§ 3.40 p.m.
§ The Secretary of State for Foreign and Commonwealth Affairs (Lord Carrington)
My Lords, with your Lordships' permission, I should like to repeat a Statement made in another place by the Prime Minister. I will repeat it in her own words:
"With permission, Mr. Speaker, I will make a Statement on the meeting of the European Council in Luxembourg on 29th and 30th June, which I attended with my noble friend the Foreign and Commonwealth Secretary. The meeting also gave me the opportunity to have a first and very friendly meeting with the new President of France, Monsieur Mitterrand.
"At the end of the Council's meeting the presidency gave a summary of the discussions on Community matters and we issued an agreed press statement on a number of international questions. I have placed copies of both these texts in the Library of the House.
"The discussion on the economic situation provided a valuable occasion for hearing the views of all the Heads of Government, three of whom were attending the European Council for the first time. The Commission gave us a useful analysis of the 205 prospects. The Council saw the first cautious signs of limited improvement in the business cycle, even though inflation and unemployment have by no means been brought under control. On objectives we were all agreed: we must overcome unemployment and inflation and return to a situation of economic growth, stability and satisfactory levels of employment. We recognised, however, that the major responsibility for tackling these problems lies with national Governments because action needs to take account of the different economic situations in each member state. The differing levels of inflation, unemployment, balance of payments and budget deficits mean differing constraints and opportunities for member countries.
"The effectiveness of action by national Governments can be increased by co-ordination within a community framework. We were particularly concerned that full use should be made of the Community's financial instruments and of the facilities of the European Investment Bank to promote the flow of productive investment, including the growth potential in small and medium businesses.
"We recognised that the changing patterns of world trade mean structural changes in our own industries. The focus should be on investment in industries with potential for the future rather than on economic activities that are bound to decline in importance.
"There was agreement on the need to improve the Community's internal market both for goods and for services like insurance and air fares; which are of special importance to this country.
"We also reviewed the matters for discussion at the forthcoming Economic Summit meeting in Ottawa. The level and volatility of interest and exchange rates could retard economic recovery in the Community. Discussion will need to be pursued with the other major monetary powers.
"On trade, the Council discussed the threat to the smooth functioning of the world trading system which comes from the excessive concentration of Japanese exports on sensitive sectors. Further it stressed the need for the Japanese market to be effectively open to foreign trade. This will need to be pursued within the Community and at Ottawa.
"We also approved the recent report of the Foreign Affairs Council on North-South policy.
"On the recent report of the Commission about the Community budget and changes in the common agricultural policy, a satisfactory impetus was given to further work. The first stage is to clarify the Commission's document to see, for example, how the budgetary proposals could affect each member state.
"In September a special group will be set up to assist the General Affairs Council to make thorough and timely preparations for the next meeting of the European Council to be held in November under our presidency. The United Kingdom assumes the presidency of the Community today, and it is our intention to do all we can to press forward with these discussions, which are so important for the future of the Community, with the objective of reaching agreement within the timetable laid down last May.
206 "The European Council also discussed the Middle East. As the communiqué makes clear, the Ten must review the results of the contacts established by the Dutch presidency on the basis of the Venice declaration. In consultation with the United States and the parties concerned, it will be for the Ten to consider how best to make an effective contribution towards a comprehensive peace settlement in the Middle East.
"The European Council approved and published a proposal on Afghanistan which has been in preparation for some time and is the result of a British initiative. The purpose is to establish the framework for a political solution which all the parties concerned accept as the objective. The proposal for an international conference in two stages builds upon earlier proposals, and offers, we believe, a reasonable basis for the peaceful solution of a problem which remains an important cause of international tension. My noble friend the Foreign Secretary will fly to Moscow on Sunday for talks about the proposal with the Foreign Minister of the Soviet Union. An initiative designed to restore the independent and non-aligned status of Afghanistan is a constructive and distinctive way to mark the start today of the British presidency of the Ten."
§ 3.45 p.m.
§ Baroness Llewelyn-Davies of Hastoe
My Lords, the House will wish to thank the noble Lord for repeating that Statement. The whole House will be very glad to hear about his visit to Moscow for discussions on Afghanistan and will wish him success. We note that he himself puts his chances at only about 50/50, but we still welcome this more positive approach; and we welcome the fact that he seems to have persuaded our American allies to move more in the direction of discussion.
My Lords, the Summit clearly had slightly less enthusiasm for the EEC initiative on the Middle East. We should like to ask the noble Lord whether he is aware that in many parts of the House, and indeed in the country, there will be disappointment that there was no reference in the Summit to the question of disarmament, especially at a time when President Brezhnev appears to have been making approaches on this matter.
We were delighted to hear that the noble Lord's right honourable friend the Prime Minister had such a very friendly meeting with M. Mitterrand. Is the noble Lord aware that we should like the Government to incline very much more towards M. Mitterand's approach to economic policy than they have in the past? It is interesting that The Times said this morning:There is a philosophical gulf which separates Britain from any of her EEC partners on planned reform of the budget and on spending policies".Does the noble Lord not think that, in spite of the agreements which he has described, there is a risk of this country incurring isolation from our Community partners, both on support for United States high interest high dollar policies and on priorities between unemployment and inflation?
We welcome the agreements that were arrived at, but we are worried that the real budget reform issues 207 and the common agricultural policy seem very little nearer solution, and that even with the working group starting up in September we may lose the initiative on reform of the budget during our own presidency.
§ 3.48 p.m.
§ Lord Gladwyn
My Lords, I, too, would like to thank the Foreign Secretary for repeating this Statement. It is, however, very difficult to make any reasonable comment when one has hardly had time to read it in advance. I do hope that in future we shall at least have five minutes to do so.
Having said that, I have very few comments to make. I note that the Prime Minister says:We also reviewed the matters for discussion at the forthcoming Economic Summit meeting in Ottawa. The level and volatility of interest and exchange rates could retard economic recovery in the Community".Is there not a case in those circumstances for our joining the European Monetary System? I have heard it suggested that that would be a very reasonable thing for Her Majesty's Government to do at the beginning of the British presidency.
Then we see that there has been some discussion on how to combat excessive Japanese exports. Is there any likelihood of a common policy on how to cope with this matter? It is rather difficult to see from the Statement whether this is even contemplated, but I hope it will be. Broadly speaking, on economic matters I imagine that, though every effort will be made to achieve some kind of convergence of the policies of the Ten, is it not likely that this will be increasingly difficult if the new French Government pursue a very different economic policy from the ones being pursued in this country? Surely some kind of compromise will have to be come to on that before the end of the year; otherwise, I am afraid, the Community may be in some danger of breaking up.
With regard to Foreign Affairs, I imagine the Foreign Secretary would agree that in the Middle East everything will very much depend on what happens in the Israeli election. We still do not know—perhaps the Foreign Secretary does—whether the present Prime Minister of Israel is going to continue. If he is, I myself would think that the chances of arriving at a reasonable solution would be pro tanto less, but that is a matter for discussion.
Finally, as regards Afghanistan, we can only all wish the Foreign Secretary good luck in Moscow. I am sure we can all agree that the general plan adumbrated in the Council for presentation to the Russians is inherently reasonable. I have heard it said that it is possible that the Russians, in spite of the Afghan Government's having apparently turned this suggestion down, will overrule it and agree to a conference on condition that it is extended, becoming wide-ranging and embracing such matters as the Middle East. Does the Foreign Secretary think that there is any possibility of the Russians moving in that direction? That is all that I have to say at present.
§ 3.51 p.m.
§ Lord Carrington
My Lords, I am grateful to the noble Baroness, Lady Llewelyn-Davies of Hastoe, and to the noble Lord, Lord Gladwyn, for what they 208 have said about Afghanistan. I think that the proposal that we have made is reasonable and I can only hope that the Soviet Union will think so too—anyway, it will be my object to persuade them of it. I would just add that the reception which has been given to our proposal from those whom we consulted before we made it public, has been very encouraging, and I hope that that will be a good augury for the future.
Both the noble Baroness and the noble Lord, Lord Gladwyn, commented about the economy and what I think the noble Baroness called the "philosophical gulf" between my right honourable friend the Prime Minister and the President of France. It is not, in a way, so very odd that there should be a political gulf when one is a socialist and the other is a Conservative. I do not find that particularly odd.
§ Baroness Llewelyn-Davies of Hastoe
My Lords, I hope that the noble Lord will forgive me for interrupting, but in fact I quoted from The Times which said that there was a philosophical gulf between this country and all the other EEC countries.
§ Lord Carrington
My Lords, I was just coming to that. I do not find it at all odd that there should be a philosophical gulf between my right honourable friend the Prime Minister and President Mitterrand. Indeed—since one is a socialist and the other is a Conservative—as a Conservative it would worry me considerably if there were not such a gulf.
But I think that the noble Baroness is quite wrong if she thinks that this country was isolated in Luxembourg yesterday in the discussion on the economy. Had she been there she would have found that that was not so. Nor was there the sort of argument which I think she supposed there might have been. The discussion was about the individual problems of each country and how they could be reconciled. It is impossible, as the noble Lord, Lord Gladwyn, surely must realise, that 10 sovereign countries with Governments of different complexions and political beliefs, should adopt the same economic policy in their countries. They all have a variety of different circumstances; they all have different inflation rates and different unemployment rates; some of them have balance of payments deficits and some have not. They all have very considerably different circumstances and the discussion ranged around that. There was certainly no philosophical gulf or isolation in the sense that the noble Baroness was talking about.
I agree with both the noble Baroness and the noble Lord, Lord Gladwyn, about the need to press on with budgetary reform. We shall certainly do that, and we shall press forward as hard as we can. But, of course, it would be idle to deny that it will not be difficult. Obviously, there are very considerable national interests at stake here. However, I think that we have started well. The Commission has made some proposals which, on the whole, have been fairly favourably received although they are in fairly general terms at present. We obviously must do what we can to get a solution by the end of the year, and that I pledge we shall do.
On Japan, the Community did decide yesterday that on the Japanese problem there should be a Community approach and not individual national 209 approaches, and it also agreed that this, of course, would have to be raised at the Ottawa Conference later this month.
I agree also with what the noble Lord said about the Middle East. I think that we must wait and see what the results of the election yesterday will bring, what the Government will be, and, of course, discuss with our allies how to make a move forward.
I probably have not answered all the questions that have been raised, but I should like to end by apologising both to the noble Baroness, Lady Llewelyn-Davies of Hastoe, and to the noble Lord, Lord Gladwyn, for the delay in the arrival of the copies of the Statement. I can only apologise and accept responsibility for it, although, of course, it was not my fault!
§ 3.56 p.m.
§ Lord Kennet
My Lords, as regards Afghanistan we on this Bench are happy to find yet another occasion when the Foreign Secretary seems to be doing the right thing in the right way. However, on disarmament, we share the regret expressed by the Opposition that nothing appears to have been said about it at the Summit meeting. May we hope that it was just an omission from the Statement and that there was, in fact, a discussion of it?—because the silence from the Western camp is now becoming a bit deafening on this subject.
Finally, as regards Japan, can the Foreign Secretary elucidate the rather startling phraseology:excessive Japanese concentration on sensitive sectors".If one reads it one finds that it looks almost as though we are accusing the Japanese of malicious policy in this respect; whereas I am sure that that is not the real intention. What is a "sensitive sector"? Is it a sector where people are likely to be thrown out of work by excessive Japanese efficiency? If that is all that it is, is the argument not rather circular?
§ Lord Carrington
My Lords, I thank the noble Lord, Lord Kennet, for his opening remarks. On disarmament, that, of course, is a matter which is usually taken in NATO and not at economic summits. Decisions have been taken in NATO about arms limitation talks on the TNF. I really do not think that there was very much more to be said at this Summit, but, of course, all of us are in favour of arms limitation provided that it is to the advantage of everybody, and we hope very much that that will go forward later this year.
As regards "sensitivity" what the Statement means, in effect, to put it crudely, is motor-cars and electronics. The motorbicycle industry went bust in this country because of Japanese imports and we do not want to see that happen to two other industries.
§ Lord Wells-Pestell
My Lords, having regard to the reference of the noble Lord the Secretary of State for Foreign Affairs to the Middle East, whatever the outcome of the present election may be, there will have to be discussions by various countries on the future peace in the Middle East. I should like to ask the Foreign Secretary whether he will bear in mind that it is, in the view of a good many people in this country, essential that the PLO should recognise 210 before there are any discussions at all, that they must accept the state of Israel as being a fact, that they must recognise it and give that undertaking before any discussions, official or unofficial, take place.
§ Lord Carrington
My Lords, I think that I have said on a number of occasions that it would not be reasonable to ask the Israelis to sit down and negotiate with a body which is said to be set upon the destruction of the state of Israel. I do not think that that would be reasonable. I hope, therefore, that—and this is really repeating the Venice declaration—the Arabs will recognise the state of Israel and that Israel will recognise the rights of the Palestinians.
§ Viscount Eccles
My Lords, my noble friend the Foreign Secretary and the noble Lord, Lord Gladwyn, mentioned foreign exchanges and interest rates. Would my noble friend agree that the fluctuations in the foreign exchange market over the last few months show that joining the EMS will not achieve its object, and that we must have the Americans in as well or there will be no stability in exchange rates? Do the European Ministers realise that?
§ Lord Carrington
My Lords, I think that perhaps some would say that the EMS, even without us, has evened-out some of the fluctuations in European currencies. I think that it has been our fear that sterling, because it is rather volatile, particularly because it is an oil currency, is in rather a separate position. I do not believe that the events of the last few weeks have made us change our mind about that. But there is no doubt that we would want to join the EMS as soon as we believed that we could.
Lord Bruce of Donington
My Lords, may I ask the noble Lord to particularise on two specific matters that are included in the Statement. The Statement says that there was agreement:on the need to improve the Community's internal market both for goods and for services like insurance and air fares".It is my recollection that agreement on the need to improve, particularly in the realm of services such as insurance, has been the aim for a long time. Over the last six or seven years all states have expressed themselves on the need to improve the internal market and, indeed, in the case of insurance, to open up the market to the insurance companies of this country.
However, is the noble Lord aware that there has been continued obstruction by at least two member states on opening up the insurance market to insurance operators in this country? Can the noble Lord not say whether they went just a little further than agreement on the need to improve? What actual matters were discussed in specific terms, and is it likely that before the end of the British presidency there will, in fact, be some endeavour to bring in the appropriate directive, which is the No. 2 Directive?
The second question that I have to ask relates to the budget, where the Statement says:a satisfactory impetus was given to further work".Just what does the term "a satisfactory impetus" mean? Is the noble Lord aware that his right honourable friend the Minister of State for Agriculture, 211 speaking last March, was very gloomy about the prospect of achieving any significant changes—and I repeat the word "significant"—in the Community's common agricultural policy? Does this Statement mean that his right honourable friend's pessimism is now no longer justified and that there is an immediate prospect of achieving those fundamental reforms to the common agricultural policy which, in the view of his right honourable friend the Prime Minister, are vitally necessary this time?
§ Lord Carrington
My Lords, on the noble Lord's first question, the four areas in which I hope that during our presidency we can make some progress are insurance, air fares, banking and the recognition of professional qualifications. I am, of course, as well aware as he is of what has happened. I think that I would perhaps put it a different way and not so elegantly; I would have said that it has got stuck, and I think that we have to unstick it. That will be the objective of the next six months; we shall try to push it along. Whether or not we shall succeed I do not know, but that is what we shall try to do.
With regard to the budget, "satisfactory impetus" means that we were all agreed upon the procedure which we should follow. Understandably, the French Government in particular—and also others who are more or less in the same position—were not prepared as a new Administration to talk in substance about the budget problems because they have not had a chance of looking at it in detail. Therefore, we agreed that they should have time to study their own position. In the meantime, the permanent representatives would clarify a number of issues on the Commission Paper, which itself, as the noble Lord will know having read the paper, proposes a number of structural changes in the common agricultural policy. They would clarify a number of those points and in September a new body would be set up which would go into the substance, and the French would then be ready to join in on matters of substance. I do not talk in terms of optimism or pessimism, but in terms of realism. It will be difficult, but we must try.
§ 4.4 p.m.
§ Lord Soper
My Lords, has the noble Lord any intention in his forthcoming visit to Moscow, or will he have any opportunity, of getting in touch with the Russian Orthodox Church? I ask the question for the specific reason that there is evidence of an increasing determination by that Church to press their peace counsel further than I think the authorities are inclined to approve; yet at the same time there is an increased sense—according to the documents that I receive from time to time—that the Church is taking a more independent line with regard to peace-making. I do not know whether this is within the schedule of the Foreign Secretary, but I suggest that it could be of considerable importance.
§ Lord Carrington
My Lords, my visit will be very short indeed. I shall only be there on Monday and will be returning Monday night. I think that it would be very unlikely that I should have time to do that. In 212 the context of the purpose of my visit, I am not entirely sure that this would be quite the right moment to do it.
§ Lord Ardwick
My Lords, in his opening Statement the noble Lord seemed to suggest that on economic policy the differences are not as wide as the newspapers have suggested. I should like to ask him to tell us a little more about President Mitterrand's ideas. Was not it a very familiar, conventional and modest idea that M. Mitterrand put forward for a selected, co-ordinated European expansion in the hope of its having some impact on unemployment? Can the noble Lord tell us why these ideas in the inspired headline of Le Monde incited the reticence of both Mr. Schmidt and the Prime Minister?
§ Lord Carrington
My Lords, I really do not think that this is quite the right moment to go into President Mitterrand's policy, which was fully set out in his election programme and which is well known to the noble Lord. Equally, the noble Lord will know the Prime Minister's position if he reads her speeches. I do not think that it would be particularly fruitful for me to embark on a précis of their two economic policies. I was trying to say that there was a general recognition that each country had its own problems which were particular to it, and obviously each country has its own Government.
§ Lord Gore-Booth
My Lords, I should like to ask two brief questions on two points that were mentioned by the noble Lord the Foreign Secretary. One is on Afghanistan. I suggest that much pressure may be placed on the noble Lord to move along a track which would possibly, if not intentionally, weaken the strength of the United Nations in dealing with this whole question, which it will have to do at some time. Without being patronising, will the noble Lord be extremely careful about the possibility of giving away United Nations points without their being mentioned as such?
My second question is on France. All of us who have some first-hand acquaintance in dealing with France must have been very unhappy over recent months. Will the noble Lord the Foreign Secretary make a very strong effort—as I am sure he will, although possibly not in official meetings—in dealing with our French friends to try to remove some of the acidity, which is not our fault, which has featured in some of our recent relations?
§ Lord Carrington
My Lords, the answer to the second question is, yes. I want to see, just as everybody in your Lordships' House would want to see, good relations with France. On the first question, it is certainly not the intention of the initiative agreed by the Ten yesterday to cut across anything that the United Nations is doing or will do. Indeed, as the noble Lord will know, it is proposed that the Secretary-General of the United Nations or his representative should be a member of the conference. So there is no question of cutting across the United Nations. Indeed, we told the Secretary-General of the United Nations about these proposals earlier on and he has welcomed the initiative.
§ Lord Jenkins of Putney
My Lords, when the question of Afghanistan comes under discussion, will the noble Lord the Foreign Secretary bear in mind that any successor régime to the present Soviet-backed régime is not likely to be a democracy—certainly not a western-type democracy—but a type of régime compared with which the present Government in Iran would be regarded as liberal and progressive?
§ Lord Carrington
My Lords, I think that is travelling a good deal further down the road than the point we have reached at the present time.
§ Baroness Gaitskell
My Lords, may I congratulate the noble Lord the Foreign Secretary on his miracle idea of going to Moscow to put a stop to the suspicion and threats that have been the main part of our policy, and the American policy, towards the Soviet Union?
§ Lord Carrington
My Lords, I am very grateful to the noble Baroness. I think the idea is all right; the miracle may be a little bit later.