EU and Russia (EUC Report)

Lord Tugendhat Excerpts

Tuesday 24th March 2015 Lords Chamber

Moved by

[Lord Tugendhat]

That this House takes note of the Report of the European Union Committee on The EU and Russia: before and beyond the crisis in Ukraine (6th Report, HL Paper 115).

[Lord Tugendhat (Con)]

My Lords, I thank my colleagues on the committee for their perseverance and very considerable help. We have had a long journey, which has required a great deal of hard work, mutual understanding and attention to each other’s views, and I am extremely grateful for their support. My only regret is that, under the rotation rule, so many of them will be leaving the committee at the end of this Session. I should also like to offer profound thanks to our two outstanding assistants, the committee clerk, Sarah Jones, and our policy analyst, Roshani Palamakumbura. I speak for all my colleagues in expressing our admiration, as well as our gratitude, for the exceptionally high quality of their contributions. Finally, I thank the usual channels for enabling this report to be debated so soon after its publication and before Parliament winds up for the election. I quite understand that, as a result of the speed with which it is being debated, there cannot be a formal government response, but I hope that the Minister will be able to reply to points made during the debate.

Before turning to my speech, I should say how very much we all look forward to the maiden speech of the noble Earl, Lord Oxford and Asquith. He will speak with great authority as a former diplomat in Moscow and Kiev. Having looked him up on Wikipedia, although it is not always accurate, I believe that he has charitable and business interests in Ukraine. An additional reason for me to listen very carefully to what he has to say is that he was educated at Ampleforth, though a great many years after I was at that school.

[Lord Foulkes of Cumnock (Lab)]

I am not able to speak for other reasons, but I think that all of us who were on the committee would say that the noble Lord, Lord Tugendhat, chaired it with great skill. He was an exemplary chairman and we should thank him very much indeed.

[Lord Tugendhat]

My Lords, I am very grateful to the noble Lord—or I think I can say my noble friend—Lord Foulkes, after that accolade. It certainly gets my speech off to a good start. I thank him very much.

As the title of our report indicates, our focus is on the events leading up to the current Ukraine crisis and looking beyond it to the future. I should make it clear, as does the report, where we stand on the present situation. Russia has to understand that taking over other people’s territory, whether in eastern Ukraine or Crimea, is unacceptable. Such actions cannot be allowed to stand. For as long as the present conflict lasts, the European Union should maintain sanctions and be ready, if required, to step them up. Therefore, I welcome last week’s European Council decision, which is in line with our approach. Sanctions cannot be an end in themselves; they must be a means to an end. Do Her Majesty’s Government believe that there should be a process whereby progress in resolving the underlying dispute and its causes is linked to a ratcheting down of sanctions? In short, should there be a carrot as well as a stick?

I have another question. In our report, we argued that, while the dispute lasts, other avenues of communication should be kept open, such as cultural links in commemoration of our shared history in World War II. Do the Government agree, and have they and other EU Governments yet taken a decision about wreath-laying in Moscow on 9 May, which is of course a particularly difficult day for British Ministers?

I turn to how the EU should proceed in future in relation to Ukraine and other ex-Soviet republics. The committee believes that, while Russia has no right to dictate to sovereign states on its borders, those states and the European Union need to take account of Russian interests and sensitivities. The historic, geographical and current economic links between those states and Russia are such that, if the EU is to play a constructive role in helping them to develop their economies and societies, that cannot be done in the teeth of Russian opposition, as the present crisis shows. This will require big changes of attitude on the part of Russia, and I will say a word about that in a few moments. However, as a committee of the British Parliament, our policy recommendations are directed to the British Government and the European Union.

The first step, I believe, must be to set goals for the EU’s relationship with those countries that take account of how far short of meeting the criteria for EU membership they currently fall and how long it will take them to catch up. We should be prepared to help them close the gap but this will require tough love. In Ukraine and elsewhere, financial, technical, social and expert aid must all be subject to strict political and financial conditionality and accountability. Inevitably, this will create resentment against the donors, but these countries have indicated that they want to draw closer to us and our values, with a view to perhaps one day joining the European Union. We must therefore make it clear that the aid is to help them to do that, not to evade or defer difficult reforms, and certainly not to garner support against Russia.

With Russia, the challenge is of a different order: it is about how two large powers with different political and social systems can work constructively together as equals on common problems in a shared space. This will require sensitivity, mutual respect and an understanding on both sides of different historical perspectives. We on the EU side must try to understand why Russia feels as it does about EU enlargement and NATO. On the evidence that we took, I think we all agreed that President Putin’s views are to a large extent shared by most of the Russian population, and that any foreseeable successor to President Putin would most likely hold the same views. On their side, the Russians must try to grasp the impact that the USSR’s post-World War II expansionism has had on Europe’s collective psyche, and why so many countries on its borders feel as they do about drawing closer to the European Union. It is in this context that the committee believes that co-operation between the European Union and the Eurasian Economic Union might provide a way forward. Let us together explore how far and in what manner the rules and requirements of these two organisations might be aligned. This could provide a useful framework within which to develop closer EU-Russia economic relations and to develop the countries that border on both the European Union and Russia.

Much as we should like to see better EU-Russia relations, there is nothing starry eyed about the committee’s approach. We attach importance to holding Russia to the obligations it has freely entered into in respect of the World Trade Organization and the European Convention on Human Rights. We also believe that even if Russia is willing to tolerate corruption and lax business practices, to put it kindly, within its own borders, these must not be allowed to contaminate its dealings with this country or the rest of the EU.

I end with an exhortation. The committee believes that since the end of the Cold War there has been a decline in the Foreign and Commonwealth Office’s analytical and language skills in relation to Russia. Indeed, only last week we were surprised to learn at a seminar that we held that, in recent years, the head of the Russian desk has sometimes turned over on an almost annual basis, and that at least one recent holder of that office did not speak Russian. I do not know whether the Minister will be able to cast light on that. Whether or not she can do that, I hope that she will assure the House that if there is a Conservative Government after the election, they will devote sufficient diplomatic resources to the vital Russian relationship.

[Lord Wallace of Saltaire (LD)]

My Lords, there is a large number of speakers in this debate. I remind noble Lords that the advisory speaking time is eight minutes. If noble Lords keep to that or less, we will finish this debate by 7.30 pm—four and a half hours from its outset—which will allow us to finish by 10 pm.

--- Later in debate ---

[Lord Tugendhat]

My Lords, I thank all who contributed to this debate and who made it such a notable occasion. I think that my colleagues on the committee and I have been greatly encouraged by the degree of support that the report has received. I also add my voice to those who congratulated my noble friend Lord Oxford and Asquith on his outstanding speech, with all the knowledge and insights that he brought to bear. Finally, I thank my noble friend the Minister for her comprehensive response and for the frankness with which she dealt with those issues on which the Government and the committee are not entirely in accord. I cannot pretend that she entirely convinced me, but she did convince me that, if she is still in post after the election, the Foreign Office will be in very good hands.

Motion agreed.

Transatlantic Trade and Investment Partnership (EUC Report)

Lord Tugendhat Excerpts

Tuesday 17th June 2014 Lords Chamber

Moved by

[Lord Tugendhat]

That this House takes note of the Report of the European Union Committee on The Transatlantic Trade and Investment Partnership (14th Report, Session 2013-14, HL Paper 179).

[Lord Tugendhat (Con)]

My Lords, it is customary on these occasions to begin with thanks, and on this occasion I do so in a very warm manner. It is no formality. The committee has been exceptionally well served by its staff and its specialist adviser. I should also like to thank all in Brussels and Washington as well as those in this country who gave evidence, especially those who came from a long way to do so. Last, but above all, I thank my colleagues on the committee for their constructive contributions, their diligent attendance, their support and good company.

Normally, on these occasions, the chairman would talk about the Government’s response to a report but, as this debate is happily being held so soon after publication, the Government have not yet had an opportunity to reply. We shall therefore look forward with heightened anticipation to the Minister’s response to the debate. For my part, I will highlight certain aspects of the report on which I should particularly like to hear from him and which I regard as particularly important. My colleagues on the committee and others who have put down their names to speak will no doubt weigh in on the issues that they consider to be of particular importance.

I begin by reminding the House that today is the first anniversary of the 2013 Lough Erne G8 meeting which, under our Prime Minister’s chairmanship, launched the TTIP negotiations. Mr Cameron described them then as,

“a once-in-a-generation prize”,

that could be,

“the biggest bilateral trade deal in history, a deal that will have a greater impact than all the other trade deals on the table put together”.

Our central finding supports that view, and not just because of the massive figures for the potential economic benefits quoted by the Prime Minister—£100 billion for the EU and £80 billion for the US, figures which we suggest should be treated with a certain amount of caution. There are other reasons as well. One is that TTIP provides the European Union and the United States, while they still account for some 50% of world GDP, with an opportunity to set the template for international trade for a generation to come. In our view, this will encourage China to adopt a more co-operative stance to international trade negotiations, and we think that there is evidence of that already. We also believe that the deal should be structured to enable third parties, including developing economies, to join and to take advantage of the benefits. As I said, this is an opportunity to set the template at a time when the United States and the European Union account for 50% of world GDP. That is not going to last very long and if we lose this opportunity it will not recur.

Another reason why we attach so much importance to a TTIP agreement is that we believe that it could revitalise the transatlantic partnership by adding an economic dimension to the security link that already exists. Then there is the emphasis which is being placed in the negotiations on removing non-tariff barriers and building for the future. Tariff barriers are important, but in transatlantic trade non-tariff barriers are much more so. Their removal could provide a level playing field for manufacturing and service companies on both sides of the Atlantic that would lower costs and open up huge new opportunities for small and medium-sized enterprises as well as for large companies. Large companies know how to get round non-tariff barriers, but for small and medium-sized enterprises non-tariff barriers are often in effect an impregnable wall that is impossible for them to penetrate. Therefore, the emphasis being placed in these negotiations on the removal of NTBs could have very far-reaching effects.

By “building for the future”, I mean establishing a structured dialogue on regulatory matters within which barriers can be progressively removed by agreement over a period of years. This is what is meant in this context by a living agreement, and it is somewhat analogous to the construction of the European single market. I ask noble Lords to imagine a single market, or something analogous to it, that would comprise not just the European Union but the whole north Atlantic area: the United States and also Canada, with which an agreement was reached a short time ago. We believe that TTIP has massive potential of very great significance, both politically, in terms of the European Union and transatlantic relations, and economically, in terms of boosting growth and freeing world trade.

I now turn to some of our recommendations directed at the United Kingdom Government and at others. The first one I shall mention concerns the continued exclusion of financial services regulation from these negotiations by the United States. We say in our report that there is an issue of principle at stake here. In a negotiation between equals it is unacceptable for one party unilaterally to exclude a chapter proposed by another. Of course, there can be hard and difficult negotiations and there is no bounden duty on either side beforehand to reach an agreement. However, for one side at the outset to exclude a chapter of importance to the other is contrary to the spirit in which these negotiations are supposed to be taking place.

That said, and given the weight which the United Kingdom attaches to this issue, the committee does not think that either the United Kingdom Government or the European Commission has as yet made a compelling case for the inclusion of financial services regulation. We look forward to hearing from the Minister today and on other occasions stronger arguments than have been put forward hitherto. I should also like to draw the Minister’s attention to the story in today’s Financial Times on this subject, although I am sure that it has been already. Can he cast any light on that and say whether the FT has it right, as it generally does, or whether, on this occasion, it has it wrong?

My next point relates to agricultural issues, which do not get much coverage in the UK media. Our view is that there will not be an overall agreement unless understandings can be reached on such matters as genetically modified organisms and geographical indicators. These matters are also likely to engage considerable attention in Congress and the European Parliament during the ratification process once an agreement has been reached.

A flagship issue on which the Minister might also be able to report is procurement. This is likely to be a particularly hard fought issue as the European Union hopes to obtain commitments from the various states of the United States as well as from the federal Government. That has been achieved in the Canadian agreement to which I referred earlier—the provinces have signed up. I would be interested to know what price the Minister would give on whether the states of the United States will be as amenable in this matter as the provinces of Canada. As not all European Union member states apply European Union procurement rules as diligently as they should, does the Minister agree with our view that it would be very good for the single market and for this country if TTIP put pressure on them to do so, which would lead to a further development of the single market?

I turn to the industrial and service sectors that stand to gain from an agreement. We were very impressed by the way in which the automotive industry on this side of the Atlantic and in the United States put its case to us. It demonstrated the practical and public benefits that it believes will flow from the agreement and eloquently explained why some of the fears that opponents of the agreement have expressed are unfounded. We came across nothing remotely comparable in any other sector. I urge other sectors of the economy in this country, elsewhere in the European Union and in the United States that hope to gain from a TTIP agreement to look at what the automotive industry is doing and to follow its example.

I conclude with some political points, bearing in mind the fact that the key period for reaching a TTIP agreement, or at least for breaking the back of the negotiations, will be once the European Parliament elections are over, as they are, once the new Commission is installed, after the US mid-terms and before the US presidential election. In that connection, we express concern about the lack of progress in Washington on securing a trade promotion authority. Unless a trade promotion authority is secured, the negotiations are in danger of being kicked into touch before they even start. On this issue, the US Administration certainly talk the talk but have yet to walk the walk. We came across no sense of urgency in Washington on this matter and the impression one gains from a distance is that that sense of urgency is still lacking. I should be grateful if the Minister could cast any light on that.

What is happening on this side of the Atlantic is also somewhat disturbing. In Germany, TTIP has been caught up in the fallout from the Snowden affair. The two obviously bear no relation to each other. Germany would be a big net beneficiary of TTIP but the view has taken hold that resentment over Snowden is a good reason for creating difficulties on TTIP. In France, I understand that there are threats that TTIP will be held hostage to the completely unconnected affair of BNP Paribas’s problems with the financial regulators in the United States. I do not know whether the Minister can cast any light on that.

Meanwhile, in the European Parliament, many of the new populist MEPs are said to be hostile to a deal. Indeed, I read in the media that even the group that includes Conservative Members of the European Parliament will, if the Alternative für Deutschland MEPs join that group, have a majority against the TTIP agreement. I find it barely believable that Conservative MEPs should be in a group that is hostile to an agreement of this sort—an initiative launched by the Prime Minister. I should be grateful if the Minister could tell us something about that.

Against this background, the committee’s recommendations that the Government should put more weight behind their communications and diplomatic efforts in support of TTIP take on additional urgency. Within the United Kingdom, they should formulate a communications strategy around the promotion of TTIP that involves Ministers with sectoral responsibilities, not just Trade Ministers. They should include Treasury, Agriculture and Environment Ministers. All the rest should be involved. In the European Union and the US, it must mean the redoubling of the Government’s efforts to secure the agreement of others. I pay tribute to the efforts that have already been made. I was impressed with the work that our embassy in Washington has been doing, but I had the feeling—I think that my colleagues shared this view—that much of the heavy lifting is being left to the Commission and that the British Government, who have such a stake in the success of these negotiations, could do more.

A successful TTIP would be of great benefit to the United States and Europe as a whole, but to no one more than this country. It is a great international initiative, launched under British auspices and with all-party support in this country. Can the Minister convince us that the Government are putting the weight behind it commensurate with the Prime Minister’s words when he launched the initiative at Lough Erne? I beg to move.

--- Later in debate ---

[Lord Tugendhat]

My Lords, this debate has taken very much the course that I had hoped. Each speaker has approached the issue from an individual standpoint and has emphasised particular aspects of the report and the TTIP negotiations, yet all have cleaved to the central proposition that a TTIP agreement is both very important and highly desirable. I will mention only one of the speeches, that of the noble Lord, Lord Jopling, because of the optimistic tone he took, the way in which he positioned the pace at which this race is run, and how difficult it is to judge in the early stages how it might be in the later stages. He added to our debate a tone that was both optimistic and realistic.

Taken together, however, we confronted the Minister with the full range of issues and questions that were raised in the report. I thank him for his positive and comprehensive response. Both his manner and his content inspire a good deal of confidence in the way that this dossier will be handled by the British Government. He said that other Ministers would also become involved and mentioned my old friend Ken Clarke, whose contribution has been very great. I will press him a little further to say that we also need to hear from the sectoral Ministers—those responsible for the environment and agriculture, Treasury Ministers and the rest. I also remind him that a year ago the Prime Minister launched this initiative at Lough Erne and made it clear that this was a major issue for the United Kingdom and for the European Union. When the Prime Minister attends European Councils and bilateral meetings with other European leaders I hope that he, too, will be able to make it clear that this remains, as he said at Lough Erne, a once-in-a-generation opportunity. I beg to move.

Motion agreed.

Queen’s Speech

Lord Tugendhat Excerpts

Tuesday 10th June 2014 Lords Chamber

[Lord Tugendhat (Con)]

My Lords, I believe that every so often an event occurs that should lead Governments to reconsider well established attitudes and policies. Recently one such event has occurred in the area of responsibility covered by the Minister and his department. In fact, there have been two: one is the annexation of Crimea and all that Mr Putin has done in Ukraine and said about how Russian policy in its near abroad is likely to develop; and the other is the Pfizer bid for AstraZeneca.

Let me take Russia first. In recent years, all EU member states have done business with Russia as if it is a country much like ours and becoming more so. Little or no thought has been given to the extent to which deals and relationships that EU member states regard as part of the normal course of business may become hostages to fortune in diplomatic, strategic and even military disputes. The most obvious example of this vulnerability is the massive dependence of Germany and some other member states on Russian gas supplies. It is hard not to conclude that this plus of course Germany’s massive industrial exports to Russia have not played a part in determining German responses to recent Russian actions in Ukraine. However, Germany is only the most obvious, as distinct from the only, major EU member state in this position. Has not the French contract to supply warships to Russia, including one aptly named “Sevastopol” influenced French attitudes? Has not the British attitude to possible financial sanctions been influenced by the massive Russian involvement in London’s financial and other markets?

In the time available to me I cannot deal at length with these issues but in the light of recent Russian actions and statements, our own policy and that of the European Union as a whole should change. A set of criteria within which economic and commercial relations with Russia should be conducted must be developed. Whether in relation to imports and exports or inward and outward investments, account must be taken of our political and strategic interests and the possible risks as well as purely business considerations. With vital imports, such as gas, this means not becoming overdependent on Russian supplies and ensuring that there are alternatives available. With exports, it again means avoiding overdependence and not supporting Russia’s armed forces. With financial investments, it means ensuring that sufficient is known about them to enable whatever action might be required in an emergency to be taken with the minimum disruption to other market operations.

We, the EU in general and Britain in particular, should also bear in mind our experience with Russia in our dealings with that other great autocratic power, China. As it has demonstrated on many occasions, China does not hesitate to use whatever leverage it has in relations with other countries in pursuit of its diplomatic and strategic aims. Her Majesty’s Government have had experience of that when they were frozen out by Beijing after the Dalai Lama incident. Now I am very much in favour of doing more trade with China and encouraging Chinese investments in the United Kingdom. We are a long way behind our EU partners, notably Germany, in developing economic links with China and we should try to catch up. However, we must also be aware that in China commercial and financial relations are always subordinate to diplomatic and strategic considerations and that Chinese companies are instruments of the Chinese state, not free-standing, independent entities.

So, as with Russia, and in conjunction with our EU partners, we need to develop a framework of rules and criteria within which to conduct our economic relations with China. As with Russia, the aim must be to ensure that we do not lay ourselves open to pressure and blackmail. Unfortunately, I feel that we are at the moment tilting in the wrong direction. I refer in particular to the bending of the rules to enable Chinese banks to set up branches rather than subsidiaries in the City of London. We have offered Chinese nuclear power station suppliers the inducement of high, guaranteed returns. It is difficult to think of an industry more sensitive than the supply of nuclear power stations and it seems strange that we should particularly invite investment into that area by a state with the characteristics of the Chinese People’s Republic.

I conclude with some thoughts arising from Pfizer’s abortive approach to AstraZeneca. Over the years, Britain has derived great benefits from foreign direct investment—the auto industry being the classic example. However, we have also seen too many great and successful British companies disappear—including two with which I was once connected, BOC and Blue Circle—because the German and French companies that took them over wanted them for their long-term value whereas the shareholders were more interested in short-term gains. Both those companies were world leaders, they were not bailouts, and they were bought precisely because they were world leaders. Since then, I am afraid, with the rise of hedge funds, shareholders have become even more short-termist. Other factors unrelated to the underlying soundness and long-term interests of the target company and its employees, suppliers and customers have also arisen.

The Pfizer/AstraZeneca incident illustrates this very well. Whereas the companies that took over BOC and Blue Circle were driven by long-term industrial goals, Pfizer was, above all, driven by tax planning—or, should I rather say, by plans to minimise taxation. In these circumstances, the Government need to take a much broader view rather than simply letting the market decide. They must recognise that the interests of shareholders who trade shares are not, and cannot be, coterminous with the interests of the target company’s employees, suppliers, customers, research programmes and all the rest of it. The long-term national interest needs to be taken into account in a very important way.

The Government should also recognise that, given shareholder pressure on managements, and the fact that this year’s predator can very well be next year’s victim, no assurances, however well meant, about future employment and research can be binding for more than a very short time. I must say that the way in which government Ministers appeared to react to the assurances that Pfizer was making showed a certain unawareness of contemporary industrial realities. As a representative of the Government, will the Minister look again at the public interest test in relation to takeovers of all kinds, with a view to strengthening it as necessary?

European Union (Referendum) Bill

Lord Tugendhat Excerpts

Friday 24th January 2014 Lords Chamber

Earlier in this debate, our critics said that we would cause problems for the Commons if we amended the Bill and would face the wrath of the people if it was amended and not accepted by this House as it stands. That assertion has been made bunkum of. We may have many blemishes on our society, but one thing that we have is a very full-blooded and strong parliamentary democracy. Part of that parliamentary system is our job, which is to scrutinise, ask awkward questions, speak out about double-talk and double standards, and amend legislation where we feel it necessary. Private Member’s Bill or not, too much is at stake now to take this Bill at face value. If we fail because of our own obduracy, Britain will be humiliated and our chances of ever reforming the EU will be severely damaged. This amendment is in the interest of our country. That is why it has my support. I hope that it has the support of many Members on all sides of this House this afternoon.

[Lord Tugendhat (Con)]

My Lords, I agree with every word that the noble Baroness, Lady Boothroyd, said and therefore will not waste the time of the House by going over the points in detail. That was admirably done by my noble friend Lord Bowness and the noble Lord, Lord Grenfell, in their speeches. I just want to make one particular point: both at Second Reading and in our debates today, I have heard it alleged that those of us wishing to amend the Bill are trying to sabotage the principle of a referendum and that there is some deep-laid plot to deny the British people the right to a referendum. The reverse is true.

As I said at Second Reading, I support the position set out by the Prime Minister in his Bloomberg speech. I shall campaign for a Conservative Government and when one is elected I shall campaign for a yes vote in the referendum when it occurs. But because I take that referendum very seriously, I am anxious that it should be held on the best possible basis: the details should have been fully thought through; it should be designed to provide the British people with the most objective possible choice and all the information that they require; and, before the referendum takes place, the British Government should have the best possible chance of achieving their objectives. I supported an earlier amendment and shall support this one, not because I wish to cut across the House of Commons or deny the British people the vote but because I wish to see the referendum carried out on the best possible basis and designed to achieve the result that the Prime Minister said that he wants to see.

[Lord Kinnock]

My Lords, the only reason we have the Bill, and certainly the only reason that we have a Bill with a deadline, is the repeated failed attempts by the Prime Minister to mollify and pacify the euro-secessionists within the Conservative Party. Because of the risks, speculation and difficulty to which it subjects our country unnecessarily, I think that it is the most fruitless and most dangerous appeasement since Danegeld.

What is the Prime Minister seeking to negotiate? That is central to the Bill. He was good enough to tell us in his Bloomberg speech that he wanted to negotiate a new settlement with our European partners in the next Parliament,

“a new settlement in which Britain shapes and respects the rules of the single market but is protected by fair safeguards, and free of the spurious regulation which damages Europe’s competitiveness”.

He does not go into more detail about that; I suppose that we will have to wait for it. He calls for a proper and reasoned debate and then says:

“I say to our European partners, frustrated as some of them no doubt are by Britain’s attitude: work with us on this”.

I use those quotations to illustrate the complexity and the need for co-operation with European partners to make any significant progress on the kind of negotiation that the Prime Minister and the Chancellor of the Exchequer envisage: to negotiate a new settlement, which has at its centre powerful and influential participation in the single market but with our obligation shorn of any of the duties and contributions to which we object.

I think that that summarises fairly the approach to be taken in the event of the Prime Minister being engaged in that new settlement. That would make the whole process very fragile. The date, which is the subject of our debate now, makes it even more fragile. Why is that? Because the specification of the date of December 2017 means that the furthest possible realistic date to honour the undertakings of the Bill, by which negotiations would have to be concluded, would be, let us say, October 2017, 17 months after a general election in which the Conservative Party hopes to be victorious. It gets even more complex because, just underneath the provision relating to 31 December 2017 is the date of 31 December 2016 as the date by which the date for the referendum must be appointed by the Government.

Do people really believe that after the date of the referendum has been specified in December 2016, we can expect our partners in Europe—despite their distractions, which the noble Lord, Lord Kerr, has properly pointed out, with their acute domestic questions relating to their general elections—to whom the Prime Minister has appealed for patience, to stick with us when they know very well that we are facing a deadline of a maximum of 12 months, during which time the referendum must be held after the date has been appointed?

That brings me to my final point. I think that noble Lords will recognise it to be a practical point because, with the galaxy and diversity of talents and experience in this place, there is any amount of acquaintance with negotiation. Probably everyone in this House has done it, in one way or another, whether as a trade unionist, an employer, a politician, a civil servant, a manager or a parent. We have all engaged in negotiations and I suppose that there are a couple of basic golden rules about them.

The first rule is that you signify a deadline for the conclusion of negotiations only if that deadline can be one of your weapons—for example, “If we do not finish this deal by next Tuesday night, the deal’s off the table”, or, “If you don’t make the deal by next Tuesday night, we’re having a ballot and going out on strike”. So you use a deadline to influence the negotiations themselves, but only when you are a participant in negotiations and have sanctions. You can negotiate with your children, if you have a more democratic parental relationship than my children tell me I had in their upbringing, because there can be a withdrawal of privileges and a denial of this, that and the other, simply because they have not kept to their side of the bargain. That is part of growing up and of being a parent. You can do the same thing as an employer or a trade unionist, or any form of negotiator using sanctions to try to uphold the deadline and secure your objective.

What sanctions are in the hand or pocket, or the red box, of any member or putative member of a future British Government who have set themselves a deadline to negotiate a complex and comprehensive new settlement with the rest of the European Union, a prominent feature of which is our implacable right to continue to operate with full privileges and obligations in the single market, if we expect them to be willing to endorse that and give us our way in the name of reform? The reform objective is decent and very supportable. I have been working and campaigning on reform of the European Union in a variety of ways for a very long time past, so I support the objective of reform. However, what reforms can you undertake while ensuring that they are copper-bottomed, secured in negotiation and adopted as policy, or even as treaty amendments, if you are working against a deadline? In this case, there are no realistic sanctions to be employed against those who will not bear with us, negotiate in good part and come to a conclusion according to the timetable set down in the Bill.

The reality—is it not?—is that you never set a deadline unless you can enforce it and use it as a weapon of negotiation. If you make a deadline in any other circumstances, the calendar and the clock will do your opponents’ work for them—or at least, not your opponents but your partners in negotiation. It is easy to make the error sometimes and I have been known to slip into it very occasionally myself. I ask the noble Lord, Lord Dobbs, to consider whether even his objective of securing this legislation to facilitate a referendum is really served by having an explicit deadline in the Bill. It is a deadline that takes no notice of the objective realities of our politics and other peoples’ politics, as the noble Lord, Lord Kerr, so forcefully pointed out. That is evidenced by any knowledge at all of the conduct of political and constitutional affairs in the European Union. A deadline takes no account of the even more basic realities of the biology and psychology of negotiation.

EU: Free Trade Agreements

Lord Tugendhat Excerpts

Monday 13th January 2014 Lords Chamber

[Lord Livingston of Parkhead]

The discussions are still ongoing. Clearly, we would like to see free trade of all descriptions, but the TTIP agreement will be largely focused on reducing import tariffs and particularly on the convergence of rules, which will help all countries. We would certainly like to see its energy exports being made available all around the world, as is the case with UK exports from the North Sea.

[Lord Tugendhat (Con)]

Does the noble Lord agree that the advantages of TTIP to the consumer need to be more emphasised? At the moment, most of the emphasis is on the benefits to producers on both sides of the Atlantic, but in terms of price reduction and a widening choice of products and goods the TTIP stands to do the consumer a great deal of good as well.

[Lord Livingston of Parkhead]

My noble friend is entirely right that the TTIP will bring a lot of benefit to consumers. When you get a convergence of standards, global models being made and lower tariffs, prices will come down and consumers will have more choice, not just in the UK or the EU but in the US as well. Certainly, we feel it is very important—Her Majesty’s Government have done a number of pieces of good work on this—to highlight the benefits that free trade will bring to consumers on both sides of the Atlantic. I absolutely agree with my noble friend that it is very important to highlight the positive impact that will arise.

European Union (Referendum) Bill

Lord Tugendhat Excerpts

Friday 10th January 2014 Lords Chamber

[Lord Tugendhat (Con)]

My Lords, as the House knows, I am a former EU Commissioner and, as such, I look forward to campaigning in the referendum that the Prime Minister has promised to hold in the event of a Conservative election victory. Whatever happens to this Bill, that remains the case. The Prime Minister set out his policy in his Bloomberg speech and I support that policy. The Prime Minister has given his word and I am sure that he will keep it. So, in the event of a Conservative electoral victory, there will be a referendum whether or not this Bill goes through Parliament. The important thing is that the referendum will take place because the Prime Minister has said it will, provided that he of course can lead a successful campaign in the election.

So the Bill is, in part, unnecessary. However, I am afraid that it is also, in part, a bad Bill. A referendum on UK membership of the European Union will be a major political, economic and constitutional event. On that point everyone can agree. It should therefore be organised with the greatest possible care and thoroughness; it should not be based on a rushed and inadequate Private Member’s Bill. The Electoral Commission has drawn attention to some of the inadequacies, as have the reports of the Select Committee on the Constitution and the Delegated Powers Committee. In the interests of brevity I will not repeat the points made by the Select Committee on the Constitution, the Electoral Commission or the Committee on Delegated Powers, but I endorse a great many of them and I do not think that the House should fly in the face of them. The points deserve serious consideration.

I would add two further points of my own. One point concerns the position of Gibraltar. It is bizarre that Gibraltarians should be given the right to participate in a referendum of this kind. I do not see why that particular overseas territory, or any other overseas territory, should be given that right. If Gibraltar has a referendum on its relationship with Spain, or whatever it might be, we will not have a vote, and I do not see why it should have a vote here. There is an element of absurdity in that.

Much more serious is the position of the hundreds of thousands of British citizens who work, live and have retired in other countries within the European Union. Those people will be directly affected by the result of any referendum and I think that they certainly have the right to participate. I do not know what the figures would be but it would not be impossible to put together arrangements which would enable a great many of those people to participate.

We should perhaps learn from Australia, a country which goes in for referenda from time to time. It had an important referendum some years ago on whether or not it wanted to remain a monarchy. Australians living, working or retired in this country, the United States, the continent of Europe, India or wherever it might be were able to vote, under certain conditions and as long as they met certain criteria. Just as Australians were able to vote on the constitutional future of their country even if they were not at the time living in Australia, so British citizens should be able to do the same even if they are not at the precise time living in this country.

To conclude, the Conservative Party will ensure that there is a referendum if it wins the election. That is true whatever happens to this Bill. However, the Bill provides an inadequate basis on which to hold such a referendum. Therefore the House should not feel inhibited about seeking to improve it.

Referendum: European Union

Lord Tugendhat Excerpts

Monday 29th July 2013 Lords Chamber

[Baroness Warsi]

My Lords, I am not in the habit of commenting on rumour. What I can say is that I am aware that Mrs Merkel is committed to a more competitive and flexible Europe and that in a number of areas we do, in fact, agree.

[Lord Tugendhat]

My Lords, does the noble Baroness agree that there is too much pessimism around these questions? Not only have there been encouraging responses from the German Government, the Dutch Government and the Italian Government, it is quite clear that in the coming two or three years either the eurozone will come closer together, in which case there will have to be a general negotiation with the non-eurozone countries, including ourselves, or the eurozone will split apart, in which case again there will have to be a general recasting of relationships. Within that context, the Prime Minister’s ambitions seem perfectly reasonable. Does she not agree?

[Baroness Warsi]

I agree completely with my noble friend.

European Union: Recent Developments

Lord Tugendhat Excerpts

Monday 17th December 2012 Lords Chamber

[Lord Tugendhat]

My Lords, I declare an interest as I was a European Commissioner for some eight years. Watersheds in politics generally become apparent only with hindsight but I suspect that 2012 will prove to have been one for the European Union. It has of course been dominated by the crisis in the eurozone. The eurozone has survived in one piece but at a very heavy price. Not so long ago, the European Union was admired as a model for post-modern interstate relationships from which Asians and Latin Americans wished to learn, but that is certainly no longer the case. Indeed, it is the reverse as Asians compare the way in which the EU has been dealing with its problems with the way in which they handled theirs a few years ago. It has also damaged very considerably the EU’s relationships with its main trading partners in the United States and elsewhere.

Worse still is the price being paid within the eurozone itself. Although the deficit countries have made more progress than they are often given credit for in improving their competitiveness and trade balances, the burden of austerity grows ever heavier. This embitters relations between the peoples of the member states, with anti-German feeling now strong in the Mediterranean and resentment and bailout fatigue growing in Germany and elsewhere in northern Europe.

Such a situation cannot continue. To many in leadership positions in the EU institutions and in other member states, the response is to transform the eurozone from a currency union into a fully fledged fiscal and economic union. That has been the case for some time but this is the year in which those aspirations have taken physical form, with the President of the Commission and the President of the European Council both producing blueprints that would, in effect, place ultimate economic and budgetary control within the European institutions.

I know that not very much progress has been made down that road. At the recent EU summit there was a banking union agreement, but a very partial one. I realise, too, that there are those among the eurozone members who baulk somewhat at the consequences of what is being proposed. However, it is the route map that has been set and it is one that Britain cannot go down. There are other EU members outside the eurozone who cannot do so either. Yet it would be contrary to our national interest to leave the EU and contrary to the national interest of all members, whether within the eurozone or not, for the EU to break up.

The challenge facing all EU Governments is therefore to find a way to maintain the EU in such a way that it can embrace both those who want closer integration and those who, within an overarching framework, want looser and more flexible arrangements. It is to this task that I urge British Ministers to direct their energies. I urge them to seek ways to maintain the single market, the common external trade policy and their supporting structures, from which we derive great benefit, so that they work as effectively as possible in the interests of both the euro-ins and the euro-outs. Likewise, I hope they will seek to maintain and improve the mechanisms for co-operation in foreign policy and security matters. I was encouraged by what the noble Lord the Leader of the House had to say on that subject earlier today.

As the largest of the non-euro countries, Britain is well placed to rally all those outside the eurozone behind proposals to reconstruct the EU along these lines in the interests of both groups. Of course, British Ministers will have an agenda of particular objectives that they wish to achieve; so will others. However, we are far more likely to achieve our objectives if they are presented within such a context rather than on their own or as part of a general resistance to the ideas of others.

Within the eurozone there will be those ready to respond to such an approach, contrary to what the noble Baroness from the Liberal Democrat Benches said earlier. Only last month the new Dutch Prime Minister, Mr Mark Rutte, called for the EU to carry out a review of its powers and consider returning some to the member states. He said:

“What we want to do is have a debate at the level of the 27 whether Europe is not involved in too many areas which could be done at the national level”.

While calling for “more Europe” on budget discipline and in handling Europe-wide financial issues he said that he is,

“not in favour of a federalist European state”.

I have one last point. It is not only in order to enable the euro 17 and those who want a looser involvement to work together in constructive harmony that a British plan for the reconstruction of the European Union is required. We must also bear in mind that there is no guarantee that the eurozone will hold together. Everyone, including us, needs to have preparations in place to ensure that the EU and its core structures can be maintained in the event that not all current members of the eurozone can live within its disciplines or, perhaps, within its aspirations.

EU: Recent Developments

Lord Tugendhat Excerpts

Thursday 16th February 2012 Lords Chamber

[Lord Tugendhat]

My Lords, it is many years since the noble Lord, Lord Hannay, and I were working not together but in the same place, in Brussels. I shall always look back with pride on my time as a European Commissioner because I believe that I played a small part in the most exciting and hopeful political initiative to have been undertaken in Europe in modern times. However, I have never been under any illusion as to the fragility of the project. However much political leaders might proclaim grand principles and grand ambitions, popular support in all member states has always been conditional. It has always ultimately depended on the extent to which public opinion in each member state has perceived the European Union to be contributing to the solution of that country’s national problems—be they political, economic, social or, in many cases, historic. For as long as the EU is perceived to be contributing to the solution of major national problems, it enjoys widespread popular support. Once that ceases to be the case, support cools. Once it comes to be seen as part of the problem rather than part of the solution, public opinion is likely to turn sharply against it.

We have seen that happen even in such a formerly staunch supporter, one of the original six, as the Netherlands. Now I fear that, thanks to the travails of the eurozone and the policies primarily laid down in Berlin to resolve them, it is becoming increasingly true of wide swathes of public opinion across the European Union.

That brings me to the delicate point which underlies all recent events in the European Union. That is the profound shift in the balance of power between the member states of the eurozone in favour of Germany. That was not a position sought by Germany. Germany never set out to be a hegemonic power. That is the precise opposite of what economic and monetary union, which Germany supported, was supposed to achieve, but, thanks to the success of German economic policy and the self-discipline of its people, on the one hand, and the way that the euro has worked out on the other, Germany is now overwhelmingly the dominant power in the eurozone.

That is the antithesis of the theory on which the European Union is based. That theory was the principle of the equality of rights between member states. In reality, of course, it was always recognised that some were larger and more influential than others, but, for long, the power of even the largest member states was tempered, partly by convention and restraint and partly by the fact that there were three big powers within the European Union, each with different attributes, and several others that were quite large. The fact that decisions were formally taken in Councils of various sorts, with input from the European Parliament and implemented by the European Commission, maintained that European character.

Now, within the eurozone, all can see that nothing can be achieved without German support nor against the will of Germany. What Germany wants, Germany gets, and others, whatever their doubts, can make only relatively minor modifications. That is a dangerous situation. Dominant powers are never popular and, for reasons of history, German actions and motives are more open to mistrust and misrepresentation than would be the case with any other country. Anti-German feeling is already rife in many European countries and rising all the time. That is a disturbing feature of the present crisis.

The danger is compounded by the fact that Germany insists on a one-size-fits-all diagnosis and treatment of the economic problems of other member states. The proposed new treaty, about which we have heard so much during the course of this debate, is an example of that. Regardless of the differing causes of the different national problems, Germany insists on the same austerity measures for all.

Of course, one understands why. First, German politicians, economists and public opinion believe that that medicine is in the best interests of the other member states and of the EU as a whole. Last week I heard the former Chancellor, Gerhard Schroeder, make a powerful speech in which he was explaining why everybody should set about resolving their problems in the way that Germany did. It is of course also the price demanded by German electors for helping others, yet it takes no account of the fact that Germany is the biggest single beneficiary of the eurozone both in terms of the huge surpluses that it has built up trading with other members states and through the great success that its exports have achieved elsewhere in the world, partly of course because of their outstanding quality and partly because they meet the needs of the market, but also because of the relatively low external value of the euro, thanks to the travails of the other member states.

Therefore, I fear very much that the longer Germany maintains its present stance, the worse the possible consequences might become. One is of several countries—not just Greece—being condemned to prolonged recessions. Another is that the protests will not stop in the streets. Extremist political forces will gather strength and there will be an explosion against the whole euro edifice and perhaps even against the European Union itself. I fear that all the European Union’s great achievements, built up over many years, could be put at risk. I fear, too, that democracy may be put at risk in some member states.

I hope very much that Germany will see the dangers and modify its stance in two important respects before it is too late. One is to respond to the sage advice of Prime Minister Monti of Italy, among others, and to indicate that it is willing to co-operate in the formulation of a eurozone growth strategy without ruling out any possible initiatives beforehand. The other is to indicate that it is willing to negotiate on a multilateral basis with other member states to find the best way forward, as distinct from laying down a menu of preconditions.

Since the 1950s, no country has done more to build the European Union than Germany. We should all pay tribute to it for that. It has contributed generously in financial terms; it has been a constant source of ideas and constructive proposals; and it has produced many very high-quality officials and politicians who have contributed greatly to the building up of policies in many areas. It would be tragic if Germany were now to become the instrument of the dismantlement of so much that has been achieved.

Syria

Lord Tugendhat Excerpts

Monday 6th February 2012 Lords Chamber

[Lord Howell of Guildford]

I do not think there have. This is a matter that appeared in the public press some weeks ago but I am not aware of it coming up in the agenda of our discussions with the Turkish Government. I may be wrong about that, but I certainly have no reports in my briefing on that particular issue.

[Lord Tugendhat]

My Lords, does the Minister agree that a major motivation for the Russian and Chinese vetoes is their fear of internal dissent in their own countries and of international eyes being cast upon their own misdeeds?

[Lord Howell of Guildford]

That is absolutely true. My noble friend is completely correct that both Governments have problems—shall we put it like that—with certain areas that are seeking either secession or a degree of autonomy that they do not want to accept, and they have this fear of fragmentation of their own national boundaries. That is a very strong motivation. On top of that, as I said earlier, Russia has huge interests in Syria, including its colossal naval base at Tartus.