§ 3.34 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 that the Prime Minister has made in another place, and I will repeat it in her words:
"I will make a statement about the Ottawa Economic Summit Conference held on 20th and 21st July, which I attended with the Foreign and Commonwealth Secretary and the Chancellor of the Exchequer.
"A declaration was issued on 21st July at the end of the Conference. A statement on political questions, including the Middle East, East/West relations and Afghanistan, was made to the press by the Prime Minister of Canada on the evening of 20th July. A statement was released on hijacking and terrorism. Copies of all three documents have been placed in the Library of the House.
"Five of the eight participants were attending 358 an Economic Summit Conference for the first time. It thus provided a particularly useful opportunity for an exchange of views on a wide range of issues. Unlike the two preceding conferences, this meeting was not dominated by a single subject. The participants were able, therefore, to cover many of the major problems, political as well as economic, facing the Western World.
"The primary challenge we addressed in our discussions was the need to revitalise the economies of the industrial democracies, to meet the needs of our own people and strengthen world prosperity. We agreed that there was a prospect of moderate economic growth in the coming year, but that at present it promised little early relief from unemployment. We noted that interest rates had reached record levels in many countries, and if long sustained at these levels, would threaten productive investment. President Reagan stressed that the programme of public spending reductions at present before Congress could be expected to reduce interest rates in the United States once it took effect.
"The Heads of State and of Government all agreed, in the words of the Declaration, that 'The fight to bring down inflation and reduce unemployment must be our highest priority and that these linked problems must be tackled at the same time. We must continue to reduce inflation if we are to secure the higher investment and sustainable growth on which the durable recovery of employment depends. The balanced use of a range of policy instruments is required. We must involve our peoples in a greater appreciation of the need for change: change in expectations about growth and earnings, change in management and labour relations and practices, change in the pattern of industry, change in the direction and scale of investment, and change in nergy use and supply'.
"We recognised the need in most countries urgently to reduce public borrowing; where our circumstances permit or we are able to make changes within the limits of our budgets, we will increase support for productive investment and innovation. All accepted the role of the market in our economies. We agreed not to let transitional measures that may be needed to ease change become permanent forms of protection or subsidy. We saw low and stable monetary growth as essential to reducing inflation.
"We also discussed relations with developing countries. Three points were made. First, we share with the developing countries many of the problems of the world economy: the need to develop energy resources, to encourage investment, to fight inflation and unemployment and to expand trade. Second, we welcome discussion with developing countries in whatever ways or groups may be useful. We all agreed to participate in preparations for a process of global negotiations provided we saw the possibility of real progress. Third, we need to direct the major portion of our aid to the poorer countries. The United Kingdom already does so.
"On trade, we reaffirmed our commitment to an open multilateral trade system and our determination to resist protectionist pressures. We endorsed the proposal for a ministerial meeting of the GATT 359 next year. We agreed to keep under close review the role played by the industrialised countries in the smooth functioning of the world trading system. This will provide us with the opportunity to pursue the particular problems that arise, for the North American as well as for the European countries, in trade with Japan.
"As to political issues, we met in the shadow of the further outbreak of fierce fighting in the Middle East, where once again the unfortunate people of the Lebanon are bearing the brunt of a conflict that is not of their seeking. Whatever any of us may have thought about the causes, we were all agreed on the need for an urgent ceasefire in the Lebanon; for an end to the loss of innocent civilian life there; and above all, for a solution to the conflict between Arab and Israeli from which the violence flows. We shall continue to use all our influence, both our own and as holders of the Presidency of the European Community, to these ends.
"Finally, we discussed relations between East and West and the concern that we all felt about the Soviet military threat to Western interests. We were much heartened by the strength of common purpose that was apparent. Without exception, we agree—and agreed with real determination—on the need to maintain a strong defence capability and to insist on the need for military balance. Hand in hand with that went our readiness to negotiate arms control agreements that would ensure genuine security at a lower level of weapons and a smaller expenditure of resources.
"So in our discussion we linked the two elements necessary to the preservation of the free world and of the free market economy which sustains it: on the one hand defence and the maintenance of peace, on the other the health and soundness of the world economy. Altogether it was a most important and worthwhile meeting."
My Lords, that concludes the Statement, but I wonder whether your Lordships would allow me to be totally out of order for one moment and to say a few words on behalf of everyone who sits on this side of the House. I should like to say how sad we were to hear of the death of Lord Goronwy-Roberts. He and I—I suppose in whichever geographical situation we were—have been facing each other across the Floor of this House on defence and foreign affairs matters for a very long time. There could have been no fairer or more generous opponent than he was. He was indeed a worthy servant of this House and of this country and he will greatly be missed.
§ Lord Peart
My Lords, I should like to thank the noble Lord for those remarks. I know that we cannot pursue them because it would be out of order. However, I think we have certainly lost a very valuable and distinguished Member of this House.
§ Lord Gladwyn
My Lords, I, too, should like to associate myself with what has been said about Lord Goronwy-Roberts. I, too, have the most affectionate memories of interrogating him on the subject of our entry into the Common Market when he was in the Government. I always thought he was extremely fair. Indeed, he was always fair and we greatly miss 360 his possible intervention on the Statement that has been made today.
§ Lord Hankey
My Lords, may I from these Benches associate myself entirely with the remarks of the noble Lord, Lord Gladwyn.
§ Lord Gore-Booth
My Lords, since speaking slightly out of order is de rigueur at this moment, may I be permitted, as the first senior Foreign Office official to work with Lord Goronwy-Roberts in what was his apprenticeship in foreign affairs, to express very strongly my admiration and my affection for my political colleague?
Lord Bruce of Donington
My Lords, we on this side of the House should like to thank the noble Lord for the Statement that he has just made, which is, of course, a repeat of the Statement which has been made in the other place concerning the conference at Ottawa. It was, perhaps, a little unreasonable to expect that great miracles could be accomplished within a couple of days. Nevertheless, we can hardly, I think, hide a sense of disappointment that a more constructive result was not achieved. Indeed, noble Lords will recall that the editorial in The Times this morning dubbed it a "fudged" conference. That is not, of course to deny the goodwill and purposefulness of the states that were represented there. But in facing this, what is termed, "primary challenge"—the need to revitalise the economies of the industrial democracies—it does not really appear that any substantial agreement on specific measures was reached. The Statement says:The fight to bring down inflation and reduce unemployment must be our highest priority and … these linked problems must be tackled at the same time".There would be few in this House who would dissent from that general proposition.
It is, therefore, a little surprising to observe that the Prime Minister herself, in her own press conference on the day before, put a rather different emphasis upon it. She is reported as saying in Ottawa on 21st July:Reflation is not a way of reducing unemployment".She claimed that all the leaders at Ottawa were agreed on the need to fight inflation first, and, as The Times correctly points out, the summit communiqué stated that unemployment and inflation should be fought at the same time. I am sure that the House would like to have it confirmed that the British Prime Minister agreed with the conference, as indeed one may infer from the communique and from that section of the Statement that was read to us, and that she has now agreed to abandon monetarism as the only way in which one can deal with the economic crisis at the present time and with unemployment.
I was a little surprised at the statement that there was agreement on a prospect of moderate economic growth in the coming year. That may be true taking the Western nations as a whole, but I should like to be reassured by the noble Lord that the Prime Minister gave no indication to the conference that there was a prospect of any moderate economic growth in the United Kingdom, because, indeed, the forecasts that have been produced by the Treasury indicate no such growth until next year at the earliest. I think that that should be borne in mind.
361 On the question of interest rates, once again the communiqué says:We noted that interest rates have reached record levels in many countries, and if long sustained at these levels would threaten productive investment".President Reagan promised to do his best to reduce them. Once again that has a slightly different nuance from the terms that were reported as being used by the Prime Minister when she gave full support for the interest rate stance of President Reagan. All that one would say on this matter is that if, indeed, it is the intention of the United States to maintain extremely high interest rates, then the Western nations, particularly those in Europe, may find it necessary either to deflate or to raise their interest rates even higher. We received this Statement fairly late. We have not had very much time to study it. However, those are the principal points on which we should like some reassurance from the noble Lord.
§ Lord Gladwyn
My Lords, I imagine that this Statement must be read in conjunction with the much longer Statements which have been placed in the Library, which I have just had an opportunity of glancing through and which are on the same subject. With regard, therefore, to the Statements as a whole, I may say that it appears to the ordinary uninformed observer that although the conference covered an immense number of subjects and there was a considerable amount of agreement on general principles, it really did not get us very much further in any particular direction. Perhaps that was impossible in the circumstances. I do not say that it was a bad thing to have the summit; nevertheless, it cannot be said that it was anything except a little disappointing. On that, I agree with the noble Lord who has just spoken.
On moderate economic growth, I should have thought that the prospect of this occurring in the next year or so is not something which is accepted by all the experts, to say the least. In any case, if we are to have moderate economic growth, surely it must mean that there must be some reduction in the rates of interest? If the rates of interest, particularly in the United States, maintain their present level, the prospect of even moderate economic growth goes out of the window. Therefore, I should have thought that with everything depending on that, we have no guarantee, as I understand it, from the meeting in Ottawa that American interest rates would be reduced, although in principle the President, it seems, will reduce them if circumstances permit—but goodness knows when that would be.
Then there is much emphasis on the need for change. We can all certainly agree that things will have to change. However, reading through the lines it looks as though what has to change and what we must recognise is going to change, is some reduction in the standard of living in the industrialised states of the world. That may be very regrettable. It may be something which no Government could permit, but I think that that is what is inherent in the idea of change in the present context. I do not know whether the Government could confirm that, but that is probably what will happen to us in the circumstances.
A great deal of emphasis has, quite rightly, been put 362 on stabilising exchanges. Again I say—and I believe that this has been supported by many experts in the press—that now is the moment for us to join the European Monetary System. Could not the Government consider this at the present time? The longer document in relation to the developing countries on the whole seems to be constructive. I think that it is on the right lines and a welcome expression of good intentions, especially with regard to relations with poorer countries. It is good news that the negotiations have been accepted, though again that is apparently in principle and always provided that the circumstances will permit. Of course, we do not know whether circumstances will permit; we hope they will.
On East-West relations, I think that there is an omission. Is it true, as we read in the press, that Chancellor Schmidt insisted on his proposal that there should be great gas lines from Siberia which would leave the Federal Republic at the mercy of the Soviet Union in the long run as regard energy? Is it a fact that there is some division of opinion on that? If so, will it go ahead?
Finally, I suggest that what is said about Madrid is rather optimistic. The latest development is that the Soviet Government have not accepted the latest western proposals and there seems to be no prospect of their accepting them in the near future. If that is so, the chances are that the Madrid Conference will end in failure and, indeed, in confusion. That is all I have to say at the moment.
§ Lord Carrington
My Lords, I think that both noble Lords who have spoken are under a total misapprehension about the object of these economic summits. They were started some time ago with the purpose that the leaders of the seven largest industrialised countries in the world exchange views informally; and get to know each other and also get to know their own opinions, their own differences of view and their own problems. It was never the intention that these summits should become an occasion when the industrialised countries issue a blueprint to solve all the economic problems of the world, and they never have.
As the Prime Minister said in her Statement, this particular meeting was very useful because, of the seven meeting there, five have never been to an economic summit before and there has not been the opportunity to exchange views. Speaking for myself (if I am allowed to), in a way I think that the summits have altogether become too formalised, with the hordes of press, the many arrangements that are made, the communiqués, and all the rest.
Nevertheless, I think that this was a useful meeting because one has only to look at the seven Heads of Government and Heads of State who were present to see that they represented different points of view and all sorts of countries with different problems. To come together to discuss both their points of view and their problems in a very free and frank way is, in itself, a good thing. The fact that there was a communiqué which represented a broad agreement over a very wide area, not only of economic affairs but also of political affairs, is quite significant. As the noble Lord, Lord Bruce, pointed out, in the Statement there is a great deal of agreement.
I confirm that the seven leaders agreed that the high- 363 est priorities were both inflation and unemployment. Everyone agrees on that; everyone wants to bring down interest rates as soon as possible—most of all President Reagan, who made it clear that he wanted to do so. There was a very broad measure of agreement. However, there was not always a total identity of view about the measures that should be taken in each country to suit the particular circumstances of each country. Therefore, I do not think I would accept that this was a disappointing summit.
The only specific question which I was asked by the noble Lord, Lord Gladwyn, was about Madrid. Since then, the news from Madrid has been rather bad and it looks as though the conference may have to adjourn, at any rate without agreement, until after the summer. I still hope that it will be possible for there to be agreement on the CSCE.
§ Lord Carrington
My Lords, a number of matters were discussed; I do not think that I can go into every matter that was discussed. It may have been mentioned when the Heads of Government were present and the Foreign Secretaries were not, but in the plenary session I did not hear it mentioned. No doubt there were discussions about that. Chancellor Schmidt may have put his point of view and no doubt President Mitterrand put his point of view, as did President Reagan. However, I doubt whether that had much bearing on the relative passage about East-West relations which went much more widely than that, and which was concerned with the total relationship between East and West.
My Lords, on the question of a possible cease-fire in the Lebanon, we have all read in the press today that Mr. Arafat has offered to have a cease-fire, yet at the same time we read that the scale of Israeli attacks on the Lebanon has been stepped up to dangerously high levels, with a consequent loss of hundreds of civilian lives, both Palestinian and Lebanese, many of them women and children. Is there any more that my noble friend can say about this dangerously deteriorating situation?
§ Lord Carrington
My Lords, I think that the situation in the Middle East is very worrying indeed. This morning the representatives of the Arab Ambassadors asked to see me and I had a discussion with them. At the same time, I asked the Israeli Ambassador to come to see me and I pointed out to him the offer that has been made about the cease-fire and hoped that there would be some immediate response from the Israeli Government.
§ Lord Hatch of Lusby
My Lords, I should like to ask the noble Lord the Foreign Secretary a question about Clause 14 of the communiqué. I understand that Clause 14 reads:We are committed to mounting substantial, and in many cases growing, levels of official development assistance, and would seek to increase public understanding of its importance".364 Can the noble Lord say what attitude the spokesman for the British Government took on these two points?—in view of the fact that British Government official aid has been, and is being, drastically reduced, and that the organisation set up by the previous Administration to increase public understanding has been dissolved.
§ Lord Carrington
My Lords, there was a discussion about the whole of the North-South and, indeed, about the Cancun Conference, which will take place next week and at which I shall be attending the preliminary conference at Cancun. Her Majesty's Government subscribe to the words in the communiqué. I very much hope that, when our economic circumstances permit, we shall be able to spend more money on aid. I think that the noble Lord, Lord Hatch, is quite mistaken if he is deriding the amount of money which we spend now. We are spending over £1 billion this year on aid. I do not think that that is anything to be ashamed of.
My Lords, in the discussions about relations with the developing countries, was note taken of the highly critical state of indebtedness of some developing countries and were contingent plans made to meet a situation which might arise if there should be any major defaults?
§ Lord Carrington
My Lords, not as such, though of course this matter arose in the discussion of the problems of the least and lesser-developed countries. These are the sort of issues which will arise at the Cancun Conference and, of course, if the global negotiations start again.
§ Lord Mayhew
My Lords, reverting to the very critical question of a cease-fire in Lebanon, while paying tribute to the tireless work of Mr. Habib, would not the chances of success be better if he were empowered to negotiate with both parties to the dispute and not only with one, as I understand the position to be?
§ Lord Carrington
My Lords, I do not think that one could deny that; it would seem to be fairly obvious. However, there is, of course, another effort going on to get a cease-fire, because the Secretary-General of the United Nations has been charged by the Security Council in a unanimous resolution to get a cease-fire and to report back within 48 hours. So there are two efforts being made to get a cease-fire. I only hope that one or other of these efforts will succeed.
§ Lord Shinwell
My Lords, would the Foreign Secretary not agree that we must proceed further than a cease-fire in the Middle East? Is it not necessary that the Arab States, including the PLO—which is not a state but nevertheless it is recognised by the Arab states—should agree no longer to make war on Israel; and, on the other hand, that Israel should be asked not to resort to violence of any sort, giving an opportunity to proceed to negotiations? Will he not use his persuasive powers to persuade both sides to adopt that attitude in order to bring this trouble to an end?
§ Lord Carrington
My Lords, I agree 100 per cent. with the noble Lord, Lord Shinwell. I think that before there is any prospect of taking any peace process in the Middle East further, or even getting it going, it will be necessary to get a cease-fire in Lebanon. That is the pre-requisite of anything happening. The noble Lord is quite right, because he repeats in essence the two principles of the Venice Declaration. The Venice Declaration said that the Arab states should recognise the state of Israel and its right to live in security. The second principle was that the state of Israel should recognise the rights of the Palestinians. I find it extraordinarily difficult to understand why anybody should object to those two principles.
§ Lord Galpern
My Lords, will the noble Lord confirm that the Israelis have agreed to enter into cease-fire negotiations with the Lebanese but not with the PLO?
§ Lord Carrington
My Lords, the Israelis have agreed that Mr. Habib should be allowed to negotiate with the Lebanese Government about a cease-fire. The problem with that is that the Lebanese Government are not in control of what is happening in South Lebanon. As I always say—some of your Lordships do not always agree—because you are faced with unpleasant facts (and some of the facts are very unpleasant to Israel) it is no use pretending they do not exist, because they are not going to go away.
§ Lord Molloy
My Lords, may I say to the noble Lord the Foreign and Commonwealth Secretary, referring to the economic aspects of the summit, that there are millions of ordinary people who really cannot quite understand why, when the leaders of the free world get together, they all wish they could beat inflation, they all wish they could reduce unemployment, but they seem to be able to do very little about resolving those problems. Then, when they are going to talk about defence and the threats that may or may not exist with regard to the Soviet bloc, ordinary people say, "Aren't they giving comfort to those who don't agree with our way of life in the West when they can't simply get together and reduce interest rates, have a unified plan and programme to do away with unemployment and all the evils that exist?" The hopeless statements that we have heard—I do not refer to the noble Lord himself—do not give much encouragement to ordinary people. The ordinary people think this sort of attitude can only give encouragement to those who disagree with our free way of life.
§ Lord Carrington
I think partly the trouble is that there is so much expectation and so much publicity about the summits that everybody thinks—indeed, I think the noble Lords, Lord Bruce and Lord Gladwyn, were almost guilty of this—that some magic formula is going to emerge from them. The difficulty is that it does not. The magic formula does not emerge because, however much the seven leaders of the industrialised world would like it, they do not have a magic wand to wave which is going to cure these ills.