The Chancellor of the Duchy of Lancaster (Lord Strathclyde)
My Lords, with the leave of the House, I shall now repeat a Statement on the G8 and NATO summits, which my noble friend the Prime Minister attended in America last weekend. The Statement is as follows:
“The common theme across both summits was economic stability and international security. At the G8 we reached important conclusions on dealing with our debts, growing our economies and dealing with the risks in the eurozone. Let me take each in turn.
Mr Speaker, deficit reduction and growth are not alternatives: you need the first to deliver the second. There was absolutely no debate about this: it was my view; it was Chancellor Merkel’s view; it was President Obama’s view; and it was President Hollande’s view. Indeed, France will balance its budget at a faster rate than Britain. In Britain, in two years, we have cut the deficit we inherited from the last Government by more than a quarter and our approach has been endorsed again by the IMF this week and by the OECD.
At a time of tight budgets, a proper growth plan requires not just a credible fiscal policy which secures low interest rates but also structural reforms to make our economies more competitive, active monetary policy and innovative use of our hard-won credibility to ensure investment in long-term infrastructure. We are taking all these steps in the UK and promoting them in Europe as well, and in every area we need to do more. Prime Minister Monti and I have gathered 10 other EU leaders to call for the completion of the single market in digital and services—classical structural reforms to our economies. President Hollande is coming forward with creative proposals, such as project bonds, and, as the House knows, in recent months the ECB has helped supply liquidity to European banks.
I will be pursuing all of these elements at the informal European Council tonight and at the formal council in June, after which I will of course be making a Statement to the House.
Growing our economies also means doing everything we can to get trade moving. At the end of the G8 meeting there was a serious and substantive discussion about the potential for an EU-US trade deal. The EU and US together make up half of the world’s GDP. There is a huge amount of work to be done—and a further effort will be made at the G20 next month—but this could have a positive impact on both sides of the Atlantic.
The greatest risk facing the eurozone and indeed the world economy is the situation in Greece. The future of Greece is for the Greek people to determine. It is for them to decide what is best for their country, but we cannot afford to allow this issue to be endlessly fudged and put off. The Greek election should in effect be a straightforward choice between staying in the eurozone, with the responsibilities that entails, or taking a different path. The eurozone and Europe as a whole need to have contingency plans in place for both eventualities. These should involve strengthening banks, protecting financial systems and ensuring decisive action by European institutions to prevent contagion. I can tell the House that whatever the outcome, the Government will do whatever is necessary to protect this country and secure our economy and financial system.
Alongside the discussion on the economy, I had two further priorities for this G8: to continue the good work of the G8 on development, and to support the Arab spring and the promotion of democracy and reform. On development, the New Alliance for Food Security and Nutrition is an important initiative that aims to help 50 million people lift themselves out of poverty over 10 years. For countries to receive help, they need to show a real commitment to transparency and good governance, and in return they get substantial support to generate private sector investment in food production. This is a great combination of promoting good governance and helping Africa to feed its people, and I will be building on this with a major event on hunger during the Olympic Games in the UK.
Encouraging the private sector to create jobs is one of the best routes to sustainable, equitable growth in poorer countries, but aid still has a vital role to play. For the first time in a decade, the amount of aid given by the world’s richest countries to the world’s poorest countries has fallen back. Promises are being broken. This is wrong. Britain continues to honour its commitments and other nations should do likewise. In the G8, which we will be chairing next year, we will once again produce the report showing who has and who has not kept their promises.
The G8 also reached important conclusions on Libya, Iran and Syria. Specifically on Syria, there was backing for the Annan plan and for further UN measures if Assad does not change course. It was significant that the Russians agreed to this. I raised Burma and the need to support the foundations of a lasting and irreversible transition to democracy, and I will be making this a feature of our G8 next year. I am sure the whole House will look forward to welcoming Aung San Suu Kyi when she addresses Parliament next month.
Let me turn to the NATO summit. Some people write off NATO as a relic of the past. I believe it is vital to our future security. The threats NATO countries face largely come from beyond our borders: failed states, terrorism and nuclear proliferation. Because of this, it makes sense for NATO to be prepared to link up with partners around the world to act out of area, and to spend less on the weapons of past conflicts like battle tanks and more on the technology needed for tomorrow’s conflicts. All of these things were agreed at the summit. That is not to say that NATO should not take steps to defend Europe and North America; it should, and we declared at the summit that the interim ballistic missile defence capability that will protect Europe is now operational.
It was particularly good to have a special session with the partners who work with NATO around the world, and in particular the 50 countries which make up the NATO-led alliance in Afghanistan. NATO’s military commanders set out the progress in the campaign. Attacks by insurgents are down and the transition to Afghan control is on track. Over the next few weeks, we will reach the point where 75% of the population will be living in areas where Afghan forces are in the lead for security. The vital next steps are to deliver the final stages of transition by continuing to build up the Afghan national security forces and ensuring that they are properly funded for the future. Britain is pledging £70 million—$100 million—a year. But it is right that other countries should step up and contribute to the future of Afghanistan, irrespective of the role they have played so far. This summit marked a turning point in these contributions, with almost $1 billion being pledged to support the Afghan national security forces.
Britain has played a leading role in this alliance for reasons of our own national security. Three years ago some three-quarters of the most serious terrorist plots against Britain had links to Afghanistan and Pakistan. Now I am advised that that figure has fallen to about half. Our aim is an Afghanistan that is able to take care of its own security without the need for foreign troops, an Afghanistan that can prevent al-Qaeda returning and posing a threat to us and to our allies around the world.
The tremendous hard work of our courageous service men and women is making this possible. After 10 years, our service men and women will finally be coming home. I pay tribute to them. Their service and sacrifice is beyond measure. We remember in particular all those who have given their lives in this vital task to keep our country safe. I commend this Statement to the House”.
My Lords, that concludes the Statement.
Lord Strathclyde
My Lords, I am immensely grateful to the noble Baroness for joining in the tribute to our servicemen, who do such an extraordinary job abroad, not just in Afghanistan but elsewhere as well. I join her in celebrating the visit of Aung San Suu Kyi next month. As soon as we have a date, we will of course let everybody know so that they can make their arrangements to come along and listen to her speak.
The noble Baroness asked about the timetable for the expected drawdown in Afghanistan. I confirm that there will be 9,000 troops on the ground by the end of this year. We need a clear pathway for drawdown based on conditions on the ground. I am sure that is well understood. We are responsible for three districts. I and other Ministers will keep the House updated as to how that timetable progresses, as we will with the situation post-2014, where we have agreed, rightly, to provide assistance with an officer training college in Afghanistan, along with Australia and New Zealand. That will be the baseline of our commitment, although we will of course listen to other requests. There will therefore be a NATO training mission as opposed to the NATO combat mission currently.
The noble Baroness also asked about the relationship with Pakistan and, in particular, the control of ground lines across Pakistan. We believe it is essential that these are reopened and are confident that progress will be made. We would like it to be more rapid and will have to wait and see until we get a settlement.
The noble Baroness made much of something that I think is equally important—the political settlement in Afghanistan. If there has been a military surge, we also need a political surge. There is no military solution for Afghanistan, but there may be a political one. As the House knows, we have made an offer to the Taliban to lay down their weapons and to join the peace process within Afghanistan. The political process has not progressed as quickly as we would like, hence the need properly to train up Afghanistan’s own security forces and police, making the country safe to hand over. However, we are fully committed to a political process. I can also confirm that the position of women in Afghanistan is extremely important, not just to this Government but to many other Governments who play their part in Afghanistan. We must hope and believe that the work and progress that have been achieved over the course of the past few years will hold—in perpetuity, I would hope—in Afghanistan after the troops have left.
I cannot update the noble Baroness any further on the situation in Baghdad and the discussions with Iran, but I can confirm that in the G8 next year the position of Africa will play a major part. This Government are immensely proud of their record of support for developing and underdeveloped nations and our commitment to expenditure and the work that has been done. We will call upon other countries to make similar commitments.
As for the United Kingdom economy, I thought the noble Baroness was unnecessarily churlish today, in a week where we have seen that inflation has fallen, that unemployment fell last month and that, for the first time since 1976, we exported more motor cars than we imported. We are reducing the deficit and we have historically low interest rates. That seems to be a good record. Of course, I say that with no ounce of complacency. We all know that we are living in extremely difficult and complicated economic times. There is a good deal of uncertainty in the world, particularly within Europe. The noble Baroness said that we had no plan except for austerity, but you have only to look at what the French President said, not that recently but last year. He said that the national debt is the “enemy” of the Left and of France. We agree with that. Much more recently, on 6 May, he said:
“The means cannot be extra public spending, since we want to rein it in”.
Austerity and growth are not mutually exclusive but you cannot have one without the other. That is the most important thing. It would be much better if we agreed about these matters across the Benches in these extremely difficult economic times. However, we have the flexibility of our own currency and the Bank of England, and I very much hope that that will lead to growth in the long term.
Lord Jopling
My Lords, will the Leader of the House tell us whether there were any discussions about the lamentable stand-off that exists between NATO and the European Union, which prevents a great deal of necessary co-operation? This stand-off has been going on for far too long because of the difficulties between Greece and Turkey over Cyprus. Was anything discussed to try and settle this long-standing issue?
Lord Strathclyde
My Lords, we will continue to work hard to resolve these issues, not just within NATO but within the EU. My noble friend has tremendous knowledge and expertise on this subject, and he is right to draw it to the House’s attention. I cannot promise that there will be an early solution, but he can rest assured that we will continue to work on it.
Lord Anderson of Swansea
My Lords, was there any evidence at the Chicago NATO summit of any repositioning of the US defence priority away from Europe and in the direction of Asia? Was there evidence also of the frustration of the United States at the lack of response within Europe to the defence needs? In particular, what relevance does that frustration have for the UK-French treaty? Do the Government think that that should be strengthened in any way? There has been some success on the nuclear side but apparently the co-operation on the non-nuclear side is fairly becalmed at the moment. What discussions are we having with the French about improving the degree of co-operation, even integration, of our defence forces?
Lord Strathclyde
My Lords, I do not think that the summit in Chicago was about a revolution within NATO or about a comprehensive reassessment of the role of the United States within NATO or indeed about the relationship between the United Kingdom and France. Obviously all these matters are reviewed and kept very firmly in discussion. The Prime Minister argued, and the summit agreed, that NATO should not lower its ambitions or look inwards to the core responsibility of collective defence but rather should look outwards, reassert NATO’s relevance and make sure it is ready and capable of tackling the threats that may lie outside its territories. Indeed, President Obama and the Prime Minister argued that NATO should consider a process not dissimilar to the strategic reviews recently carried out in Britain and the US.
As far as France is concerned, where co-operation has been extremely close over the past few years, there is a recognition that there is no need to change that but, with a new President, discussions will continue. I see no reason why we should not continue that close co-operation between the United Kingdom and France.
Lord Dholakia
My Lords, I thank the noble Lord for this broad Statement. It seems that the most exciting part of the G8 event was Chelsea’s victory over Bayern Munich and the resulting hug from Chancellor Merkel.
On growth and jobs, what is the EU/US trade deal in relation to our co-operation on this matter? Would it apply to all business sectors? How will it be taken forward? Secondly, on Iran, there is considerable speculation about action including, as the Leader of the Opposition said, obtaining a legal opinion on this matter. Can the Leader of the House assure us that before any action is taken in relation to Iran there will be full consultation with the British Parliament?
Lord Strathclyde
My Lords, I am always in favour of as much consultation as possible on these matters. One important but less well recognised aspect of the G8 was the discussion between the EU and the United States about a long-term trade arrangement. We are all disappointed that the Doha trade round is going nowhere, and I think there is general recognition that we need more energy on trade around the international system to push back the rising tide of protectionism. We want to see further trade liberalisation where groups of countries forge ahead with ambitious deals of their own. Therefore, we are keen to launch negotiations with other countries, including Japan, and are preparing to negotiate with the US. It is a tough challenge, and I cannot offer my noble friend a road map of exactly how it is going to take place, but given that together the EU and the USA make up a third of global trade and nearly half the world’s GDP, the prize is extremely substantial and worth while.
Lord Browne of Ladyton
My Lords, in the Statement that we have just heard, the noble Lord the Leader of the House reported that the Secretary-General of NATO took advantage of the NATO summit to declare that the interim ballistic missile defence capability was operational. Is the noble Lord able to explain in more detail what that phrase means and, much more importantly, how much that capability cost, what the next stage of development will cost, how much the United Kingdom has committed to paying for the next stage of development and whether it will come out of the core defence budget? Perhaps when he answers this question he may tell your Lordships’ House when we may get an opportunity to debate ballistic missile defence.
Lord Strathclyde
My Lords, it is not often that I get asked a question that I am comprehensively unable to answer, but this is one of those times. I am afraid that I cannot go beyond the sentence that I read out in the Statement. Perhaps I could reply to the noble Lord by letter. More importantly, he suggested that there should be a debate. There are opportunities for debate over the next few weeks and the missile defence system may well be one of those areas that the usual channels should discuss whether or not to bring forward.
Lord Stirrup
My Lords, the noble Lord the Leader of the House mentioned the cost and funding of the future Afghan national security forces and described the NATO summit as something of a watershed in this regard, with $1 billion in pledges. Perhaps a better metric might be the comparison between, on the one hand, the sum total of Afghan GDP and foreign aid and, on the other, the expected cost of running the future Afghan state, since after the end of the NATO mission it will be as much a matter of politics and development within Afghanistan as it is a matter for us. Can the Minister tell us where we stand on that metric?
Lord Strathclyde
My Lords, all I can say is that our support for Afghanistan, particularly in terms of development through DfID, will continue according to needs and the criteria that are set. What was important about the Chicago summit was a recognition that, post-2014-15, there would still need to be substantial financial support for the security forces of Afghanistan, hence the setting up of this fund to raise over $1 billion. The United Kingdom has fully pledged its support for this and has committed to spending £100 million a year, at least for three years post-2014.
Lord King of Bridgwater
I join my noble friend in his tribute to the great courage of our Armed Forces. Is it not true to say that, in a very real way, the objective that they were sent there to achieve has been achieved, which was to make sure that Afghanistan did not become a future base for al-Qaeda? In that connection, I challenge something in the Statement, which has linked together the most serious terrorist plots that are supposed to have had links with Afghanistan and Pakistan. I wonder how recent any links have been with Afghanistan. I am sure that there is a real problem about Pakistan and a real problem about the Yemen, but I personally believe that the Afghan Government and the ethnic groups that support them, as well as the Taliban, will all stand together in being absolutely determined that al-Qaeda will never get back into Afghanistan because of the problems and disasters that it caused.
Perhaps I could add one further point. The noble Baroness and the noble Lord, Lord Dholakia, raised the issue of Iran. The noble Lord, Lord Dholakia, encouraged full parliamentary consultation before any action is taken. That tends not to be possible in the real world, so let me start the consultation now by saying that I think that the maximum restraint should be exercised in an extremely difficult situation and that every possible muscle of the British Government should try to ensure that there is no ill advised and extremely dangerous military action that could only make a difficult situation worse.
Lord Strathclyde
My Lords, my noble friend, with all his knowledge and experience in these matters, has taken the opportunity to share his views with your Lordships’ House. That is immensely useful as part of the process of discussion. On Afghanistan, I do not think that where my noble friend stands and where my right honourable friend the Prime Minister stands are all that different. With him, we agree that the initial objective in Afghanistan has been reached and that the most important objective, which is that it should no longer become a home for terrorism, has been largely achieved. But my noble friend is right, and we entirely agree with him, that there are other countries, most notably Pakistan, with which the United Kingdom has very close links, where there are still major issues to resolve. That is not just in Pakistan; it is also in other countries.
Lord Barnett
The noble Lord spoke briefly in the Statement about the eurozone problems and Greece in particular. He said that that was a matter for the Greek people, but is it not the case that the Greek people—according to opinion polls, anyway—seem inclined to stay in the eurozone while not wanting the austerity programme? Can the noble Lord tell us what the situation would be then?
Lord Strathclyde
My Lords, the noble Lord is asking me to look into a crystal ball to give us the results of the Greek elections and to try to guess what I think is almost unguessable at the moment as to the likely reaction of the markets of the rest of the eurozone countries and the impact not just within the EU but on the rest of the world and particularly the United Kingdom. The Prime Minister has laid out—and I suspect that the noble Lord, beneath his occasional expostulations, agrees with this—that it is in Britain’s best interests for the eurozone to sort out its problems. The eurozone is at a crossroads. It either has to make up or it is looking at a potential break-up. Europe should have a committed, stable and successful eurozone with an effective firewall; it should be well capitalised with well regulated banks and there should be a system of fiscal burden sharing and supportive monetary policy across the eurozone. If we do not get that, we are in uncharted territory. I will not be the first Minister from the Dispatch Box to advise either the Greeks or the eurozone what they should do next.
Lord Forsyth of Drumlean
My Lords, even if we get what my noble friend suggests, which is some kind of common fiscal and government operation across the eurozone, is it not evident now that Greece is not the malady but simply a symptom of the malady and that, if we persist in this belief that you can tie economies that have different competitiveness together, we will see the problem re-emerge? Should we not therefore be encouraging people to acknowledge in the G8 and elsewhere that the euro has been a disastrous experiment, which is impoverishing people throughout Europe? We must look to a return to currencies in Europe and acknowledge the damage that has been done rather than encouraging further integration, which will simply lead to more grief, more poverty and more discontent throughout the European Union.
Lord Strathclyde
I take no view on what the eurozone should do. I accept that it is at a crossroads and there are two different views as to what could and should happen next. The House should be in no doubt that, whatever path is chosen, the Government are prepared to do whatever is necessary to protect this country and to secure our economy and financial system.
Lord Soley
On the problems in the eurozone, can the Leader of the House tell us what the Prime Minister was really thinking when he said that he would protect Britain’s interest? He went on to do what I can remember no other Prime Minister doing, which was to attack our major allies in Europe by lecturing and hectoring them and using phrases like,
“kicking the can down the road”,
which is more reminiscent of a debate in a university than it is of true statesmanship. Right now we need statesmanship.
Lord Strathclyde
My Lords, I do not follow that at all. There is no sense of my right honourable friend the Prime Minister lecturing those in the eurozone, although he might well be tempted to do so given that the United Kingdom economy, with our independent bank and independent currency, has been better able to weather the storm.
Lord Eden of Winton
My Lords, in one of his answers the Leader of the House seemed to give hope that the attitude of Pakistan is becoming altogether more positive. Can he give any further information about that, as it would be helpful to our efforts in Afghanistan if that were the case? Secondly, was any consideration given to the need to preserve the independence and integrity of the Lebanon?
Lord Strathclyde
My Lords, I cannot confirm that there was a discussion on Lebanon itself but there certainly was a discussion about Syria, which is not far away. I do not wish to be flippant, even though that may have sounded so. What happens in Syria is integral to what is happening in Lebanon. The G8 called on President Assad to follow the Annan proposals, which he has conspicuously failed to do until now.
On Pakistan, it is a fervent wish of anybody who has studied this subject that relations between the United States, the rest of NATO and Pakistan should be better than they currently are. It is crucial to recover the supply routes and ground lines. A lot of work is ongoing at the moment. The negative aspect is that a final agreement was not reached over the past few days. More positively, there is a great deal of hope that one will be reached in the weeks and months ahead.
Lord Craig of Radley
My Lords, before he was elected, the President of France talked about withdrawing French troops from Afghanistan earlier than previously intended. Following the NATO meeting, are the Government satisfied that this earlier rush for the door —if I may call it that—that was being threatened by France and other countries will not now take place?
Lord Strathclyde
My Lords, I thank the noble and gallant Lord for his question about France. It is true that the French President has called for the drawdown of French combat troops by the end of this year, and that is to happen. However, the Government and the rest of NATO are entirely confident that we can make up the shortfall and that there will be no detriment to the mission.
Lord Higgins
My Lords, if the Prime Minister is to protect Britain’s interests in the eurozone crisis, is it not essential that he should express a view on the situation, particularly with regard to the need for adequate contingency plans? Should the summit not have recognised that Greece has both a debt crisis and an exchange rate crisis? However much one delays and prays for time by bailing out to solve the debt crisis, it does not solve the exchange rate crisis. That is absolutely essential if we are to find a long-term solution, since it is clearly inconceivable that Greece will become competitive at the present exchange rate. Therefore, should we not be unashamed to express views on this issue, even though we may at times seem critical of what happened at the summit, to ensure that proper contingency plans are made?
Lord Strathclyde
My Lords, whatever happens, the UK Government are going ahead with their contingency plans to deal with the full horizon of eventualities. However, what my noble friend said is in direct contrast to what the noble Lord, Lord Soley, just said. I lean rather more towards my noble friend Lord Higgins. Decisiveness and strong action by all Governments are required, whether that is strong action to deal with the deficit or dealing with the banks to calm the markets. Greece faces an extraordinary crisis, which is shared by the rest of the eurozone countries. It is important that there should be clarity so that, as my right honourable friend the Prime Minister has said, we do not allow the can to be kicked further down the road with an inconclusive outcome.