Rules-based International Order

Lord Tugendhat Excerpts

Thursday 16th January 2025 Lords Chamber

[Lord Tugendhat (Con)]

My Lords, I congratulate the noble Lord, Lord Hannay, on sticking to the seven-minute speaking limit; he is the first person to have done so. This is a very broad, wide-ranging and complex subject and I will concentrate on its economic, international trade and financial aspects—or some of them, at any rate—and try to answer the question posed by my noble friend Lord Howell as to why.

As with the other aspects of the international rules-based order, the principles and institutional structures were set up by the United States, with some assistance from us, in the immediate post-war years. Therein lies one of the problems: the world has changed out of all recognition since then, and this has led to efforts by China and others to adjust the system to reflect more closely their rise in the world. That, in turn, has led to practices that challenge the systems and bring them under stress. But the real nub of the problem is the fact that the international order no longer reflects very closely the international realities, and until that is put right, we will continue to have major problems, with people breaking the rules and seeking to undermine them.

The main challenge, as has already been made clear by a number of speakers, now comes from the United States. That is not just because of the rise of Trump; it is the culmination of a number of factors. For most of its existence, the rules-based international economic order worked not just in the overall interests of the United States but, broadly speaking, to the benefit of most sections of its society. The great majority of people shared in the fruits of an expanding economy, enhanced wealth and widening opportunities. Of course, that was also true of other industrialised countries and countries that were not industrialised at the beginning but found ways of taking advantage of the opportunities that were open to them.

But in recent years, the system has increasingly worked in another direction. Those with the right education and skills, in the right part of the country, have continued to do very well—indeed, in some cases, exceptionally so—but as new industries have arisen and prospered, others have gone into decline, often terminally. Those who were dependent on these industries, such as steel, motor manufacturing and textiles, have seen their livelihoods disappear and with it their status in society. Wealth inequalities have widened enormously and social tensions have increased. These factors have fuelled the rise of the MAGA movement in the United States and the rise of Donald Trump as its spokesman. He reflects the frustrations, disappointments and anxieties of a very large segment of American society.

In addition, we have had two further problems: one, of course, is the resentment caused by immigration, and the other is the resentment caused by the strong sense in many parts of the United States that a number of their closest allies, who benefited considerably from trading with America, have freeloaded in defence. I am afraid that we, like other Europeans, stand guilty under that head.

Trump has been elected in large part to put all this right, from the point of view of his supporters. We do not know what exactly he will do, nor how he will prioritise among the incompatibilities of a number of his objectives, but we do know that we have arrived at a point where the leader of the country that was the principal founder of the international rules-based order is going to approach this problem on the basis of transactional, unilateral negotiations without regard to the rule books or to the views of multilateral institutions that might shackle or inhibit American power. This is a novel and very worrying situation, and one where the Government will need great wisdom and support if they are to carry the British ship of state through these turbulent waters.

The Ukraine Effect (European Affairs Committee Report)

Lord Tugendhat Excerpts

Thursday 21st November 2024 Lords Chamber

[Lord Tugendhat (Con)]

My Lords, unlike the noble Baroness, I was not a member of the committee, so I begin by congratulating the noble Lord, Lord Ricketts, and the other members of the committee on the report they have produced. It has been 10 years since I chaired a committee—the EU External Affairs Sub-committee of the old European Union Committee—that produced a report on Ukraine, and I know what is involved in this matter. I congratulate the members of the committee on the outcome.

I must also say that, as an outsider, I found the committee’s report rather encouraging. It shows the extent to which, when faced with a common threat, the UK, the EU and its member states are able to work together in formulating policy and determining objectives. Of course, the implementation has perhaps not been quite as good as the willingness to co-operate. The spirit is willing but the flesh has been weak so far as sanctions are concerned, although I was struck by what the noble Lord, Lord Ricketts, and the report had to say about the greater success in military co-operation.

However, there are clear limits to what is possible. The noble Lord, Lord Ricketts, mentioned the third-party rules arising out of our non-membership of the European Defence Fund. This is not only serious in itself; as I will point out in a moment, it provides a warning of problems to come. Of course, there is a long history of British reluctance to get involved in European initiatives within NATO, and of European reluctance to see outsiders participating in European projects. But, as the report says, what we have at the moment amounts to protectionism. The committee says:

“Protectionism is not the way to build an efficient defence”


alliance, and nor is it the best way to keep the newly elected President Trump involved in European affairs. What he wants is European countries to operate more effectively, as well as to spend more. It is essential that this obstacle to which the committee refers be overcome.

I also fear that, whether or not that is overcome, similar attitudes could be carried through from defence procurement to the reconstruction of Ukraine, notwithstanding United Kingdom participation in the Multi-agency Donor Coordination Platform and our prominent role in the European Bank for Reconstruction and Development. As the report says, the reconstruction of Ukraine will be a colossal task, and it will also be closely linked to Ukraine’s candidacy for membership of the European Union. This means that it will also be closely linked to that most controversial of all issues within the European Union: its budget, for which, many decades ago, I was at one time the responsible commissioner. The danger is that it will be so difficult for the EU member states to reach agreement on programmes and expenditure among themselves that, when they finally do, it will be even more difficult for agreement to be reached with other donor countries. Against that background, the UK Government must ensure not only that the costs of reconstruction are fairly and proportionately divided, but that UK companies receive an appropriate share of the contracts involved.

Finally, I want to say a word about paragraph 222 of the report, which refers to bringing Ukraine into western institutions. Yes, we and the EU do want to bring Ukraine into western institutions, and Ukraine itself wants to be brought into western institutions, but I would suggest that this should not be an exclusive relationship. Looking to the long term—perhaps, but not necessarily, after Putin has gone—Ukraine should also rebuild its economic and personal links at all levels with Russia. To the extent that the Russian people—I emphasise, the Russian people—see Ukraine as the vanguard of western encroachment into their own historic sphere of influence, it will remain a potential casus belli. To the extent that Ukraine has links with Russia as well as with the West, it could provide a bridge to help bring about improvement in relations between Russia and the West. That might sound at present rather idealistic, but it is very important that Ukraine should be facing east as well as west if it is to have a secure position in the West. When one looks at the historic links of the Ukraine economy with that of Russia, it will also be beneficial in the long run if Ukraine is able to rebuild its relationships with Russia, as well as to become embedded in western institutions.