EU: Recent Developments

Lord Teverson Excerpts

Thursday 16th February 2012 Lords Chamber

[Lord Willoughby de Broke]

My Lords, it is a great pleasure to follow the noble Lord, Lord Dobbs. In his excellent speech, the right reverend Prelate the Bishop of Guildford talked about the earlier vision for Europe, and the noble Lord, Lord Grenfell, mentioned his own vision for the future of Europe. Well, visions are all very well, but as what the noble and learned Lord, Lord Davidson, would call a “blinkered Europhobe”, I prefer to look at the facts. The plain fact now is that the southern states, what is referred to as the “Club Med”, have been badly failed by the political adventure of the EU and the euro. Nobody, not even the most ardent supporters of the euro—with due respect to the noble Lord, Lord Taverne—can really pretend that, so far, the euro has been a success. The Eurocentrists have had to fall back on the Merkel gambit to justify the pain it is causing to the poorer states. In one of her speeches, she said:

“Nobody should take for granted another 50 years of peace and prosperity in Europe … If the euro fails, Europe fails”.

The argument appears to be that if you are against the euro or the EU, you are in favour of war. But as the noble Lord, Lord Flight, said in his speech, by any objective measure the euro itself is stoking the fires of national antagonism.

I can well remember the triumphant fanfares when the euro was introduced in 1999. Those of us who predicted that it could never work were dismissed as swivel-eyed, foam-flecked Europhobes hopelessly out of touch with the reality of the new Europe. I just want to remind the House what my noble friend Lord Pearson said as long as 15 years ago in a debate on the European Communities (Amendment) Act, talking about European monetary union:

“Personally, I do not believe that that is a bird which will ever fly, but if it is pushed off the top of the cliff by ignorant politicians I fear that it will do much damage when it crashes to the ground … I believe that civil unrest will become a real probability”.—[Official Report, 31/1/97; col. 1332.]

That was 15 years ago, and who has been proved right? It is the foam-flecked ones who have been right and it is the “blinkered Europhiles” who have been comprehensively and spectacularly proved wrong.

The political imperative behind the euro is so strong that the Eurocrats will go to any lengths, as the noble Lord, Lord Dobbs, said in his speech, to keep the political construct of the euro travelling along the road. But let us look at where this Europhile dogma has led us. Instead of the promised stability and prosperity, what do we have? We have riots in Greece, where the taramasalata has hit the fan badly; and we have demonstrations and riots in Italy, in Portugal and in Spain. Indeed, Spain has 50 per cent youth unemployment and 30 per cent total unemployment. That is the reality. Europe has turned into a weapon of mass economic destruction.

What is the remedy prescribed by the EU leeches? It is to take more blood in the form of more wage cuts, more unemployment, lower pensions. “Austerity macht frei” seems to be the remedy prescribed by the Germans, certainly to Greece and to the rest of the “Club Med” members of the eurozone when they are unable to meet the German requisites. They cannot, as one other speaker in the debate has said, turn themselves into Germans.

[Lord Teverson]

My Lords, can I just say that I find that remark offensive because it likens German economic policy, however wrong we may agree it is, to a camp that practised genocide? I think that that is utterly inappropriate.

[Lord Willoughby de Broke]

I am sorry that the noble Lord takes it like that. The fact is that the German Finance Minister, Herr Schaeuble, is recommending more and more pain to be inflicted on Greece regardless of the fact that it is going to do the Greek population and Greece’s economy no good at all. That is what austerity is leading to. That is why I used that expression. He is saying that more austerity will bring you free—austerity macht frei. I repeat that.

As the noble Lord, Lord Hamilton, asked, will it really be worse for the Greeks or any of the other countries afflicted by the euro to leave it? I agree that it is not going to be easy, but will it be any worse than the pain inflicted by 10, 15 or 20 years of austerity, low employment, no jobs and lower pensions? That cannot be a viable alternative in a democratic country.

Worse, almost, than the financial pain which the euro ideology is inflicting on Europe is the failure and erosion of democracy. Ireland, Portugal, Greece and even Italy are now wholly owned subsidiaries of the European Commission. When the European Commission says jump, all they can ask is, “How high?”. I remind your Lordships of what happened to the Greek Prime Minister when he threatened to ask his countrymen whether they wanted to submit to the harsh criteria of the bailout fund. He was immediately given a sharp lesson in Euro democracy and told that, if he had the referendum, he would be out. In fact, he was out anyway, and there was, of course, no referendum. It is ironic that what scared the pants off the bureaucracy was the prospect of a democratic vote in Greece, the country that gave the world democracy.

I do not really understand why our Government are spending quite so much political capital and time supporting what is going on in Europe now. Our membership of the EU costs us £18 billion a year; EU regulations and red tape are costing our businesses fortunes every single year. We have lost control of our immigration policy; we have lost control of our energy policy; and the emissions directives have forced us into enormously expensive wind and energy policies which are putting many people in this country into fuel poverty. On the evidence so far, if the EU is the answer, we have been asking the wrong question.

However, I want to end on a more positive note. The noble Lord, Lord Howell, said in his opening speech that he supported the Commonwealth. We should stop being quite so Eurocentric and look, as he said, at our interests in the Commonwealth and beyond. After all, we have many ties with it, both legal and financial. The noble Lord, Lord Kerr, is not here, but I cannot resist reminding him of the words of Winston Churchill when he was challenged by De Gaulle. He said:

“If Britain must choose between Europe and the open sea, she must always choose the open sea”.

The political construct of the EU is yesterday’s idea. The future lies with the growth economies of the Commonwealth, the USA, South America, China and the Pacific rim, not with the moribund, zero-growth EU.

I remind the noble Lord, Lord Dykes, whom I am pleased to see in his place, that the UN has 193 members. 166 of those are nation states that do not belong to the EU, yet they manage to trade perfectly well with each other and with members of the European Union without being stifled by the panoply of directives and regulations that emanate from the Commission.

To prosper in this world we do not need to belong to the EU club and its stifling rules. There is only one club in the world that we need to belong to—that is the world, and we are already a member.

--- Later in debate ---

[Lord Teverson]

My Lords, we have heard an excellent diversity of views around the Chamber. I will take up one point. On a number of occasions Greece was described as a victim. My noble friend Lord Dobbs, who is not in his place, used the term. It is worth remembering that Greece and its Governments—perhaps not its people, although the Governments were elected—are completely responsible for their fiscal condition. I absolutely agree that they should not have been allowed into the eurozone. Again, however, the Greek Government applied to join, and although the other eurozone states should take some responsibility for not refusing the application, it would be wrong to say that Greece is purely a victim. However, when it comes to dealing with Greece now, screwing it down further and further is not a solution. We need solidarity and we need to find a way forward, whether through a Marshall plan or otherwise, that does not breach the moral hazard of sovereign states and debts. I will come back to that theme later. Another thing I have found delightful in this debate is that so many of my Conservative coalition colleagues are Keynesians and are for growth as well as fiscal rectitude. I join them in that.

I want to follow up the point made by my noble friend Lord Risby, who made an excellent case for where the European Union has been successful. Indeed, I see it as the most successful multinational organisation, apart from Coca-Cola, that there has been since the Second World War and perhaps since well before that. It is far more decisive and has far more power than the United Nations. It has performed rather better than OPEC and has been able to fulfil its objectives. The African Union is nowhere near, and although NATO has been a very successful and important organisation, it has not been as able to fulfil its mission as the European Union. The European Union has done it largely through soft power, but it has generally managed to make things happen. There is a long waiting list from Iceland to Turkey with a lot of western Balkan countries in between. It is the largest single market in the world. It has a reserve currency. At the moment, 26 per cent, I think, of all international reserves are in the euro, while 4 per cent are in the UK pound and around 60 per cent are in the dollar. It has produced stability—military, democratic and market—across central Europe.

That success in Europe has been, and will increasingly be, more important because Europe is becoming relatively less important. We are all aware of the growth of China and the Asian economies. China passed Germany as well as Japan, I believe, in the past year. United States Secretary of Defense Panetta recently announced defence cuts including a reduction of 100,000 armed forces personnel and half a trillion dollars over the next 10 years. In that context, there is no way that the United States is going to take its eye off the ball in the Asian theatre so, whatever is said, that can only mean that its focus on Europe and European defence is going to become far less in future. Europe has to look to its own security and defence far more, whether as part of NATO or through the European Union. I believe it has to be through both. If it is through either, then both benefit.

This region has also become less important because it has less authority since the 2008 financial crisis which was in many ways seen as the end of western financial hegemony over the rest of the globe. The western model of finance and capitalism, as opposed to state capitalism or whatever, was brought into question. This watershed in 2008 was a great irony because, as this House will know, at that time the Lisbon treaty was ratified and came into force. At the time when we expected Europe to raise its game in terms of democratic accountability and, particularly, in terms of world presence, it was totally tripped up in global public opinion by three of its smallest economies: Ireland, although it is recovering well, Portugal and Greece, which accounts for 2 per cent of total EU GDP. The European Union, which contains three of the old G7 members, was completely unable to sort out its own economic future and to solve a problem that, to the rest of the world, seemed quite minute: debt issues in one of its 27 member states.

What happened after that? Angela Merkel went to China and started negotiating—as Europe still is—about whether China could help us out with our financial difficulties. This was summed up very well by Martin Wolf in the Financial Times on 31 January when he described the European Union as “stuck on life support”. As for Herman Van Rompuy, the President of the European Council, I do not even know where he is or what he has done. For someone who believes that Europe is critically important for the future, not just of our own region but of the world, this is a very difficult time indeed.

Where is the UK in this? As many other Members of this House have mentioned, we opted out—although perhaps saying that we have been opted out would be more accurate. Before that fateful night when we did not manage to do the deal with the other 26, I read a letter in the Evening Standard from a Back-Bencher from the other place, which said that the Prime Minister needed to call Angela Merkel’s bluff and that we should make sure to leverage all the benefits out of this crisis. Of course, the bluff that was called was our own, not Europe’s, and we are in the situation that we are.

Unfortunately, we continue to lecture but, I have to say, nothing like how we used to under the previous premiership, which was even worse. We continue to exercise all our discussions around red lines. Some of these are important, like the fact that the EU budget should not increase in real terms in the short term, but a lot of the others are far more minor, which makes the UK brand rather toxic and, I believe, demeans us.

We are at a turning point. It is quite clear to me that despite all the difficulties, the eurozone and the euro will survive. There will be increased membership of the eurozone, as a number are still queuing up to join, strange though that may be. As the noble Lord, Lord Tugendhat, said, we have a German leadership, but that is a bit like the Americans in Libya saying that they were driving from the back; we have Germany in the driving seat but without the leadership that a lot of the rest of Europe is asking for. Although there may be some resentment in the rest of Europe, I remember the Polish Foreign Minister actually demanding more leadership at this time from Germany, given its unique position.

Europe is a part of the world that must not be marginalised. We are far too important for that. Securing the future of the European Union is one way to prevent that. I do not believe that the fiscal pact is sufficient as a way forward. We have to find a way for growth and we have to persuade the other 26 in the European Union to modify that policy so that we can move forward in growth and not have the lost decade that was the fate of Japan.

[Baroness Stowell of Beeston]

My Lords, I hesitate to rise in a debate that is not time-limited, but perhaps noble Lords will find it helpful if I advise the House that we are running slightly behind schedule, based on the guidance that my noble friend issued at the start of the debate, and that is bearing in mind that two noble Lords have scratched. Most noble Lords have been very diligent in keeping to the guidance, but I thought it would be useful for me to remind noble Lords that the guidance is for about nine minutes.