Middle East and North Africa

Lord Lamont of Lerwick Excerpts

Thursday 30th October 2014 Lords Chamber

[Lord Lamont of Lerwick (Con)]

My Lords, may I first refer to the Register of Lords’ Interests? I have been a director of a number of companies in the Middle East on both sides of the Gulf and I have also been for many years the chairman of the British Iranian Chamber of Commerce—a post that I took over from the noble Lord, Lord Temple-Morris, whom I see in his place today.

It is a humbling experience to follow the very moving speech of the noble Lord, Lord Sacks. This has been a remarkable debate and there was a remarkable speech from my noble friend Lady Warsi. I congratulate my noble friend Lord Risby on initiating such a remarkable debate and on introducing it with a brilliant tour d’horizon of all the different problems of the region. I very much agree with him that it is extremely difficult to be optimistic about the region.

We seem to have been fighting a never-ending war in the Middle East. The West has indeed been fighting the consequences of our own disastrous policies. In some respects, we have been addressing risks that we ourselves created. After flirting with the Arab spring, we are now back into our old traditional comfort zone of uncritical support of Sunni autocracies. Only now are we waking up belatedly to the fact that many of the citizens—I do not say “Governments”—of our allies have been funding those they are helping us to fight. I pay tribute to the campaign by the Sunday Telegraph highlighting the movement of funds to terrorist groups in the Middle East.

In that paper last Sunday, David Cohen, the US official in charge of financial intelligence, described Qatar and Kuwait as,

“permissive jurisdictions for terrorist financing”.

The Shadow Foreign Secretary, Douglas Alexander, also wrote recently that Riyadh, Doha and Kuwait City have all enabled religious foundations to channel funds to radical Sunni elements. He referred to lax anti-money-laundering regulations and regimes. Could the Minister comment on this point? What exactly are the Government doing to raise concerns with the relevant Governments?

Some of the citizens of our allies share with ISIS Wahhabi doctrines that the Shias are idolatrous apostates. A recent opinion poll in the pan-Arab newspaper, Al-Hayat, which I believe is Saudi owned, indicated that 92% of Saudis replied in the affirmative to the question of whether ISIS conformed to their values of Islam and Islamic law. I was rather surprised by that and put it to a Saudi friend of mine. He said that he believed it but thought it referred not to the violence and beheadings but actually to the governance and type of polity that ISIS were introducing. Even so, that was a very revealing and alarming poll result.

Many people have bought into the fantasy that Sunni Muslims—1.3 billion out of 1.6 billion—are somehow a victimised minority. I want to talk about the Shia enfant terrible, Iran, and the nuclear talks. I know that some noble Lords and Baronesses are worried that there will be a successful outcome to those talks. I acknowledge fully the shortcomings and past misdeeds of Iran, its bad human rights record, the unacceptable threats against Israel and the support for rocket attacks through Hamas and Hezbollah. None the less, a nuclear deal is firmly in the interests of both Israel and the wider Middle East.

I did not hear the Question of the noble Baroness, Lady Deech, earlier, but for those noble Lords and Baronesses worried about a deal, I have some good news: I do not think there will be a deal at all. Mr Netanyahu and AIPAC have certainly done their best to make this very difficult. The real mistake has been for the negotiations to concentrate so single-mindedly on just the number of centrifuges, rather than on a regime of transparency and openness. It was always going to be extremely difficult to get agreement on the physical destruction of facilities that already exist.

If I am right and the deal fails, what happens then? Are we going to bomb Iran? That would spread a huge conflagration throughout the Middle East. Are we going to have more sanctions? That is what the Foreign and Commonwealth Office seems to be indicating. What will Iran do? Will it go back to the previous level of producing more highly enriched uranium and will it stop converting enriched uranium into fuel rods?

If the talks fail, the important point is that on both sides we do not go back to the position we were in before. Even if the talks fail, something will have been gained in terms of understanding each other’s viewpoints and talking about different issues within the region. President Rouhani made some very wise remarks on this issue when he said, referring to the possibility of failure in the talks, “I want to repeat: we will not return to the past and our situation will definitely change. This is what the world wants”.

I welcome the fact that the Prime Minister met President Rouhani—the first meeting with an Iranian president for well over 35 years. I gather that it was a good meeting, but I rather regretted the very aggressive comments that the Prime Minister made after President Rouhani’s studiously moderate speech condemning terrorism at the UNGA. The Prime Minister made quite an aggressive speech, the result of which was to undermine President Rouhani’s position in Iran and to lead to renewed calls in the Majles that the British embassy should definitely not be reopened. I know that the date of the reopening has been put off yet again—indeed, there is no date.

The interests of the West and those of Iran overlap in many areas but, of course, this has happened before. It happened at the time of President Khatami, when he helped with the invasion of Afghanistan by America and offered full diplomatic relations and the reining in of Hamas and Hezbollah. For his trouble, he was labelled part of the “axis of evil”. We must be careful that we do not do the same thing to President Rouhani today. Too often, the West seems to think that Iran is part of the problem and that it does not need to be part of the solution. This is wrong. Iran has been part of the problem, but it definitely also needs to be part of the solution.

Transatlantic Trade and Investment Partnership (EUC Report)

Lord Lamont of Lerwick Excerpts

Tuesday 17th June 2014 Lords Chamber

[Lord Lamont of Lerwick (Con)]

My Lords, I speak only as a member of the committee and only in order to express solidarity and agreement with the committee’s report. It was a real pleasure to be a member of the committee. My noble friend Lord Tugendhat has thanked our clerk Julia Labeta—who very deservedly has been promoted—our policy analyst Roshani Palamakumbura and our policy adviser Edward Bolton. All of them did a wonderful job in drawing together the huge weight of evidence that we had and helping us to draw the conclusions from it. However, my noble friend Lord Tugendhat deserves special praise for his chairmanship of the committee. He was a very balanced chairman and had a remarkable ability to draw out the different threads of the argument and to guide the committee towards proper and appropriate conclusions.

Like my noble friend, I believe that TTIP has huge potential benefits, to the advantage of both the United States and Europe. However, they are potential benefits; whether they will ever actually be realised is perhaps more of question than has hitherto been admitted. The benefits of an agreement are, of course, mainly about trade but they also extend to investment. Professor Baldwin pointed out in his evidence to our committee that, whereas US-Asian trade is very much just about trade, trade between the United States and Europe is also very intertwined with investment. An increase in trade between the United States and Europe is likely to lead to much more transatlantic investment in both directions as well.

The figures that were produced on the overall benefit of TTIP to the two economies were massive. A number of members of the committee queried the precise figures; they are quite right to be sceptical about the precision of figures of this magnitude as they are produced, but the dramatic impact cannot really be doubted. We also heard enough from our witnesses to banish some of the wilder fears about TTIP. There is no reason to believe that we are going to see social and environmental regulation being gutted, and there will not be reductions in consumer protection or a race to the bottom.

The hope, as my noble friend Lord Tugendhat said, is that TTIP will become a template for the future. In recent years, there have been many more bilateral negotiations, as global negotiations have stalled. This is hardly surprising, as Robert Zoellick made quite clear when the negotiations with WTO ministerial representatives failed at Cancun and he said, “I cannot do business with these people here. I will go and find people with whom I can do business”. That has increasingly led to a lot of different bilateral agreements. It is hoped, as my noble friend Lord Tugendhat said, that this very big bilateral agreement—if you can call one with 28 Governments a bilateral agreement, although it is two organisations negotiating together—might give impetus to restarting the global negotiations.

It also emerged that one of the thoughts in the mind of the United States Government was that concluding a successful trade agreement between Europe and the United States might act as an incentive to bring China back to the table and play a more active role in global talks once again. This was a good thought, although I think that all members of the committee would agree that when we met the representatives of the People’s Republic of China’s trade representation in Brussels, they were aware of but highly resistant to this thinking in the American position.

The point was made very early on and very quickly in our discussions that many of the issues in TTIP will be about non-tariff barriers, because tariffs have come down so much. However, it is important not to forget that there are some areas in which there are still relatively high tariffs, such as automobiles, textiles and clothing, which are very important sectors indeed. Non-tariff barriers are much more difficult to negotiate and, because of that, the issue seems to be not whether regulations as such can be harmonised but whether one can agree a path or process, into the future, by which future regulations, as they evolve, are based on a co-operative dialogue and increasingly harmonised.

The noble Lord, Lord Mandelson, drew a distinction between brownfield harmonisation and greenfield harmonisation for the future. I must say that this seems to be quite difficult and one must not be overoptimistic about it. There is a certain institutional lethargy here. Co-operation between regulators internationally is quite limited because regulators see their role as regulating within the jurisdiction in which they operate. Their responsibilities are often embedded in constitutional and legal structures. Regulators are often reluctant or afraid to trust the judgments of regulators in other countries, leading to a reluctance to have mutual recognition or passporting mechanisms that allow people who are approved in one country to operate in another. Moreover, regulators are often under a legal obligation to demonstrate this or that to national Parliaments. Finally, of course, regulators are often established and have powers for very strong political reasons that are not easily moved.

This was abundantly clear in the financial sector. As my noble friend Lord Tugendhat has said, there was absolute resistance in the US about the financial sector and strong opposition from US agencies, which do not wish to indulge in a form of harmonisation in the future. They were not having it, as one person who gave evidence to the committee put it. The fear in the United States seems to be that too much co-operation and harmonisation could cause Dodd-Frank to unravel. Dodd-Frank is umbrella legislation, so a lot of the detailed work will come later on in what we would call secondary legislation. The Americans are particularly anxious to make that fit for purpose in their country and for their conditions, and not to see it interfered with from abroad. For that reason, as the report says, we were not really very clear on what the Government’s objectives in the financial sector are. One could see certain things to do with insurance and Lloyd’s, but beyond that it was almost as though someone in the Foreign Office or BIS had just said, “What are we good at in the UK? We’re good at financial services, so we’ll have those as one of the objectives of this negotiation”. But boy, it ain’t going to get anywhere, and I would be interested to hear from the Minister how the Government see this.

Another difficult area is that of public procurement. The EU says that it expects no less than a quarter of the gains that might be made by Europe through an agreement to come from the benefits of opening up procurement, but that has to be reciprocal. We have a rather asymmetrical negotiation with 28 sovereign Governments, each with a public procurement programme, against one sovereign Government on the side of the United States. Plainly, the negotiation ought to involve the individual states of the United States as well, but it has been estimated that only 10 of them stand to gain, with just four, I believe, having indicated that they are prepared to participate seriously in negotiations. It was argued by one of our witnesses that transparency might be a middle way. If there was a public duty of transparency, that would force the opening up of procurement markets. However, we heard evidence of a shocking nature from other witnesses that transparency comes well after jobs in the eyes of many US legislators.

Finance and procurement are difficult areas, but automobiles, food and drink are more promising. As I said earlier, there is scope to reduce tariffs, as there is scope for the non-tariff barriers. It was suggested to us by the automobile industry that some manufacturers might move to the low-cost states of the United States in order to export back to Europe. As the noble Baroness, Lady Quin, highlighted, a lot of gains can also be made from the alignment of regulations, even on quite trivial things such as the sort of light you have to have on a car or a heavy goods vehicle indicating when the brake is on. All these little things, when added up together, can produce very considerable savings for manufacturers. An agreement in this area could not just stimulate trade but have a profound effect on the location of investment.

It was unfortunate that we did not hear more about energy in our report. One would have liked to have learnt much more about the possible future of exports of gas from the United States. Of course, what is happening in the energy markets in the United States could itself dwarf the impact of TTIP, because a lot of people will be attracted to trade and investment in the United States because of the lower costs, including the lower cost of energy.

TTIP is a very ambitious concept. It would be nice to say that it is an idea whose time has come. I hope it has. One day it certainly will happen but the difficulty is in making it happen in the near future. The important thing going forward is to advance the points that are most practical—to grab the low-hanging fruit—and then try to establish a path for future regulatory co-operation. As the noble Lord, Lord Mandelson, said, most trade negotiations are a snapshot and the trick is to turn the snapshot into a movie for the future.

Syria and the Middle East

Lord Lamont of Lerwick Excerpts

Thursday 27th February 2014 Lords Chamber

[Lord Lamont of Lerwick (Con)]

My Lords, I draw the House’s attention to my entry in the Register of Lords’ Interests. I am the chairman of the British-Iranian Chamber of Commerce and have also been involved with several companies on both sides of the Gulf, including some in the past involved with Iran. It was that country that I wanted particularly to talk about today, having in January gone with the parliamentary delegation led by Jack Straw to Tehran. It was in the first week of January but it seems to be an eternity away, and a considerable amount has gone on since then.

We had very good access within the Iranian Government to Foreign Minister Zarif, Mr Nematzadeh, the organiser of President Rouhani’s campaign, now the Industry Minister, and Mr Nahavandian, the head of the president’s office. Almost everybody we met in the Government was western educated. Indeed, it is said that there are more American PhDs in President Rouhani’s Cabinet than there are in President Obama’s. We also, because this was a parliamentary visit, met quite a number of the members of the Majlis, where we met many more hardliners, so we got a feeling of the spectrum of politics within Iran.

There is a lot of argument about whether President Rouhani is a reformist in the Iranian sense, but it cannot be denied that he has the support of the reformist element. His Cabinet is very similar to that of President Khatami. President Rouhani has certainly unleashed in Iran an enormous feeling of optimism on the part of the population, of expectation and a great rise in business confidence. The Government frequently say—and I know that many people believe—that only sanctions have brought Iran to the negotiating table. I would say that that is only partly true. They have had an effect, but it was public opinion, the election and the election of President Rouhani that changed the policy. If the election had gone the other way and Mr Djalili, the previous nuclear negotiator, had been elected, there would have been no change at all.

I believe that there is the capacity for change in Iran. The revolutionaries are ageing and it is moving into a post-revolutionary phase. Of course, there are people who want to keep the spirit of the revolution alive, and we have to be very careful that in our dealings with Iran we do not make mistakes that strengthen them. But Iran has the capacity to evolve without violence and further revolution, whereas I could not express that view about all the countries in the Gulf. Some of them do not have the same capacity to evolve peacefully and will not have the same capacity to evolve into something more akin to a western democracy.

Iran is a complex society, and it does have elements of democracy in it, but it is also an authoritarian state whose record on human rights is extremely bad. We did not flinch at every meeting that we went to from raising the issue of human rights, including that of public executions. The West is right to press Iran on human rights, but it is an issue that should be kept separate from the nuclear issue, which is a prize that is worth winning on its own and could yield considerable benefits to the region and the world.

We discussed the nuclear issue with Foreign Minister Zarif and he professed that he was not very optimistic about the outcome of the talks. I think that the greatest difficulty in the talks is going to be over the objective set out in the initial agreement to reach a mutually agreed definition of a nuclear programme—that is to say, what scale of enrichment should be allowed, if it is to be allowed, in Iran. One can see the gulf in thinking when you consider that Iran currently has 20,000 centrifuges, but in a recent article in the Financial Times Mir-Hossein Mousavi, another previous Iranian nuclear negotiator, pointed out that broadly 100,000 centrifuges are needed—it depends what type they are—for one nuclear power station. Iran has 20,000 at the moment. The other day Wendy Sherman said she could not possibly see why Iran needed 20,000 centrifuges. Of course the West is concentrating on reducing the number of those centrifuges, yet paradoxically it looks as though it wants Iran to reduce the number of centrifuges to a limit which would enable it to produce a nuclear weapon but not to actually power a power station. That does not seem a very sensible approach. I think it would be much better if the West did not concentrate on the number of centrifuges but actually concentrated on transparency, inspection, the additional protocol, the right to go throughout the country and to make undeclared visits. That will be the way in which agreement might be possible.

We spent a lot of our time discussing the nuclear issue but we also discussed the Syrian situation. I agree with everybody who has described that as an absolute humanitarian disaster and I do not for one minute defend the position that Iran has taken. However, Foreign Minister Zarif and others repeatedly said to us—they never mentioned Assad—that they felt the only way in which the situation could be resolved would be through a political solution which led to free elections. I regarded that just as a formula which they trotted out but I notice it is a formula that they use on every public occasion. I suggest that we take them at their word. Of course the idea of elections is light years away in the present situation but we ought to be trying to create that situation. By involving Iran we would be more likely to do that and create a path in which elections could be the ultimate destination.

I believe that Iran regards Syria in exactly the same way that Saudi Arabia and the United States regard Bahrain. They regard it as a very important and strategic interest. They regard Syria as the route to Hezbollah and recall that Syria was of course the only Arab country that supported Iran during the Iran-Iraq war. I was in the Middle East when the recent unrest first began in Bahrain and I recall that a very well-known senior American politician made it quite clear to me that there would be no change to the regime or fundamental political change in Bahrain. He just said, “We have interests there,” meaning, of course, the fleet. That is exactly the attitude Iran has towards Syria. I think Iran’s links towards Hezbollah and Hamas, which occupy a very different space on the political Islam spectrum, ought to be looked at in the context of Iran’s own security concerns. It regards its links with Hamas and Hezbollah as assets. Iran has a very weak air force. I think it was General Petraeus who said the other day that the entire Iranian air force could be wiped out by that of the UAE in one afternoon. Therefore, alternative sources of firepower—asymmetric responses—are very much part of the strategic thinking. It was once rather brutally put by Mr Larijani, the speaker of the Majlis, who said that if there is an attack on Iran, expect Israel to be in a wheelchair. In other words, the response will come from south Lebanon.

I want to say a word about sanctions and the way in which they are being applied. I hope that we will be very careful during this interim phase. I cannot for the life of me understand why, when we are moving towards a situation in which we want full diplomatic relations with Iran to be restored, we will not allow the Iranian chargé in London to open a bank account. How is an embassy meant to operate if it cannot have a bank account? Yet the Government simply refuse to give any help on this. The banking boycott is causing a lot of ill will in Iran. One of the concessions made in the interim deal was on humanitarian goods such as medicines. Lots of supplies of medicines, which are in great demand in Iran, are not getting through because, although they are allowed to be supplied, there is no access to banking facilities. The West seems to be giving on the one hand and taking away with the other. All this of course is due to US banking sanctions being imposed informally by the back door on our own banking industry. If we wish to frustrate the supply of humanitarian goods let us do it openly, not with subterfuge and methods that are hitting ordinary people. We always said that we did not want the sanctions to hit ordinary people but that is precisely what they are doing because of the boycott being imposed, largely informally, by American authorities threatening banks in the UK.

I say that because the likelihood of a successful outcome in the talks with Iran is only 50:50. It is in the balance. Anything could upset it. It could be upset in the United States or it could be upset in Iran. It would be a tragedy if, in our handling of the sanctions issue, we gave the Iranians any excuse to withdraw from these talks, which I hope will come to a successful conclusion.

Iran

Lord Lamont of Lerwick Excerpts

Thursday 24th October 2013 Grand Committee

[Lord Lamont of Lerwick (Con)]

My Lords, I refer to my entry in the Register of Members’ Interests. I am the unpaid chairman of the British Iranian Chamber of Commerce and some years ago I was a director of companies that did business with Iran. I assure the Committee that I have no direct commercial or financial interests in Iran, although I work for a company whose main shareholder has interests in Iran.

For the avoidance of doubt, I will say that I absolutely condemn the abuses of human rights in Iran and recognise the concern over them. Only this week, Dr Shaheed, the UN monitor of human rights in Iran, highlighted and condemned the continued detention of human rights activists, journalists and the leaders of the green movement. However, as the noble Baroness, Lady Afshar said, 500 Iranian intellectuals wrote an open letter. Eighty of them were or had been in prison. They said that the election of President Rouhani had produced a significant change in the climate, that things were changing and that they felt the offer Rouhani had made ought to be responded to by the West. That was the way they put it.

I congratulate the noble Baroness, Lady Afshar, on initiating this debate. I entirely agree with what she said about cultural exchanges. I am also involved in the Iran Heritage Foundation, which exists to do precisely what she described. For example, it was involved in helping set up two major exhibitions in the British Museum and in taking the scroll of Cyrus back to Iran. The Foreign Office advised that it would be stolen by the Iranians, but we went ahead and did it, and it was returned on time and generated a lot of good will.

I believe that the election of President Rouhani was a significant event to which we should pay great attention. In that election, the economic needs of Iran and foreign policy became one issue. People were very dissatisfied with the state of the Iranian economy and wanted relations with the West to improve.

Despite Prime Minister Netanyahu saying that it is the same old thing with a smile, I do not believe for one minute that President Rouhani could have said the sort of things he said with eloquence in the television debates without meaning them and without intending to try to bring change to Iran. His spoke about the use of social media and greater freedom for individuals, and just 48 hours ago made a speech about freedom in universities. Above all in his comments, he spoke about transparency in the nuclear programme.

There are some people who say that sanctions have brought this about, and therefore that we should continue with them, not relax them. That would be a huge error. People wanted change, but polls show that there is considerable public support for the nuclear programme and that people blame the absence of medicines—something that was highlighted by the UN human rights monitor at the UN this week—on sanctions and foreign powers.

Israel has made it quite clear that it does not want an agreement between the West and Iran. I suspect that it would prefer a country which is beyond the pale. It does not want a large country in the Middle East that has normal or near-normal relations with the United States. Other Gulf states have voiced their anxiety, and although they are our good friends—they invest here, they lend us money—I hope that people will realise that they, too, have their own domestic political reasons for promoting the image of Iran as a threat to them, and that religious prejudice is not always in one direction only. I do not believe that Iran has any territorial designs on any country; I do believe that it has its own security concerns.

People often try to read the mind of Mr Khamenei. I think you need to know only one thing about Mr Khamenei. Before he became the Supreme Leader he was President for two terms. During that entire time he was a president at war—a war in which 500,000 people either lost their lives or were seriously wounded. People do not recognise that Iran is, militarily, a very weak country. I think it was General Petraeus who pointed out the other day that the entire air force of Iran could probably be wiped out in 24 hours by that of the UAE, although we continue to sell arms to the UAE for reasons I sometimes find difficult to understand.

Is a deal possible? There are a number of points that need to be considered. First, obviously, we need the maximum transparency and rigorous inspection. The additional protocol has to be signed by Iran, meaning that inspectors can request to go anywhere in the country. Then there is the big issue of the timescale. The Iranians want a quick deal. They talk of six months. Of course, they want quick relief from sanctions. However, quick relief from sanctions does not mean that there could not be an extended period, perhaps lasting five years or so, in which the suspension of sanctions was conditional or dependent on Iran continuing to honour the undertakings that it made with regard to its nuclear programme.

Then you have the issue of the size of Iran’s enrichment programme. The Israelis say that it should be dismantled completely. I think it is clear that that is unacceptable to the Iranians. I do not pretend to have any nuclear expertise but I have spent quite a bit of time talking to people who have. I believe that by taking measures to deal with capacity, output and the type of centrifuges involved, it would be possible to define the breakout period. The breakout period is what concerns Israel: that is, the time it would take to break out from a civilian programme to manufacture a weapon. That period has to be long enough so that the West can identify and respond to it. I believe that that could be identified.

I do not believe that Iran will accept that there should be an end to all enrichment in that country. That would be very difficult for it to accept politically, and very difficult for it to justify after all the suffering from sanctions and all the billions that have been spent on it. However, its programme should be related to what its need for nuclear electricity is likely to be. We threw away opportunities in the past: in 2003 and 2005. Even the Israeli Defence Minister said yesterday that he believed Iran was genuine in wanting a deal. Israel may be opposed to it, but he said that Iran was genuine in that belief and aspiration. I hope that we will not repeat the mistakes we made when President Khatami was in power.

--- Later in debate ---

[The Senior Minister of State, Department for Communities and Local Government & Foreign and Commonwealth Office (Baroness Warsi) (Con)]

My Lords, I start by thanking the noble Baroness, Lady Afshar, for calling this incredibly timely debate. It is particularly timely because nuclear talks with Iran resumed last week in Geneva, and for the first time in a decade we are seeing serious exchanges between the E3+3 and Iran on the nuclear issue. On the bilateral side, we have agreed with Iran that we will both appoint non-resident chargé d’affaires, which marks a first step towards improving diplomatic relations. As my right honourable friend the Foreign Secretary said on 8 October:

“It is clear that the new President and Ministers in Iran are presenting themselves and their country in a more positive way”.—[Official Report, Commons, 8/10/13; col. 27.]

That is, of course, welcome. However, the noble Lord, Lord Triesman, is right to say that we must advance cautiously. So far, the contact has been thus. On 5 August 2013 the Prime Minister wrote to President Rouhani, and on 23 September the Foreign Secretary met the Iranian Foreign Minister, Mohammad Zarif, in the margins of the UN General Assembly in New York. He spoke to him again on 7 October. The FCO’s political director met the Iranian deputy foreign Minister on 25 September, and again in Geneva on 16 October. However, we remain concerned about a number of Iran’s policies, including regional activity, particularly in Syria, and human rights. We want to see a change in actions, not just a change in words, from Iran.

Iran’s nuclear programme remains our overarching priority. Iran has thus far failed to reassure the international community that its nuclear programme is for purely peaceful purposes and it is therefore right at this stage that the UN and the EU have imposed sanctions on Iran. Given the current sanctions regime, the British Government do not encourage trade with Iran and do not support companies who wish to export to Iran or have a presence within the country. However, trade does continue in humanitarian goods such as medicine and foodstuffs, which are exempt from sanctions.

[Lord Lamont of Lerwick]

Has the noble Baroness noticed the report of the UN monitor of human rights who specifically said that the relief from sanctions for medicines and humanitarian purposes for poorer people in Iran is ineffective because the banking sanctions remain?

[Baroness Warsi]

I take the point made by my noble friend. So far as the UK is concerned, we have tried to issue export licenses for these products as a priority, but I understand the challenges that are presented by the banking sanctions. I shall certainly take back the comments that have been made in the debate today, including those referring to CORDS, the organisation that is in attendance here. It is the ambition of the UK Government to resolve the impasse in the nuclear issue peacefully. We therefore hope that President Rouhani’s Government will engage constructively and reach a negotiated settlement with the international community.

I can assure noble Lords, and specifically in response to the comments made by my noble friend Lord Lamont, that we have been open with Iran. We have said clearly that reaching a comprehensive agreement on the nuclear issue would mean the normalisation of political and economic relations with the international community and the end of all nuclear sanctions. Iran’s nuclear programme would be treated in the same manner as that of any other non-nuclear weapon state party to the non-proliferation treaty. A solution to the nuclear problem would mean that normal commercial ties with Iran could resume. It is therefore in all our interests for this matter to be resolved and for us to proceed to the next stage. The E3+3 accepts and respects Iran’s right to use nuclear energy for peaceful purposes. But this remains impossible if Iran continues to expand its nuclear programme in violation of UN Security Council resolutions and multiple resolutions of the IAEA Board of Governors.

Iran’s recent activities go far beyond what is required for a civil nuclear programme. Iran needs to take concrete steps to address international concerns and comply with international resolutions. We therefore welcome the more positive approach taken by the Iranian Government in nuclear talks between Iran and the E3+3 in Geneva last week. Foreign Minister Zarif presented a basis for negotiations and for the first time diplomats have begun more substantive discussions with Iran on issues of concern. We hope that negotiations will lead soon to some tangible results. There is a great deal of hard work ahead and further talks will take place on 7 and 8 November in Geneva. It is important that we maintain the positive momentum of the negotiations while at all times keeping a clear focus on Iran’s continuing efforts to develop its nuclear programme.

The noble Lord, Lord Hylton, and other noble Lords raised the issue of educational ties. We deeply regret that one implication of the lack of progress on the nuclear issue and a consequence of the closure of our embassy in Tehran has been to make it harder for Iranians to apply for visas to travel here as students, and for other visas. While there has been a noticeable drop in the number of students applying for visas, the UK remains committed to fostering educational links and has issued nearly 1,500 student visas via our diplomatic missions in Istanbul and Abu Dhabi. We also continue to run the Chevening Scholarships programme for Iranian students. This scheme is part-funded by the Foreign Office and will enable six outstanding scholars from Iran to study a one-year postgraduate course at a university in the UK.

The British Council suspended operations in Iran in 2009 but, noting President Rouhani’s positive comments regarding engagement with the international community, is now looking again at strengthening cultural and educational links between the UK and Iran. In the mean time, the British Council has supported English language teacher training through the development of digital resources and face-to-face training events outside Iran.

[Baroness Warsi]

I will certainly look at that specific issue, and will continue to press for the overall normalisation of relations, which will impact positively on all visa applications.

In May this year, the British Council also hosted a meeting across the Persian Gulf in Dubai, which brought together senior non-governmental stakeholders from the Iranian education sector to discuss language and education in Iran. Such dialogues are continuing; for instance, with a round-table discussion next month, which will explore the role of cultural relations in developing UK-Iran engagement.

The noble Baroness, Lady Afshar, and my noble friend Lord Lamont spoke about banking restrictions. It is regrettable that a number of banks have taken the position that they have. It is not the intention of sanctions for that to have happened. The impact of sanctions on student bank accounts has been as a result of some banks imposing their own restrictions in addition to the sanctions. The FCO has held some initial discussions with the Treasury on how to resolve this issue, and these discussions are currently ongoing.

As my right honourable friend the Foreign Secretary has said, progress in our bilateral relationship with Iran must be on a step-by-step and reciprocal basis. We are open to more direct contact and further improvements in our relationship. It is with this in mind that we are appointing the chargés d’affaires, who will be tasked with rebuilding our relations and dialogue on many issues.

My noble friend Lady Williams is right: one issue where Iran can, and must, play a constructive role is Syria. The new Iranian Government have said that they want to see a peaceful solution to the Syrian conflict. No decision has been made on Iran’s participation in Geneva II. We call on President Rouhani’s Government to match their words with actions and publicly endorse the G8-backed Geneva communiqué, which calls for a negotiation between the Assad regime and the Opposition on a new transitional authority for Syria. Iran has so far failed to endorse that communiqué. Iran’s actions must not prolong the conflict and must not contravene UN Security Council Resolution 1747. However, by supporting the Syrian regime with weapons and financial assistance, unfortunately Iran’s actions continue to do that at this stage.

Finally, as this Committee is well aware, the human rights situation in Iran continues to be a matter of serious concern. We regularly receive reports of serious violations by the Iranian regime against its own citizens and have condemned these. While I accept the comments of my noble friend Lady Williams, Iran does differ in many positive ways on the issue of human rights, women’s rights in particular, but there are still challenges. Women continue to suffer discrimination under Iranian law with a draft Islamic penal code continuing to legitimise disparity between the sexes. We saw a further erosion of women’s rights in Iran in August 2012—

[Lord Lamont of Lerwick]

I entirely accept what my noble friend is saying, but does she make the same representations equally unequivocally to Saudi Arabia?

[Baroness Warsi]

I am not the Minister with responsibility for Saudi Arabia, but I can assure my noble friend that when I last met with the Saudi Justice Minister I was incredibly forthright and frank in the discussions on the issue of women’s rights in Saudi Arabia.

We have made many public statements about women’s rights in Iran, too. The death penalty remains to be used excessively, and Iran has one of the world’s highest per capita execution rates. Discrimination and persecution of religious and ethnic minorities continues, as does torture and intimidation. I would be supportive of anything that the right reverend Prelate the Bishop of Ripon and Leeds could encourage the Church of England to do to help foster understanding.

The noble Baroness, Lady Afshar, noted some positive moves, including the release of Nasrin Sotoudeh. This is, of course, a welcome step, but more needs to be done to ensure all Iranians enjoy the rights and freedoms to which they are entitled. I can assure the right reverend Prelate that the issue of human rights concerns is as important to us as nuclear concerns. We have designated more than 80 Iranians responsible for human rights violations under EU sanctions and have helped to establish a UN special rapporteur on Iran human rights. We supported Iran-focused human rights resolutions at this year’s UN General Assembly. In relation to Mujahideen-e Khalq and Camp Ashraf, we have called for a timely Iraqi investigation and for those responsible for these terrible attacks to be held to account. I have answered questions on these matters on many occasions before the House.

In conclusion, we sincerely hope that the marked change in Iran’s public statements is accompanied by concrete actions on issues of concern, not least the adoption of a viable approach to nuclear negotiations. If it is, the UK stands ready to work with Iran. We do not underestimate the difficulties ahead, but must take full advantage of any opportunities. If Iran matches its words with genuine steps to address the concerns that have been outlined in today’s debate, the Government believe that there is a rare and significant opportunity for progress to be made, and for our commercial and educational links to be strengthened as a result. This can only be to the benefit of Iran, Britain and the rest of the international community.

EU: Prime Minister’s Speech

Lord Lamont of Lerwick Excerpts

Thursday 31st January 2013 Lords Chamber

[Lord Lamont of Lerwick]

My Lords, I believe that the Prime Minister’s speech was brave and far reaching. He made it clear that his view and his preference was that Britain should remain a full, active member of the EU. I agree, but I emphasise the term “preference” rather than the words “predetermined” or “inevitable”. As the Financial Times said, a whole confluence of trends has made a referendum inevitable: the increasing scepticism of the British people, the changing nature of the EU and the fact that we have not had a referendum since 1975. Some people call this a gamble. But democracy is sometimes a gamble: you do not know the outcome when you call an election. One of the worst features of the EU has been that it only welcomes referendums that produce the right result. My noble friend Lord Ashdown asked why, if the Prime Minister rejects a referendum in this Parliament, we should have one in the next? There is a slight problem, however. We are in a coalition with him and they are not likely to allow a referendum in this Parliament.

The Prime Minister’s proposals are designed to improve and strengthen Europe’s competitiveness, as my noble and learned friend Lord Howe said. There is a challenge; it requires improvement. That is why what he said is right. It is in Europe’s interest as well as ours that these changes should be made. The single market is valuable, but it should not require everything to be harmonised in the search for, as the Prime Minister put it,

“some unattainable and infinitely level playing field”.

The Prime Minister rightly wants to prevent the integration of the eurozone fragmenting the single market and discriminating against non-eurozone countries. That is an entirely reasonable and right affirmation of our natural interest.

The Prime Minister said in his speech that the single market,

“is the principal reason for our membership of the EU.”

That is one of the problems; that is what Europeans dislike. As Jacques Delors said the other day,

“The British are solely concerned about their economic interests … If the British cannot accept the trend towards more integration in Europe, we can nevertheless remain friends, but on a different basis”.

He went on to suggest a free trade area.

We do want the single market, but not at any price. We could have access to it with the free trade areas suggested by Delors. Of course, we would not be setting the rules, any more than Germany would be setting the rules of the single market in Britain—and Britain is now Germany’s most important trading partner. Outside the EU, Britain is not going to become an insignificant nobody. The US and the EU will still want us as an ally.

Forty-one years ago I made my maiden speech in the House of Commons, supporting our membership of the European Economic Community. I quoted Lord Rosebery about the 1707 Act of Union, when he said he wondered what affection might grow out of that union. I wondered what affection might grow out of our entry into the EEC. But I was completely wrong. As the noble Baroness, Lady Noakes, said, this is not just a loveless marriage but, one might add, a quarrelsome one. If there is no agreement on what the future of the marriage means, then it would be better eventually to separate and, as Delors said, remain friends and move on.

Middle East: Recent Developments

Lord Lamont of Lerwick Excerpts

Friday 13th July 2012 Lords Chamber

[Lord Lamont of Lerwick]

My Lords, perhaps I may begin by drawing attention to my entry in the Register of Lords’ Interests. I am a director of a company which has investments in Iran. I am a director of other companies with interests elsewhere in the Arab part of the Middle East. I am also unpaid chairman of the British Iranian Chamber of Commerce, which many noble Lords will be delighted to hear has a sharply declining membership.

I want to make comments, first, about Syria and, secondly, about the nuclear negotiations with Iran. The headlines have been dominated obviously by the tragic situation in Syria. The Minister in his excellent speech outlined the recent most regrettable and tragic events. Inevitably, these have given rise to cries for intervention, but those who call out for intervention are less forthcoming about precisely what they mean. Are they talking about safe havens? Are they talking about aerial support? Are they talking about supplying arms?

When I listen to all this talk about intervention, I feel it is as though we learnt nothing from the disaster in Iraq. As the Minister tellingly said, Libya may well be an exception but I do not think we can escape the fact that the history of liberal interventionism in recent years has emphatically not been an unqualified success. In these situations, whatever the pressures, it should encourage us to be cautious about intervention.

We have yet to hear the conclusions of the Chilcot inquiry about what lessons should be drawn from the invasion of Iraq. Some conclusions I think suggest themselves. First, we never know enough about the countries where we choose to intervene—about the cultural and tribal loyalties, which often are concealed where there are dictatorships or authoritarian regimes. We learn about them only when we are there. Secondly, the fact of intervention in a country by foreigners often stirs up nationalism and religious fervour. Thirdly, intervention may be done in the name of saving lives but it usually costs lives in large numbers. In Iraq, it was something like 100,000. In Afghanistan, hardly a day goes by without President Karzai or the Pakistanis complaining about the collateral damage—the inevitable damage from the use of drones.

Bad as the situation in Syria is, it could be made worse by an ill timed intervention. “First, do no harm” is not a bad candidate for the first rule of diplomacy. But we are now in a situation where the United States in Syria appears to be co-ordinating the supply of arms to an opposition which is divided and came to blows in its meeting in Cairo, and one where some members of the opposition, particularly the National Co-ordination Committee, are totally opposed to all foreign intervention and the supply of arms.

We need to be careful that we do not get into the situation of the United States in Afghanistan in the 1980s where the United States’s conviction that the enemy of my enemy is my friend led it to support Bin Laden and the Taliban. What, one wonders, is Qatar, a country of perhaps 150,000 people, doing throwing if not its weight its money around in Syria? I am sure that the Government do not believe that Saudi Arabia is aiding the opposition in Syria because it is dedicated to creating a liberal secular democracy there.

Lives are being lost every day in Syria, as we have heard today. There cannot be a military solution to the conflict. Supplying arms can only make it worse. Diplomacy is essential. Neither side can win. Attention is focused on the removal of Mr Assad but even if and when he is removed, we will still have to negotiate with the huge state apparatus and the huge army there. It will not be possible just to wipe out all these elements at once.

For that reason, I very much welcome what the Minister said about still supporting the Kofi Annan plan—there seems no real alternative to it—for a ceasefire, but a ceasefire that is imposed on both sides and monitored much more heavily than is being done at present. What you cannot do is both support the Annan plan and supply arms at the same time.

This conflict is not about Syria or promoting democracy in Syria. It is about the geopolitical aims of other powers—of the United States, Iran, Saudi Arabia and Israel. It would be tragic if the battle was fought out to the destruction of Syria as it was in Iraq. It would be tragic if it led to the expulsion of religious minorities and Christians. I was glad to hear my noble friend highlighting the danger of that. It would be disastrous if it spread to the destabilisation of Lebanon as well.

I turn now to Iran, the nuclear issue and the nuclear negotiations. Indeed, the nuclear issue is not just about Iran possibly developing nuclear weapons. It is also about Iran’s place in the region and the negotiations have to be about that as well. Iran’s main rival in the Middle East is not Israel; it is Saudi Arabia. The two theocracies have little in common and I believe that it is debatable which of the two theocracies in the long run will prove to be the more reliable and possible ally of the West. Saudi Arabia is just, if not more, assertive as Iran in spreading its own brand of Islam—Wahhabism—which is much more inimical to western interests. But whatever the truth of that, I hope that the West will have nothing to do with the suggestion of Henry Kissinger about creating a Sunni crescent in order to counterbalance the so-called Shia crescent. That would be as irresponsible as encouraging a Catholic crescent against a Protestant crescent.

Whatever one thinks about Iran, it will be necessary to live with Iran. I condemn without reservation the repression, the imprisonment of the opposition, the torture, the beatings, the threats against Israel and the suppression of the media. People I personally know have been imprisoned in Iran and others live under the threat of that. But Iran is a country with which we will have to live. I believe that a negotiated settlement with Iran is far better than a military attack. I strongly agree with what the noble Baroness, Lady Falkner, said.

Iran is a country of 70 million people. It cannot be locked up in a cupboard and isolated. That is just not realistic. It is important that talks continue despite the difficulties. But we need to show Iran what it stands to gain at the end of the process if it makes concessions subject to verification. We forget that sanctions will have leverage against Iran only if those sanctions are reversible. I believe that the Iranians have great doubt as to whether an American President can lift sanctions against the will of a determined Congress. The negotiations also need to address the real security fears of Iran—and it does have security fears.

The West may be in danger of overbidding, calling, for example, for the closure of the Fordow facility, primarily, I suspect, because although it is under IAEA supervision, it is none the less underground. But to call for its closure is like saying to Iran, “Please make your facilities available for aerial attack”. Mr Peter Jenkins, the UK former ambassador to the IAEA, has argued that the West should allow Iran to enrich uranium on its soil but under the tightest possible IAEA safeguards. That is what 17 or 18 other countries do, some of which in the past have had programmes to do weapons research in the nuclear area. To some it appears that we are demanding a higher standard—a double standard—from Iran.

Sanctions are undoubtedly having an effect on the Iranian economy, as the noble Baroness, Lady Falkner, said. But the sanctions almost amount to a form of economic warfare, and they have been accompanied, as the noble Baroness said, by cyber-warfare, whose legality is questionable and which we may live to regret, as well as by the assassination of Iranian personnel—something that the Government have rightly condemned. We must understand that Iranian attitudes are hardened and formed by these events as well.

Iran is able to stand hardship; they are a battle-hardened people, having been through a revolution, a war with Iraq and facing these threats today. Even critics of the regime are the strongest defenders of the nuclear programme in Iran. To my mind, although I know that the Government take a different view, it is unlikely that sanctions will force the regime to capitulate. If they did bring the regime to its knees and then force it to capitulate, that would not necessarily be a good thing.

Machiavelli once wrote that,

“forced agreements will be kept neither by Princes nor by Republics”.

Lord Salisbury said much the same thing when he said that, “the first evil is war and the second evil an obvious diplomatic triumph”. An unreasonable forced bargain runs the risk of not being kept. A sensible negotiated settlement will make a real contribution to the stability of the region.

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

Lord Lamont of Lerwick 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.

EU: Recent Developments

Lord Lamont of Lerwick Excerpts

Thursday 16th February 2012 Lords Chamber

[Lord Lamont of Lerwick]

My Lords, it is a pleasure to follow the right reverend Prelate. I think Thomas More might have been in favour of an ever closer union of peoples but it would have been of peoples, not of institutions and crowns—of that I am sure. However, I am grateful to the right reverend Prelate for making that observation.

I spoke in the debate in November on Europe and so I hesitated to impose myself on this House again. However, this is a fast-moving scene although we always seem to be in the same place. I wish to comment on four issues. The first is the so-called veto by the Prime Minister of the proposed treaty change. I would not have criticised the Prime Minister if he had not vetoed it. However, unlike some Eurosceptics and some Europhiles, I did not regard the veto itself as a seismic event. On balance, it seems to me preferable to have an intergovernmental treaty outside the main EU treaties because it lessens the read-across from the treaty to the single market and to the issues raised by financial regulation. It is true that, of course, a regime for financial regulation has already been agreed but it was agreed in different circumstances where there was a different relationship to the rest of the EU from that which there is now, when there is to be a fiscal union within the EU. That seems to me to raise profound issues for a pan-EU regulatory system.

At the subsequent Council, the Prime Minister took the advice of my noble friend Lord Brittan of Spennithorne and did not veto the use of EU institutions. However, as my noble friend Lord Howell has made clear, that is still an option that we have. Indeed, if the treaty is to be folded into the wider EU treaty, Britain still has a veto. Noble Lords on both sides of the House will take different views about this but whatever the rights and wrongs of the Prime Minister’s veto, the Financial Times got it right, when commenting on the drift and indecision that has characterised this crisis, when it asked, “Even if the Prime Minister made a mistake, what on earth has the eurozone done?”. Indeed, the summit was extremely disappointing in its outcome.

A number of noble Lords are worried that Britain will be isolated and will lose influence. However, we cannot be both in the euro and outside the euro: we have to make a choice. We have made a decision not to be in the euro. There used to be an old French joke that if an Englishman was asked whether or not God existed, he replied, “The truth is somewhere in the middle”. We must stick by the consequences of the decision that we have made not to join the euro, which I think was a sensible decision.

The second issue on which I wish to comment is the fiscal union itself as opposed to the veto of the fiscal union. It has long been said by many people that inevitably the single currency, if it is to work, would have to lead to a fiscal union. I must say I was a little puzzled by the enthusiasm of the noble and learned Lord, Lord Davidson, for fiscal union and the treaty. Noble Lords on that side of the House spend a lot of time criticising the Government for reducing the deficit far too quickly. I am not sure that they quite realise what the fiscal union treaty would imply. It is a treaty which actually abolishes Keynesianism. Although I am not a great Keynesian myself, I would fight for the freedom of the other side to be Keynesians and to implement their policies.

Mrs Merkel talks about a fiscal union, even a political union. However, I am sceptical that that is really what this treaty is. It seems to me that it is a much more beefed-up version of the stability and growth pact. The interesting point is that it does not use the word “growth”. That was true of the original proposed title of the stability and growth pact. Originally, the Germans wanted it to be called just the stability pact and then the French insisted that “growth” was added. This time the French have not even been able to get “growth” added. However, this is not real fiscal union in the true sense of the phrase—that is, having a harmonised tax system and a single treasury. It is a cloak for German-style policies—I do not mean to use that phrase in any sinister way—to be imposed on other countries in Europe. That is what it is, and is what led one German Minister, rather foolishly and rashly the other day, to say about the fiscal union, “Everyone in Europe is now speaking German”—a remark that was not universally well received, particularly in one country where someone remembered the Hapsburg Emperor Charles V, who said that he spoke Spanish to his court, French to women and German to his horse. That is perhaps how that remark was viewed in certain other countries. Of course, a real fiscal union, as the former President of Germany, Mr Herzog, has observed, poses profound questions of accountability and democracy. That observation was made by a former President of Germany, not a Eurosceptic.

The third issue I wanted briefly to comment on was the decision of the ECB to make available the three-year long-term refinancing facility for banks. This has been a bit of a game-changer, not for the reason that a lot of people have given. They believe that this is the buying of bonds by the back door, which the German Government—rightly in my opinion—are absolutely opposed to. No, this is actually safeguarding the banking system, making liquidity available to it, and in that way has separated the issue of the stability of the banking system from the issue of the finances of Governments. That has been a feature of the crisis—the ricocheting from sovereigns to the banking system, and from banks back to Governments. The actions of the ECB have managed to separate out those two things. However, the ECB has become an interbank market. It is the substitute for the interbank market. That cannot go on indefinitely. It is merely buying time, and at some stage the banks have to come back to the market and get commercial financing, or we are not living in a real world or a real market economy.

The fourth event or issue that I wanted to comment on were developments in Greece. Although I have always been opposed to the single currency, I have said that I thought it would survive for quite some time, and that it would survive its first crisis but probably not its second. However, that did not exclude the possibility of, say, one or two countries dropping out of it. At the beginning of this year, I took a bet with someone that Greece would still be in the euro at the end of this year. I am not sure that I am going to be able to keep my money. The question is: would it be better if Greece left the eurozone? It was the late Lord Butler—not the noble Lord sitting here but the late Lord Butler of Saffron Walden—who once said, “Politics is the art of the impossible”.

[Noble Lords]

Possible.

[Lord Lamont of Lerwick]

Possible. What I was about to say was that politics is more accurately described as choosing between the utterly impossible and the utterly incredible. That is the situation in which Greece finds itself. The package that has been proposed is extraordinarily far-reaching—a 20 per cent cut in public sector salaries on top of a 20 per cent cut previously, and a 22 per cent cut in the minimum wage. The Greek economy has contracted by 6 per cent in the past year. It has been in recession for five years. Yesterday, someone who described himself as the Minister for Public Order in Greece—a rather Robespierreian title, but I believe it was genuine—appeared and said that Greece was absolutely at the limit of what people could and would be able to tolerate. That seems very probably to be the case. It seems to me unlikely that Greece will ever be able to implement what it is being asked to do. Even if by some miracle it was able to achieve what is being demanded, it will get debt to GDP down to 125 per cent of GDP only by 2020, and so more austerity will be demanded of it, even after 2020. It seems a certainty that Greece will leave the euro. It would probably be more honest and dignified if that happened now, rather than later, after money has been lent to Greece. It will eventually have to make that choice. It will be very difficult in the short term, as it was with Argentina when it ended its currency link and currency board.

The point I want to conclude on is that Greece is not unique. Italy, Spain and Portugal are in a similar, not so bad, situation, but are two years in arrears. Italy, if it is to comply with the fiscal union pact, will have to run a primary surplus of 5 per cent. To get growth, Italy will have to lower its real exchange rate by 20 per cent to 30 per cent without being able to alter its nominal exchange rate. It will have to achieve levels of inflation 2 per cent below those of Germany. This is the prospect that faces Spain, Portugal and Italy. Greece, therefore, is not unique. It is an extreme example, but it is the canary in the mine. Members will remember that miners used to take down a canary into the mine as a warning of the dangers to come. I fear that what the eurozone faces is a very bleak future, and several countries will have to face unrest and discontent—as, indeed, Mario Monti has recognised. The sooner that that is recognised about the euro as a whole the better. Europe is not the euro, and the euro is not the European Union either.

[Lord Lea of Crondall]

Before the noble Lord sits down—

--- Later in debate ---

[Lord Wallace of Saltaire]

My Lords, in the context of a global recession, the Greeks would be facing a very severe run on the drachma and quite possibly also a default. As a number of people have remarked, the Greeks defaulted on a number of occasions over the past 120 years.

People talk also about a common European foreign and defence policy. When I am in Germany, politicians there often tell me they are deeply committed to it—and to a European army. However, they cannot explain the strategy, funding, structure or command structure that it would have. In practice, the United Kingdom contributes a great deal to a European foreign policy and to European co-operation in defence. The UK/France defence relationship continues to move forward very well. We are working with others to cope with the immensely complicated problems of the Syrian crisis. In Libya, we flew missions with our French, Belgian, Danish, Swedish and Italian partners. We have been working in Helmand with Estonian troops embedded in British battalions. When I went some weeks ago to the joint command centre at Northwood, I was briefed by a Latvian naval officer on the anti-piracy patrol. In practice we are very deeply embedded in co-operative defence and foreign policy in Europe.

We will have to work hard to defend liberalism in a recession. I mean liberalism in the broader sense of liberal societies, open markets and international co-operation. The noble Lord, Lord Judd, made a wonderfully liberal and internationalist speech. Nationalism, populism and protectionism thrive when unemployment rises and incomes go down. The noble Lord, Lord Monks, mentioned the problems in Hungary. The Commission is now in active dialogue with the Hungarian Government about the extent to which some of their new laws will fit with EU rules. I was fascinated to hear from my Finnish friends that there is now a sort of Eurosceptic International across the European Union, with Eurosceptics in Britain working with their Danish, Finnish and other colleagues internationally against internationalism, so to speak.

The problem of popular opinion across Europe is very severe. I suggest to the noble Lord, Lord Grenfell, that young people in Europe are often not immensely committed to internationalism. They take what they have for granted and they do not support the distant co-operation of elites through international organisations, which is what the European Union provides. It would be easy for us to give way to similar forces in the United Kingdom, in the belief that leaving the European Union would relieve us of international regulation. The demonisation of Germany is part of the way in which one finds easy answers to very complicated problems.

A number of noble Lords said that the fundamental underlying issue was that of Britain's place in the world. On my blog this morning, I came across references to a speech by Daniel Hannan MEP to the Conservative Political Action Committee in the United States, in which he praised Newt Gingrich and was in turn praised by Fox News. He made all the obvious references to Churchill and the Nazi threat, and suggested that Britain should leave Europe and blindly follow wherever the next American Republican Administration might lead us. Others would like us to become Switzerland with nuclear missiles or Norway without having to pay the very substantial sums that Norway contributes on a “voluntary basis” to the European Union. Our political leadership over the past 25 years, including the previous Labour Government, has failed to make the case for active engagement in Europe.

[Lord Lamont of Lerwick]

The noble Lord is enjoying himself attacking Eurosceptics right, left and centre. Is he going to answer some of the points in the debate? In particular, will he answer the questions asked by the noble Lord, Lord Kakkar, about the working time directive as it affects hospitals? Or will his answer be that it means different things to different people, or that it does not really mean what it says?

[Lord Wallace of Saltaire]

The coalition Government are clear that Europe is our firm base from which we look outwards. France, Germany, the Netherlands and Ireland are our closest neighbours and our natural partners, and with them we work to promote our shared values, economic and political, across the world.

Perhaps I may answer some of the points that have been made. The net British contribution to the EU budget was raised but, according to Treasury figures—which are, as always, entirely reliable—last year it was €7.4 billion and not the €10 billion that the noble Lord, Lord Pearson, suggested.

European Union Bill

Lord Lamont of Lerwick Excerpts

Wednesday 13th July 2011 Lords Chamber

[Lord Stoddart of Swindon]

The House of Commons is entitled to amend amendments that we have made in this House, but did not do so. The Labour Party did not do so because it did not want people outside to get the impression that it was against consulting them about losing further powers to the European Union. That is the real reason behind it.

I know that the House wants to get on, but I just want to say that the noble Lord, Lord Davies, referred to Greece. Of course, it is very clever to do that because we know the appalling state that the eurozone is in at present. He made the reasonable point that if it were a unitary state the Commission would have examined the accounts of the Greek Government. It had the opportunity to do so before Greece was admitted to the eurozone, but it did not do it because it was a politically driven decision. It wanted as many countries in the eurozone as possible, whether they were broke or, like Germany, prosperous. We should be very careful when using the present crisis to undermine the Bill. I would like it to go further but it is the best we are going to have, and I hope that the House will not insist on the amendments on this occasion.

[Lord Lamont of Lerwick]

My Lords, I had not intended to speak in this debate and I will be extremely brief. I rose to speak only because so many of my noble friends have made rather powerful speeches, but ones with which I disagree. I take very seriously the point made about moving too far in favour of plebiscitary democracy. One has to agree that that is a real danger. Balanced against that has to be the fact that the seeping away of the power of Parliament to the European Union is also an extremely serious issue. I agree in general that referendums should be held largely on constitutional issues because they are a good way of settling how we live with each other and how we are governed.

We had quotations from the side opposite and from Cross-Benchers in earlier debates from Edmund Burke and the judgment of members of the legislature. One might quote back at them Tom Paine, who argued that constitutions belong to the people: that it is not for politicians to decide the rules by which government is conducted—sovereignty comes from the people. While I think that referendums should be on constitutional issues—important constitutional issues, as has been said—the totality of our relationship with Europe is a huge constitutional issue. It is therefore right that referendums should play a part in that.

That poses the question: is it right that we should have in this Bill so many different powers and so many different issues all rolled into one that might, as has been said, give rise to a flood of referendums on trivial issues? I do not believe that that will be the consequence of this Bill. That has been said before in our proceedings on the Bill, so I shall not go on about it at any great length. I will say, however, that that will not happen because: first, these measures are likely to come in packages; and, secondly, there are reserve powers—reserved to the nation state and left out of the previous treaties of Lisbon, Nice and Maastricht—because individual countries in the past have wanted to preserve them, and not necessarily Britain. There are other countries in the European Union, and one can look through the minutes of the constitutional convention leading up to the Lisbon treaty to see how some other countries in the past have argued for the veto to be preserved in certain areas. This is not just at the insistence of British politicians.

[Baroness Quin]

The noble Lord said that he could foresee referendums dealing with issues in packages. In those circumstances, how are people who agree with one issue but disagree with another supposed to vote?

[Lord Lamont of Lerwick]

That question was raised by the noble Lord, Lord Taverne, earlier in the debate. The answer is: just as they vote in elections. They have to decide on five or six issues in an election. In the past, there were referendums in other countries on treaties in which they had to decide on a series of questions raised by those treaties. I repeat my point that where a veto exists, it is not necessarily just at Britain's insistence but because other countries, too, wanted it.

Thirdly, I think we will have referendums only where a British Minister agrees with the proposition that will be put to the people of this country, and where the Government believe that they can win the referendum. For that reason, and with great respect, I do not agree with the point made by the noble Lord, Lord Hannay, that our flexibility in negotiations will be impeded because a certain area is covered by the possibility of a referendum being held on it. If a Minister wishes to argue in favour of something, presumably he is confident that he can sell it to the public. If he cannot sell it to the public, and they are going to disagree with it, perhaps he should think carefully about whether it should be advanced at all. Therefore, although I agree with the general proposition that we do not want to go down the road of having a massive extension of plebiscitary democracy, I do not think that that will be the consequence of the Bill. That assertion has been repeated many times, but the argument is not convincing and I urge my noble friend to support the Government on this.

[Lord Howell of Guildford]

My Lords, I hope that I will be forgiven if I say that I have a faint feeling of having been here before—and forgiven also for not responding to every strongly held view and argument put forward in this debate that was put forward again and again in the past. The Government and I regard some of these arguments as deeply flawed and consider that they do not understand or come to grips with the realities of political life today, either here or in the rest of the European Union. I will also deal briefly, as is the custom, with the Motion—it is not the custom to make long second speeches on a Motion—and with the amendment moved by the noble Lord, Lord Liddle, which goes very much further than anything standing against the Government’s Motion that the amendments be resisted.

On the decisions involved in Clause 6, none is in the grey or insignificant category. They are all there for very strongly established reasons that are largely supported by many other countries. Many vetoes are maintained because the signatories to the Lisbon treaty did not want them to go into the QMV category. They are there because their use could only ever provide for a transfer of competence and power from the UK to the European Union—for reasons that we have explained from this Dispatch Box and that many of my noble friends have explained again and again—and so should be subject to the referendum requirement.

It is difficult to accept that any of the decisions in Clause 6 would not be significant in constitutional or economic terms. Those who say that it stretches their imagination to understand the significance of the measures listed in Clause 6, or Schedule 1, which springs from it, surprise me. Surely a decision on whether to give up our vetoes on, for instance, the multiannual financial framework, border controls or joining the single currency—I refer now to the amendment of the noble Lords, Lord Liddle and Lord Triesman, not to the main one that accepts them—would all fall, under Amendment 13B, into the bracket of something that had to be judged according to whether or not it was significant. This is a completely unnecessary process. Clearly they are of the most profound significance.

I know that the shadow Minister for Europe said on Monday that he considered other items in Clause 6 to be not so important. He exempted the important three—border controls, the European currency and one other—but dismissed the others as paperclips and minutiae. We do not accept that analysis. We firmly believe that the other issues are also of great significance and, when understood in terms of their impact on jobs, work and the processes by which our law system operates, certainly could be subjects of conversation in the pub in Burton-on-Trent, where the noble Lord, Lord Lea, has been listening to conversations.

On the European public prosecutor, I know that it is regarded by some of my noble friends, and by some noble Lords opposite, as not being of constitutional or economic significance. However, it is because it involves affording a supranational body the ability to prosecute citizens of this country within the scope of its own criminal justice system in respect of alleged crimes affecting the EU's financial interests. Someone must decide what that financial interest is and whether the crime has been committed. Is that a paperclip or minutiae issue?

What about the vetoes listed in Schedule 1? Why are they not significant when they all relate—that is why they are there—to the red lines adopted by successive Governments, fought for very hard by the previous Government and sustained by this Government, covering foreign affairs, security and defence policy, economic and tax policy, including issues of the EU's budget, which all of us admit is a red-hot issue, social security, employment policy, justice and home affairs policy, and citizenship and elections? Are these all minutiae, paperclip decisions and things that are never discussed in any pub? I have to ask where some of my noble friends, and some noble Lords, have been if they think that these matters are of no significance, because they include not only domestic issues, where after all Parliament can make and unmake laws, but transfers of power, sovereignty and competence that would almost certainly be irrevocable—in fact, they would be irrevocable.

The amendment before us would, for instance, allow the British Government to relinquish their veto over decisions relating to the multiannual financial framework without first getting the consent of the British people. That is a hugely important decision that Members in the other place were particularly concerned with, and rightly so. The Minister for Europe rightly pointed out that the forthcoming decision on that framework will in effect set budgetary decisions and ceilings for the next five to seven years of the EU's life and development. Are these minutiae, paperclip decisions or matters that people will not understand? I ask my noble friends and noble Lords who think that these matters are insignificant to think again. Their significance is obvious.

It is vital that these matters remain subject to unanimity and that whichever British Government are in office—this matter should be above party—continue to have the right of veto. Similar views are taken in almost every other country in the European Union. We all know what happens when one gets casual about the veto and lets it go. This was the case in the surrender of the veto on Article 122 of the TFEU, which opened the way to fearsome, huge and titanic new financial commitments to the funding of Europe in its present financial difficulties.

The amendment before us would reduce precisely the clarity that we all seek. It would also risk the possibility of judicial review on a decision by the Minister not to consider one of these clear-cut decisions to be significant. The so-called pragmatic flexibility that the noble Lord, Lord Liddle, keeps reminding us about and seeks could well be impeded by his own amendment. He would end up in a quagmire of pragmatic flexibility of his own making. It was too much of this pragmatic flexibility approach in the past that caused antagonism—the turn-off, if you like, of popular support for the European Union and for Ministers’ actions. The ministerial discretion that some of my noble friends and noble Lords call for has become the ministerial indiscretion and undermining of trust and support for the European Union that we are trying to correct.

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[Lord Radice]

The House of Lords is a very effective revising Chamber and has proved that on this Bill by making it better and more manageable than it was at first. However, the House of Commons has not accepted our amendments, except in the case of the definition of parliamentary sovereignty—I congratulate the noble Lord who so ably pioneered the provision that we have now just passed. We have just rejected the idea of confining referendums to major issues. Therefore, there is a case for a sunset clause.

This Bill is an attempt, as the people who introduced it in the House of Commons have made quite clear, to bind successor Governments, and it involves a major extension of referendums. In a sense, it is a major constitutional innovation. Noble Lords who have so ably supported Governments of the past in Europe have said to us that we should take seriously the danger of marginalisation that might arise from the Bill. Therefore, there should be a reassessment mechanism in it. I consider that we have a new, mild and flexible version of that in this amendment, which it would be very useful to Parliament to have. We should go beyond what the Labour Government introduced, which has been mentioned already; that is, a committee report on whether a Bill has been effective. Perhaps that should be part of the process, but we should then go on, as the noble Lord, Lord Goodhart, said, to have a mild version of a sunset clause.

[Lord Lamont of Lerwick]

My Lords, sunset clauses are appropriate in some legislation: for example, when one has emergency legislation and Governments take exceptional powers. Those powers may have an effect on civil liberties for instance. Counterterrorism Bills sometimes have such an effect. However, this is not emergency legislation; it is legislation that seeks a long-term and permanent change in our relationship with Europe.

There is another reason why a sunset clause would be inappropriate. It is in effect, as proposed, a reversal of primary legislation via a resolution. It is a fast-track procedure for removing legislation. In a way, it is a bit like the Article 48(6) provision in the European Union treaty which this Bill is designed to act as a safeguard against.

One is either for or against this legislation, and many noble Lords have given reasons, powerfully and eloquently, why they are deeply opposed to it. However, they cannot have it both ways. To suspend the legislation, either in whole or in part, is to fudge the decision. If noble Lords do not agree with the legislation, they cannot hide behind amendments that would allow the referendum requirement to be taken out while maintaining the appearance and the structure of the legislation giving effect to consultation and decision by the people.

As the noble Lord who speaks for UKIP said, this will arouse suspicions among some members of the public that Parliament is taking away the right to be consulted while giving the appearance that that right still remains. I can think of nothing that would be more likely to undermine trust than to maintain the legislation on the statute book but incorporate into it a provision that would take the guts out of it.

European Union Bill

Lord Lamont of Lerwick Excerpts

Monday 13th June 2011 Lords Chamber

[Lord Hamilton of Epsom]

I think that the noble Lord would accept that, enshrined or otherwise, the red lines have until now never been subjected to a referendum. If this Bill goes through, there will have to be referenda on all the red lines originally laid down by the Labour Government. That seems eminently sensible, so I will not be supporting these amendments.

[Lord Lamont of Lerwick]

My Lords, the noble Lord, Lord Dobbs, said in a very amusing and eloquent speech that the face of the European Union has changed out of all recognition. He added that all faces change unrecognisably as they get older, but he did not add “except to those who are behind the face”. Some of the enthusiasts for European integration should look in the mirror when they say that the European Union has not changed at all.

Earlier, we had an argument, which bordered on being disagreeable or a little ill tempered, about whether misleading things had been said about the future development of the European Union. I have to confess— I do not intend to pursue this point very long—that I am rather on the side of those who think that there was some misleading about its future development. I seem to remember that, in 1975, Harold Wilson told us that there was no question whatever of monetary union ever arising in the future. As for the phrase “ever closer union”, of course there will be ever closer co-operation in coming together, travelling and meeting across European boundaries—that is the nature of the modern world and of commerce and travel in Europe today. However, I never interpreted the phrase “ever closer union of the European peoples” as meaning the involvement of a supranational authority to such an extent, but perhaps I was wrong in my assumptions and failed to understand.

I remember standing in Trafalgar Square and sharing a platform with my noble friend Lord Deben. He and I have entirely different views on the European Union as it has evolved, but at that time we stood on the same platform advocating membership of the Common Market, as it was then. However, because, in a sense, the point is not of such great importance, I am quite prepared to concede that perhaps I failed to understand. Yet if I failed to understand, so did millions of other people in this country. Regardless of whether they should be criticised or told that they are fools for not understanding, the fact is that there is considerable disillusionment with the European Union, not just in this country but throughout Europe. I acknowledge that the noble Lords, Lord Hannay and Lord Kerr, have both admitted that extremely important fact during these debates.

As I have said before, it is not because of the Daily Express that the True Finns party has suddenly burst upon our consciousness. There are other reasons for it. First, there is a real problem with governance and democracy within the European Union which relates to the type of indirect democracy that we really operate. Deals are done between Governments; Ministers come back to the House of Commons and announce decisions; decisions can then hardly be modified because they are dependent on other decisions and concessions that have been made and on the horse-trading that has taken place. Secondly, as came out in the exchange with the noble Lord, Lord Stoddart, treaties cannot be amended. Treaties are treaties. So the role of Parliament and the great discussion which we have had about Burkean democracy is a bit irrelevant when you have the results of horse-trading in that indirect democracy and when you have the presentation of treaties. Those are two reasons why there is a real problem of governance in the EU. I am pleased to see the noble Lord, Lord Kerr, returning to his seat at this point.

The third and most important point is the irreversible nature of the decisions that are made in the EU—not just decisions about competence, but so many decisions about policy as well. They are very difficult to reverse simply because they are arrived at by a process of compromise, a process of agglomerating, of aggregating the decisions and interests of different countries together. If three, four or five years later one country has now got a different view of that issue, it is extremely difficult for the Parliament to reverse that decision because, unless public opinion has changed throughout the European Union, one Parliament alone cannot then change the decision that has been made, because one Government will require either a qualified majority or unanimity in order to reverse the decision.

--- Later in debate ---

[Baroness Williams of Crosby]

I agree with the noble Lord, Lord Martin, but I think he misunderstood my point. I was not advocating that we join the euro—indeed, I went so far as to say that I saw no possibility in the near future of our doing so or even wishing to do so. My point was that we cannot walk away from the plight of Ireland because we do not happen to belong to the euro. We have to address those issues whether or not we belong to the euro, and that is an issue on which I would have thought the noble Lord and I would find ourselves sharing a very strong sense of agreement.

[Lord Lamont of Lerwick]

My Lords, I hope the noble Baroness, Lady Williams, will forgive me if I do not entirely follow her down the road of her argument and her thoughts. Of course I agree that what happens to the euro has a profound impact on us and I certainly want to see the crisis resolved in as orderly a manner as possible.

I shall be extremely brief. I am not intervening in this debate simply because two other Chancellors have spoken, although I did feel under a certain obligation, like both of them, to speak when the noble Lord, Lord Kerr, had tabled this amendment—not only tabled this amendment but talked to me, dare I say it, incessantly in the bars about it and written me a letter about it. I have the greatest respect for the noble Lord, Lord Kerr. In fact, he, I and, above all, the Prime Minister, John Major, all worked hard over the piece of paper that we are debating now: Protocol 15 of the Maastricht treaty. Although I spent a large part of my life poring over this, I have spent what seems an eternity this afternoon poring over it again trying to work out what on earth it means and trying to work out how some parts that seem to contradict it actually come together. Of course I owe it to the noble Lord to consider very seriously what he said, because he gave me great support when I was Chancellor, although when I knew that the noble Lord was putting forward this amendment, the story of Talleyrand came to mind—having been told that someone had died, he asked whatever had he done that for.

I confess that even having thought about this a little, I am not entirely convinced that there is a massive difference between the way that the noble Lord, Lord Kerr, wants to tackle it and the way that my noble and learned friend Lord Howe wants to tackle it. My noble and learned friend said that he was quite sure that I and my noble friend Lord Lawson needed no reminding that joining the ERM was in our manifesto in 1979. I confess that it was only when I became Chancellor that I expressed exasperation about the whole thing and the Permanent Secretary at the Treasury reminded me that it had been in our manifesto. It did not come quite so easily to my memory as to that of my noble and learned friend Lord Howe.

I turn to the subject of the debate. An extremely important point is that the referendum should not be about the exchange rate. Anxiety has been caused by whether Article 143 would give rise to a situation in which the actual exchange rate at which we joined the euro—perish the thought that we ever did—would be on the ballot. It is my understanding, and I hope that the noble Lord will be able to confirm this, that it does not follow that it will have to be on the ballot paper. It is an option but not essential. As I understand it, the Government are proposing a package approach. They are intending that the negotiation of the draft content of the Article 143 decision should take place before the Government formally notify the Council that it intends to adopt the euro; that is, that the negotiations should take place first. I do not see that as a great problem and I think it can be done that way. This is something which, as I understand it, has happened before.