European Council Meeting

HL Deb 03 December 1980 vol 415 cc406-11

3.32 p.m.

The Secretary of State for Foreign and Commonwealth Affairs (Lord Carrington)

My Lords, I will, with permission, repeat a Statement which my right honourable friend the Prime Minister is making in another place about the European Council Meeting which she and I attended in Luxembourg on Monday and Tuesday of this week. A copy of the Council's conclusions has been placed in the Library of the House.

"We were glad that the Greek Prime Minister attended for the first time and we look forward to full Greek participation in the Community from 1st January.

"The first matter we discussed was the tragic earthquake which took place last week in Southern Italy. We expressed our deep sympathy with the victims, and of course agreed that the Community would help financially with the formidable task of reconstruction.

"The Council then turned to the economic problems facing the Community, foremost of which is the rapid increase in unemployment. We were all deeply concerned about the effect of higher oil prices on our own economies and on the economic situation in the world as a whole. We agreed that they are the main cause of the world recession. We noted the particularly serious consequences which any further increase in oil prices would have on the non-oil-producing developing countries.

"We agreed that within the Community reduction in inflation rates and improvement in competitiveness were the most appropriate ways of achieving growth and combating unemployment on a lasting basis. Europe must also have regard to the extent to which the Community has fallen behind in the field of industrial development and innovation. The Council therefore agreed that the institutions of the Community should examine ways of improving incentives to innovation and of making the best use of the Community market. We welcomed the continued use of Community instruments to help reduce structural unemployment, and agreed that special efforts should be made with the training of young people and to assist them to find jobs.

"We agreed to extend the present phase of the European Monetary System. We stressed the importance of the work being done by the independent international financial institutions in dealing with the problems created by higher oil prices.

"We welcomed the decisions taken recently by the Council of Foreign Ministers on trading relations with Japan. These called for a wide-ranging dialogue between the Community and Japan, based on moderation in Japanese exports in certain sensitive sectors; allowing the yen to reflect the fundamental strength of the Japanese economy; and improved access to the Japanese market with the Community being treated no less favourably than other major trading partners.

"I drew attention to the problems created for our chemical and other industries by current American policy on oil and gas prices. I urged strongly that early decisions should be taken on continued access for New Zealand butter. I drew attention to the very slow progress being made on questions such as insurance and air fares where the Community has yet to show its readiness to have freer competition in the service sector.

"In discussion of future problems facing the Community, we recalled the mandate which would fall on the new Commission to produce a report by next June on how the structure of the Community Budget should be changed so as to ensure that unacceptable budgetary situations do not arise again for any member state. The United Kingdom, along with Germany and France, emphasised that this will have to be done not only within the accepted principles of the Community, but also within the 1 per cent. VAT ceiling.

"The Council also discussed foreign policy questions: in particular East-West relations and the Middle East. We were deeply concerned about developments in Eastern Europe and in particular about the position of Poland. We agreed that events there have given a special significance to the language of the Helsinki Final Act about the right of every country to choose and develop its political, social, economic and cultural system free from any outside intervention. The Helsinki principles are applicable to all states in all circumstances.

"The nine heads of Government therefore called upon all the signatory states to abide by the Helsinki principles with regard to Poland and the Polish people. They emphasised that any other attitude would have very serious consequences for the future of international relations in Europe and throughout the world. They also expressed their willingness to meet, in so far as their resources allowed, the requests for economic aid which have been made to them by Poland.

"On the Middle East, the Council took stock of the work done since the Declaration which we issued in Venice in June. We decided that the Presidency—which from 1st January will be held by the Netherlands—should conduct the next round of contacts with the parties concerned, with the aim of giving more precision to the main questions at issue: withdrawal, self-determination, security and the future of Jerusalem. Our hope is that the sustained diplomatic activity on which the Nine are now engaged will contribute to a narrowing of the differences between the parties in the Arab-Israeli dispute. Our objective is a comprehensive, just and lasting settlement based on the two principles stated at Venice: security for Israel and recognition of the rights of the Palestinians.

"In discussing these and other foreign policy issues in Luxembourg, the Council was conscious of the gravity of the various crises now facing the world. The heads of Government of the Community are aware that they have both the opportunity and the duty to play a significant role in the search for solutions to these problems. To this end they expressed in their agreed conclusions their determination to ensure that the unity of Europe was strengthened, and its voice heard."

Lord Goronwy-Roberts

My Lords, the House would wish to thank the noble Lord the Foreign Secretary for coming down to the Chamber to make this important Statement. One is interested in the reference to the attendance of the Greek Prime Minister, albeit in the position of art observer at the present moment, and one wonders whether the Community is seriously engaged in studying the implications of the adhesion to the Community at an early date of three largely agricultural countries—Spain, Portugal and Greece—with a view to making the necessary adjustments, especially in the area of the common agricultural policy.

We very much welcome the reference to the tragic occurrences in Southern Italy and the agreement in the Community to help financially as a group in the formidable task of reconstruction and of alleviating the terrible suffering of thousands of Italian people in that region. The Government will be very strongly supported by the Opposition in anything they seek to do, and certainly anything they seek to do in co-operation with our partners in the Community in this regard.

The references to the pressing economic problems facing the Western world, and indeed the rest of the world, are more in the nature of taking note of the gravity of developments, especially in unemployment. One would have wished to see a new note of urgency—certainly a suggestion of new initiatives—to tackle what is rapidly becoming a recession which, in magnitude and danger to the structure of the Western world at least, and possibly in danger to the stability of the world as a whole, is possibly without precedent. Apart from deploring the immense rise in unemployment, especially among young people, throughout the countries of Europe and beyond, and deploring the effect of higher oil prices on the third world in particular, is the Community engaged in any concrete initiatives to solve these problems? There is an absence of that sense of urgency and initiative in this part of the Statement and the communiqué.

One is intrigued by the phrase which indicates that the Community is in favour of allowing the yen to reflect the fundamental strength of the Japanese economy. I wonder whether the noble Lord the Foreign Secretary returned with a desire to urge in Cabinet that the pound should be allowed to reflect the reality of the British economic situation. The words of friendly adjuration to the Americans on the question of oil and gas prices—and especially on their implications for the third world—are I think well-pointed and are deserving of repetition. We are glad to see that efforts continue to ensure that there is continued access for New Zealand butter. We have a moral as well as a practical obligation to follow that course, and I welcome the reference to this point in the communiqué.

As to the Middle East, one wonders whether the Community has taken another look at the Camp David decisions and the recommendations flowing therefrom, that as soon as possible there should be free elections on the West Bank so that the true representation of the Palestinian people should be made available by democratic means. That may well be the way in which the well-founded objections of Israel to the inclusion of violent groups in any future conference may be allayed.

Finally, the Statement is positive and strong, which we welcome, on the question of intervention in Poland. It is coupled with an equally strong American statement which was issued last night. I should like to ask whether there was proper consultation between the Americans and the other leaders of the Western world before the two statements were made. I hope that there was. I detract in no way from the strength of this language, which is a clear warning to whoever may be contemplating intervention in Poland that, if they do so, the possible consequences to détente may be fatal. With that goes the imperilling of the success of important discussions, notably SALT 2—to which the American President-elect has indicated he would in certain forms be willing to adhere—the MBFR discussions in Vienna, and, of course, CSE in Madrid. It is a warning that not only would détente be imperilled, but the various instruments of discussion might grind to a halt because the rest of the world would see no point in continuing them. One hopes that whoever is considering interfering in Poland will take these warnings very much to heart.

The stress on the validity of the Helsinki Act is well put. I am not sure whether in the communiqué as distinct from the Statement there is an equal stress on the validity of the United Nations' Charter. All who are concerned with these matters are signatories, not only of the Helsinki Act—which binds them to nonintervention—but also to the United Nations' Charter.

3.46 p.m.

Lord Gladwyn

My Lords, we, too, should like to thank the noble Lord the Foreign Secretary for repeating this obviously very important Statement, and for giving us an account of what, on the whole, I feel sure was a rather fruitful meeting, in the sense that all the great problems of the day were discussed and investigated at the highest level. I was rather impressed by the emphasis given to the oil situation in this Statement. It says: We are all deeply concerned about the effects of higher oil prices on our economies". I should think so. The other day I attended a meeting of the Atlantic Institute in Paris where some of the greatest experts in the world were speaking on that matter. They made a very great point of saying that if the price of oil is raised in the fairly near future an extremely grave situation will arise. I rather take the same view as the noble Lord, Lord Goronwy-Roberts, that it is one thing simply to deplore that, but it is another thing to have some plan for coping with it if it should happen. If it really happens, I suppose that some plan will have to come into operation in the fairly near future—given that there is only a certain amount of oil available—as to who will get what, notably in the Community. It is a terrible problem, but I think that experts are well-advised to give it great attention now. I do not know whether the noble Lord the Foreign Secretary would agree with that, but I hope he would.

Of course we welcome the new structure for the budget. Clearly, that will be a great question in a year or a year and a half's time, and we must try to get the common agricultural policy reviewed in connection with that restructuring. Whether in the long-run it will be possible to do that within the context of the maintenance of 1 per cent. VAT, as is emphasised now by Britain and more particularly by Germany and France, I rather doubt, but that is a question for the future.

For the rest, like the noble Lord, Lord Goronwy-Roberts, we greatly welcome the emphasis put on Poland, and I imagine that behind the scenes again some thought is being given to what we would actually do if the Russians were so rash as to invade that country. It is not evident what we could do in the military sense; probably nothing, as Mr. Luns has said. But there may be other actions that could be taken, and they should be prepared in secret if need be.

Finally, on the Middle East, I think I am right in saying, generally speaking, that there may be a division of opinion between the policy of the Council of Foreign Ministers—of which we Liberals approve—and the new incoming American Administration. It is possible that there may be a real division of opinion there. That is something which must be avoided at all costs. At the very earliest stage I hope that the Community will be in touch with President-elect Reagan in order to discover whether there is not some kind of common ground on a matter about which at the moment we seem to be rather far apart.

3.50 p.m.

Lord Carrington

My Lords, I am grateful to the noble Lords for generally welcoming this Statement, and also for the support they have given to the passage on Poland. I agree with them about the gravity of the situation. It is obvious that if there were an intervention in Poland certain things would inevitably follow, and it would in effect, as has been said on a number of occasions, mean the end of détente, at any rate for a very long period of time.

The noble Lord opposite asked me whether or not we have been talking about enlargement. The Community is very conscious of the problems of enlargement which are taking place at the same time as the restructuring of the budget. I do not think we see any reason why negotiations with Spain and Portugal should not go ahead in parallel with the discussions on the restructuring of the budget, although of course there will have to be a decision about the latter before the former can finally be decided. I am quite sure that it would be wrong, at a time when we seek to reform the com m on agricultural policy, to suggest that the 1 per cent. VAT ceiling should be broken, because I do not believe that there could be any financial discipline on the Community if that were the proposal.

I would only say to the noble Lord, Lord Goronwy-Roberts, that if he will read the communiqué he will see that it reflects clearly the sense of urgency that the Community, the heads of Government in the Community, felt about the economic situation, and there are one or two proposals there which I hope very much will help. I do not believe that there is a magic solution to this, and I agree with the noble Lord, Lord Gladwyn, that probably the most important factor which has led to the grave economic situation confronting us all is the rise in the price of oil. We must do everything in our power to persuade the oil producing countries that it is not in their interests to have another increase in the price of oil which will make the situation, at any rate in the short term, very much worse than it is already.

Whatever the noble Lord opposite may feel about the value of the pound and whether or not it reflects the British economy, what the value of the pound does is to reflect what other people think of Britain. It is extremely difficult to see what you do about that. He and I may think it is too high, but other people do not. We certainly took into consideration, and have been taking into consideration in the Community, what is happening in Camp David, and of course keeping closely in touch with the United States, although the noble Lord, Lord Gladwyn, will know that the policy which President-elect Reagan will pursue on the Middle East is not known to us. We do not even know who are the people concerned, but of course we shall keep very closely in touch.

I would only say about the idea on elections that of course we examine all these things, but I think at the moment it would be unlikely that elections could take place. Of course the difficulty about having elections solely concerned with those who live on the West Bank is that there are a great many Palestinians who live outside the West Bank. These are complicated problems which we shall have to go into in greater detail as we go more and more into detail in the European initiative.

Lord Caccia

My Lords, while also welcoming the Statement made by the Secretary of State for Foreign and Commonwealth Affairs, may I ask him a particular question? He made some welcome remarks about what Europe felt they could and should do to contribute in regard to the various crises that may occur in the Middle East, or in Europe over Poland. But in speaking earlier about what happened last year over Afghanistan he himself said that he did not think that Europe at that time, at any rate, had the mechanism and the methods for what might be described as crisis management. Is there anything that he could usefully say about the situation as it has developed during this last year?

Lord Carrington

My Lords, I made some suggestions about a better mechanism for political co-operation in Europe which are, so to speak, in the machine at the moment and have not come up for discussion by Ministers. There are various proposals in addition to that which are being considered. But I can give the noble Lord the undertaking that the delay which took place in consultation among the nine Foreign Ministers when the invasion of Afghanistan took place on 27th December last year will certainly not take place again in any other eventuality.