§ 3.28 p.m.
§ The SECRETARY of STATE for FOREIGN and COMMONWEALTH AFFAIRS (Lord Carrington)My Lords, with permission, I will make a Statement on the meeting of the European Council in Luxembourg on 27th and 28th April.
This meeting took place against the background of a sombre international situation of which all of us in Luxembourg were acutely conscious. The first part of our discussion was therefore directed to the problems of Afghanistan and Iran. On both of these we were in total agreement. We reaffirmed the absolute necessity for every Government in the world, whatever its political attitude, to respect the Charter of the United Nations and the principles of international law. This requires in Afghanistan that Soviet forces should withdraw, and in Iran that the American hostages should be released, without further Belay. So long as these two illegal situations remain, the world will continue to live in the shadow of potentially grave developments.
I am sure it was right, therefore, for the European Council to repeat the earlier suggestion which the Nine had made for a political solution to the problem of Afghanistan, which would permit that country to resume its traditional neutrality and non-alignment. Equally it was right for the Council to reaffirm the decisions on Iran taken last week by the nine Foreign Ministers, while at the same time assuring the Secretary General of the United Nations of our full support for his efforts to find a political solution to that problem.
The second part of our meeting involved discussion of Britain's net contribution to the Community budget and a number of other Community questions which had been associated with it. For this reason my right honourable friend the Minister of Agriculture attended a meeting of the Council of Agriculture Ministers on Sunday. That meeting continued their previous discussions on the proposed agricultural prices for 1980–81 and other 1150 agricultural questions. They reported to us that, with some reservations, the other eight Member States were ready to approve an average increase in prices of about 5 per cent, including 4 per cent, on milk and sugar, an increase in the co-responsibility levy for milk and a range of other measures. There were also fresh proposals on a common organisation for sheepmeat which the others were ready to approve.
On our budget problem there was broad agreement on the methods by which the Community would both reduce our contribution and increase the benefits to us from Community expenditure. We were able to make considerable progress on amounts but less on the duration of the arrangements. A number of proposals were made including one which would have reduced our net contribution to £325 million, but for 1980 only. We were not able to agree on later years. In spite of intensive efforts to reach a satisfactory compromise it proved impossible in the time at our disposal to find an acceptable combination of both amount and duration.
We then discussed the other agricultural matters which our partners wanted to settle at the same time. These discussions revealed a number of difficulties for Britain. The Prime Minister made it clear that the proposals on Common Agricultural Policy prices would have budgetary and other consequences for us which we did not feel justified in accepting. Those on sheepmeat contained features which would have been seriously disadvantageous and which we would not accept.
We also reviewed the progress of discussions on a common fisheries policy. We all want to continue to make progress, but it is clear that more work needs to be done on this subject. The Prime Minister told her colleagues that to be acceptable to us any solution must safeguard the vital interests of our fishing industry.
We discussed the energy situation in the Community and the problems caused by the tenfold rise in international oil prices over the last eight years. We invited the Energy Council, first, to examine what new measures may be necessary on oil supplies and, second, to review the current policies of Member States on the replacement of oil by other fuels, on the development of nuclear power and on 1151 conservation. The Council intends to revert to these matters at its next meeting in Venice.
I regret that it proved impossible to make more progress on our internal problems. But, since our partners have brought these several issues together, I believe it is understood that they cannot be dealt with unless at the same time the budget problem is solved.
Meanwhile the President of the Council intends to be active in the next few weeks in seeking a satisfactory outcome. He will receive our full co-operation. We both believe that given goodwill such an outcome can be achieved.
§ 3.43 p.m.
§ Lord GORONWY-ROBERTSMy Lords, we thank the noble Lord for making that Statement. On behalf of Her Majesty's Opposition, may I ask him whether he is aware that this is really a Statement on three distinct sets of discussions by the Council? First, there is the question of political co-operation, and may I ask him whether he is aware that we welcome the emphasis which the Council have placed on the absolute necessity for every Government in the world, whatever its political attitudes, to respect the Charter of the United Nations and to act in consonance with it, particularly in relation to Afghanistan and Iran?
We welcome equally the search for a political solution to the problem of Afghanistan, with a view to restoring the traditional neutrality of that country; and also the emphasis in the Statement on support for the attempt by the Secretary-General of the United Nations to find a political solution to the problem of the hostages in Iran. Is the noble Lord aware that we are glad that the Council have made that absolutely clear, while reaffirming their decisions in regard to Iran of last week?
On the budgetary and agricultural matters which were discussed, may I say that my right honourable friend the Leader of the Opposition will, of course, be putting forward a number of points. Therefore, will the House allow me to confine myself to just one question on the budgetary section of this Statement? May I ask the Foreign Secretary whether 1152 he can help us a little further in relation to the suggested abatement of the British contribution of £800 million in the first year? Can he say whether there were any suggestions which he can pass on to us about the amounts that would be involved in the second, third and, possibly, fourth years?
Is he aware that any critique of the proposal that there should be a reduction of £800 million would necessarily need to be related to the amounts that came out of the formula at the end of the second, third and, possibly, fourth years? The £800 million looks quite good standing on its own, but it might not look at all good in relation to what is proposed for subsequent years.
May I put two questions about the third category of matters which were discussed. First, is the noble Lord aware that we are pleased that the Government have maintained an attitude of caution in regard to the discussion on our fishing industry, and have once more made it clear that no solution to the fishing dispute, if I may call it that, which did not serve the vital interests of the British fishing industry would be acceptable to us?
Secondly, in regard to the energy situation, is the noble Lord aware that we are glad that the Energy Council will proceed, with, I assume, a sense of urgency between now and the Venice meeting, to examine and bring forward practical proposals covering the question of alternative oil supplies, the replacement of oil by other fuels, the development of nuclear power and, equally important, the question of conservation?
Finally, can the noble Lord assure the House that, if there is a special meeting related to questions of political cooperation convened in Luxembourg or Brussels, he will keep the House minutely informed, as he always does, about the progress of discussions on whatever action we may need to take in co-operation with our partners in the European Community in relation, first, to Afghanistan and, secondly, to Iran?
§ 3.47 p.m.
§ Lord GLADWYNMy Lords, while we must thank the Foreign Secretary for repeating this important Statement, I fear 1153 that we on these Benches can only regard the line taken by the Prime Minister in regard to our contribution to the Community budget as wholly deplorable. Everybody admits that our present contribution is too high, but nobody abroad, and no person with any real knowledge of the facts in this country, believes that it should effectively be zero—that is, we should not put in any more than we take out—which is, after all, what she proposed in Dublin. Subsequently, she was persuaded to negotiate—a process which presumably entailed getting a compromise between what our partners were prepared to give and what we believed we ought to get.
As a result, it seems that Mrs. Thatcher got our partners down from their original proposal in Dublin that our contribution should be about £750 million a year to £325 million a year, which I must say was a very remarkable achievement. She herself at one stage, if the Press is correct, indicated that she would be prepared even now to accept a contribution of something in the nature of £200 million, although I may have got the figure wrong. So the gap, which has for the most part been filled, rather nobly, given his political difficulties, by Herr Schmidt was reduced to not much more than £100 million.
This the Prime Minister apparently refused to accept, because it related, I think, only to 1980, although I understand from the Press that the period was something over a year. Why she could not have accepted the offer gratefully and agreed to negotiate the rest next year or the year after that, we on these Benches fail to understand. By refusing, she has not only infuriated all our partners, but we shall presumably have to go on paying no less than £1,150 million a year—that is, some £300 million between now and Venice—unless, in accordance with the wishes of the Labour Party, she is to violate the Treaty by refusing to hand over the proceeds of our agreed proportion of the VAT, and thus risk breaking up the Community, which a good many members of the Labour Party welcome. The interests of the nation, therefore, have accordingly been badly served and there is a real risk of the Community becoming inoperative. Until this issue is settled, certainly it will not go forward.
In the circumstances it was surprising 1154 —or perhaps it was not so surprising—that on foreign policy the Ministers reached a very reasonable common policy, upon which I sincerely congratulate them, as regards Afghanistan and Iran. On Iran, I suppose the Ministers considered the possible effects of the action taken by President Carter in Iran, but I can understand why there is no mention of it in their communiqué. But there, most Liberals would have a certain sympathy with President Carter, in that they would have been delighted had his raid succeeded in releasing the hostages and believe that he can hardly be blamed for trying to release them by irregular means. Nevertheless, those who counselled the President against taking any forceful measures of this sort were clearly right in the event, since the failure of the raid has resulted in an obvious worsening of the lot of the hostages and in a lessening of the chances that they will be released following upon the diplomatic and economic sanctions which the European allies of the United States had already agreed to take. The conclusion must surely be that while we should still of course proceed with these sanctions, if any future action of a military nature is proposed, it should, in view of the possibility of far-reaching consequences, be taken only after the fullest discussion with our European allies.
§ 3.52 p.m.
§ Lord CARRINGTONMy Lords, I am grateful to the noble Lord, Lord Goronwy-Roberts, for his remarks and, indeed, for the remarks that the noble Lord, Lord Gladwyn, made about the international aspects of this Statement. One of the most heartening things that has happened in the last 48 hours—it was not all heartening—was the identity of view about international affairs of all the nine countries. This was very marked and very striking, and I think it is something which we should find very satisfactory.
The noble Lord, Lord Goronwy-Roberts, asked me two questions, and in a way this may answer the point made by the noble Lord, Lord Gladwyn. I am talking in units of account because I know the figures in units of account. If noble Lords should wish to translate them into pounds, they will have to divide by five and multiply by three. Then they will get a moderately accurate estimate of what the answer might be.
1155 There were two alternatives on offer yesterday. One was the proposal that there should be a rebate to this country of a thousand million units of account for three years, and for the next two years something rather less. It would appear that this year our net contribution, after receipts, to the budget will be something between £1,700 million and £1,900 million, which would leave a gap of 700 to 900 million units of account. My right honourable friend the Prime Minister and I thought that this was too big a gap for us to accept, having regard to the economic position of the country and the net contributions made by other countries.
The other alternative on offer was a ceiling on our contribution in 1980 of 538 million units of account, which is the figure I gave in millions of pounds in my original Statement—£ 325 million for one year. For the next year, although it was not very specific, it was suggested that there should be a ceiling of 800, or thereabouts, million units of account on our net contribution, which is very nearly the figure that the Leader of the Opposition when he was Prime Minister found to be unacceptable in 1979 and which was the first figure that we brought to the attention of our colleagues in Europe on the problem which faced us. After that, there was no suggestion that there should be any other arrangement. That did not seem to us to be a very good idea, in that the whole business of the Community over this last year has very largely been taken up with this British budgetary contribution. To accept a settlement for one year, with something very unacceptable in the second year, would be to settle nothing but merely to postpone a decision for a few months before the whole issue came up again.
It is also true that it became clear that if we accepted either of those two alternatives we should be expected to agree to the CAP price increases and the sheepmeat re´gime. If I may say so with the greatest goodwill to the noble Lord, Lord Gladwyn, I think he had better examine those facts before he describes the Government's decision as deplorable. I hope that he is not accusing me of sabotaging the Common Market. I would remind him with the greatest goodwill that I was advocating membership of the Common Market before he joined the Liberal Party.
1156 The noble Lord opposite asked me about the statement on energy and laid great stress upon its importance. I agree with him. I think that this is an area in which the Community has a great part to play. I think we really should take a grip on the energy policy of Europe, and I am glad that yesterday the European Council gave a lead in that respect. The Statement also makes clear the policy on fish of Her Majesty's Government. With regard to his last question, if of course there were to be any unexpected meetings on political co-operation, of which none is planned at the moment, naturally I should keep the House informed—and, indeed, of any other meetings.
§ Lord PEARTMy Lords, the noble Lord has put the position clearly to us. May I say to the noble Lord, Lord Gladwyn, that in no way do I wish to violate the Treaty. I hope he will withdraw that suggestion. When I was negotiating in Europe, I always played my part fairly and constructively within the limits of the Treaty, and my party does the same. So I reject what he said—a rather cheap remark.
On the question of farm prices, we had a discussion the other day about prices in Europe, and the noble Earl, Lord Ferrers, answered. We agree very much that there should be no attempt to prevent prices rising, but it is important that they should not rise too much. Therefore we believe that in the present circumstances it is right to have a freeze.
I think that the distinguished editor of the Guardian summarised succinctly the problems we face regarding the summit. He said that the offer open to the Prime Minister was a future net budget payment of about £500 million but that this was slowly improved upon, as the day wore on, to about £325 million, which implied a reduction of £800 million in what Britain would otherwise have had to pay. So I believe that the Prime Minister has the support of us all, certainly of those of us on this side of the House, in relation to the budget contribution. I know that my noble friend has today expressed the same sentiments.
Once more there is the question: where next on farm prices and where next on sheepmeat? I know that this problem is bedevilling our relations with France, 1157 and I hope that it will be taken up at Foreign Office level. I have confidence in the Minister of Agriculture—I think that he has done well in Europe—but I believe that it has gone beyond that now and that there should be some movement.
I should like also to know in which part of the fisheries industry we are going to be affected by this question. That is important to the fishermen in our ports. Otherwise, in the circumstances I think we must wait until the next Summit and again put further pressure on the people who would restrict us.
§ Lord CARRINGTONMy Lords, as to where we go from here, I hope the noble Lord, Lord Gladwyn, is not feeling bruised, but I wholeheartedly agree with him that we want to get a settlement on this matter. Indeed I think all of us want to get a settlement. What we must do is to get more movement. We got quite a lot of movement yesterday and the day before, and both the French and the Germans made a genuine effort to compromise. We compromised, too, and we must all make another effort to get this matter settled because it is bedevilling the whole problem of Europe. Nobody is more anxious than I am to get a settlement, but I hope that on reflection the noble Lord will agree that the Government are right not to accept this particular compromise.
I arrived back at about 3 o'clock this morning, so we have not had much chance to sit down and think about where we are to go from here; but I think perhaps the best course would be to send these matters back to the appropriate councils for the time being and then consider how best we may proceed. I think it would be much better if we could have a real effort to get the whole of this settled before the next European Council, which is in Venice in a little over six weeks' time, so there is not much time in which to do it.
§ Lord SHINWELLMy Lords, may I ask the Foreign Secretary whether or not he would agree that because of the momentous importance of the two issues to which he has referred, the situation in Iran and also the situation in Europe, they cannot be dealt with adequately by means of question and answer. Therefore would it not be desirable that in 1158 another place—it is not under our control; it is for them to decide—they should debate what they regard as the most important issues and then we can follow that?
Having put that question to the noble Lord, may I put a further question, which relates to one of the subjects, namely, the Iranian situation. Despite the importance of the European Common Market situation, in my judgment—and I would ask the noble Lord whether or not he would agree—the situation in Iran is of greater significance because we are not aware of what the United States means by the suggestion that further military action might follow what happened the other day. In those circumstances, would the Foreign Secretary take account of what happened in 1950–51 when a similar situation arose—not the hi-jacking of a number of people and incarcerating them, but when Mossadeq, who was Prime Minister, took possession of the Abadan refinery? Then there was talk by the Cabinet of the day of taking military action, but we decided that would be a mistaken policy because it might lead to further wide-ranging conflict—and the idea was abandoned in favour of dealing with the matter financially.
May I therefore ask the noble Lord this: Is it not possible for the United Kingdom, either in alliance with our European allies or with the United States in this matter, to deal with the matter financially? After all, fundamentally from the Iranian point of view, is it not a matter of finance? They want the Shah back. They may not get him back; but if they were to get the millions back they might find that a reasonable compromise. Therefore, would it not be advisable to abandon the concept of freezing the vast number of millions in the United Kingdom held on behalf of Iran? In other words, without asking anything further, would it not be desirable for the noble Lord the Foreign Secretary to consider whether the United Kingdom could not take unilateral action in its own fashion in order to effect a compromise and to avoid what might eventually happen, unless we are careful, namely, a military adventure which would put the whole world in chaos? I would ask him to consider that. It was done in 1950–51; it could be done now, in spite of all the difficulties that seem to be involved.
1159 As regards Europe, I want only to say one thing. From my point of view—not from the point of view of the majority of Members of your Lordships' House—I am delighted that Mrs. Thatcher is standing firm. I hope she will continue to stand firm, and I hope she will keep in mind that the primary interest is that of the United Kingdom and not Europe itself.
§ Lord CARRINGTONMy Lords, I do not think anybody in the House could possibly disagree with the noble Lord, Lord Shinwell, about the gravity of the situation. I do not confine it to Iran. I think that the situation in Afghanistan and in the Middle East generally, including the Arab/Israeli situation, is very serious indeed. So I would go further than the noble Lord, and of course he will understand that we are trying to do everything we can, and we are thinking of ways and means of helping. Certainly I will consider what he has said.
One thing we have already made clear is that Her Majesty's Government do not believe that the way to find a solution in Iran is by the use of force. I exclude the operation to rescue the hostages because I think that was a legitimate operation, but I myself would not think that the further use of force is likely to secure the release of the hostages. We must think of something else, and I can assure the noble Lord that that is what we are seeking to do, because all these problems interact one with the other, and in my view the situation is very serious.
§ Lord MACKIE of BENSHIEMy Lords, I should like to ask the Minister to clarify a point on agricultural prices. As I understand the Statement, the other members of the Community wanted the prices to be up by between 4 and 5 per cent., and this appeared to be unacceptable to the Government, although in fact with inflation this leads to a lowering in return to farmers in the Community and particularly in this country. May I ask the noble Lord whether this was the sticking point, or would the Government have accepted a rise of 4 or 5 per cent, if they could have got a reasonable reduction in our budgetary contribution? Finally, may I support my noble friend Lord Gladwyn and say that it is perfectly 1160 I true that in horse-trading you can turn your back and walk away once too often.
§ Lord CARRINGTONI do not know much about that, my Lords. Yes, the agricultural prices that the other eight partners wanted represented an increase of 5 per cent.; and of course the noble Lord is perfectly right in saying that probably the Commission proposal was an increase of an average of 2.4 per cent., and it is obvious that if the farmers, because of inflation, receive no increase, they will come very badly out of it.
What particularly worries my right honourable friend the Minister of Agriculture, Fisheries and Food is the proposed increase in prices for those products in surplus. I think that is the most worrying feature of it. No doubt our attitude to all these matters would be coloured by what happens on each of all the problems with which we are faced.
Lord BRUCE of DONINGTONMy Lords, may I press the noble Lord on one aspect of the Statement he has made, when he said that on our budget problem there was broad agreement on the methods by which the Community would both reduce our contribution and increase the benefits to us. Would it be possible for the noble Lord to provide the House with some particulars of the methods which were in fact agreed?
I am sure the noble Lord will agree that many of us have applied our minds to this problem over many years and it would be nice to see just what the methods are. I think he will agree—at least I hope he will—that it is important, when discussing the net contribution of the United Kingdom, not to discuss it for one year only; we are not discussing from the United Kingdom standpoint a mere handback of money to us in one dollop, which may be a little less in the next year and a little less in the year after that. Would he agree that what we are really after is a radical change in the whole method of determining what the respective contributions shall be, so that these have a permanent and lasting effect and are seen to be fair to all the Community countries? Will he agree that it would be best to insist on coming to agreement on an arrangement of that kind, rather than adopting any ad hoc or temporary solution to the problem.
§ Lord CARRINGTONMy Lords, as the noble Lord knows as well as I do, the problem of our budget is basically that we do not get back in receipts anything comparable to the figure which other countries do, and this is very largely as a result of the preponderance on the Community budget of agriculture, which is now 75 per cent. When we joined the Community we had the expectation that the proportion of the budget spent on agriculture would be reduced, while in point of fact it has risen. This is basically the problem which faces us. It really will be necessary sooner or later, because the Community will come up against the 1 per cent. VAT ceiling, to obtain a restructuring of the budget. That really will be necessary quite regardless of the British problem; consequently that will have to be done and will take care of our problem in future years. In the meantime, we have to devise a system whereby we are treated fairly. The Community yesterday agreed on the two methods by which we should get reimbursed. One is by the financial mechanism agreed in Dublin in 1965 and the suspension of some of its provisions, which would probably give us in a year something like 500 million units of account. The rest would be in the form of Community projects, agreed by everybody, which we want in this country, under Article 235 of the Treaty of Rome.
§ Lord GODBER of WILLINGTONMy Lords, while congratulating my noble friend on the stand which he and the Prime Minister took, may I ask him to clarify a little more what he said on the agricultural side? I understood him to say in answer to a previous question that he suggested that the matter went back to the various councils. Does he mean that the Agriculture Council will be free now to come to some agreed determination, or has the matter got to wait until further discussion of the global picture in Venice? I ask that because some of the agricultural prices are due to change on 1st July, and time is slipping by.
§ Lord CARRINGTONMy Lords, the answer is the first alternative; the Agriculture Council can meet, and if they can agree they can come to a new set of proposals upon which all Nine could agree. But my noble friend has been a Minister of Agriculture and he knows what they are like.