European Union (Croatian Accession and Irish Protocol) Bill

Kelvin Hopkins Excerpts

Tuesday 6th November 2012 Commons Chamber

[Mr Lidington]

Yes, we have made it clear—my right hon. Friend the Foreign Secretary repeated this in Belgrade in the past couple of weeks—that we support Serbia’s ambitions to join the EU. It is also, however, important that while remaining vigorous supporters of EU enlargement we remain committed to rigorous accession criteria. That is in the interest of the candidate countries and of the integrity of the EU.

[Kelvin Hopkins (Luton North) (Lab)]

My constituency is home to some Bosnian Muslims. The accession of Croatia will erect a much more significant border between Croatia and the other Balkan countries—setting Montenegro aside—particularly the significant ones to the south, Serbia and Bosnia. Before Serbia attains accession, which might be many years ahead, the relationship may change. Does the Minister have any thoughts about how that relationship might change in the future?

[Mr Lidington]

I hope that the requirement to police the external EU border between Croatia and Bosnia and Herzegovina will provide an additional incentive to political leaders in the latter to commit themselves with greater energy to the task of political and economic reform, particularly political reform and reconciliation, which is needed if they, too, are to qualify for EU membership.

One of the sadnesses about the western Balkans today is that Bosnia and Herzegovina, which a few years ago saw itself as at the head of the queue of potential new members of the European Union, has now fallen behind not only Croatia, but Montenegro in that race. I want to see Bosnia and Herzegovina move towards EU membership, and for that matter NATO membership too. I hope that one impact of Croatian accession is that people and leaders in Bosnia and Herzegovina will see that they need to commit themselves with renewed energy and vigour.

The United Kingdom’s interest in Croatian accession lies partly in the fact that we have a national interest in the long-term political stability of the western Balkans, and partly in the fact that there are economic benefits to expanding the single market. Our trade with the eastern and central European countries continues to grow. To give the House one example, United Kingdom exports to the “emerging Europe” countries of central Europe have trebled over the past 10 years, reaching around £16 billion in 2011. More recently, in the first quarter of this year our exports to countries in the east of Europe have increased by no less than 28%, so in economic terms, amidst the current financial crisis, the project of EU enlargement remains as relevant now as it ever has been to our economic as well as our political interests.

Following the ratification of Croatia’s accession treaty by all 27 EU member states, Croatia is expected to join the EU on 1 July 2013. Meanwhile, we expect Croatia to sustain the momentum of six years of significant reform, particularly on judiciary and fundamental rights issues, so that it meets fully all EU requirements by the time of accession. This is something to which I know the Croatian Government are committed. When I visited Zagreb in July this year to discuss the ongoing reform progress, I was impressed with the dedication in evidence, particularly from the Foreign Minister and the Justice Minister of Croatia. They are very aware of the challenges that face their country and they are keen to prove to us as their neighbours and friends, and to their own citizens, that they can make a success of accession. It is on that basis that we look forward to welcoming Croatia to the EU as the 28th member state.

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[Jacob Rees-Mogg]

Not nationalist? I do apologise.

If a country has weak borders, it undermines the free movement of people within Europe.

[Kelvin Hopkins]

There has been discussion in recent years of the possibility of passport controls at internal borders. If there were, and if everyone had to carry a passport if they were not a resident of a country, we would solve some of that problem.

[Jacob Rees-Mogg]

I am very reluctant to see controls on the free movement of people within the UK. We ought to have secure borders, and the extension of the EU has weakened our border controls and allowed member states to give their citizenship away. One recent case is Hungary, which sells citizenship. If Hungarian citizenship is sold, UK citizenship is also effectively sold, because people will have the free right to move and settle here. In due course of time, when the provisional practices that apply to countries such as Croatia, Bulgaria and Romania end, their citizens will also be able to work here.

That ought to concern us. I agree with my right hon. Friend the Home Secretary, who has said that we need to look at the whole question of the free movement of people, because of certain extraordinary anomalies within it, which were highlighted on “The World Tonight” on Radio 4 last night. The programme explained the difficulties that UK citizens have in bringing in a dependant who is not an EU national. However, a member of another EU nation state who is resident in the UK can bring in a dependant who is not an EU national.

One could argue that the structures of the free movement of people in the EU are in fact racist, because they deny the right of people from Commonwealth countries, who are often non-white, and who have very close associations with the UK, to come here, when people within the EU, with whom we sometimes have very little connection, can come here. We must therefore look at the free movement of people of the EU. It used to be a rich man’s club, but it is a European man’s, and indeed woman’s, club that excludes members of the Commonwealth who are not also EU members, who are often not white. This is a serious question for us to think about. Is the basis of the free movement of people within the EU fundamentally a racist principle? We need to consider whether seven years will be enough for Croatia, and whether we should amend British law to restore controls over immigration that are fair to people across the world, and that do not discriminate favourably towards Europeans but unfavourably towards others.

Croatia might not be ready to join and might fail to meet the requirements of the EU. On tackling corruption, the Commission is concerned that only three people have been found guilty of abuse of office. The Commission states:

“The implementation of the Law on the Police should be ensured, in particular to depoliticise the police and increase professionalism”.

The fact that that problem has not been tackled is a difficulty. What if we cannot have confidence in the police in a country that is about to join? Even if it is not part of Schengen, it will be part of the European arrest warrant arrangements, but it does not have a de-politicised police force or one that has been made sufficiently professional. Are we really, after the middle of next year, going to allow British subjects to be arrested on the say-so of a Croatian court, when Croatia has a police force in which even the European Commission does not have confidence?

The European Scrutiny Committee report shows that what is sought from Bulgaria and Romania is not happening. The same applies to some extent to Croatia. Is there an autonomously functioning and stable judiciary? That, too, relates to justice and home affairs agreements. We allow the judiciary of foreign countries to have an effect on subjects of Her Majesty going about their business in the UK, but countries that are joining the EU do not meet basic standards. The report states that we have not seen

“concrete cases of indictments, trials and convictions regarding high-level corruption and organised crime”.

We are therefore concerned that the state is corrupt at the highest level, yet we are allowing it to join before the problems are sorted out. That is once again the triumph of hope over experience—can letting them in and hoping to sort it out possibly be the right way forward when we have so many commitments through joint recognition of standards in fellow member states? We are also concerned that Croatia does not have

“a legal system capable of implementing the laws in an independent and efficient way.”

We must be more careful and prudent. Widening is a good thing—it is splendid to have a wider rather than a deeper EU—and it is good thing that newly emerged democracies have been able to come into the EU fold. However, when we have so many commitments to the EU that can be enforced upon us by foreign countries, is it right that we should let them in before the requirements have been met or without installing protections for ourselves by amending the treaties? I therefore have concerns that the opportunity to negotiate repatriations of power to the UK that could protect us from some of the inadequacies of the Croatian state before it joins the EU has not been taken—whether by the previous Government or this one is beside the point.

In that context, it is worth looking at what Ireland has done. As we know, Ireland was bullied by the EU into voting twice. That was a classic example of the EU believing in democracy for others but not for itself. It is a question of it saying, “Vote as often as you like until you give the right answer, and then you don’t need to vote again.”

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

Kelvin Hopkins Excerpts

Monday 10th September 2012 Commons Chamber

[Mr Clappison]

I beg to move amendment 1, page 1, line 14, leave out subsection (2) and insert—

‘(2) This Act shall not come into force until the day after the Secretary of State has laid an order certifying that the constitutional requirements of all the member states of the EU have been complied with and all the related legal challenges have been disposed of.’.

I am grateful to the right hon. Member for Rotherham (Mr MacShane) for giving the Committee a perhaps unintended trailer of the film, as it were, but I hope to persuade hon. Friends that the film is rather better than his trailer for it. The gist of his argument was: what business is it of ours and how dare we lecture Europe on what it should do? But there is a difference between what he said and the amendment, which is concerned with what Europe has decided and how it takes effect in this country. That is rather a different matter, and I hope that I will persuade the Committee that important questions arise from it.

The amendment, which I do not intend to press to a vote, is designed to probe some of those questions. In the negotiations leading up to the amendment to article 136 of the EU treaty, the Prime Minister secured a good deal for Britain. It was a good deal for reasons I shall explain shortly. I do not want to go into the background of how in May 2010 the country became committed to the European financial stabilisation mechanism, which was different from the European stability mechanism, which we are talking about now, and from the European financial stability facility—there is no shortage of such acronyms and measures. In fact, I asked the House of Commons Library this morning how many attempts the EU had made since 2008 to resolve the euro crisis, but it said that it was difficult to say in the time available because there had been so many and it was so complex. However, it gave me a rough estimate of 17, including the latest one from Mr Draghi—we must hope that the 17th is more successful than the previous 16.

[Kelvin Hopkins (Luton North) (Lab)]

I agree with the hon. Gentleman. Some say that these repeated measures to try to save the euro are like kicking a can down the road, trying to fend off the inevitable for a little longer. Is that a fair assessment?

[Mr Clappison]

I pay tribute to the hon. Gentleman, who has been consistent in his analysis. I have not yet heard anyone who has convincingly contradicted his analysis of the underlying economic problems.

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[Kelvin Hopkins]

I am astonished that my right hon. Friend should say that the value of a country’s currency is not important. If that is so, why did Britain recover after 1931 only by coming off the gold standard? We devalued our currency in 1949 and in 1967, we allowed for a big depreciation after the crisis of the early 1980s, and after the collapse of the exchange rate mechanism we recovered simply because we devalued our currency substantially to bring it into line with the needs of our economy.

[Mr MacShane]

I do not know whether my hon. Friend has spent much time holidaying in Europe in recent years, but there has been a substantial devaluation of the English pound against the euro since, roughly, 2008, and what have we seen? A recovery in Britain? An increase in exports? A decrease in imports? An increase in the creation of firms and jobs? In fact, we have seen the very opposite. My hon. Friend is right historically—he is always right historically—but I prefer to live today rather than in history.

The main problem with the amendment is that it is a wrecking amendment, and I hope that when the Minister replies he will have the honesty to say so, although the amendment was tabled by his hon. Friend the Member for Hertsmere. The notion that nothing can be ratified until every other country has ratified it and disposed of putative legal challenges is a circle that can never be broken. If the same rule were adopted by even one other EU member state, nothing could be ratified until we had agreed to ratify it, and we could not agree to ratify it until other Parliaments had done so.

Not only are we, as usual, condescendingly and patronisingly lecturing other Parliaments on what their constitutional settlements should be, but this is nothing short of a wrecking amendment, and I wish that Conservative Members would have the intellectual honesty to say so.

[Martin Horwood]

It is generally a pleasure to follow the right hon. Member for Rotherham (Mr MacShane) in European debates, as he and I share a broad enthusiasm for the European Union and its development. However, I think that on this occasion he is being a little unkind to our hon. Friends on the Conservative Benches. I do not think that this is a wrecking amendment; I think that it asks legitimate questions about the timing of the transfer between the European financial stability facility and the European financial stabilisation mechanism and the new European sustainability mechanism—although I think that by demonstrating that we know the difference between the EFSF, the EFSM and the ESM, we are probably all showing that we need to get out more.

The right hon. Gentleman asked whether the old EFSM, which made Britain liable for the financial bail-outs, could be brought back. That is an interesting question, and I too would like to hear the Minister answer it. I assume that a vote by the Council, probably with unanimity, would be required to bring the EFSM back into operation, given that the Council voted to end it, or at least not to involve it in any new bail-outs. If that is the case, I think that it would reassure Conservative Members considerably to know that the EFSM is, in effect, dead and buried, at least in respect of new bail-outs.

There are two problems with the amendment. The right hon. Member for Rotherham pointed out one of them in what was a rather pre-emptive intervention. This amendment ties the triggering of United Kingdom legislation to actions of other countries—to events in Berlin, Dublin or the European Court, for instance. That is a strange principle for Members who have generally been rather keen to emphasise the unique sovereignty and independence of the United Kingdom Parliament to be trying to introduce into a British Bill. It raises a constitutional question, too: should we be putting clauses into British legislation that are entirely dependent on events in other countries?

The second problem is the political roundabout problem. If other countries follow our example and make their ratification of the treaty dependent on others finishing their processes, we will be like cars at a roundabout, with everybody waiting for everybody else to go, and the whole process will completely logjam. I am not sure whether that is what was intended, but it would make the amendment something of a wrecking amendment, in practice if not in theory. I think this is an impractical amendment—albeit perhaps a well-meaning one, which has produced an at least mildly illuminating debate.

[Kelvin Hopkins]

First, let me say that I entirely support what the hon. Member for Hertsmere (Mr Clappison) said, and I was pleased to sign his amendment.

The idea that we are being difficult by talking about delaying our effective support for this European Union measure is wide of the mark. We are being asked for a favour in respect of something that does not technically affect us, because we are neither contributors to nor beneficiaries from this new mechanism. We as a country are being gracious by putting this Bill forward, as we are helping out. It is absolutely sensible that the eurozone countries, who are very different from this country, should make sure that they have approved this mechanism and that there is no possibility of legal challenges before we say, “Yes, okay, as you’ve all approved it, we’ll sign on the dotted line to help you out”—and we should do that at the end of the day rather than at the beginning.

If we were to rush ahead and do this, the left-wing Eurosceptics in Holland would rise up to derail the Dutch situation, or the German constitutional court would decide it did not like the system, and we would be left having approved something that the eurozone countries do not even like very much themselves. We would be in a very silly position. It is therefore entirely sensible that we and other countries outside the eurozone should only go along with any decisions once the eurozone countries have agreed to them.

However, I must say that I still believe this mechanism is simply another measure for kicking the can further down the road and putting off what some think of as the evil day when the euro comes to an end. I do not say that simply because I have been sceptical about the euro from the beginning and disagree with the whole principle of the single currency, because it is not just me saying this now; other people agree. Indeed, this week George Soros said that Germany should leave the euro. It would be daft of the Germans to do that, however, because if they did, the new Deutschmark would immediately appreciate in value and Germany would become very uncompetitive in comparison with other member states.

[Emma Reynolds]

I read reports of that George Soros quote as well, and will my hon. Friend clarify that what he actually said was that Germany should either lead or leave, and that he would prefer the former, not the latter?

[Kelvin Hopkins]

I stand corrected, but George Soros leaves open that possibility of leaving, and by talking of Germany leading he presumably means the country putting vast amounts of German funding into saving the euro.

Others have also been looking at the future of the euro—which I think is doomed. There was an interesting article by Anthony Hilton in last Tuesday’s Evening Standard. He said that, in a sense, the euro is already dead, because a genuine currency has a number of features. It should be a medium of exchange, and some people are starting to mistrust it as a medium of exchange and want to be paid in other ways. Indeed, some economic advisory bodies are advising their clients not to accept especially long-term payments in euros, but to accept other currencies—sterling or dollars, for instance. That is understandable.

Currencies should be a store of value. Even Greek politicians, as I understand it, are buying gold because they do not trust the euro. Greek people do not want their euros to be devalued into drachmas overnight, so quite sensibly, they are buying gold. Trust in the euro as a store of value is dying by the day; so, let us wait a little. This could all happen very quickly, of course. It could happen over 10 days or over a year, but at some point a decision will be made that the euro is no longer going to function.

[Dr Julian Lewis]

Is not the real choice that is going to have to be faced that the euro will be dismantled in an orderly way, or will collapse in a disorderly way? Is not the danger that we feel that we cannot be seen to be sabotaging this project, in which so many of our colleagues in the European Union have invested so much energy and treasure, and yet, by not speaking the truth about the matter, we are making more likely a disorderly collapse, rather than orderly dismantling?

[The First Deputy Chairman of Ways and Means (Mr Nigel Evans)]

The hon. Gentleman will answer that intervention through the prism of amendment 1, please.

[Kelvin Hopkins]

Of course, Mr Evans. Amendment 1 is essentially about delaying our approval of this measure until such time as the eurozone countries have agreed, signed and sealed it. That is a very sensible way forward. The hon. Gentleman is right, and I and others have made the point a number of times that there are examples of single currencies that have been dissolved in an orderly and managed way. When the Soviet Union was dissolved, the first thing its countries did, wisely, was to create their own currencies. Such countries were able to choose an appropriate parity and interest rate, and to do what was necessary to make their own economies work well in relation to others. That is obviously the way forward, and in the journals it is increasingly being said that the dismantling of the euro, which would enable countries to reflate their economies, would be far less painful than what is happening now in some of the eurozone’s weaker countries, which is dreadful for working people. There is mass unemployment and falling living standards, and growth in Greece has fallen by upwards of 20%. They really are in serious pain and difficulty, and it could not be worse if they re-created the drachma, devalued and started selling cheap holidays to British people who want to enjoy the sunshine of Greece. That is their way forward, and the same is true for other countries.

There has been talk about how to help our Irish friends. I have many Irish friends and constituents, and I have said before—even last week—that the way forward for the Irish is to persuade them to re-create the punt, depreciate and come to a sensible parity with sterling. We are their major economic partner, and they belong much more in the sterling zone than the eurozone. That would be massively beneficial to the Irish, including the relatives of many of the people who live in my constituency.

Delay is absolutely sensible and the right thing to do. I ask that, even now, the Government consider delaying our ratification until such time as the eurozone countries have all signed and sealed the deal.

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[Mr Baron]

I rise to support my hon. Friend the Member for Hertsmere (Mr Clappison), and to question my right hon. Friend the Minister for Europe on a number of what I consider to be design flaws in the ESM.

First, although £500 billion in lending capacity sounds like a big figure—and it is—it would be a drop in the ocean should an economy the size of Italy need help. That is especially the case as the ESM’s mandate will be broader than was initially envisaged. In fact, it could be argued that the perception that the eurozone rescue funds could run out of money could drive borrowing costs higher for the Italian and Spanish Governments and raise the likelihood of such an outcome.

Another design flaw, and perhaps a more fundamental one, concerns the circularity of having the facility guaranteed by the same group of countries that might need to draw on it. What will happen if one of those countries needs to draw on it? The burden on the remaining countries will increase, thereby increasing the likelihood that they, too, will face a debt crisis. That is another potential flaw that I wonder whether the Minister has considered.

A further flaw is the reliance of the ESM on the creditworthiness of all its guarantors. The triple A credit rating that it aims to achieve, and hence the low borrowing costs, hinge on a sufficiently large number of eurozone countries maintaining their credit ratings. We have seen in the past the effects of ratings downgrades, such as in January 2012 when Standard and Poor’s downgraded nine eurozone countries, including France. That was followed by a downgrading of the European financial stability facility only four days later. Has the Minister considered those potential but fundamental flaws in the design of the ESM?

Finally, I put it to the Minister that the ESM would not exist if were it not for the political will to maintain the euro. It is quite obvious to many, and certainly to many eurozone leaders, that one cannot have monetary union without fiscal union and, in large part, one cannot have fiscal union without political union. As many of us on the Conservative Benches and, to be fair, some on the Opposition Benches, have long argued, the euro endeavour is a political initiative to move towards closer political union, and the chickens have finally come home to roost.

If the politicians were not interfering so much, we would have something similar to the Asian debt crisis at the end of the 1990s. For a short period, that was a pretty bloody affair, but as nations’ sovereign debt was allowed to be reneged on, as countries defaulted and as currencies were allowed to depreciate, there was a rapid bounce back in economic growth. GDP was higher two to three years after the start of the crisis than it was at the beginning, because market forces kicked in, currencies devalued and growth rates picked up because of the greater competitiveness. The Asian crisis moved on and the countries involved are in a much better state than at that time, because their currencies were allowed to depreciate.

What do we have? We have a system by which countries are locked into a single currency and cannot devalue, which prolongs the agony. What Greece needs now, desperately, is to devalue its currency so that it can become more competitive and can grow its way out of its problems. Holidays for British tourists, for example, would be 25% cheaper with a 25% devaluation, which would help the economy. The goods that Greece manufactures would be 25% cheaper, which would help it to export its way out of its problems. However, the euro is sealing its fate in many respects, and prolonging the agony. My concern is that the ESM is part and parcel of the package to preserve the euro and prolong that agony.

[Kelvin Hopkins]

To return to the hon. Gentleman’s earlier point about the Asian crisis, the Asian countries were strongly advised by the International Monetary Fund not to do what they did in the end. They ignored the IMF, did what they thought was right—rightly—and of course they recovered, as he said.

[Mr Baron]

The hon. Gentleman is absolutely right, as he has been so many times; he has a long track record of being fundamentally right on this subject.

Although it can be argued that the ESM does not really affect us, that this is just a treaty change and that we should not get involved, I ask the Minister to reflect on the fact that we are actually playing a small part in prolonging the agony of the euro. We need some fresh thinking on this issue, because, to return to a point made earlier, by not facing reality we risk a very disorderly break-up of the euro, which cannot be good for this country or, indeed, eurozone members generally.

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[Wayne David]

I profoundly disagree with the previous contribution. I am no fan of the Government, but it is simply sensible for the Bill to be agreed and the amendment to be defeated, because it is sensible for us to introduce the European stability mechanism as quickly as is practicable. That is in Europe’s interests, but more importantly it is in the United Kingdom’s best interests. I say that for one simple but important reason: about 40% of the United Kingdom’s trade is with our eurozone partners, so it is in our best interests for stability and eventually prosperity to be achieved and maintained inside the eurozone.

[Kelvin Hopkins]

I absolutely agree with my hon. Friend that a large portion of our trade is with the rest of the European Union. Of course, we have a massive trade deficit, and one of the reasons why is the effective undervaluation of the German currency. If the eurozone broke up, the new Deutschmark would appreciate and we would become much more competitive with Germany, which would help our manufacturing.

[Wayne David]

I am afraid that I do not share that confidence. If that course of events took place, it would be a massive step into the unknown. Nobody could say with any definiteness what would happen. Indeed, the converse of what my hon. Friend says could also be true, and there would be greater economic difficulties. It is therefore important to recognise the size of the single market and of the eurozone, and to recognise that much of our trade is dependent on the success of the eurozone.

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[Kelvin Hopkins]

I thank my hon. Friend for giving way again. The problem is a lack of demand—the great chasm where there economic demand should be. That is the case because all the countries in the European Union, including ours, are in a process of fairly savage deflation, including deflation of demand, which means that we cannot sell anything. If the eurozone were to be dissolved tomorrow and all those countries were able to reflate, we would sell more and everyone would be better off.

[Wayne David]

Indeed; I have some sympathy with that last comment, but it is not an argument against the European stability mechanism. It is an argument, which I fully support, for having austerity and the European stability mechanism, but it is also a reason for having a positive, stimulating policy, across the European Union as a whole, to ensure an increase in demand and in the activity of the economy, which is sadly lacking at the moment.

Oral Answers to Questions

Kelvin Hopkins Excerpts

Tuesday 4th September 2012 Commons Chamber

[Mr Lidington]

We are certainly continuing to support the efforts that eurozone Governments are taking to make their currency zone more stable and sustainable than it is at present, but we are also continuing to emphasise at every EU meeting that Europe’s competitiveness depends in the end on deepening the single market, improving free trade with the rest of the world, and cutting red tape and regulatory burdens on business.

[Kelvin Hopkins (Luton North) (Lab)]

I am one of those who happen to believe that the eurozone is not long for this world. Is the Foreign Office looking seriously at what Europe might look like after the eurozone, and is it not possible that international relations within Europe will be improved once the tensions of the eurozone are gone?

[Mr Lidington]

We make all sorts of contingency plans for all sorts of contingencies, as the hon. Gentleman would expect, but I say this to him: while I believe the United Kingdom is much better off outside the eurozone, those 17 countries have taken democratic sovereign-national decisions to form this currency union, and we who support national independence and the right of nations to determine their own futures should respect those decisions.

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

Kelvin Hopkins Excerpts

Monday 3rd September 2012 Commons Chamber

[Mr Hague]

Clearly, the economic crisis in the eurozone—“implosion”, as my hon. Friend terms it—affects us enormously, but so do many other things in the world such as the deficit of the United States and the economic policies of China. What we are dealing with is the approval of one change to article 136—a change that concerns eurozone countries and gives certainty to the creation of a treaty purely for those countries. It has an additional benefit for the United Kingdom, to which I shall come in the course of my speech.

I do not pretend for a moment that the ratification of the decision or the establishment of the ESM alone will solve the eurozone crisis. As the present situation shows, many other things are needed for that solution. For the long term, sustainable public finances and globally competitive economies in all the eurozone’s member states are needed. Those tasks are vital not just for eurozone countries to succeed but for the United Kingdom as well, and are at the heart of this Government’s programme.

[Kelvin Hopkins (Luton North) (Lab)]

I thank the Foreign Secretary for giving way. He has talked about resolving the eurozone crisis, but the measure will just pour good money after bad. Will not the ultimate resolution of the eurozone crisis come only when certain countries are allowed to leave the eurozone, recreate their own currencies and expand their economies again?

[Mr Hague]

Different solutions can be advocated and the hon. Gentleman is advocating what he thinks would help as a solution. However, the point that he and I have to bear in mind is that those countries—their national Parliaments and democratically elected Governments—wish to stay in the eurozone. That position is different from the one that he and I have always taken on the United Kingdom, but that is their wish. Therefore in practice we are dealing with that situation. We want those countries to succeed in stabilising the eurozone.

Let us take the worst-case scenario—the hon. Gentleman’s assumption that the measure would pour good money after bad. What we are ensuring is that money from the United Kingdom taxpayer is not going after other money, good or bad, giving assistance to eurozone countries. The Bill provides solely for the parliamentary approval of an amendment to article 136 of the treaty on the functioning of the European Union, which makes it clear that the eurozone member states may, by means of a separate intergovernmental agreement, establish a financial assistance mechanism—the European stability mechanism, or ESM—without acting in contravention of their obligations as member states of the EU.

As the House will know, this is not the first time that this treaty amendment has been considered and approved by Parliament. Before the Prime Minister agreed to the treaty amendment decision in March last year, a motion in favour of the draft decision was passed by both Houses under the provisions of the previous legislation—the European Union (Amendment) Act 2008. Before our Act of last year, that was all the parliamentary scrutiny and control required for the Government to agree to a change in the EU treaties under the simplified revision procedure.

In our view, those provisions were grossly inadequate, so at that time my right hon. Friend the Minister for Europe committed us to bringing the decision before the House again under the more stringent parliamentary scrutiny of what was then the European Union Bill. Indeed, we introduced an amendment to that Bill, now section 5(6), to enable the treaty change to be subject to the Bill’s provisions once it entered into force. That Bill has become the European Union Act 2011 and any use of the simplified revision procedure now requires an Act of Parliament for ratification. That is why this Bill is being presented to the House.

Having gained the approval of Parliament in March last year, the Prime Minister formally agreed to the decision at the following European Council. The decision must now be ratified by all 27 member states before the amendment to article 136 can enter into force. Eighteen member states have now done so. The target date for entry into force, as set out in the European Council decision, is 1 January 2013.

The scrutiny process under the European Union Act 2011 began in October last year, just under two months after its relevant provisions came into force, when I laid a statement before Parliament, to which my hon. Friend the Member for Stone (Mr Cash) has referred, under the provisions of section 5 of the 2011 Act. I set out in that statement why the decision does not trigger the requirements for a referendum set down in the European Union Act 2011.

The proposed amendment to article 136 applies only to member states whose currency is the euro. Consequently, it does not transfer further competence or power to the EU from the UK. The opinion set out in the statement was open to judicial review, but in the intervening 11 months no one has sought to challenge it in the courts. To ensure timely ratification of the decision, which is strongly in our country’s interests for reasons that I will now come to, the Bill was introduced in the Lords, where it was passed without amendment. Should the Commons now grant its approval, the Government intend to ratify the treaty amendment by the end of this year.

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[Mr Alexander]

I hope I can give my right hon. Friend the assurances that he seeks. The Opposition are far from indifferent about the future of the eurozone, not least for the reason that I have already explained—many British jobs and exports rely on the eurozone coming through the current crisis. His point highlights one of the delusions that is apparent among at least a few Members, which is that if Britain were to leave the European Union, the concerns that currently afflict the eurozone would somehow become remote from the interests of British jobs and workers. The eurozone will continue to be of absolutely fundamental interest to British manufacturers, exporters and jobs. The Prime Minister arrived at a recent summit lecturing the Germans and left being shouted at by the French, and that certainly does not seem to me to be how to secure the type of agreement that I sense lies behind my right hon. Friend’s question, which we want to see in the best interests of stability in the eurozone.

[Kelvin Hopkins]

Is it not the case that countries such as Poland and Britain have the great advantage that they can choose a parity for their currency that is appropriate to their own economies, rather than being forced to adopt a wholly inappropriate parity through the eurozone like Greece, Ireland and a number of other countries? Does my right hon. Friend agree that if Britain had joined the euro with the parity that existed at that time, we would now have a wrecked economy?

[Mr Alexander]

It is hardly a revelation that I strongly supported the five economic tests back in the years immediately following 1997, whether in relation to the convergence criteria or more broadly. In that sense, the Opposition’s position has not changed. It was an intriguing interpretation of history by the Foreign Secretary to attribute to his own conduct out of office so much credit for what the Labour Government did in office in keeping Britain outside the euro. However, he is right to recognise that there is broad consensus, which extends even to the hon. Member for Cheltenham (Martin Horwood), that there is no immediate prospect of British entry to the euro, for some of the reasons that my hon. Friend describes.

Let me be clear about some of the Opposition’s specific concerns, in a spirit of genuine concern about and mutual interest in the eurozone. First, we believe that the eurozone firewall needs to be bigger in scale and more flexible in operation than the ESM alone currently allows. Although the ESM is a key part of that broader firewall, an effective European Central Bank should also be used to enhance, and contribute to the establishment of, an effective firewall. Since the House last debated the matter, the ECB has announced its intention to begin buying bonds if member states comply with the relevant conditions regarding the management of their fiscal budgets. That is a welcome development, and we look forward to the ECB president Mario Draghi’s announcement this Thursday of how that new programme will work. The ECB must now deliver on its promise if it is to function properly as a lender of last resort and provide the necessary firepower to support the eurozone economies effectively under bond market pressure.

--- Later in debate ---

[Mr Cash]

My hon. Friend is right. Those of us who argued that we should come out of the ERM were laughed at. But on that famous date, 15 September—

[Kelvin Hopkins]

Golden Wednesday.

[Mr Cash]

Indeed, although it is known by others as Black Wednesday. However it is described, it saved our economy then.

To come back to the unemployment that has been inflicted by treaties that are not meant to be changed—the single currency is regarded as irrevocable—the youth unemployment level in Spain has moved beyond 52%, as it has in Greece. Other countries are moving in the same direction and the quack remedy contained in these bail-out provisions does not have enough snake oil in the bottle to make it even half realistic.

There are those, such as the coalition Government, who claim that under the arcane procedures of section 4(4) of the European Union Act 2011, we should vote for this arrangement because it will solve the euro crisis and—miracle of miracles—will not affect us. That is but a harrowing indication of the pain of hopelessness in the face of proven experience. There have been at least 20 economic summits in the past 24 months and not one has come up with a rational solution. All they ever do is promise more and more money that they do not have, with the implicit assumption that if they do not have it they will print it, and break the rule of law—the law laid down through the European Union that we implement under the European Communities Act 1972. Although we are not members of the eurozone, it certainly affects us, and it certainly affects the other European countries.

The explanatory memorandum to the 2011 Act, which I and many other colleagues here voted against, put down amendments to and did everything in our power to prevent from passing, because it simply was not going to work, stated that

“an Article 48(6) decision does not apply to the UK merely”—

I repeat “merely”—

“because it may have consequences for individuals or organisations within the UK, such as UK businesses.”

Believe it or not, that is given as a reason why a referendum is not required—because it would “merely” have an effect on UK businesses. That is on the astonishing grounds that although it has consequences for the daily lives of our voters and their small and medium-sized businesses, it is a mere detail that under the 2011 Act the Government can swat away with reference to “the opinion of the Foreign Secretary”. And that opinion cannot be properly challenged. Anyone who knows anything about administrative law knows that where an Act of Parliament states, “In the opinion of”, it effectively bars challenge in judicial review. I would be extremely surprised, therefore, if it was possible to set up a judicial review—I noted that the Foreign Secretary said that none had been forthcoming. People might well assume that because those words are in the Bill—it has not been enacted yet—there is no point in seeking to upset it because it will only have effect when it becomes an Act of Parliament.

The legislation goes further. Clause 1(3) explicitly states that the decision taken by the European Council on 25 March 2011 does not warrant a referendum, on the spurious grounds that it is the view of the Foreign Secretary, whose opinion once given cannot be effectively challenged, irrespective of the consequences for voters and UK businesses. I certainly concede that we are not part of the eurozone or directly contributing to the bail-out, but what is happening is having a devastating impact on our growth.

As I said in reply to an intervention a few moments ago and as I clearly demonstrated in an article I wrote for The Daily Telegraph on 14 August, I simply do not subscribe to the view that changes in planning law and ever-more Keynesian attempts to boost public spending will do anything if we do not sort out the problems with the single market. We are trading a monumental deficit with the EU, and it is doing immense damage to our economy. Trading with the EU is now like trading with a bankrupt company. The Bill will allow the drug of continual bail-outs, so heavily criticised by the President of the Bundesbank, with the involvement of the ECB, to drag Europe into an ever-deeper maelstrom. To then pretend that it does not affect us, when 50% of our trade is with the EU, is economic and political nonsense on stilts, which is why I voted against the proposals in 2011. Since then the situation has got worse and worse.

--- Later in debate ---

[Kelvin Hopkins (Luton North) (Lab)]

It is a pleasure to follow the hon. Member for Camborne and Redruth (George Eustice). I agreed with much of his speech, particularly his emphasis on the desirability and common sense of flexible exchange rates—not necessarily floating exchange rates, but flexible exchange rates, at the very least, so that countries can choose and negotiate currency arrangements that suit their economies. If all countries can do that, they are free to reflate their economies and to drive growth, so everybody benefits. That is the great advantage. Co-ordinated reflation was a slogan that many of us on the Keynesian left called for back in the 1980s. Indeed, co-ordinated reflation would be desirable now, but we have co-ordinated deflation—savage deflation whereby people wonder why the economies of the world are getting into difficulty. It is because Government after Government are cutting deficits, driving cuts and deflating their economies. There is quite a lot that we in the debate have in common.

I should make two points before proceeding. One is to emphasise my support for the strong view put by the Minister for Europe—and indeed by my right hon. Friend the Member for Paisley and Renfrewshire South (Mr Alexander), the shadow Foreign Secretary—that civil servants should remain non-political. It should be Ministers who are accountable and Ministers who are political. Ministers, as well as Members of the House and politicians, should make political statements, not civil servants. The great tradition of non-political civil servants for whom Ministers are responsible should be preserved and given strong support. We should not accept the contagion of the officials in the European Commission, who are politicians in the guise of officials who drive policies themselves. Our civil servants are not like Commission officials, and we should not let them drift in that direction due to the contagion they experience in Brussels.

I shall not speak for long, but I want to emphasise that we are in serious difficulty—not just in Britain, but across the European Union. It is my view that the euro will ultimately not prevail and will not last simply because it cannot work. Countries cannot constantly deflate their way to success. There will come a point at which Greek people will realise that it is the euro that is their problem. Some on the left think that now, but many others will come to that view.

When Greece is able to escape from the euro, re-create the drachma and devalue substantially, people will find imports too expensive and what they spend will be directed to the domestic economy, which will help their domestic economy to grow. Greece’s exports include tourism and holidays, and when Greek holidays drop to half the price they are now, many more people will have holidays there.

[Mr MacShane]

I am following the argument, but will my hon. Friend explain why the British pound experiencing a severe devaluation of up to 25%, or perhaps nearly 30%, of its value in the past four years has led to a worsening balance of trade and an increased recession? If devaluation of a currency is the magic recipe, why has it not worked for us?

[Kelvin Hopkins]

There is a case that we still have not depreciated our currency enough, but demand for our exports is falling because there is deflation elsewhere, particularly elsewhere in the EU. We should consider the history of devaluations; the proper ones have invariably been very beneficial. After the escape from the exchange rate mechanism in 1992, the economy bounced back strongly and many Conservative Members would agree that, had they managed to stay in office for three or four more years, people might have realised that that big devaluation was driving economic growth and falling unemployment. We reaped the benefit of the collapse and what happened in the ERM, particularly in my constituency, which was the epicentre of housing repossessions and negative equity, which led to my having one of the largest swings to Labour in the country, simply because of the ERM.

I was one of the few people who wrote about economics in 1990 who were saying that the ERM would be a disaster. I predicted—I surprised myself, indeed—the precise course of that experience and said what would happen in the end: interest rates would go through the roof and eventually we would come out of the ERM and devalue, which we did. However, that is not the point that I am making tonight.

I agree with the hon. Member for Stone (Mr Cash) on many things, but I do not agree with him on economic policy. I doubt that many Conservative Members read the New Statesman, but in the last week or two it has featured a series of economists who initially signed a letter of support for the Government, but are now recanting, saying that they made a mistake and should not have called for deflation and cuts. They are implying that that situation ought to be reversed. I agree with them, and I was one of the few in the House who absolutely and profoundly disagreed with the Government from the beginning, quoting Paul Krugman and others, who said that they were going in precisely the wrong direction, towards the savage deflation that led to the 1930s’ depression.

We are in danger of going in that direction now. Countries have to find a way to expand their economies, and they will not do that when they are stuck in stupid arrangements such as the euro. We must have a deconstruction of the euro. There is much talk of an uncontrolled crash, but currency zones can be deconstructed rationally. When the Soviet Union collapsed, all the countries of the ex-Soviet Union created their own currencies. That was done fairly straightforwardly. When Slovakia and the Czech Republic separated as Czechoslovakia broke up, they created their own separate currencies. That worked. It can be done in a controlled and not-too-difficult way. I shall not say that it will be that easy, but it is not impossible and there are examples of such a thing happening. I suggest that, initially, Greece, and perhaps one or two other countries, ought to quit the euro and recreate their own currencies. That might mean freezing banks for a few days and so on.

[Mr Michael McCann (East Kilbride, Strathaven and Lesmahagow) (Lab)]

I am following the argument closely, but can my hon. Friend explain himself? He is talking about countries that came from an impoverished state, so the only way was up. Surely the problem with the eurozone is that we are talking about countries that have experienced high standards of living. Ultimately, any break up would mean that those would go down.

[Kelvin Hopkins]

Standards of living ultimately depend on productivity. If a country produces wealth it can consume wealth. If those countries get into a position whereby they can start to rebuild their economies and expand growth—have more people going on holiday to Greece, for example—they will bounce back and become better off again. I have said many times, in writing and in the House, that strong currencies derive from strong economies, not the other way round. If a strong currency is imposed on a weak economy, it will drive that economy down.

Finding a way to get that economy to grow, which might initially mean a devaluation, means that the currency will ultimately strengthen. Indeed, the 1944 Bretton Woods conference made arrangements that allowed for countries to depreciate or devalue their currencies as necessary. Indeed, if Keynes had had his way, he would have had countries required to appreciate their currencies. I suggest that Germany ought to be appreciating its currency and not be allowed to get away with what it has done for decades, which is to undervalue its currency. That has meant that it has had a competitive advantage against every other nation in the EU, and indeed in Europe.

If the euro were to be deconstructed, a major consequence would be the new deutschmark appreciating quite substantially. There are now worries even in countries such as Denmark and Finland. Finland, which is in the euro, would be forced upwards to a currency valuation that it found uncomfortable. The Danes have chosen to peg their currency to the euro. They might think again about devaluing, but Germany has, effectively, an undervalued currency relative to all the other countries of Europe, which is a fundamental component of its economic success. That is an unfair way to operate and we ought to address it.

I am pessimistic about the future of the eurozone. At the moment, there is a kind of “quietism”. People in the EU are trying not to talk about all the terrible things that are going on, but as I understand it from my friends on the continent, what is effectively a giant building society in France was last week on the verge of having a run—going bankrupt and people taking their money out. The French Government effectively nationalised it and pushed €90 billion into it to save it. That has just happened to President Hollande, but people do not want to talk about it too much because they know that there are many other problems of that kind. There is a Franco-Belgian bank into which €50 billion has been pumped to keep it alive. Indeed, even German banks have lots of supposed assets that are not really assets; they are IOUs that will never be repaid. If I claimed that people owed me £100,000, but I knew that they were all poor people and would never be able to pay me, that would not be an asset of £100,000, but a worthless IOU. A lot of banks are stuffed full of worthless IOUs; that is the reality. It is only when countries start to manage their economies effectively on a national basis, with an appropriate currency value and appropriate interest rates, that they will start to recover. Many of the poorer countries will never be able to compete within the euro, and ought to get out fairly soon and re-establish their own currency.

Take the case of Ireland; I have many Irish constituents. The reality is that Ireland is part of the British economy more than anything else. It should be part of the sterling area, but it is overvalued relative to sterling. If it recreated the punt, devalued and came into line with sterling, Ireland would benefit enormously, because we are its major trading partner. I hope that will happen, because it will benefit many of my Irish constituents and their relatives in Ireland. I look forward to common sense ultimately prevailing, but I have a feeling that we will go through an awful lot of pain before that happens.

Court of Justice of the European Union

Kelvin Hopkins Excerpts

Thursday 12th July 2012 Commons Chamber

[Jacob Rees-Mogg]

I begin by thanking the Minister, because it is down to his initiative that we can have this debate under the European Union Act 2011, which was a major improvement in our procedures to enable anything altering the structures of the Court to come before Parliament and to be the subject of a proper debate and motion. That is all to the good and increases the power of the House in relationship to the EU.

It is worth reminding ourselves that the European Court of Justice is not a proper, honest, decent court, like our courts are. I remind the House that these are the judges who ruled to their own benefit against that legal maxim that a judge should never be a judge in this own cause. They ruled to increase their own pay, and we should always remember what an improper and rotten court it is. We are dealing here with a small package of measures that will make it a more efficient, if no less improper, court by enabling it to attend to some of its business faster.

There is a wonderful paragraph from the helpful Library document. It is a quote from the Max Planck Institute, which my hon. Friend the Member for Stone (Mr Cash) cited, about what the European Court is up to:

“Whether it is buying a car, going on holiday or taking out an instalment loan, few aspects of our everyday lives are conceivable today without reference to European Union law. Countless directives and regulations, which set out the rights of consumers and entrepreneurs, apply not only in international legal undertakings, but also in domestic legal transactions. Which party has the law on its side is increasingly dependent on the European Court of Justice in Luxembourg, which ensures the implementation of European law within the EU.”

That is a rotten state of affairs.

There were great debates in the 18th century in this House on the motion:

“That the power of the Crown has increased, is increasing, and ought to be diminished.”

In every debate on the EU, we should remind ourselves that the power of the EU has increased, is increasing, and ought to be diminished. That is why I challenged my right hon. Friend the Minister for Europe over whether it was a good thing to make the European Court more efficient. In response, he challenged me with a proposition that I would normally accept, because he quoted an ancient British maxim—one probably invented in Somerset, where all good things come from—and it is true that justice delayed is justice denied. But the key word is “justice”, and the European Court of Justice might have that word in its title, but it is not its essence. Its essence is as a political entity. It is seeking to increase the power of a federal European state and turn the EU into a functioning country. That is why the House should be cautious about doing anything that makes it more powerful, because it is fundamentally hostile to us.

[Kelvin Hopkins (Luton North) (Lab)]

I have much sympathy with the latter part of the hon. Gentleman’s speech in particular. Would it not be a good idea to test the water somewhat by seeking to repatriate some powers—some power, even—to Britain, to see what the reaction of the European Union would be? There is much talk of repatriation, but let us take back just one simple power: I would start with the common fisheries policy, as he might know.

[Jacob Rees-Mogg]

I am extremely grateful to the hon. Gentleman, who is so wise in these matters. We ought to be looking at the inefficiencies in the European Court of Justice and saying, “Could these matters be decided in our own courts?” Is there a way in which, instead of saying, “Give them more power; give them more money; and give them more judges,” we can say, “Let these laws be determined in our country.”?

It is interesting, as my hon. Friend the Member for Stone said, that one of the reasons for the increase in the European Court of Justice’s work load is that our courts are sending it judgments for preliminary approval and guidance on what European law says. Would it not be better to repatriate that? Indeed, when we are in the process of negotiating on the European Court and how to make it more efficient, this is surely the opportunity to do so.

UK-Turkey Relations

Kelvin Hopkins Excerpts

Wednesday 4th July 2012 Commons Chamber

[Emma Reynolds (Wolverhampton North East) (Lab)]

I welcome today’s debate on UK-Turkey relations and Turkey’s regional role. I congratulate the Foreign Affairs Committee, of which I was briefly a member, on its excellent report on the issue.

Right hon. and hon. Members on both sides have made thoughtful contributions. The Select Committee Chair gave a comprehensive overview of the report. My hon. Friend the Member for Ilford South (Mike Gapes) underlined the need to resolve the Turkish question, and the hon. Member for North Dorset (Mr Walter) stressed that Europe’s neighbourhood is Turkey’s neighbourhood. My right hon. Friend the Member for Cynon Valley (Ann Clwyd) reminded us that we can be both a friend and critic of Turkey’s. The hon. Member for Penrith and The Border (Rory Stewart) demonstrated, as ever, that he is the Foreign Office’s keenest human resources critic.

We also heard from my right hon. Friend the Member for Rotherham (Mr MacShane) and the hon. Members for St Austell and Newquay (Stephen Gilbert), for Enfield, Southgate (Mr Burrowes), for Peterborough (Mr Jackson), for Stroud (Neil Carmichael), for Poole (Mr Syms) and for Romford (Andrew Rosindell).

Turkey is vital to the UK, geographically, strategically and economically. Geographically, it is at the crossroads between east and west and it remains one of the most important transit countries for the movement of goods and people anywhere in the world. It is as important now as when the merchants of the silk road travelled the country exchanging goods, philosophy and culture between Europe and the east.

Strategically, Turkey is its region’s rising power and it is vital to the UK, Europe and the United States. It is a key NATO partner, given not only its geography but the size of its military. It has the second largest army in NATO in terms of personnel, second only to the United States. Turkey is a democratic, secular Muslim country that offers hope and inspiration to countries in the region—especially those going through radical transformation as a result of the Arab spring. In the middle east, Turkey is central to securing stability across the region and, crucially, to solving the conflict in Syria and securing a nuclear-free Iran.

Economically, Turkey is a rapidly rising force. In the past 10 years, its economy has grown, on average, by more than 5% a year. Its gross domestic product has tripled. Trade and direct investment have increased dramatically. By 2050, it is set to be one of the world’s top 10 economies, with a vibrant, young and growing population, more than 50% of whom are under 30.

Turkey is already an important member of the G20 and its influence is growing. Its economic rise is impressive, especially given the dark economic days that it suffered in the late 1990s and early 2000s. Turkey’s democratic development is also impressive given the military dominance of the past century, with four coups in the past 50 years. The so-called deep state has now been successfully dismantled.

Given Turkey’s ever-increasing prominence and importance, we fully support the continued strengthening of the UK’s bilateral relationship. Labour Members are proud that in 2007 the then Prime Minister agreed the first UK-Turkey strategic partnership. In 2010, British exports to Turkey totalled over £1 billion. About 2 million British nationals visit Turkey every year. There are over 150,000 Turkish nationals and about 500,000 people of Turkish origin in the UK. In cities across the UK, we can see evidence of the contribution that these Turkish communities make to the fabric of British society. There continues to be a strong cultural exchange between our countries. We therefore support the Select Committee’s assertion that the Government are correct to seek to strengthen the UK’s relations with Turkey as a strategic partner. This partnership covers agreements on a range of issues including education, defence, regional stability and culture—from managing migration flows to the development of low-carbon technologies.

We welcome the Foreign Office’s commitment to increasing its diplomatic presence in the country. We also welcome the recent military co-operation treaty agreed and signed by the Government and the Turkish Government. The Select Committee is right to note that the strategic partnership is a means of measuring the success of the Government’s policy on our bilateral relations with Turkey. Two years on from his Government’s launch of the renewed strategic partnership, I look forward to hearing the Minister reflect on the key achievements to date and the key objectives for the years to come.

Alongside Turkey’s economic rise, its regional and international prominence has also been significantly enhanced. I echo the comments of the hon. Member for St Austell and Newquay in saying that Labour Members commend Turkey for its ongoing commitment to the mission in Afghanistan. Turkey has supported many NATO, UK and EU foreign policy objectives. Today, crucially, Turkey is central to resolving the horrific conflict in Syria. We welcome Turkey’s involvement in the Friends of Syria group; it hosted the group’s second meeting in April. We welcome the steps that Turkey has taken to encourage dialogue between opposition leaders by hosting talks in Istanbul. Turkey has accepted over 36,000 Syrian refugees and, crucially, it has offered a safe haven for defectors from the Syrian military. As a fellow member of NATO, we welcome Turkey’s moderation in its reaction to Syria’s unprovoked and unacceptable attack on a Turkish aircraft on 22 June. As my hon. Friend the Member for Ilford South emphasised, Turkey’s restraint in this matter was exemplary.

On Iran, Turkey has been proactive in trying to find solutions to securing a nuclear-free Iran. It recently hosted a P5 plus 1 meeting in Istanbul and this week it has been hosting a meeting of technical experts.

Turkey’s wider role in the region is also important. The hon. Member for North Dorset stressed its influence in the Balkans. The Kosovan Foreign Minister recently praised Turkey for its positive role in the region in recognition of its efforts in helping to establish better relations between Serbia and Kosova—a relationship that we and, I am sure, the Government will want to be improved.

Following the dramatic transformations triggered by the Arab spring, Turkey played a leading role in supporting democratic change. The Turkish Prime Minister was the first international leader to call for President Mubarak to stand down. The Select Committee is right to underline the importance of a democratic, secular and Muslim state such as Turkey acting as an inspiration to moderate political forces in north Africa and the middle east.

Finally, let me turn to Turkey’s EU membership. We welcome the continued cross-party consensus in this House in favour of Turkey’s EU membership. The Select Committee rightly focuses on this issue in the second part of its report. When Labour was in government, we were a strong advocate of Turkey’s accession, and we are pleased that the current Government have continued this policy. However, as several right hon. and hon. Members have pointed out, we must recognise the difficulties in this area, not all of which relate to the acquis communautaire. It is regrettable that for the next six months the negotiations will be suspended. It is encouraging that relations between Turkey and France seem to be on a better footing since the election of François Hollande in May. President Hollande has accepted the invitation of Prime Minister Erdogan to visit Turkey, which will be the first such visit by a French President for 20 years.

There are also problems with regard to the acquis communautaire, as was highlighted by the European Commission’s recent progress report. Turkey has a great deal of progress to make on human rights, as has been pointed out by several hon. Members, in particular with regard to the freedom of expression and the reform of the judiciary. I welcome the Select Committee’s recommendations in that area, in particular that the Foreign Office should ensure that Turkey is left in no doubt that the shortcomings in its justice system are damaging to the country’s international reputation. We also agree with the recommendation that the Foreign Office should suggest that the Turkish Government encourage prosecutors and judges to exercise restraint in the use of pre-trial detention while the reforms to the justice system are being carried out.

We are concerned about the Select Committee’s finding that some improvements in human rights have been reversed, especially with regard to the limiting of media freedoms and freedom of expression. To echo the comments of the hon. Member for St Austell and Newquay, there are also concerns about LGBT rights. In its recent accession report, the European Parliament urges the Turkish Government to ensure that LGBT rights are guaranteed by the law effectively enforced and respected by the police.

The Select Committee is right that a settlement on the relationship between the Turkish state and Turkey’s Kurdish community is vital. It is of great concern that over the past year the level of violence in that decades-long conflict has increased. It is estimated that over the past 30 years 45,000 lives have been lost. As recently as last month, 34 people were killed at a military border post. However, there are also encouraging signs. As my hon. Friend the Member for Ilford South outlined, there is a greater level of co-operation between the Turkish Government and the Kurdish regional government in northern Iraq, including plans to build an oil pipeline between the two areas. I echo the question put to the Minister by the Chair of the Foreign Affairs Committee: what do the Government think the prospects are for a settlement on this issue in the months and years to come?

[Kelvin Hopkins (Luton North) (Lab)]

I have not heard the whole of my hon. Friend’s speech, but she has not touched on the Cyprus problem in the last part of it. I know that the matter has been discussed in the debate, but she has not mentioned it. Will she say something about Cyprus?

[Emma Reynolds]

I thank my hon. Friend for his late intervention. There has been quite a lot of discussion of the Cyprus question. It is clearly an obstacle to progress in Turkey’s accession negotiations. I referred to it somewhat obliquely when I talked about political problems, rather than problems relating to the acquis communautaire, in Turkey’s membership negotiations.

In conclusion, today’s debate has underlined the many reasons why Turkey is an important strategic and economic partner to the UK. As I touched on earlier, as a result of the Arab spring there is a high degree of hope for a democratic future in the middle east and north Africa, but also a high degree of uncertainty. The ongoing crisis in Syria and the problems with Iran serve only to exacerbate that instability. Turkey is a vital ally in that key region and beyond. It is a stable, democratic, secular, Islamic state, a beacon of democracy and an inspiration for countries such as Egypt and Tunisia. For all those reasons, it is clear that Turkey is a strategic partner of growing importance to the UK. I look forward to hearing how the Minister and the Government will continue to strengthen our bilateral relationship with this important country.

Foreign Affairs and International Development

Kelvin Hopkins Excerpts

Tuesday 15th May 2012 Commons Chamber

[Mr Alexander]

I think I am with my right hon. Friend in all of his remarks. Perhaps I shall write to him on the final phrase of his intervention.

In all seriousness, isolation can sometimes be a price worth paying for getting one’s own way in international affairs, but isolation achieving only defeat is surely unforgiveable. Even at this late stage, the Government must set out what steps they will take to ensure that real and urgent progress is being made at this month’s EU Council meeting. Alongside the welcome measures—

[Kelvin Hopkins (Luton North) (Lab)]

rose—

[Mr Alexander]

I am happy to give way and I am sure that it will be a comradely and unifying question.

[Kelvin Hopkins]

Indeed. On a positive note, it is certain that at least one member of the eurozone, and almost certainly several others, are about to recreate their own national currencies. Given that we sensibly have our own national currency, is there not a good case for us building strong relationships with these countries with their new national currencies? We could work with them to mutual benefit and help them in their difficulties.

[Mr Alexander]

There is a rare moment of unity between myself and the Chancellor of the Exchequer in saying that I am not sure it is entirely wise to speculate today about which countries have a future within the eurozone. But I would certainly concur with my hon. Friend’s point that the Labour Government did make the right choice in saying that the economics did not make the case for Britain entering the euro. I know that it was the present Foreign Secretary who argued that we had 24 hours to save the pound. I checked, and I think we have had 90,192 hours since he made those remarks, and as far as I am aware, we all still have a pound in our pocket, thanks to the actions of 13 years of a Labour Government and a little time from the Conservatives thereafter.

European Council

Kelvin Hopkins Excerpts

Thursday 26th January 2012 Commons Chamber

[Mr Cash]

We are all in favour of growth, but unfortunately the European treaties themselves work against that aim because of the degree of overregulation, and many other matters that I shall come to in a moment.

The lack of growth is contaminating the UK economy. Elsewhere in Europe it is creating civil disorder, with youth unemployment of up to 45% in Greece and Spain, and 30% in Italy. The present European Union is completely undemocratic, and the existing treaties should be sent to a convention so that all the member states could have the opportunity to face one another and decide what kind of Europe they want. In the past, when referendums have been held in France, Holland, Ireland and Denmark, the no vote has been overturned by bribing and threatening the electorate. That kind of behaviour, combined with economic and political crisis, creates a fertile breeding ground for the far right, as I predicted as far back as 1990.

There is no growth in Europe, except in Germany. We cannot grow from a stagnant Europe, and the coalition cannot achieve its main objective of reducing the deficit and achieving growth so long as this paralysis continues. The remedy of the Eurocrats—and, indeed, the leaders of European Government and the Liberal Democrat leadership in this country—is a fatal obstruction to our present and future economic success.

The approach adopted by the Prime Minister today at Davos reflects the view that I expressed in my pamphlet “It’s the EU, Stupid” and the growth paper that has been circulated to all Members of Parliament and the Lords and others, as well as in my remarks to the Minister of State, Cabinet Office, which is that we need to refocus our trade towards the rest of the world and not rely on the fact that we have 40% to 50% of our trade with the EU to provide the mainspring of our economic future.

[Kelvin Hopkins (Luton North) (Lab)]

Emphasis is constantly placed on our trade with the European Union, but it is not always pointed out that we have a massive trade deficit with the EU. Given the austerity measures here and over there—but particularly over there—that is only going to get worse.

[Mr Cash]

Indeed. In 2009 there was a trade deficit of £14 billion in goods and services, but since then it has risen to £51 million. Those figures speak for themselves.

Cuts in public expenditure cannot solve the problem on their own. We need enterprise for small and medium-sized businesses and drastic cuts in overregulation. We need enterprise, not strangulation. Indeed, we must insist on our ability to enter into trade relationships on our own terms, in our own national interests, and not be confined to a single trade policy dictated by the European Commission.

I was deeply alarmed to read in today’s City A.M. that Angela Merkel at Davos is encouraging more integration. She is quoted as saying:

“We have to become used to the European Commission becoming more and more like a government.”

She urges more and more Europe, but that Europe would be both undemocratic and increasingly dominated by Germany itself, as I have repeatedly stated for 20 years, and as The Economist concedes in this week’s edition. It states, following France’s downgrading, that

“the balance of power has long been shifting from the French President to the German Chancellor”,

and a former French economic Minister has said that

“Berlin is alone in the cockpit”.

That is not healthy for Germany or the UK, and certainly not for Europe. It now seems certain that President Sarkozy is on the way out, and Italy and Greece have technocratic Prime Ministers. Democracy is dwindling and diminishing. The Franco-German partnership is now a hollow reminder of German strength and French weakness. This is all the more reason why the UK must insist on leading Europe out of this crisis with Euro-realist policies and an insistence on government by consent. Sadly, Germany believes in government by rule, and is now even proposing the European Commission as the anchor of European government.

There has been much agitated activity in seeking to resolve the Greek bankruptcy, but there has been no result. A few days ago I came across a five-page article written in 1998 setting out exactly why Greece should not be allowed into the European Union, which was of course ignored. Every member state is responsible for this failure of judgment and must bear the consequences. It is a pity that those such as George Soros who are now wringing their hands in Davos did not listen to the Euro-realist arguments instead of condemning and mocking them.

On the draft agreement, we must bear in mind that the issues now being presented to the British electorate and the European Union are more political than legal. There are still fundamental legal problems in the latest draft of the agreement between the 26. There must be no misunderstanding: this deal is flawed in seeking to incorporate the European Commission and the European Court of Justice, which are institutions of the EU, into a non-EU treaty.

Furthermore, what is the basis in the treaty on the functioning of the European Union for the proposed powers, including infringement powers, to be conferred on the European Commission under article 8 of the agreement? Prima facie, that is unlawful, given the prohibition on infringement proceedings under article 126(10) of the treaty. There are serious doubts about the use of article 273 in relation to issues of jurisdiction. There is also the issue of enhanced co-operation under article 10, which bypasses the treaty requirement that enhanced co-operation should be used only as a last resort; the agreement proposes its use “whenever appropriate and necessary”. This could cause serious damage to British national interests in relation to the internal market.

My Committee, the European Scrutiny Committee, will be investigating all these matters with the assistance of evidence from witnesses from all sides of the equation. There is a further problem of whether the treaty to establish the European stability mechanism can come into force before the amendment to the Lisbon treaty, so that member states could allow such a treaty, given that the United Kingdom has not yet ratified it. I would be grateful if the Minister would answer these questions when he responds to the debate; I hope that he is listening to what I am saying. We urgently need to know whether the Government have received the fifth, and presumably final, draft. If not, will he tell us when they will, and when it will be sent to the European Scrutiny Committee?

With regard to article 13, will the UK Parliament be involved in the proposed inter-parliamentary conference? If so, will the European Scrutiny Committee be invited to attend? At present no one knows how that arrangement will work in practice—there are serious question marks over the agreement—but we know that it will be determined by German demands and conditions. I do not blame Germany for its pride and defence of its own national interests, but I do not believe that we the UK should pay one penny to provide funds for an EU bail-out which, if it were done within the European Union itself, would be blatantly unlawful.

Mme Lagarde, who is now head of the International Monetary Fund, openly admitted in September 2010 that to save the euro,

“we violated all the rules”.

It is ironic that she should now be in charge of a further attempt to bypass the rules. That is outrageous, and I am glad that America has quite rightly said that it believes that Europe should sort out its own mess. However, that will be achieved through policies for genuine growth, and not through bail-outs with fictitious money and a refusal to face up to Euro-reality.

We now live in peaceful democratic times, and we must therefore insist on our Westminster democracy as the basis for protecting our national interest. Let us therefore get down to the business of letting the British people have their say, and of saving the United Kingdom from impending disaster and the European Union from itself. We must turn our eyes to the sunlit uplands of enterprise and international trade, earn our way in the world by our own efforts and re-create the foundations of true independence of action and prosperity for our own country.

--- Later in debate ---

[Mike Gapes (Ilford South) (Lab/Co-op)]

The decision by the Prime Minister to walk away from potential agreement at the European Council in December is a disaster for our country and for its long-term influence in the European Union. No previous Conservative Prime Minister, whether John Major or Baroness Thatcher, had taken such an approach, and we are about to see the consequences of the current Prime Minister’s decision in the developments going on in the European Union this week. ECOFIN met this week to consider the fourth draft of the agreement—on which the House of Commons Library has produced a helpful note—for the proposed inter-governmental arrangement on the future of the eurozone. That fourth draft agreement made some progress at this week’s meeting, but two issues were left for the bigger meeting that will take place in the next few days: further discussion about qualified majority voting and debt and deficit criteria; and the attendance of non-eurozone member states at the summit.

[Kelvin Hopkins]

I must say that I find my hon. Friend’s speech somewhat astonishing in blaming Britain for the problems in the eurozone. The problem, as the Father of the House said at Prime Minister’s questions yesterday, is that the Germans are refusing to bail out the weaker members.

[Mike Gapes]

If my hon. Friend looks at Hansard, he will see that I was not blaming Britain for the problems in the eurozone, but saying correctly that our influence in the European Union will be reduced because of the misguided tactics adopted by the Prime Minister.

--- Later in debate ---

[Damian Collins (Folkestone and Hythe) (Con)]

Following the remarks of the hon. Member for Ilford South (Mike Gapes), it should be stated clearly that we can never have a negotiating position, in any area of life, let alone in a European Council meeting, if we are never prepared to say no and walk away from the table. Otherwise, people will believe that we will always capitulate, and that nothing we say is worth listening to. That must be one lesson that we take from the European Council in December.

Whatever view hon. Members hold about that Council and the decisions that were taken, we cannot doubt that the European Union is at a fundamental crossroads at which it must confront a number of serious issues that affect all European Union citizens. As the financial crisis has made plain, the European Union—its treaties and economic and monetary union—has not made Europe stronger; indeed, its weaknesses have been made all the more clear. Currency union has not made countries such as Greece, Portugal and Spain competitive with countries such as Germany. In some ways, it has exacerbated their weaknesses. Currency union has made it easier for countries such as Germany to export at low cost across the countries of Europe and has held back the march of competitiveness that should have come in some of the weaker countries.

The mechanisms of stability and convergence created at Maastricht to try to bring economies closer together have, over the years, been undermined by member states and have not been followed. If they had, perhaps the crisis would not have been as great as it is. We are where we are, however, and the challenge for Europe is now a test of nerve— whether it will plough on in the same old way or whether it is serious about embracing change and leading in a fundamentally new direction towards a Europe that is more competitive and open, which embraces the world rather than seeking to pull in on itself.

[Kelvin Hopkins]

Does the hon. Gentleman agree that if European Union member states had their own currencies and could adjust them to the appropriate parities for their economies, they would all be more able to reflate and we could have better growth and prosperity for everyone?

[Damian Collins]

The hon. Gentleman makes a good point and I am sure that citizens in Greece, Portugal, Italy and Spain will be asking in whose interest is the survival of the euro as it stands. They will be able to see that it is in the interests of the Germans and some of the stronger economies, as they have an artificially low currency that makes it easier for them to export across Europe. I am sure that is one reason that the German economy has continued to do well. Those citizens will also ask, however, what is in it for them and whether they—and Europe—would be better off in the long run if countries with weaker economies and bigger problems with debt were able to reach a much more sustainable level for their currency.

Oral Answers to Questions

Kelvin Hopkins Excerpts

Tuesday 17th January 2012 Commons Chamber

[Mr Lidington]

I have to say that it is unusual to find my right hon. Friend looking to the example of the former Soviet Union for inspiration. We have looked across Government very carefully at what the consequences of a eurozone break-up might be, and one of the key differences between now and 20 years ago is that the economies and the financial systems of Europe are much more closely interlinked now than they were then. It is certainly our judgment that it would be damaging to the British national interest were a collapse of the eurozone or a prolonged recession in the eurozone to take place.

[Kelvin Hopkins (Luton North) (Lab)]

The credit ratings of a number of eurozone states have been downgraded this week. The bail-out fund is now considered to be far too small to do its job. Mario Monti, Italy’s unelected Prime Minister, said yesterday that there would be a backlash against austerity unless Germany provides more support to Italy. The crisis becomes deeper every day. Is it not the case that recovery for many of those countries can come only when they can recreate national currencies, devalue and start to grow again?

[Mr Lidington]

With respect to the hon. Gentleman—his views on the subject are utterly consistent and I respect them—that is a matter for the peoples and Governments of those sovereign countries. From our point of view, what is needed is for the eurozone countries to implement in full the deal that they agreed to in October last year, and for Europe collectively at 27 to move forward urgently with deepening the single market, boosting global trade and cutting red tape and regulation on our businesses. That is the way to growth and jobs.

European Union

Kelvin Hopkins Excerpts

Tuesday 13th December 2011 Commons Chamber

[Damian Collins]

My hon. Friend makes a perfectly valid point. Of course, this is only a communiqué produced by the eurozone countries, not a binding agreement. However, it is clear that these decisions will be taken at European level. It will be the Commission’s decision, or that of whatever European body is created to police this compact, to determine how quickly countries should reduce their deficit, to decide whether they are keeping on track, to propose what measures of intervention should take place if they fail to do so, and to create what it calls a common economic policy that is the stated aim and objective of these countries. If the eurozone members wish to proceed down that path, then that is a decision that they will take. It should be clear to all that Britain would never go down that path. We would never countenance such a transfer of power and sovereignty over our economic affairs to the European level. In setting out his objections and vetoing a treaty of 27, the Prime Minister clearly reinforced that point. There can have been no doubt and no surprise.

A question that has been asked is, what next for Britain and Europe? The summit in Brussels on Thursday and Friday was not about Great Britain, it was about the eurozone and its crisis. My concern, and that of other hon. Members, is that the crisis has not been fixed and that the measures that have been put in place do not provide the guarantees that the financial markets want. That makes it more likely that there will be a default in the eurozone, and that countries may leave the euro. The economic consequences of that are unknown, but most countries around the world predict that it will not help the world economy and, if anything, will make its problems greater. Europe has to overcome that problem.

European leaders may well reflect on the negotiations in Brussels and say that it would have been better to give the Prime Minister the concessions and reassurances that he was seeking rather than force us out and force us into using the veto, thereby delaying the possibility of a proper and sensible negotiation of a resolution for the eurozone crisis. That will be seen to be an error.

Turning to our own position, there has always been much talk about the amount of trading that we do with the European Union. As a bloc, it is worth more than 50% of our trade. Over the past 10 years, however, our trade with the developing economies around the world— Brazil, India, Russia and China—has been increasing, as has that of countries such as Germany. Those are large, developing consumer markets, and it is reasonable to expect our exports there to increase in relative terms and those to the European markets that have been the major home of our trade in the past to decrease in relative terms.

[Kelvin Hopkins (Luton North) (Lab)]

Of course, we have a massive trade deficit with the rest of the European Union, so it needs us more than we need it.

[Damian Collins]

The hon. Gentleman makes a clear point about our trading relationship, but the point that I was seeking to make was that in the decades to come, our trading relationship with other countries around the world will become increasingly important. The idea that the only expression of British wealth and interest comes through the EU is not correct. Also, not just us but other EU members will have to put far greater priority on developing and expanding markets in other countries. That issue of trade policy has been neglected, particularly by countries in the eurozone.

Our focus has to be on making our economy more competitive both within the European market and around the world and on developing our trade interests around the world. That should be a priority for Europe as well. The idea that we can ignore the euro crisis, the challenges that Europe faces and the challenge of the emerging and dynamic economies is false.

My concern about what happened in Brussels is not about the fact that Britain took a firm stand and made it clear that we would not be part of policies that are an outdated solution to an old problem. We see the world not as a series of competing blocs, with the EU fighting against China and the United States, but as a developing patchwork of economies that we want to engage broadly with. We took a stand for what I believe will be the future direction of the world. My concern is that other members of the European Union have missed that challenge and missed the opportunity to put their own house in order, which was what the summit was supposed to be about.