Queen’s Speech

Lord Clinton-Davis Excerpts

Thursday 28th May 2015 Lords Chamber

[Lord Clinton-Davis (Lab)]

My Lords, several hours ago, the noble Lord, Lord Howell of Guildford, paid a deserved tribute to a friend of us both—the noble and learned Lord, Lord Howe of Aberavon. I can well remember when I was a commissioner in Europe that the noble and learned Lord was universally welcomed by people in the Commission and elsewhere. I think, therefore, that the noble Lord’s tribute was well deserved, but there our partnership must cease.

Perhaps I may say to the noble Earl, Lord Howe, that I welcome his appointment. He is universally popular in this House. One of the things that endears him to us is that in his past role he was both critical and supportive, but what is most welcome about him is his integrity. I thank him very much.

There are three possibilities so far as Britain and the European Union are concerned. First, some who are known as Eurosceptics would assert that we should not be part of Europe at all, a view which I reject utterly. Secondly, we should accept Europe as it is, subject to minor amendments. The Prime Minister has declared that this is beyond the pale. The third possibility is that we should stay in the European Union but pretend that we can effect fundamental changes and reforms. I think that that is based on something of a pretence which is designed to mislead several sections of the Prime Minister’s party and, more significantly, the British public. It is the route favoured by the PM, but I hope that, even at this late stage, he will move away from it.

It is now inevitable that we will have an in-or-out referendum on the EU, but is it right? There have been no basic changes to the European Union over the past few years, which represents an enormous obstacle to the Prime Minister’s plans. Secondly, the Prime Minister, even now, is somewhat fuzzy about his intentions. I was a former commissioner in the EU, playing an influential role in helping to develop its policies. The amount of debate that goes on within the Commission is enormous and sometimes it prevails, but it does not always.

On EU law, it is often difficult to come to firm decisions. I know that only too well because I witnessed it during the time I was a member of the Commission. Everything proposed by the Commission is scrutinised by national Governments and Parliaments, by the European Parliament and its various committees, and by European Union institutions. To suggest that there is inadequate consideration is palpably absurd.

Of course, mistakes, however rare, can occur, but that also applies to national Parliaments, including our own, as we have seen from the present Queen’s Speech. To withdraw from the European Union—this remains a possible route favoured in the main by Conservative Back-Benchers—would, in my view, be absolutely disastrous. Those favouring this course say that nothing very substantial would change. Frankly, I dispute that. It is both unrealistic and it plays with fire. Our trade with the EU is huge and it is put at risk by this sort of talk. Furthermore, we would have virtually no chance of influencing EU policies if we were outside it.

From an international point of view, this possibility of withdrawal is to be avoided at all costs. The United States and others have expressed the view that the possibility of our withdrawal from the EU is nonsensical. I agree. Britain would, of course, continue to trade whether in or out, with countries within the EU but our membership provides an invaluable link with other countries. It is indisputable that our EU membership is vital. Even Boris Johnson could not persuade otherwise. Trade, however significant, is not the sole criterion. From a political stance, Britain—a middle-ranking power—could no longer let its voice be heard if we moved to leave the European Union.

I have tried to present the reasons for staying in the EU and indeed, within the European institutions, which are not always part of the EU but play an invaluable role in framing our law. As a lawyer, I think that we have learnt a great deal from the EU and we have a great deal to impart to it as well. I hope, therefore, that we will not put this in jeopardy.

[Lord Ashton of Hyde (Con)]

My Lords, can I remind the House of what the Deputy Chief Whip said? If we are to finish at a reasonable time—and, more importantly, have adequate time for Front Bench speeches—although I know that there is no advisory limit, it would be very much appreciated and helpful if noble Lords restricted themselves to about seven minutes.

Greece: New Government

Lord Clinton-Davis Excerpts

Tuesday 3rd February 2015 Lords Chamber

Asked by

[Lord Clinton-Davis]

To ask Her Majesty’s Government what are their priorities in establishing a relationship with the new government of Greece.

[The Minister of State, Foreign and Commonwealth Office (Baroness Anelay of St Johns) (Con)]

My Lords, the Government’s first priority is to establish a strong working relationship with Greece’s new Government. Last week, the Prime Minister called Prime Minister Alexis Tsipras on the telephone to congratulate him, and yesterday the Chancellor met the new Finance Minister, Yanis Varoufakis. The UK remains committed to working closely with the new Government on the full range of bilateral, EU, NATO and wider international issues.

[Lord Clinton-Davis (Lab)]

My Lords, are not the poor and many middle-class people in Greece enduring unbelievable hardship? What are the United Kingdom Government able to do to mitigate this disaster? Are the people of Greece able to look forward in any way? It is hardly surprising that they are resorting to radical measures. What can the Government do, given that Britain is a member of the European Union, to alleviate their plight?

[Baroness Anelay of St Johns]

My Lords, we are indeed a member of the EU, but we are not a member of the eurozone; so I would gently say to the noble Lord that we are not directly involved in Greece’s debt repayment negotiations, and nor indeed should we be. Of course, we are open to the discussions with the Greek Government, as I explained in my first Answer. The discussions yesterday were cordial and constructive, and that was the interpretation of both the Greek Finance Minister and the Chancellor of the Exchequer. As I say, we are open to discussions, but since we are not a member of the eurozone we are not the country that will take the decision about how the Greek Government may decide to present their plans—which possibly will be next week. I know that they are working hard to achieve that.

European Commission: Portfolios

Lord Clinton-Davis Excerpts

Wednesday 2nd July 2014 Lords Chamber

[Baroness Warsi]

I understand the point that the noble Lord is trying to make. However, we all have to accept that the Prime Minister stood up for UK interests and was responsive to what we all heard—or should have heard—at the recent European elections, which is that the people of the European Union, across the European Union, want change.

[Lord Clinton-Davis (Lab)]

Would it not be appropriate for the Prime Minister to be rather less abrasive and rather more constructive as regards the EU institutions? Insults get us nowhere at all, particularly when significant jobs are being sought for incumbent or future Commissioners. Is that not the most important issue facing the Government at the moment?

[Baroness Warsi]

The Prime Minister has a good record of delivering for the United Kingdom, whether on the Budget, on Ukraine or on red tape. We can be confident that he is the right Prime Minister, delivering for Britain at the right time.

EU: Prime Minister’s Speech

Lord Clinton-Davis Excerpts

Thursday 31st January 2013 Lords Chamber

[Lord Clinton-Davis]

My Lords, in recent times we have witnessed the transformation of the European Union—previously warring countries co-operating, growing in economic strength and developing their negotiating power. We are living in a competitive world of power blocs. The European Union has also developed social policies that have been a worldwide example.

Of course, the Union should not be static, but our position should not be poisoned by threats and ultimatums. If federalism leads to a new treaty, then the British people, like all others within the EU, should be able to express their opinion in a referendum. Shouting from the sidelines is no substitute for being constructive and sometimes critical.

It is my experience within the EU that all controversial proposals are tackled in depth. Of course the Commission and others can make mistakes. They are human. Her Majesty’s Government are not exactly a shining example to the country. The Commission does its best, as do all the other institutions.

What this Tory-led Government really want is the adulteration, even the elimination, of the European Union’s social policies. It would be absurd for the UK to absent itself from specific areas of policy. Estrangement from our partners would be utterly mistaken, and that would be the inevitable outcome of what the Government are proposing. The pathetic aim of trying to pacify the Eurosceptics, who are so prominent in the Tory Party today, is bound to fail, and it will deserve to.

EU: United Kingdom

Lord Clinton-Davis Excerpts

Monday 26th November 2012 Lords Chamber

[Baroness Warsi]

My Lords, I know that there is a wide variety of opinions in this House, including on my Back Benches. All opinions in the House are valid in their own right. In relation to the budget negotiations, the Prime Minister will soon make a Statement about last week’s meeting. The Leader of the House of Lords will repeat the Statement later today, so it would be inappropriate for me to deal with that. On our relationship with Germany, I agree with my noble friend; we have a strong relationship. Germany is the UK’s second largest export market worldwide. The UK is Germany’s sixth largest trade partner. Great Britain is the first investment destination for German companies. Almost one in six of all foreign companies in Germany are British. There is a strong relationship that continues to grow.

[Lord Clinton-Davis]

Does the Government’s strategy of aligning Britain with the far right members of the EU alienate or befriend Germany?

[Baroness Warsi]

I am afraid I did not catch the question completely.

--- Later in debate ---

[Lord Clinton-Davis]

What I asked is whether the Government’s strategy of aligning Britain with the far right members of the EU alienates or befriends Germany.

[Baroness Warsi]

I thank the noble Lord for the question but I disagree with the statement he makes; the Government are not aligning themselves with the far right in Europe.

Middle East: Recent Developments

Lord Clinton-Davis Excerpts

Friday 13th July 2012 Lords Chamber

[Lord Clinton-Davis]

My Lords, I start by thanking the Minister for initiating a debate that has been very thoughtful, and for his contribution. We are engaged in debating a subject that is full of uncertainty. Although there is an Arab spring in many countries of the Middle East, each country has vastly different problems. I do not have time to dwell on every nation.

I will start with the affairs of Syria. Only today it was announced that a further 200 people had died in Hama province. The Syrian situation is desperate and there seems to be no escape from the bloodbath that beckons. I know that people have dwelt on the issue at some length, but I cannot detect any possible solution.

Iran represents the gravest risk in this area of the world. We must look askance at the issue and, in particular, the fact that within two years Iran will be a nuclear nation. Perhaps the Minister will say something more about that, because it is a predominant issue that ought to capture our minds.

Egypt has just elected a new President but remains deeply divided. Its people desperately hope that things will improve—but will they? The division between the Muslim Brotherhood and the army is only part of the story. Only 50% of the electorate voted in the recent election—hardly evincing a keen interest in the outcome. However, Egypt remains a serious participant in this hazardous area. What will eventually emerge is shrouded in mystery.

A somewhat similar picture depicts the situation in Libya, but there is a huge difference for those involved. We know with clarity that for some 40 years Libya endured a tyrannical dictatorship, camouflaged by a diplomacy that completely bemused—or were they willing victims?—the West, Russia and China. Arms were sold and the Libyan people were in effect held hostage. So-called elections have now been held, but again the situation is far from clear, and what will prevail is extremely problematic.

A number of today’s speeches were about Israel—although that nation, even viewed through its opponents’ eyes, can hardly be held responsible for the plight of the Middle East. I have long been an admirer of a democratic Israel, which sets a desirable example to others in the area—but, sadly, we have witnessed a decline from the high standards that were set as long ago as 1948 when Israel was established. I hope that the situation today is not irrevocable.

The deterioration is undoubtedly associated with the growth of some—but not all—settlements. Some inhabitants believe in a literal interpretation of the Bible. Some younger people have joined the Israeli armed forces, bringing with them an ideology completely alien to the forces in which they serve. How can such people resolve the dangerous dilemma of choosing between loyalty to their ultra-orthodox rabbis and to their commanding officers? The dilemma is acute. I do not accept that this affects all Israeli armed deployment, but the situation I outlined must be confronted before it is too late. Some ultra-orthodox rabbis have instructed their disciples to refuse to obey legitimate military orders. A minority obeyed, but happily most ignored the directive. I trust that illegal settlements will be dismantled by an Israeli Government—if not by this one, then by a more benign regime in future.

Religious zealotry, practised by Arab or Jew—in the main, comparisons are odious—is the enemy of a peaceful resolution of these troubles. Peace can be won only if Israelis and Palestinians resolve to survive rather than die together.

European Union (Approval of Treaty Amendment Decision) Bill [HL]

Lord Clinton-Davis Excerpts

Wednesday 23rd May 2012 Lords Chamber

[Lord Lamont of Lerwick]

My Lords, this is our second debate in three days on the eurozone, but that is hardly disproportionate considering the huge potential threat of the crisis in the eurozone to the world economy. The measure before us is already well known and publicised and, indeed, is already priced into the markets, so anyone who thinks that what is being debated today will make a crucial difference to the eurozone crisis is under an illusion. It may be a necessary first step, but it is already priced into the markets.

The Minister gave a clear and lucid explanation of the Bill, and suggested that we should welcome the new permanent bailout mechanism not just for economic reasons, but because it replaces the EFSM, the first bailout mechanism, to which Britain had to contribute. I hope he will forgive me if I probe this argument a little further to find out how completely copper-bottomed it is. In practical terms, the new mechanism makes the EFSM obsolete; if you have the ESM, you do not need the EFSM. But as far as I can see, there is no legal assurance or guarantee that the EFSM has actually been abolished. The document, 407/2010, which is the instrument that set up the EFSM, is not repealed. There is no amendment in this treaty amendment to Article 122 under which the EFSM was set up. The treaty amendment does not say, as one might have expected, that there should not be financial assistance to countries that have over-spent or over-borrowed under Article 122, the original provision that obliged Britain to contribute. If this seems a little suspicious, paranoid or swivel-eyed to the Minister, perhaps he will forgive me simply because the use of Article 122 to set up the temporary bailout mechanism was, in many people’s opinion—including that of Madame Lagarde—an illegal use of it. The Government have always been coy about its legality, but given that she said that, we are entitled to be sceptical and to ask for further assurances.

Perhaps I may remind the Minister that the Council decision under Article 136 which set up the ESM says that member states whose economies are not in the eurozone “may decide to participate”. There is a little bit of daylight there but it is far from clear that we will definitely not be involved in this. I might also mention that there are other bailout provisions in the treaties which apply to non-eurozone countries. Articles 352 and 143 provide for bailouts to non-eurozone countries. They cover us, we have no opt-out and, of course, decisions are made by qualified majority vote.

I should like to ask the Minister one or two questions about the ESM itself. First, according to a document dating from 2011 on the European Central Bank website, the ESM could be used to buy sovereign bonds on the primary markets. I imagine that that is not now correct and that it has been overtaken. However, I should be grateful for the Minister’s assurance on that point. Secondly, again according to the ECB website, the debt of the ESM will be classified as the debt of EU institutions. It will not be classified as government debt and will not count as government borrowing, even though the ESM is going to issue securities and borrow from the markets, and even though those bonds are themselves guaranteed by the Governments of the eurozone. Can the Minister confirm that that is the case?

Thirdly, how confident is the Minister that the ESM will be able to maintain an AAA rating? The intention is to issue securities that are AAA rated, but because of recent downgrades, the ESM is now backed by only one large economy that has a universal AAA rating. This idea that a lot of Governments that have sub-AAA ratings can have their securities all wrapped up together and that those can then be described as AAA securities has a rather uncomfortable similarity to certain things that happened in 2007 and 2008, through the CDOs that led directly to the financial crisis.

Fourthly, perhaps I may ask the Minister about the capital of the ESM. According to the ECB website, this is put initially at €80 billion, rising to a callable amount of €620 billion. Again, this capital is being provided by countries in proportion to their GDP and populations. That presumably is something like 18% for Italy and 12% for Spain. But can Italy actually afford to make its contribution? Will the contribution be made in cash or in terms of guarantees? The whole mechanism seems rather like a lot of not very sound economies getting together to try to guarantee their own finances. Of course, at some future date Italy might very easily be in a position where it could not meet the capital requirement that was asked of it.

I have one or two comments to make about the current situation in the eurozone. I listened very carefully to the noble Lord, Lord Radice, who always speaks very eloquently and with a wealth of experience. He made the slightly familiar point that we were not being listened to—that was an implied criticism—and that we had lost influence. Perhaps listening is not the strong point of the eurozone Governments. They were not exactly prepared to listen when they were warned in the first place that this was an unworkable system that would lead to great financial problems. The noble Lord suggested that we must be constructive, get in there and be more influential. I am afraid that is a policy that has been tried and has failed many times before. I see no point in participating in, or at least reinforcing, a wrong policy merely in the interests of some chimera called influence.

[Lord Clinton-Davis]

What conclusion is the noble Lord coming to? Should we withdraw entirely from the euro?

[Lord Lamont of Lerwick]

Well, we are not in the euro, so that is not a point that leaves me in great difficulty.

The euro has been a disastrous experiment. It has brought nothing but grief and problems. What has been the achievement of the euro? What have been its consequences? Twenty-one neo-fascists in the Greek Parliament is one consequence. The system that was promoted in order to produce harmony has produced nothing but acrimony and xenophobia. The European Union used to boast that its great achievement was to underpin democracy in post-dictatorship countries such as Portugal, Spain and Greece, yet we have seen the political life of Greece being torn up by the demands being made of it by the eurozone.

The main force that is keeping the monetary union together is simply the fear of the consequences of it falling apart. As well as looking at the costs and dangers of it breaking up, it is only rational also to look at the costs of keeping it together, because they can continue to mount, even to the point of threatening the stability of the German economy. Germany has contributed something like €200 billion so far to shoring up the euro. It may find that it has to do more and more of this as the years go by.

The Bundesbank is now worried about what are called the TARGET2 balances. These are the claims that the Bundesbank has on the central banks of the peripheral countries, because the central banks have had to step in to fill the gap where the interbank, international, commercial market has withdrawn. The claims on the Bundesbank’s balance sheet in respect of the peripheral countries now come to something in excess of €500 billion, which is causing a lot of anxiety in Germany.

It seems clear that if Greece leaves the euro—whatever we think about that, there seems to be a distinct stench of inevitability about it—a €500 billion firewall is not going to be sufficient to stop contagion. It may be enough to deal with one country but will not be enough to deal with several. I noticed—and the noble Lord, Lord Radice, picked up on it—that Finance Ministers, including Mr Schauble, have been saying that Greece’s departure might be difficult but not fatal. We must hope that they are right but it would not be the first time if they are proved wrong.

I certainly feel a degree of sympathy with Spain and the situation it finds itself in. Spain ran a perfectly responsible policy before the crisis and actually spends, as a proportion of GDP, somewhat less than we do as a country. The historic yield it pays on its debt is something like 3.6%, but today in the markets it is having to pay something like 6%. Spain cannot remain solvent if interest rates remain at these levels, as they are likely to do for some time to come. I say “likely to” because it seems very probable that the rates on sovereign debt will never return, in the near future, to the level they were at before the crisis began.

At the moment, we have a complete stand-off between Greece and Germany. Greece is, I think, overplaying its hand by threatening to bring the whole pack of cards tumbling down. At the same time, German public opinion is, I believe, hardening. Mr Hollande, for all that was said, will find this very difficult to move, as German public opinion is extremely resistant to further bailouts. The one thing that some people think could be done to ease the situation—the noble Lord, Lord Radice, referred to this—would be if Germany had higher inflation. To my astonishment, Mr Schauble referred to this. It may be the one thing that would help the eurozone but the one thing that would turn German public opinion absolutely against the euro is if it had to put up with inflation of 4% or 5%. That would be anathema to the German people. For all Mr Schauble said, I do not believe that is the course that Germany is going to follow.

The question is: which will blink first—Germany or Greece? My guess is that neither is going to blink, and therefore we will have a chaotic, unplanned exit from the euro. Greece and its politicians say they do not want to leave the euro, but clearly they need a third bailout and are very likely to default again. Greece may not want to leave, but what it is demanding is not on the table and is not available. If the second election produces the same result as the first, the eurozone has to grasp the nettle and show the door to Greece.

The truth about this mess and this situation we are in is that every option is unpalatable. Breaking up the euro carries dangers, while soldiering on risks the danger of hugely escalating costs. However, the worst option of all is the third one, which is that the crisis has no end and we have this sapping away of confidence. People talk about the need for a growth package, but growth depends above all on confidence, and as long as this crisis goes on, we will not get confidence and we will not get growth. It is time that the eurozone made some hard choices. Winston Churchill once said, “We have to face reality or reality will face us”. It is time for the eurozone to decide to face reality, however hard that may be.

--- Later in debate ---

[Lord Clinton-Davis]

Some time ago, the noble Lord, Lord Howell, explained the purposes and effects of the Bill, and I wholly approve of the intentions that underlie it. It is a technical Bill, but I want to speak about other matters and I am not the only one to do that.

We have had the voices of doom and gloom from the noble Lords, Lord Lawson and Lord Lamont. The noble Lord, Lord Lawson, spoke of arrogance and irresponsibility, and he knows what he is talking about because that explains the whole purpose of his chancellorship. His period of office was not exactly crowned with glory. I think that writing off the European Union as he has done is irresponsible in itself. Our job is to save it, not drown it.

I approved very much of what my noble friend Lord Radice said, especially his remarks concerning the relationship between this country and the eurozone. The Bill has to be regarded against the background of the current crisis affecting the eurozone, and we cannot be immune from its possible deleterious effects. Of course, the crisis directly involves Greece. Ireland, Italy and Spain are also involved, and it would be idle to pretend that the entire European Union is not affected; of course it is.

Some argue that the euro is bound to fail—a scenario which I refuse to accept. Talk of that kind will inevitably lead to the collapse of the euro. I am rather more optimistic about its prospects of survival. Some argue that Greece will have no alternative but to leave the euro and possibly the European Union. I hope that that will not happen. It is, of course, for the Greek people to decide their country’s fate, but to pretend that Britain would be unaffected and that contagion is remote is idle to contemplate.

Others contend that this scenario is to be averted if at all possible; that there is a duty on all members of the European Union, including ourselves, to rescue the European Union from its present plight; and that the Union with all its accumulated funds can and must overcome its present woes. In all this, of course, our country is pivotal and is inevitably involved. As a convinced supporter of the European Union with all its blemishes—what institution does not have any?—I continue to believe that the previous Labour Government were right not to join the euro, but that cannot mean that we can be just a non-playing bystander in the whole enterprise.

Notwithstanding that we face global instability, we now need the EU and we should strive to make it a success. We should support Presidents Obama and Hollande at the recent G8 summit in their quest to concentrate much more on growth, on a stimulus package and on promoting employment. In other words, budgetary solvency and the maximising of growth must be our equal priorities. Unhappily, the policies of the coalition are bewilderingly confused. At home, we have a programme of strict austerity; abroad the coalition urges the acceptance of the Obama formula—ineptitude writ large—and vividly illustrated by its desire during the recent French presidential campaign to shun Hollande, who won, and support Sarkozy, who lost.

To desert the European Union, to quell revolt on the part of Conservative Back-Benchers, and to hector the European Union from the sidelines does not amount to a realistic policy. Surely no Lib Dem could support that endeavour. An increasing number of allies are now calling for economic growth. Of course, Germany finds it difficult to forgo its past, and we have to sympathise with that dilemma, but somehow the European Union must develop, grow and tackle the deficit. This is a conflict that we cannot afford to lose and I do not think that we will, despite the voices of gloom and despair.

Middle East

Lord Clinton-Davis Excerpts

Friday 16th March 2012 Lords Chamber

[Lord Clinton-Davis]

My Lords, undoubtedly the Middle East is a highly complex, incendiary and volatile area, where peaceful solutions are elusive. There are too many extremists amid the two populations—Arab and Jew—for whom “sensible compromise” represent dirty words. Implacable hostility can result only in dire consequences for both sides.

As the noble Lord, Lord Wright, has said, a two-state solution has to be encouraged. It is the only way out of the present debacle. However, the intractable problem is how we can convince all the parties that this is so. In the past negotiations have almost reached this goal and then broken down. It requires strong moral leadership from within the power bases of both Israel and Palestine to urge their respective followers to face up to reality and to accept what will ultimately deliver a peaceful future. Sadat and Begin pursued that objective.

Iran’s quest for aggressive, long-range nuclear weaponry, capable of doing real damage to the Israeli population, as well as potential harm to its close neighbours, cannot be lightly dismissed. This is no figment of the imagination in the light of Iran’s stated aim to annihilate Israel. The fact that numerous Arab states share this fear of nuclear empowerment indicates that Iran’s threats and words strike huge fear across the region. Iran has few friends, the beleaguered Syrian regime being among them. It is also divided within itself. Free speech is suppressed in a violent way. Notwithstanding these bleak facts, it would be foolhardy for Israel to be engulfed in what appears to be an unwinnable war. However, the ceasefire declared in the past few days between Hamas and Israel offers a glimpse of hope—I put it no higher than that—that negotiations are not beyond the bounds of possibility. However, ongoing hatred and suspicion mar this desirable objective.

It is essential for all advocates for peace on both sides of the divide to speak out now so that a two-state solution can arise and avert a conflagration. It has to be in the interests of Palestinians and Israelis—at least for their children—one day to realise a dream of a future based on peace, trust and prosperity for the region that both peoples inhabit.

The Israel-Palestine conflict is not, as many people attest, the sole issue in the Middle East. In a number of countries there is poverty, disease and inequality, all adding to the dangers which bedevil this part of the world, and these must also be tackled. The Governments of the United States, Europe and others, confronted by fierce armed conflicts, instability brought about by religious, social and political turmoil and the cruelty and intransigence of dictatorships, are not to be envied. What is needed now are cool heads, profound thinking—outside the box when necessary—considered reflection and a determination to stay the hands of those who would lead us inexorably into a war beyond anyone’s control. I thank the noble Lord for leading this debate in the most constructive way.

EU: Recent Developments

Lord Clinton-Davis Excerpts

Thursday 16th February 2012 Lords Chamber

[Lord Howell of Guildford]

My noble friend puts forward one of the many challenges that we have to address. I will not go into the full details at this stage, but he is right; there are several areas where the challenges are very great for the whole of Europe, including this country, from the rising power of the great emerging markets. We have to face the fact that, as I began by saying, the world’s pattern of wealth and competitiveness has changed radically over the past five years. I am not sure that many people in the media or, dare I say, some of our great policy thinkers have always grasped this fact.

The changes that we are making provide solid foundations for doing business and a platform for trade, investment and development, which in turn will be the prosperity, or perhaps I should say in a more realistic tone the survival and maintenance, of our existing standards. Trade within the Commonwealth totals more than $3 trillion annually. Our European membership is very valuable in promoting trade interests and access to new markets such as these.

The UK continues to play a strong role in achieving collective European action on many foreign policy issues, when appropriate and effective, in order to advance our shared interests and values. We drove concerted action forward at the EU level in response to Libya. The EU was actively engaged since the early stages of the conflict and we secured a UN resolution and assembled a multinational coalition force faster than at any time in history. Today, we are playing a prominent role in the EU response to the continuing violence in Syria. Some 11 rounds of EU sanctions have already been agreed and we hope to agree further measures on 27 February at the Foreign Affairs Council.

We have been at the forefront of action on Iran where, along with France, we led the EU in agreeing an unprecedented package of sanctions. The UK continues to be a strong supporter of European Union enlargement, which helps to create stability, security and prosperity. Enlargement brings significant benefits for the United Kingdom. An enlarged market obviously expands the opportunities for trade and investment. We want European nations to succeed not just as an economic force but as an association of countries with the political will, when they wish to mobilise it, and the values and the voice to use their collective weight to make a difference in the world.

Looking ahead to the March European Council, the UK will focus on ensuring that EU initiatives and projects deliver growth and jobs as agreed at the January Council. The UK plays an important role in these and other issues of significance for the Union as a whole. We are driving forward the single market, we are improving competitiveness across Europe and we are leading decisive foreign policy action when collective action works. European eurozone members are often our closest allies on some of these issues. Britain is part of the European Union not by default but by choice. It does reflect our national interest to be part of a single market on our doorstep and we have no intention whatever of walking away.

We want Europe to be a success, and not just for parochial reasons. We are going through a fundamental rebalancing of global power, a point I have just made to my noble friend, as economic weight shifts from west to east and from north to south; some of us have been pointing this out for two decades. Political power is diffusing from the G7 to the G20 and beyond, and from global groupings of states to regional groupings such as the Arab League, the African Union, ASEAN and many others.

[Lord Clinton-Davis]

My Lords, I am very interested in all that, but the Prime Minister withdrew from the European People’s Party. Does the noble Lord agree with that? I thought that the EPP was in favour of a muted Europe, not an entirely neutered Europe.

[Lord Howell of Guildford]

That is a debating point from the noble Lord, if I may say so. He believes that that is what has happened, but some of us believe that we are working in ways that fit the pattern and evolution of the role of the European Union to be effective in the 21st century. I do not accept his words at all.

As I was saying, we are dealing with a new landscape to which Europe as a whole must adjust, as indeed must this country. Our commitments to Europe must be seen as part of a larger repositioning of ourselves in a world in which no country can go it alone. To maintain our prosperity and political clout we must work together with our neighbours and our friends. We face the same challenges and will be much stronger in dealing with them if we do so together.

I end by saying that we want to be quite clear that Britain is an active and influential member of the European Union and will remain so. That is the basis of this Government’s approach to European affairs, as an integral part of our response to the changing global conditions generally. As old enmities and differences recede, it is time to forge new alliances and strengthen old ones in a reformed European Union, through the Commonwealth—indeed, perhaps I can add even here in the British Isles with our Irish neighbour, which has been through so much with great courage and to which Her Majesty the Queen recently paid such a fabulously successful visit. The coming year of the Diamond Jubilee and the Olympics gives us a golden opportunity to reposition Britain firmly in the new international landscape that is now unfolding, and that is what we will do. I beg to move.

--- Later in debate ---

[Lord Clinton-Davis]

My Lords, the single market is not the only feature of the European Union. I was very glad to hear my noble friend Lord Monks refer to the social dimension of the EU, a view which I put forward in the Commission some years ago. I am also very glad that the noble Lord, Lord Brittan, is here today and the noble Lord, Lord Tugendhat, who are members of the Commission.

The idea of Britain being isolated in the European Union is absolutely hopeless. In my view, we have a duty to align ourselves with those who think alike, not on everything, but on most things. That is why I think that our continued membership of the European Union is absolutely vital. The policy pursued by the present Government is quite wrong, in my view. We could say goodbye to our chances of being heard if it were applied. It would be a sure route to insignificance and wholly in line with the decision to quit the European People’s Party. I have never agreed wholly with the EPP but I think that is a manifest mistake.

Of course, the Prime Minister is terrified of his own Eurosceptic Back-Benchers and at the same time most of the members of the eurozone. It is a somewhat uncomfortable posture and the very opposite of leadership.

We should always remember that our exports to the European Union constitute a significant proportion of the whole, even if we accept the view that they should be downgraded to 40 per cent from 50 per cent. Perhaps even more salient—this would be the view of the vast majority of the European Union—we should seek allies, as I have already said. Should you put both those objectives in jeopardy?

As the noble Lord, Lord Newby, has said, it is bizarre that our Prime Minister should invoke other members of the eurozone to,

“sort out the mess that is the euro”.

Do we have no responsibility? Is it all down to the Lib Dems? Do they really approve of the Cameron veto? In my view, Labour was right to assert that, in any event, this was a phantom veto because, as the Foreign Secretary has argued, no one really knows where Britain stands vis-à-vis the European Union, not even the Prime Minister. He walked out of the European Union negotiations last December. Was it less an act of defiance and more a frightened curtsey to his European sceptics? It makes it infinitely more difficult to be listened to, to be heeded and for our real interests to be protected. That is not, in my view, the right way to go. The success of the French in hanging on to their dubious agricultural policies has not been due to a walk-out, but quite the reverse.

I am not arguing that everything in the EU is rosy or is incapable of error—no Government can ever tame those objectives—but, in my view, we are better off in than in our present posture of being neither in nor out. Our voice should be heard; that is precisely why we joined the European enterprise in the first place.

The European Court of Justice must be the enforcer of financial rectitude in the eurozone. It should levy fines against eurozone members. In this regard at least, surely Angela Merkel is right to contend that this is immutable. I am not saying that I agree with all her views, but on that proposition she is absolutely correct.

As for Greece, the IMF has contended, via Poul Thomsen, a senior official with direct responsibility for Greece, that while reforms to modernise the economy should continue, the needs of Greek society must not be overlooked. That is not a view that I have always heard in this place or elsewhere.

It goes without saying that the EU is plagued by serious financial problems—but is severe austerity the only and right answer? Overdoing it, as the IMF acknowledged, can lead to deep recession. A compromise is essential. Some growth is indispensable. Public sector cuts must be accompanied by the ability of consumers and businesses to spend more sensibly.

What the Government are doing—alas, they are not the only ones—is aiming their axe at public expenditure, thus reducing economic activity, growth and tax revenue. Alternatively, right across the EU, public investment, cutting income tax for low earners, and attacking tax avoidance, along with deficit reduction, would promote employment and growth. It is never too late to change tack.

For Britain to withdraw from the EU would be a dangerous and perhaps fatal policy. The views of the public, for example on hanging, can be misleading. Something may be popular at one time, but the public are not always right. There is too much at stake on this issue. Those of us who believe in the fundamental purposes of the European Union must be more assertive in explaining that there is no realistic alternative if Britain's true interests are to be served.

Iran

Lord Clinton-Davis Excerpts

Tuesday 24th January 2012 Lords Chamber

[Lord Howell of Guildford]

The noble Lord is raising the broader issue that we have touched on in these discussions and in many debates about the position of Israel and the position of Iran. On the second point, we are pretty sure that Iran is still short of achieving nuclear weapons, but we are also fairly well advised by the IAEA and other bodies that it is on the path to doing so. As far as the Israeli situation is concerned, I was stating the official position. Obviously, it is common talk that Israel possesses these weapons, but it has not officially asserted or confirmed that it does. Therefore, in terms of international facts—and I must use my words carefully—it cannot be asserted without question that it has nuclear weapons. That is the unsatisfactory position at present, and it is one from which we would all like to move. Of course, in the longer term, a middle-eastern nuclear-free zone would take us in that direction, but how we get there is the issue before us now and before all diplomats in the free world.

[Lord Clinton-Davis]

Is it not obvious, as the Minister said, that doing nothing and saying nothing is not an option at the moment? Is it not vital that Britain’s voice must be heard and that the Government are doing exactly that? Is there any indication of the Iranian Government acceding to the reasonable international pressure which is being employed at present? If not, is there any possibility of that in the future?

[Lord Howell of Guildford]

We clearly hope so. That is the aim of the policy. At the moment it does not look like that. It may be in the next few days that, as has happened in the more distant past, the Iranian authorities will come forward and say, “Yes, let’s return to the negotiating table”. They may add all sorts of impossible conditions and qualifications that make that difficult, or they may see sense and, in the interests of the Iranian people—with whom we have certainly have no quarrel; I should have made that clear in answer to the noble Lord, Lord Kerr—they will begin discussions in a sensible, calm way on how we prevent the whole nuclear proliferation pattern running away into a horror story in the future for the Middle East.