age of networks, soft power and sub-governmental and non-governmental linkages between states and societies, which require new diplomatic machinery—a point that I shall speak on more in a moment—at state level. They require a much greater diplomatic resource, as the noble and gallant Lord, Lord Bramall, rightly reminded us.

Fifthly, the world’s and our own energy mix is changing fast. Energy is the lifeblood of our society and can of course switch us off at a moment, killing everybody and everything if it is not there. The energy mix is changing, which to some extent downgrades the importance of the old fossil fuels, oil and gas; it certainly changes the shape of our concerns about the Middle East and Russia, exposing the UK to very clear medium-term risks. So there we have the new realities. I am not talking about extrapolations, distant visions or hopes for fighting climate change—those are important—but about here-and-now facts which are already establishing themselves on the international stage and which pose immediate and important questions for British foreign policy.

Do we have the right stances and tones in our relations with Washington, Brussels and with the new rising powers of Asia and the Middle East? That valid question has been raised in the debate. Years ago some of us commented that the Blair concept—if I can call it that—of the UK as a bridge between America and Europe did not really work and was always a flawed idea. Indeed, speakers have said that even the New Statesman has woken up to that fact.

Do we have the right military and security dispositions to meet these entirely new conditions? Is American policy, as we think it is emerging under Mr Obama, the right one for us to follow in both detail and tone? Do we want to get into that lapdog style against which my noble friend Lord Marlesford warned? Do we want to follow the emerging policy with regard to

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Afghanistan or to Pakistan, where some strange things are going on? Do we want to follow that policy towards Israel, Lebanon, Syria, Iran, or towards Iraq, where hitherto Britain has followed American policy almost slavishly? It is now clear that the US policy of economic sanctions and military threats towards Iran has failed. Iran is accelerating its programme. We have seen photographs of Russian technicians starting up the Bushehr plant this very week. So that policy has failed and a radically new approach is needed. The right reverend Prelate the Bishop of Ripon and Leeds rightly pointed that out.

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