EC: Relations between Member States

HL Deb 08 May 1991 vol 528 cc1093-120

3.12 p.m.

Lord Annan rose to call attention to the case for improving relations with other member states of the European Community, particularly Germany; and to move for Papers.

The noble Lord said: My Lords, I am moving this Motion primarily to draw attention to the need to improve our relations with Germany. The time could hardly be more propitious because the Prime Minister, greatly to his credit, has changed the climate by establishing a warm relationship with the German Chancellor.

It is very much in our interests to improve relations. Germany is now our biggest export market. In 1990 Germany overtook the United States as the best outlet for British goods. The situation in East Germany gives our exporters a unique opportunity. Our banks ought to give British industrialists favourable credit terms to enable them to exploit that opportunity. If we can get in on the ground floor there it will be to our advantage in the next century. Moreover, the banks are less likely to acquire bad debts than they are in South America or in third world countries. The Wirtschaftswunder east of the Elbe may prove to be less spectacular than that in West Germany in the 1950s, but let no one doubt that it will come.

Germany is our most important partner in defence. The 70,000 troops we deployed in Germany and in Berlin nay now be being reduced by half but troops are still likely to be deployed west of the Rhine. For too long this country has continued to believe that our role is to police the world—in Korea, east of Suez, in Belize and now in the Gulf. We spend billions updating weapons that grow ever more expensive and trillions on updating a useless nuclear deterrent—useless because under no circumstances that one can possibly foresee would it ever be used. We need Germany to help us turn NATO into an organisation which shares that defence burden. No other nation in the European Community would be willing to help us in that way.

Germany is the key to the development of the Community. Germany is beginning to see that the development of the EC is much more complicated than Monsieur Delors imagines. The mass unemployment and collapse of the East German economy after the establishment of the deutschmark on a parity with the East German mark has made the German Government, as well as the Bundesbank, think again about the speed at which the European Community can move towards a common currency. Surely the Prime Minister was right to say that whether or not it is sensible to use the same money we can surely all agree on the need for sound money. We do not want to crow over Germany's difficulties. On the contrary, we need to sit down with the Germans and examine the lessons to be learnt in establishing common economic institutions, the lessons which Germany is now learning in its relations with what used to be East Germany.

There is something else that we can learn from Germany. Germany has the best industrial relations in Europe; we have the worst. That problem will not go away. Lord Bullock's report could not have appeared at a worse time—the late 1970s—when militant and irresponsible trade unionism was rampant. Its recommendations could not have been implemented then. But the German model of one industry, one union, 17 unions in all, with a collective bargaining system developed and set in law, which makes prolonged disharmony illegal, mocks our crude confrontational policies. No doubt such corporatist solutions are out of date in the view of the Government today, but is it inconceivable that the leaders of the biggest trade unions in this country might confer with their colleagues in Germany and learn how the German system works?

If we move closer to Germany it will be important not to try to drive a wedge between Germany and France. We must recognise that owing to our contempt for the Continent for 25 years after the war Germany will for many years regard France as her premier ally. She will do so because the French, recognising their own self-interest, forged a genuine economic alliance with Germany. However, Germany is a federal republic and we may therefore be able to persuade the Germans that too tightly-knit a bureaucracy in Brussels is to nobody's advantage. Some latitude must be allowed for regional and national differences as there is in the Bundesrepublik. Our aim should be to convert the Franco-German tandem into a three-horse troika as the driving force in the Community.

There is another reason why relations with Germany need to be closer. We are closer to America than any of our European colleagues, so much so that they have often pictured Britain as outside the Community and looking in. Mrs. Thatcher when she was Prime Minister on several occasions spoke for the Community, for example over Star Wars. Her close rapport with President Reagan won some concessions to the Community view. However, she gave the impression of speaking on her own, whereas the present Prime Minister has won golden opinions in the Community by consulting with his European colleagues first. He did so in creating the safe havens for the Kurds. He has done so again in bringing Community pressure to bear on the United Nations to police northern Iraq.

Instead of British initiatives being regarded with suspicion, they are now regarded as European initiatives. We saw that the other day when the Community declined to follow the lead of the President of the United States in lowering interest rates. I do not think that anyone should doubt the need for Britain! and the Community to keep the Atlantic alliance in being, and we are best placed to attack the most virulent forms of anti-Americanism on the Continent and to proclaim the benefits of NATO. But, by working in concert with his colleagues, the Prime Minister can eradicate the image of Britain acting on its own outside the Community, always at odds with our partners.

What is it that impedes better relations? There are many in my generation, and perhaps especially in this House, who find great difficulty in believing that Germany has changed its character. They are still haunted by the spectre of the power that provoked five wars between 1864 and 1939. None of us can forget the Holocaust of 45 years ago and some people still want to punish Germany for it. We all of us, I hope, recall how well-meaning people between the wars, indignant at the folly of the Versailles settlement, wanted to revise it; how that policy of appeasement after Hitler took power was disastrously continued; and how Britain undermined French foreign policy and rotted the French will to resist. Those are the memories that very understandably alarm people. They certainly alarmed Mrs. Thatcher and Mr. Ridley. Many people are determined, as they would say, not to be fooled again.

But in diplomacy, as in war, it never pays to fight the same battle over again. It is inconceivable that Germany or any other European power will start a war in Europe again. Of course there are isolated Germans who may talk of revising the Polish frontier or who smash Jewish gravestones, but I cannot think of a single reputable observer who does not agree that the sense of shame about the Holocaust and about the calamity of the Second World War permeates German society.

In fact, the Germans' distrust of themselves is so marked that Germany began by being almost neutral in the Gulf war. The leader of the Social Democrat Party said, "Don't those foreigners understand that you can't offer brandy chocolates to a former alcoholic who is on the waggon?" But very soon other voices began to be heard in Germany. The editor ofFrankfurter Allgemeine Zeitung, Herr Joachim Fest, criticised his countrymen for sitting in moral judgment upon the Western countries when those countries had guaranteed Germany the benefits of international order. The German Chancellor rallied his nation and Germany made a large monetary contribution to the allied forces, of which we received no less than £277 million.

Japan, notably, gave less. Germany made that contribution at a time when it was paying large sums of money to the Soviet Union to enable the Soviet Union to withdraw and rehouse its large army in East Germany. At the same time, Germany was giving large credits to East European countries to enable them to rebuild their shattered economies—all of that while Germany itself is faced with the desperately serious problem of mass unemployment and a derelict country in East Germany.

Nor is Germany backward in honouring obligations to Israel and in the third world. Everyone knows of the good work done by the young people of this country in VSO, but how many people know of the voluntary service that young Germans do in Africa, particularly in the leper colonies? No country in Europe, ourselves included, is in better standing with the international community.

What can we do to convince Germany of our good intentions? Let me suggest one move, though I suspect that it may find no warm welcome in the Foreign Office. Sooner or later the seats on the Security Council in the United Nations will come under scrutiny and Germany will have a prior claim among European countries to be given a seat. I can well imagine the Foreign Office's response: "Any change is quite impossible. We certainly could not cede our seat and, if Germany is admitted to the Security Council, why not Japan, Nigeria, Brazil, India and countless others who have good claims?".

Such a response would be negative and unimaginative. Not everyone may warm to Herr Genscher's manner, but should we not consider his overtures more carefully than we have at present? Those overtures suggest that we should consult our EC colleagues on all major issues in the Security Council, or, if that is too great a burden, we should consult at least Germany, so that we can reach agreement on any matter that comes to the Security Council. Britain would then speak for Germany and the other EC countries as well as herself; better still, if the seat which is now ours could rotate on a three-year cycle between the two countries. It is by a gesture such as that, which costs us virtually nothing and would earn us an enormous dividend, that we could improve relations with Germany.

In 1945 I became head of the German section of the political division in the Control Commission. I tried to supervise and encourage the rebirth of political parties. It was then that I met Dr. Adenauer and Herr Schumacher. I well remember the situation that arose when the British military government sacked Adenauer as the mayor of Cologne and put him under house arrest. I was sent to release him and to explain to him a little later that the ban had been lifted and that we wished him well. I am not at all sure that I convinced him, but there was no doubt in my mind what he was and where his heart lay.

I remember Adenauer asking me what I thought was the greatest mistake that this country had ever made in its relations with Germany. I hesitated and suggested that perhaps, discretion being the better part of valour, he might answer that question himself. "I shall tell you", he said. "It was in 1814 at the Congress of Vienna when you so foolishly put Prussia on the Rhine to protect you against future French aggression". That was characteristic of the man who was not merely a German but a European and always had the interests of Europe as a whole at heart, even though he was perhaps not much of a friend to this country. He was a scion of the great humanistic culture of the Enlightenment and the Romantic movement and his heart lay not just in Germany but in Europe.

That was characteristic of the new Germany that came to birth, but it is not from sentimental or nostalgic reasons that I argue for closer relations with Germany today. It is for reasons of the deepest self-interest—the only reputable motive in foreign policy. We missed the European bus in the 1950s and in the 1960s the conductor, President de Gaulle, stopped us getting on it. We have never recovered from that false start and it looked until very recently that we would have to take a seat in the rear of the bus. But now we have a chance to drive it. I ask the Government what they are doing to bring that about.

My Lords, I beg to move for Papers.

3.30 p.m.

Lord Briginshaw

My Lords, I find it necessary immediately to say how happy I am to participate in this debate and to follow the noble Lord, Lord Annan. He has made penetrating submissions and not wasted time. He raised many questions that can help us. Nevertheless we should be under no illusion that the pressures of the moment in either Germany or the Soviet Union will alter the consequences of unification. They will not. In our relationship with Germany we should be friends but not fools. We should be competitors and co-venturers. It is preposterous in any case to imagine that we can halt the Germans.

But we can exercise power through influence. Avenues are available. First, our voice in the Community should be used to tie Germany ever more fully into Community approaches. We should avoid isolating the Germans. Secondly, we should recognise our joint interest with France and urge the French to do the same. The best bargaining approach to Germany is a common one from France and Britain. France is likely to be more receptive than usual. The efforts made by the French in the 1980s to build an exclusive relationship with Germany by a series of bilateral arrangements were largely undermined by the events of 1990. The French are still smarting. Unfortunately the British Government appear to wish to do exactly the wrong thing and tread the same path as the French in the 1980s by applying to become Germany's most favoured friend. That is in return for vague promises. Frankly, neither France nor Britain alone can rely on their individual strengths to an extent which would allow them to veto any German single-mindedness. Acting together, the same is not true.

The aim must be that in return for co-operation with Germany, either at Community or other levels, we should expect a more substantial invitation to share i n the profits of expansion and indeed those available in the domestic German economy. What do I mean by co-operation? Let me give one practical example. We currently pay lip service to the American line on something which they call dual purpose technology transfer—I repeat, dual purpose technology transfer. That appears to mean that, when the Americans designate a particular form of new technology as having a purpose which although designed for civilian use may also have military application, the export of that technology is restricted or prevented. I am afraid that that is a smokescreen for American self-interest.

We should oppose those restrictions for two reasons: first, the restrictions harm our own exporters; secondly, to further a strategic purpose. The Germans at best are lukewarm to the regime imposed by the Americans. Our opposition to the restrictions would be viewed as something in the nature of a concession to Germany—a concession inviting a reward. That does not mean that we should not be vigilant about non-civilian use of technology but our vigilance could more profitably shift from prevention to verification. We can insist on proof of civilian use just as we now insist on the verification process in disarmament negotiations.

Ultimately, the only way that we can guarantee our profitable participation in the expansion eastwards is to influence the Germans as economic equals. While diplomatic accord with the French is one way forward, it is no excuse for inaction in strengthening and expanding our own industrial, financial and economic base. If the Government need to lead by intervention, so be it. I have spoken on these matters in other contexts. Suffice it to say that the present government have offered rhetoric rather than ability in this task. It is time that they went.

I conclude by saying that Germany's obvious eminence has required constructive co-operation on our part. We should be friendly but the friendship should begin and end with self-interest. Our interest is self-interest.

3.37 p.m.

Lord Monson

My Lords, we must all be grateful to my noble friend Lord Annan for giving us the chance to debate this interesting and topical Motion. The Motion speaks of the case for improving relations with other member states. I took that to mean our informal relations rather than formal ones, but no matter. The wording rather assumes that it is a matter of 11 against one—or one against 11 if that is preferred—which, I suggest in all deference to my noble friend, is a misreading of the situation.

We are of course Europeans and always have been, just as the Swiss, Swedes, Poles and other non-members of the EC are and always have been Europeans. But we are not and never can be Continentals. Our geography has formed our history and our history has formed our culture, thought processes and loyalties. The French, among others, will never cease to resent the fact of the special relationship (which still exists, though it may have diminished) between Britain and the United States or the fact that, by and large, we feel closer to the Australians and the New Zealanders than we do to them. Frankly, that is just too bad. It is something that the French, among whom I number many friends, will simply have to put up with.

Leaving aside our island status, it is a great mistake to suppose that there exists an identity of ambition together with a striving for even greater homogeneity among the Continental member states. To date, the Latin countries have acquiesced in almost every directive spewed out by the Commission, for unsentimental but perfectly respectable considerations of commercial advantage and, above all, the consideration of ever rising standards of living. Those directives which they do not like they quietly ignore. The Germans have acquiesced in order to attain total respectability. The Belgians have done so as a means of subsuming their communal tensions—it is not too strong to refer to them as communal hatreds—within a greater whole.

However, this acquiescence will not last for ever. Before long the people of those countries will become restive about the constant stream of interference and standardising of laws and regulations. I do not talk today about the common currency, the Uruguay round or those regulations which are absolutely necessary to achieve the famous level playing field in 21 months' time—vitally important though all those matters are. I refer to the petty interferences and efforts at standardisation and harmonisation which are not genuinely vital for a free movement of goods and services. My recipe for good relations between the peoples of the Community is to stop paying mere lip service to the idea of maximum national diversity within the European Community and to adopt a positive policy of live and let live.

It was, after all, that great German who has now become a naturalised Englishman and a great European in the true sense, as well as in the more restricted sense used by Euro-enthusiasts, who over 16 years ago publicly deplored what he described as "obsessive harmonization" which he predicted would stir up resentment and ill will between the peoples of the EC. I speak of course of Professor Ralf Dahrendorf. I make no apology for referring to his wise words yet again in your Lordships' House.

How extraordinary it was yesterday to hear calls from the noble Lord, Lord Clinton-Davis, speaking from the Opposition Front Bench, for common European speed limits. There are no common speed limits in the United States, Australia or Canada. One can only suppose that those people who call for such limits want the ancient nation states of Europe to have less freedom of independent action than the states of America and Australia or the provinces of Canada.

What business have people of one country to regulate the drinking water of people in another country hundreds of miles away? For example, what right have the Greeks to dictate to us the composition of our custard tarts and the temperature at which they should be stored? In fairness to the average Greek, he has not the slightest interest in the composition or storage temperature of our custard tarts, any more than the average Briton cares about the composition of the taramasalata eaten solely within Greece. Nevertheless, it must appear to the average person that he has been interfered with by individuals of other countries rather than by impersonal bureaucrats. That inevitably stirs up resentment against other nations.

I always enjoy the articles of Carole Tongue, Labour MEP, although I frequently disagree with them. However, even she—an enthusiast for greater European integration—wrote in the House Magazine of 6th May of the necessity, of ensuring that harmonisation respects national differences and concerns. This is very important politically. If the European Community does not show great sensitivity and flexibility on this issue, it could lose the support of many European citizens"— to which one can only say, "Hear, hear".

However, we must beware the snare and delusion of remedying what is an undoubted democratic deficit by conferring more power upon the European Parliament. Apart from the fact that the composition of that parliament unfairly favours some countries at the expense of others, few people who stand for public office nowadays anywhere in the world believe in allowing the citizen to do his own thing. Quite sincerely, they believe that the gentleman in the legislature knows best.

One has only to look at the ratio of restrictive laws and regulations to permissive laws and regulations produced by this Parliament over the past 12 years—the ratio must be about 100:1—to understand the point that I make. It would be no more acceptable for bullfighting to be banned in Spain as a result of Belgian and British MEPs conspiring together, for shooting seasons or liquor licensing laws to be drastically altered in Portugal as a result of a casting vote of a German MEP or for 14 year-olds in Italy to be forbidden to ride mopeds as a result of a deal between Danish and Dutch MEPs than it would be if those activities were banned outright by the Commission.

I deplore the TGV line being driven from Valence to Aix-en-Provence and on to Nice across one of the most beautiful regions of Provence. But essentially it is none of my business; it is the business of the French themselves. Similarly a Frenchman may deplore the M.3 extension being driven across the chalk downs to the east of Winchester. But I am sure that the average Frenchman too realises that it is essentially none of his business; it is the business of the British alone.

The only solution is this. When the Treaty of Rome is renegotiated, as it surely will be soon, it must ensure that every country's right to be the sole regulator of its strictly internal affairs is spelt out in black and white.

Perhaps I may now refer to Germany. Unlike my noble friend Lord Annan who has been deeply involved at very high levels, I do not know the country well. My first visit was with a Cambridge friend in the spring of 1952. It was almost seven years after VE Day, at the start of a long zig-zag journey by rail to southern Yugoslavia, which was just starting to open its borders to the outside world. None of the devastation resulting from the Blitz and the VI and V2 attacks upon London had prepared us for what we saw in Germany. The centre of Mannheim, where we spent the first night, once a thriving industrial city, was totally flattened over an area of more than a square mile. Our hotel was a hole in the ground in the middle of that wasteland leading to an ingeniously converted air raid shelter—simple but adequate.

No one who saw the contrast between Germany then and the Germany of 15 or 20 years later can fail to respect the resourcefulness and hard work which made that transformation possible, aided though it may have been by a minimal defence burden. But it must be said that respect is not the same as trust or affection. It has always struck me as curious that, while some people who suffered badly under the Nazi occupation still dislike Germany and the Germans, others who suffered equally badly do not. Into the first category one can put the Dutch and the Czechs; into the second one can put the French, the Belgians and the Yugoslavs. Indeed the Yugoslavs were remarkably friendly with the Germans even in early 1952, perhaps because over 500 years they had become used to brutality and massacre and the Germans were merely par for the course.

Strangely, although Britain suffered less from the last war as a result of having fended off a Germany invasion, the British seem to ally themselves with the Dutch and the Czechs rather than the French and the Belgians—at least if one goes by children's comic strips and the tabloid newspapers. Mistrust of alleged latent Germany militarism can permeate even the higher reaches of government, as we saw in the latter part of 1990.

Yet intelligent British travellers to Germany in the 19th century, at least up until 1870, never considered the Germans to be inherently warlike or militarist, notwithstanding Frederick the Great, Marshal Blucher and a tradition of supplying mercenaries to all and sundry. Nor as a matter of fact did they appear particularly interested in physical fitness. "Strength through joy" was an unknown concept at that time. According to those observant travellers, the Germans much preferred sitting comfortably listening to opera or chamber music, munching innumerable cream cakes in the intervals. Their energies were concentrated on commercial success, possibly as a result of not having an overseas empire from which they could derive heap raw materials and to which they could sell their manufactured products without any great exertions.

One particularly perceptive English traveller reported a sea voyage that he took to Panama at about the turn of the century. On the ship there were 12 commercial travelers—10 German and two English. The Germans had taken the trouble to learn not only correct Spanish but also various South American Spanish dialects and one or two Indian languages. When confronted with a foreigner, the British commercial travellers merely shouted loudly in English. One can imagine who secured the orders. Alas, how little things appear to have changed.

We are right to oppose the CAP. It is unusual that a socially conscious country such as Germany should back a policy which impoverishes many people for the benefit Of many already well-to-do part-time Bavarian farmers. We are also right to worry about German commercial competition. However, we are probably wrong to worry about German military ambitions. Either Germany's present-day pacifism is a front to disguise such ambitions or the 75 years from 1870 were a n aberration and the Germans have now reverted to type. We should give them the benefit of the doubt and assume the latter.

Baroness Phillips

My Lords, before the noble Lord sits down, does he agree that if we had not had to pay for the defence of Germany we too could have rebuilt our cities much faster?

Lord Monson

My Lords, I mentioned the fact that the Germans have not had to contribute a great deal towards their defence. The noble Baroness will see that tomorrow in Hansard.

3.50 p.m.

Lord Greenhill of Harrow

My Lords, the noble Lord, Lord Annan, has a happy knack of promoting debates which are both timely and controversial. His recent debate on education was a good example. Today's debate is equally timely given the critical stage that we are approaching this year in our relations with our Community partners. Nobody will contest that there is a strong case to which priority should be given for improving our relations with our partners, in particular Germany, given its past history and present dominance. It is only common sense to do so. The noble Lord, Lord Annan, is an expert on Germany. We should be well advised to heed what he says, although I do not agree with some of his proposals.

I turn to the suggestion of reforming the composition of the Security Council. I wish to remind your Lordships of a conversation between the late Lord Stewart of Fulham and President Gromyko that I overheard some years ago. Lord Stewart suggested similar reforms to which Gromyko responded in a weary fashion, "If you knew how difficult it was to get agreement on the present arrangements you would not start suggesting modifications". That is the right attitude to take at the moment. The time for reforming the United Nations is when the results of the Gulf war have produced in the organisation a more effective and strong-minded group.

We should seek to improve our relations not only with the European Community but with as many countries as possible. We should not forget old and tried political and commercial friends. Last year your Lordships had a short debate on the future of the Commonwealth. There was general agreement that our historic links should be maintained, although in most cases Europe would be given priority.

I wish to comment on our relations with the Community. There are long-standing difficulties with Spain and the Republic of Ireland about Gibraltar and Ulster respectively. They are well known and no immediate solutions can confidently be foreseen. However, the news in today's newspapers suggests that movement may be made in both directions. We must therefore have patience and recognise that such difficulties will colour the attitude of Spain, Ireland and this country in respect of the Community.

Secondly, I wish to emphasise that our relations with the Community, concentrated in the two inter-governmental conferences now in the process of negotiation, are reaching a critical stage. It was originally agreed that the negotiations should be confidential. Needless to say, there have been copious leaks. With some success the Prime Minister has set the tone for our participation, and clearly the atmosphere has improved. One hopes that it will not be spoilt by Ministers and ex-Ministers taking insufficient care over comments about our Community partners, in which case the press will no doubt react.

There are well-defined obstacles ahead in the inter-governmental negotiations. I need not remind your Lordships of them. It would be wrong at this time to press our Ministers for a detailed report and to attempt to extract from them statements that would make the task of our negotiators more difficult. However, we should be deceiving ourselves if we believed that the Prime Minister's statements have solved the problems ahead. Nor do we have a clear idea of how the Opposition plans to deal with the problems that will arise.

Among the Europeans, ambitious individuals and countries are advocating positions that are clearly unwelcome and disadvantageous to us. Particularly dangerous to our interests would be an attempt to steamroller the next council in June before the two conferences have explored the necessary compromises. We should resist any attempt to do so. Good relations between the members cannot be achieved if attempts are made to impose one-sided concessions.

One of the welcome aspects of the intergovernmental conferences is that decisions are being sought by representatives of sovereign states answerable to national parliaments. The Commission and the European Parliament are observers at the conferences and are not in the driving seat. Constant harking back to the intentions of the founding fathers is not the answer to the way ahead. The founding fathers played their part but today the world is very different. It is not now necessary for Members of this House to anticipate and to discuss the intergovernmental negotiations. We must wait until the obstacles to satisfactory agreement have been identified. Decisions can then be taken about whether we can agree to an amended treaty. That will not be easy; it must be acceptable to Parliament and to the country as a whole. It will dictate our future relations with the Community members.

In the meantime we must keep on good terms with our partners. We must also ensure that the United States is given a defence role which is to its own advantage and that of Europe. As regards their defence during the past 50 years, the members of the Community owe a debt to the United States and to this country.

4 p.m.

The Earl of Longford

My Lords, the noble Lord who has just addressed us is an acknowledged expert on international affairs, as is, in a rather different sense, the noble Lord who speaks next. He is speaking from the Labour Benches today. He may be independent but he has paid us the compliment of sitting on the Labour Benches. I do not claim to be an expert on international affairs but I have one or two qualifications which may persuade the House to allow me to speak on Anglo-German relations.

I was Minister for the British zone of Germany from 1947 to 1948. I was responsible for 26,000 members of the Control Commission. I believe that, by that time, the noble Lord, Lord Annan, who spoke so brilliantly, may have returned to academic life, so I was never responsible for him. However, I was connected early on with Anglo-German affairs. I was the first chairman of the Anglo-German Association which was formed later. I have always been a strong, although somewhat taciturn, supporter of Europe.

The noble Lord, Lord Annan, described meeting Dr. Adenauer. I shall describe another meeting in 1950. I got to know him quite well when I was Minister for Germany but in 1950, when I was Minister for Civil Aviation, I paid him a courtesy call. The Adenauer/Schuman plan for coal and steel, which was the forerunner of the European Community, was just coming forward at that time. Greatly overestimating my significance, Adenauer begged me to persuade the Prime Minister, Clem Attlee, and Ernest Bevin to join the plan. History would have been very different had I had the slightest influence. I tried to explain to Dr. Adenauer that he should not rely on me but he insisted on sending me back with that message. Of course, I got nowhere.

I have said before that I admire Lord Attlee more than any other British statesman this century. I have described him as an ethical giant. However, I must say that, if he had a weakness, it was his attitude towards Germany. Some time after 1950 when I was chairman of the Anglo-German Association I tried to persuade him to become a patron. He hated to cause pain to anyone towards whom he was well disposed. However, he finally brought himself to tell me that he had never cared for the Germans. In order to be fair he said, "Vi and I once had a German maid. We became very fond of her. But she was an exception". I am afraid that that was his attitude towards Germany.

Today we are facing a new phase in British policy towards Germany. The first phase was the Potsdam phase of combining with the so-called allies—United States, France and Soviet Union—to hold down Germany indefinitely. In those days Germany was thought of as a united Germany to be held down by the four powers. In 1947 I sat, as a timid acolyte, beside Mr. Bevin throughout the Council of Foreign Ministers, with Mr. Molotov a yard or two away. After a time the Council of Foreign Ministers was getting nowhere and General Marshall and M. Bidault decided that there was no point in continuing. Ernest Bevin had to go along with that but he was reluctant to give up the idea of a united Europe. However, in the end he accepted the position and, in my estimation, did more than any other man to bring about the Atlantic pact.

An Atlantic pact, with Germany eventually playing a strong military part, had seemed inconceivable a little while earlier. Sir Ivone Kirkpatrick, an old friend of the noble Lord, Lord Greenhill, was then head of the German section. He summed up the matter in a memorandum at that time by saying, "You cannot hold down Germany with one hand and hold back Russia with the other". Therefore, the policy of holding down Germany indefinitely had to be abandoned. That was the end of the first phase. There is no doubt that that was the policy at that time.

Soon after I became the Minister for the British zone I commented to a high Foreign Office official that the pension plans being arranged for the Control Commission seemed to imply that we should occupy Germany for at least 25 years. He replied very solemnly, "I would be very sorry if I did not think that that v' as the plan". One can remember how quickly that plan was scrapped as a result of Russian sabotage. It was not a deliberate, well-intentioned move on our part although there were many well-intentioned people about. The Russians destroyed the Potsdam plan.

In the summer of 1947 I went out to Germany in a well-meaning way to preach a version of Christianity. I found many half-starved children in the streets of Dusseldorf and I tried to encourage them to be proud of being German. That got me into quite a lot of trouble. That was not our policy at all. I was asked by Foreign Office officials, who were no doubt carrying out government policy most correctly, whether I minded having a public relations officer with me when I went back to Germany so that my indiscretions could be explained away. I said that I had no objection but that I should continue to say what I thought until eventually I got kicked upstairs. However, that is a long story. In the meantime, that policy was destroyed by Russian aggression.

The plan underlying the second phase was to take Western Germany into a partnership based on the idea that Germany was weak and that Russia was not only very strong but also very frightening. On those assumptions, the Atlantic pact was formed. Forty years later the situation has changed again and we are entering a new phase. Germany is stronger than it has ever been. As regards Russia, I doubt whether even the experts like the noble Lord, Lord Greenhill, would care to say confidently that Russia is permanently weakened. She certainly seems to have lost permanent control of her satellites but who can say whether she is permanently weakened and less dangerous? At present the situation is very obscure.

My plea—and I am putting in a slightly cruder way the more refined analysis of the noble Lord, Lord Annan—is that the old, half-sarcastic, phrase, "Don't let's be beastly to the Germans" should be supplanted by a new slogan: "Don't let's be frightened of the Germans". That is the message which I wish to offer to the House today.

Even those in the ranks of Tuscany must agree that the present Prime Minister has made a very good start in his altitude towards Germany. I am sure that, when he is supplanted by leaders of other political persuasions, the same enlightened policy will be pursued, perhaps even more strongly. I am confident that British policy towards Germany will go forward on the right lines. However, I wish to emphasise that we should not be frightened of the Germans. That advice is based on long experience of where fear may lead us. Fear led us astray after the First World War. We held down the Germans until Hitler appeared on the scene and we held them down again after the next war until the Russians sabotaged that. Let us not make the same mistake again.

4.9 p.m

Lord Weidenfeld

My Lords, like other noble Lords, I believe we owe the noble Lord, Lord Annan, a double debt for both the theme and the timing of this debate. With the Gulf war behind us, and decisive discussions on a common European foreign policy urged upon us by Brussels ahead of us, this is a fitting moment at which to pause and reflect on relationships with our continental neighbours and especially the new united Germany.

The Gulf war and its aftermath has been a watershed in relations between Britain and Europe. There is no doubt that at the outset both the collective voice of the Europe of Brussels and the gut reaction of individual European countries have differed greatly from this country's instinctive as well as considered response. It seemed as if the various European nations behaved according to traditional stereotype: the Dutch, stout and solid; France, prone to vacillate at first, co-operative at the end, yet always stylishly unpredictable; our Mediterranean neighbours—Spain, Italy and Greece—probably largely because of their intricate ties with the Islamic world, yearning throughout for even the faintest signal from Baghdad to justify face-saving accommodation. And Germany: how did Germany behave? Hesitant, uncertain, embarrassed, one might even say sheepish and then turning more than half circle to munificent support and positive action.

The German attitude bears examination and deserves compassionate understanding. Deeply involved with the troubled East German economy and the delicate last stages of unification with several hundred thousand Soviet troops still on the national soil, a sudden switch of priorities to a new crisis flash point proved immensely difficult. Moreover, any form of military intervention beyond the territorial limits set by the NATO alliance presented a real psychological as well as political and, indeed, constitutional problem.

The younger generation of Germans is overwhelmingly pacific, if not pacifist, and staunchly anti-interventionist. I think it was Madame de Stael who once said that the Germans are a nation like any other but only more so. It is a fact that when Germans embrace a cause they do so with a thoroughness, skill and dedication that makes them stand out. When they embraced a militarist ideology, when they extolled the state above the individual, they went to enormous extremes.

There has, of course, also been an important libertarian strain in Germany history from the Age of Enlightenment to the present, but it has only intermittently been allowed to surface and prevail. Yet in this last phase of German history for almost half a century the Germans have proved capable of building a truly civil society, a smoothly functioning parliamentary system, a free and yet socially responsible market economy which makes them the pride of Europe and, indeed, the whole civilised world. The pragmatic humanism of men like Adenauer and Heuss, Erhard and Schiller, Brandt, Schmidt, and indeed Weiszaecker and Kohl, have made the new Germany responsible partners of both the Western military alliance and the European Community.

The Gulf crisis has been a traumatic experience for the German nation. It has proved to the Germans that they can no longer plead total absorption by their own problems. They must face up to their responsibilities as a European and world power. In a crisis such as that provoked by Saddam Hussein one cannot simply buy oneself out of responsibility. The German public was shocked when it was revealed how much German industry had contributed to Iraq's war machine, not only quantitatively but, in the field of chemical weapons,horribile dictu, qualitatively as well. The debate in Germany continues and I believe that this is likely to be the last international crisis when Germany will still behave like a political dwarf and economic giant.

What lessons are we to draw from our neighbour's performance in the gravest international political crisis since the Second World War? The advocates of accelerated political union and a common European foreign policy point to the need for Europe keeping always in step, acting as a block, speaking with one voice and presenting an independent persona. The opponents of European integration have little difficulty in pillorying the indecision, dissonance and, at times, even callousness of certain European attitudes and interventions. I believe that the truth lies somewhere between those two extremes.

A greater involvement of Britain in the European council is desirable; indeed it has paid off. The Prime Minister's intervention on the Kurds, in the question of reparations and possible war crime trials as a result of transgressions in Iraq, has won extensive European support. Britain's resolve to work from the heart of Europe, reasoning her case from within rather than sulking on the margins, is and has been acknowledged to be the right policy. It is indeed the right policy for all European countries for there is no doubt that there is not sufficient harmony among Europeans on a whole range of issues—the Middle East, East-West and North-South. There is no sufficient harmony that would justify a degree of institutionalisation where, by a simple count of heads, national governments would greatly restrict or even abandon their right to independent foreign policies. That may happen one day in the future—I hope it will—but not yet. We must not forget that it is quite probable that before the turn of the century a European Community may include Austria, Sweden, Norway, Finland, possibly Switzerland; not to mention some of the newly emergent democracies in East Central and Eastern Europe.

But for this country relations with Germany, government to government and people to people, are of paramount importance. The time for 19th century power politics, an outmoded inter-European balance of power, is over. Closer ties with Germany does not mean isolating France; nor does the undoubted and profound Franco-German partnership necessarily threaten Great Britain. This is the age of pluralism in every sphere. Consortial thinking in industry and trade, multinational projects in social, educational and scientific realms is the order of the day. Germany will be the leading power in developing, indeed, nursing back to economic health, the countries from the Baltic to the Black Sea. We should be involved with Germany as partners. This will not only give us fresh opportunities but in a way relieve the Germans to be free to spread their wings and share the burden in helping other areas of Europe and the third world.

Our political systems have a growing affinity and stand to gain by closer co-operation. The British Labour Party, since its conversion to Europe, can further strengthen its ties with German Social Democracy. My neighbours on these Benches—the Liberal Democrats—will find much common ground with Germany's FDP and the party opposite may well owe its probable acceptance into the fold of a European conservative bloc in Strasbourg to the good offices of the German CDU.

When Helmut Kohl quoted the words of Thomas Mann, that the great ambition of his nation should not be to create a German Europe but a European Germany, he was reflecting the mood of the vast majority of his people. There are no certainties in history and there are always dormant demons in the subsoil of a nation's—any nation's—history but they are best banished by comprehension and goodwill among neighbours. I submit that a growing friendship between this country and the Germany of today and tomorrow should lie at the heart of our European policy.

4.17 p.m.

Lord Bonham-Carter

My Lords, I too should like to join other noble Lords in thanking the noble Lord, Lord Annan, for allowing us to participate in this timely and interesting debate. I thank him also for the admirable way in which he introduced it and for his survey of Anglo-Saxon attitudes to Germany, which are schizoid and sometimes self-contradictory. On the one hand, some of us claim to be terrified of being dominated by a Germany which is an aggressive economic and, as we say under our breath, potential military power. On the other hand, the Gulf War occurs and we express contempt for the Germans' pacific behaviour. I should prefer to live with a Germany that adopts the attitude to the Gulf that it did than one with the attitude expressed by those who fear its dominance.

In this debate I should like to examine an aspect of our self-interest which the noble Lord, Lord Annan, rightly said should be the basis of foreign policy. It is also Europe's self-interest and can best, and probably only, be achieved through European policies; that is, through developing European Community policies, economic and political, towards the states of central Europe. In order to do that, it is essential that this country should develop the strongest and most intimate political and economic relations with our colleagues in the Community.

It is inevitable that during the months since the autumn our attention has been diverted from these matters by the dramatic and tragic events which have occurred in the Gulf. But it remains the fact that today and for the next 10 or 20 years the future of Central Europe must be a major preoccupation in Europe and a major responsibility of the European Community. It is only by achieving the incorporation of Poland, Czechoslovakia and Hungary within the economic and political systems of Western democratic societies, and the establishment in those countries of political democracy and free economies, that the peace and stability of Europe can be made more secure. Such a condition is a prerequisite of that security and stability. I suggest that one of the conditions for achieving that is that those countries can realistically look forward to joining the Community. Thus they can be protected from chaos in Russia and from the kind of trouble that we are witnessing in Yugoslavia.

It is hard to exaggerate the importance of the task. It is equally hard to exaggerate the difficulty of achieving it. The task of extending democracies and building democratic societies comes after 40 years of communist government and atomisation of society. By that I mean the destruction of all civil institutions. A civil society is one in which the interests of groups and individuals are articulated by groups and individuals independent of government. Such a state of affairs must be the ultimate enemy of a communist society. War has to be conducted in such a society in order to destroy all movements, bodies and individuals who might promote individual or group autonomy.

Therefore in discussing the crisis in Central Europe it is far easier to talk about the economic crisis, which is quantifiable, which can be described in figures and which can be measured, than to talk about the political structures which have to be built in this kind of social desert. Institutions have to be established in societies where all needs and requirements have found no adequate means of identification, representation or articulation.

Let us consider the case of Poland. A distinguished Pole told me that the Poles have no particular respect for their political institutions for the simple reason that they have no reason to have any respect for them. One can only conclude from that that for Poland and the other countries the democratic movement rests on exceedingly fragile foundations. Therefore, Poland requires the maximum economic and political support from us in the West. Poland needs to have an objective, a goal and a destination to work towards.

The results of the Polish election demonstrate that fact. Forty per cent. of the electorate did not vote and the 60 per cent. who did gave victory to Walesa and defeat to Mazowiecki. Twenty-five per cent. of the voters voted for an extremely dubious and previously unknown figure. How do we interpret that? I interpret it as recognition by the Polish people that communism had failed and that Western democracy was better and brought wealth. They voted for what they believed would be democracy because it brought freedom and wealth.

In the result, freedom brought with it a sharp drop in the standard of living, a sharp rise from zero to well over one million unemployed and therefore a sharp disappointment. The danger is obvious. Disillusion with the delayed arrival of the economic rewards promised by democracy may encourage people to turn to some other solution, whether it be nationalism or a charismatic leader, to solve their problems. It is in warding off that outcome that the role of this country, and still more of the EC, is so crucial. It must be said that we in this country can do rather more than we have.

Perhaps I may give two small examples. The Polish debt is 45 billion dollars, of which 70 per cent. is owed to governments. The question at issue is the degree of forgiveness that should be granted. If you ask bankers they will tut-tut and say that forgiveness is a bad thing.

Nonetheless, I believe that they wanted retrospective legislation to get them out of the difficulty caused by various recent swaps with local authorities which they had entered into. How much is forgiven seems a political question. The object is to give democracy a fair wind and to speed up the rewards which free enterprise can offer. Therefore generosity is the wise course in our own self-interest. A cut of 50 per cent. in the debt has been agreed. That should be increased as advocated by the United States and, I believe, also by the French.

Perhaps I may give a much smaller example; namely, the question of visas. Unlike the rest of the countries in the EC and our treatment of Hungary and Czechoslovakia, we still insist that Poles apply for visas before coming here. The cost of a visa is one month's salary. If you do not get it you do not get your money back. You have to pay to apply. A far higher proportion of Poles are refused visas than Hungarians or Czechs. The visa processing work clogs up the embassy. It causes the maximum of It does this country's reputation nothing but harm. I believe that no one in the Foreign Office in his heart of hearts supports that policy. It bears the stamp of the Home Office and of all its heavy-handed tactlessness. If you should not take bankers' advice about politics nor should you let your foreign affairs be run by the Home Office.

I say this because the argument I am putting forward is that the development of democracy in the Central European countries is of crucial importance to the future of Europe as a whole. It is so because the chief beneficiaries of success, apart from the countries themselves, will be the members of the EC. In the event of failure, the chief losers, apart from the countries themselves, will be the members of the EC. It is the EC which has responsibility for co-ordinating aid to Central Europe. It is the prospect of joining the EC which provides for those three countries the main objective, goal and destination to which they look forward. It provides the magnet which is pulling them towards democracy and economic reform. If those countries are disappointed in that ambition or if they thought they were likely to be disappointed, it would be a grave setback to the measures they are taking.

It is my view that it is through the EC that the security needs of the Central European countries will be met. At the moment, with the collapse of the Warsaw Pact, these countries belong to no military or political alliance. They feel a strong sense of insecurity and isolation. Of recent months the USSR has been trying to persuade them to make a series of bilateral defensive pacts with the USSR, which is in neither their interests nor ours. Therefore, I believe that the security problem is one which we should take very seriously. If these propositions are true, then the development of a coherent Community policy which deals with economics, politics and security has to be pursued. In the development of that policy I believe that this country must be at the heart of policy-making and of its execution.

4.30 p.m.

Lord Cledwyn of Penrhos

My Lords, we are all very grateful to the noble Lord, Lord Annan, for enabling us to have this debate on our relations with the Community, and with a united Germany in particular, and also for his masterly speech. We have had a most interesting discussion, and all noble Lords who have participated have made knowledgeable speeches. I much enjoyed the relevant reflections of my noble friend Lord Longford.

We are all conscious that Britain's relationship with the Community, both before and after we became a member, has been fraught with doubts and difficulties. The noble Lord, Lord Annan, said that we had missed the European bus, and I agree with him that there is a very strong case for saying that we should have been in at the start negotiating the Treaty of Rome with the Six; but, for reasons which we know, that opportunity was missed and we lost important advantages as a result.

We have been a member of the Community for nearly 20 years and by now it is unthinkable that we should contemplate a divorce, although there are many in this country who prefer sleeping in different bedrooms. Mrs. Margaret Thatcher is one of those, but with the advent of Mr. Major one senses an increasing warmth in the matrimonial home. His speech in Bonn, when he said that, Britain would work at the very heart of Europe, was an indication of that. It was warmly welcomed on the one hand and regarded with suspicion on the other. Mr. Major has also warned that the pace of economic and political union should not be rushed. I think that most of us take the view that that is sensible. It was also the view of the Select Committee which produced a valuable report on the subject and of noble Lords who took part in the debate on it a few weeks ago.

The noble Lord, Lord Annan, also referred to our share of the defence expenditure since the war. As he knows, there have been significant developments in that field over the past few months, upon which we should much value the noble Earl's comments when he winds up the debate. The House is aware of the draft treaty which was presented in mid-April to the Intergovernmental Conference on European Political Union, which was rejected by the Government. The draft proposed an independent Community defence policy by 1996. That would involve a very substantial switch in British Government policy. It would involve turning the Western European Union into the defence arm of the new European union. The draft was to have gone to the EC summit next month, but because of what has been described as a deepening split inside the Community over whether it should assume responsibility for defence policy, we are informed that the meeting has now been deferred until next October. Incidentally, that is also the month in which the Community is to decide on a European political union treaty, including a common foreign and security policy.

Therefore, it seems clear that there is a serious rift between the Community and NATO on those basic issues. I shall be glad to know whether the noble Earl agrees with me on that. It has been reported that the United States Administration have expressed concern. Mr. James Baker, the Secretary of State, has asked the Community for assurances that, nothing would be decided that would weaken NATO or call into question the military structure of the Alliance". These are matters of considerable importance to us and to the Community. I hope that the Minister can enlighten us about the Government's attitude to these policy developments.

We know that the French and German Governments are anxious that greater powers on defence and foreign affairs should be given to the European Community. To what extent does the Government support or oppose that? We all remember the arguments which took place within the Community during the Gulf war. There certainly appeared to be some lack of understanding and co-ordination both on military and diplomatic strategy throughout those weeks. The result of that was that Members in both Houses were questioning whether it might not be too soon to contemplate political union and defence union. I recall noble Lords in this House making that very point during the debates we had on the Gulf war. Matters have improved since then, but we must learn from these experiences as we proceed, because it is vital that the Community should build on a sound foundation of mutual trust.

The noble Lord, Lord Annan, stressed the need to take positive steps to improve relations with Germany. I am sure that he is right, although the noble Lord, Lord Greenhill, saw obstacles to at least one of his suggestions. I noted that Herr Hans-Dietrich Genscher has said that we need a decision-making executive body as an institution of pan-European security and co-operation. He is of course looking to the future, and we must be encouraged by that.

As I have said, relations have improved since the Gulf war ended, and the Community has responded constructively to certain initiatives taken by Her Majesty's Government, namely to the safe havens proposal and the recommendation for a United Nations police force. On this side, we have given the former our strong support, and we support the latter in principle, although we should like to know more about it; for example, how a police force would differ from the UN forces which are already in the Gulf and which have operated in other parts of the world as well.

Taking all that into account, I must ask the noble Earl whether I am right in assuming that the Government's objective is to secure new agreements and initiatives in other areas of foreign policy.

As I have indicated before, the immediate task is to get the balance right between the Community and NATO How does the Minister reconcile the review of NATO policies in which the United States is involved on the one hand and the draft treaty which commits the Community to an independent defence policy on the other hand? The majority of Community governments support the latter, but for over 40 years Europe in defence has rested upon the axis of the WEU, the EC and NATO. We are on the threshold of a new era and there is need for wisdom and sound judgment on all sides if we are to fashion balanced policies

Speeches have been made which reveal the apprehensions which still exist and which have been referred to by a number of noble Lords. Mrs. Thatcher has spoken of, the dangers of Germany dominating Europe". Chancellor Kohl responded by saying, We do rot want to dominate anyone. We know that Europe can only come about if we all show respect for each other". We know that the Prime Minister's comparative moderation has encouraged Community leaders. I have read articles by the Prime Minister, by my right honourable friend Mr. Neil Kinnock and by the German Foreign Minister in The House Magazine of 15th April with great interest. Mr. Major said: We and the Germans agree that nothing should be done to underniine the Atlantic Alliance or the essential role played by the United States in the defence of Europe". Furthermore, both he and Mr. Kinnock believe in developing the relationship between Germany and Britain. My right honourable friend rightly pointed out that After a terrible war we successfully turned our relationship from that of deadly enemies to close and enduring friends". The cementing of that friendship is essential if we are to have a permanent peace in Europe.

The German Minister of Foreign Affairs also appeared to be optimistic. He said: We will advocate that the European Community remain open to tie democracies of Central and Eastern Europe". He goes on to argue that, anyone wishing to keep them out would be abusing the Community's name—it being a 'European' and not a 'West European' Community; and they would be detracting from the Treaties of Rome". Such an expansion of the European Community would take a little time but his objective is one which I think we should support. In the meantime, we should give careful thought to the effect of the proposed Community defence policy on the new democracies and on neutral countries which are preparing their application for membership of the Community. We on this side welcome Austria's application and also those from Sweden and other EFTA countries. Perhaps the Minister will tell us how the proposal to establish a European economic area is proceeding. I know that there are complications, especially on fisheries, but I hope that these can in due course be resolved.

With regard to the East European countries which are showing a keen interest in EC membership, perhaps the noble Earl will tell us how the proposed accession of Poland, Hungary and Czechoslovakia as full members is progressing. That would be a very significant development. I agree with the wise remarks of the noble Lord, Lord Bonham-Carter, about Poland and the other East European countries.

We are fortunate to have the report of the Select Committee on European Agreements with these three countries which has just been published. I am the first to mention this in the debate. Noble Lords will agree when they read it that it is an impressive document. The central conclusion of the committee is that the rebuilding of the three economies of those countries will be, an enormous and daunting task". It goes on to say that, it is difficult to over-estimate the problems which face the three countries in converting themselves into free democracies". Any agreement with the Community depends on the success of political reform and the maintenance of democracy. The committee concluded that, if that assumption fails, the agreement fails—a most serious development. There are other conditions, but I think we shall need a separate debate on the report if we are to do it justice. One further point is that the provision of financial support to the three countries is essential and is likely to remain so until the end of the decade.

Time does not allow me to deal with other matters such as the social charter, which we support, and also the huge task of reconstruction and modernisation which faces Eastern Europe as a whole. A short debate like this reminds us that the problems facing us and our partners and allies are vast and complex. Our primary task is to help create a stable and democratic Europe. We must not let ourselves be diverted from that aim because success here means peace, whereas failure could mean disaster.

4.47 p.m.

The Earl of Caithness

My Lords, I too am grateful to the noble Lord, Lord Annan, for tabling this Motion. We have had a useful discussion which has revealed the close linkage that exists between bilateral and multilateral relations.

An increasing number of questions of international importance now have a substantial multilateral dimension. The fight against drugs and terrorism and the challenges of the environment are but the most recent examples. In the modern world the vitality of a bilateral relationship is often expressed through co-operation in multilateral fora rather than through traditional bilateral exchanges. This is the case with Britain and the other member states of the European Community and is a natural and welcome development. Thus I will not dwell on the bilateral element of the Motion, except for our relations with Germany which have been highlighted. I merely say that Britain not only instinctively looks to strengthen its bilateral relations with all our Community partners but also with all countries that share our common values of democracy, freedom and justice. I shall focus what I have to say on Britain's relationship with, and role in, the European Community. I shall set out some guiding principles.

First, the Community is central to British policy making. The 1992 internal market programme, for example, shows more than any other development in the history of the Community the ever closer integration of member states' economies. Britain's prosperity and the welfare of its people are inextricably bound up with the successful completion of the single market.

Secondly, Britain is a committed member of the Community. We abide by the treaty obligations we have freely entered into. Our commitment to the respect of Community law is shown by the fact that the UK has implemented more items of single market legislation than any other member state except Denmark. But implementation is not the end of the story. To have a fair and free market, enforcement is essential. That is why we regularly urge all member states to improve their records and have tabled proposals on improving implementation and enforcement within the Community at the political union IGC.

Thirdly, we are playing a constructive role in discussions on the future development of the Community. As my right honourable friend the Prime Minister said in the foreword to the Government's latest White Paper on developments in the European Community, it is in our national self-interest to help build and shape the future Europe—and to do so with enthusiasm". We agree with much of what the noble Lord, Lord Weidenfeld, said. Nobody, we believe, can seriously contemplate a United Kingdom in any real sense outside Europe. The shape and structure of Europe is in a process of remarkable development, and the future is a challenging one. The British Government are determined to play an active role in this process. Our commitment to, and constructive participation in, the Community does not however mean that we adopt an uncritical approach to proposals within the Community. On the contrary, we shall continue to fight our corner ferociously where essential UK interests are at stake. We must not forget that Britain is the second largest of only four net contributors to the Community budget. That concentrates the mind. If more countries were net contributors that would be beneficial in preparing and adhering to sensible economic and budgetary proposals. It is essential that we examine thoroughly every proposal for Community action. Our record in amending those proposals which are inimical to UK interests is a good one.

Our Community membership and our ability to present a united front with our Community partners bring us advantages on the world stage. Our combined weight gives the Community a negotiating power which no member state would possess in its own right. And as the EC gains in stature, the UK's position and influence in the Community will be an increasingly important factor for bilateral relations with both our Community partners and non-EC countries.

An important element of this is Britain's strong support for the process of European political co-operation. Indeed, it was the United Kingdom which first suggested putting this process on a legal basis, now enshrined in the Single European Act. For example, recently my right honourable friends the Prime Minister and the Foreign Secretary have put our ideas for safe havens and for a UN police force in Iraq to our European partners. We received their immediate and full support. That gave us a powerful basis on which to launch our ideas at the UN with success. We applaud the German role in helping the Kurds. Like the noble Lord, Lord Weidenfeld, we welcome the generous German contribution to our costs in the Gulf war.

The Prime Minister said in Bonn in March that he wanted Britain to be, at the heart of Europe, working with our partners in building the future". That will involve constant dialogue with our partners. We will continue to be in the heart of that dialogue as we have been, for example, over the single market and negotiations on the Community's inter-governmental conferences on economic and monetary union and political union. As the noble Lord, Lord Greenhill, said, these are the focus of discussion in the Community.

An important aim in the conference on political union has been to encourage the Community to take a close look at its processes and procedures—a subject that the noble Lord, Lord Monson, majored. I agree with the noble Lord that we must try to improve the way it works and increase its efficiency. The Community should act only where it needs to, and in those areas it should operate effectively. Financial accountability and a greater appreciation of the financial implications of policy initiatives, together with closer scrutiny of Community activities, are therefore important. The hand of the European Court of Justice should be strengthened to ensure compliance with its judgments.

These are reforms aimed at improving and strengthening the existing structure of the Community. We consider it important to maintain the institutional balance envisaged by the Community's founders; that is, the balance between the respective roles of the Council of Ministers, the Commission and the European Parliament. That balance has served the Community and its member states well and should, we think, remain the basis for closer co-operation in the future.

On economic and monetary union, the UK has made it clear that we cannot commit ourselves to move to a single currency without a separate decision at the appropriate time by the UK Government and Parliament. Subject to that reserve we are negotiating actively and constructively at the conference. It is no secret that we are sceptical about the claimed benefits of a single currency and very conscious of the costs—particularly of a premature move to a single currency regime. That is why we have laid great emphasis on the need for the Community to satisfy itself that member states' economies have converged satisfactorily before the Community moves between the stages of EMU.

We believe that it is important to adopt an evolutionary approach that works with the grain of free and open markets in a way designed to ensure lasting benefits. We should seek to build first on those areas on which we can agree. One example of this philosophy are our proposals for a hard ecu which are designed with these objectives in mind. Many of our views are now accepted by our partners. They are also coming to recognise that no member state can be forced to accept a single currency against its will. We remain confident that the negotiations in Brussels will ultimately find a treaty language which respects this position.

The noble Lord, Lord Annan, talked of the Franco-German alliance. He wanted a British-Franco-German tripartite alliance. The noble Lord, Lord Briginshaw, said that we ought to be closer to France. We believe that within the EC, bilateral relations with countries are very important. But we are not seeking to make permanent alliances within the Community. The Community will not thrive on exclusive relationships. Thus we constantly seek common ground with different member states on different issues. The tactics of negotiations in the EC are essential—all the more so where qualified majority voting applies.

Having dealt generally with our bilateral relations in the Community, I shall deal with the Community's hopes 'or the future, with special reference, as the noble Lord, Lord Bonham-Carter, said, to Eastern Europe. The Government strongly welcome the expansion of the Community's relations with Central and Eastern Europe. The EC has trade and co-operation agreements with all countries except Albania and gives generous assistance to support economic and political reform programmes. First, steps were taken to allow them easier access to the Community markets. Secondly, the PHARE programme will spend some£600 million this year on technical assistance in the priority sectors of agriculture, training, the environment and economic restructuring. Thirdly, the EC is willing to provide generous loans in support of IMF programmes to help mitigate the worsening economic climate in which those countries must implement their reforms.

But perhaps the most important single step is the negotiation of association agreements with Poland, Hungary and Czechoslovakia. Association agreements were originally a British idea, enthusiastically adopted by our EC partners. Over their 10 year life they will provide for free trade with the Community. They will facilitate a political dialogue on all major current issues and, in the longer term, through co-operation in such spheres as standards, Customs procedures, industrial restructuring, the environment, statistics, company law and many others, will draw Poland, Hungary and Czechoslovakia closer still to the Community. If, in the end, they decide to apply to join, they can fulfil all the obligations which membership imposes. That will surely bring closer the European ideal of the Community's founding fathers. It was the policies of the Western world that encouraged the lights to be lit again in Eastern Europe. Those countries must not be denied the opportunity to join the Community in the future.

The Motion of the noble Lord, Lord Annan, calls our attention particularly to the case for improving relations with Germany. I am happy to be able to assure tile noble Lord that this is a case well understood by Her Majesty's Government. Our relations with Germany are in an excellent state and we are working hard to improve them yet further. On 11th March my right honourable friend the Prime Minister and a number of colleagues visited Bonn for a very successful meeting with Chancellor Kohl and his colleagues.

Our personal relationships are fully in tune with the close working relationship we enjoy with Germany on a range of issues both inside and outside the European Community. Germany is our ally, our partner and our friend. That is why last year we welcomed Germany's unification in peace and freedom. We were proud to play the central role that we did in resolving the external aspects of unification through the 2+4 process. We worked too for the speedy integration of the new Lênder of Germany into the European Community.

Completing the economic integration of the former German Democratic Republic will take time and is not without its difficulties. But the united Germany remains a strong economic power. German industry, like that of Britain, will be looking to take advantage of the benefits of the single market programme. Like the noble Earl, Lord Longford, we believe that it is up to the United Kingdom, in common with other members of the European Community, to rise to the challenge that German economic success poses. But that is not to say that it is a threat. I am not one of those who wish that our friends were poor, our allies weaker, or our partners less reliable.

I wish to turn now to some points raised by the noble Lord, Lord Cledwyn of Penrhos. He referred to the CFSP. Britain is committed to strengthening the role and identity of the European Community on the international scene. As part of that process we fully support the aim of working towards a common foreign and security policy. To promote that aim the UK tabled at an early stage of the inter-governmental conference a draft treaty text on CFSP. That marked a significant step forward from Title 3 of the Single European Act which sets out the existing rules for European political co-operation.

The draft treaty incorporated two principles which we believe to be fundamental if Europe's role is to be strengthened. The first is that the procedures for defining and implementing the CFSP should be flexible, pragmatic and based on consensus. Introducing mechanisms such as majority voting would weaken Europe's voice and lead to acrimony and disunity. The second principle is that we should distinguish between the security and defence dimension of the Twelve and make sure that any European defence dimension does not weaken but reinforces NATO in which we already have a tried and tested common defence policy. Your Lordships will recall a recent debate on the future of NATO during which I set out the Government's position carefully. It is right that Europe should assume greater responsibility for its own defence. But the way forward is to develop the European defence identity through the Western European Union, establishing a role for it as a bridge between NATO and the Twelve. I take up the point made by the noble Lord, Lord Cledwyn, that we cannot ignore the very constructive and helpful role that America has played and which we wish it to continue to play in the security and peace of Europe.

We have articulated these ideas extensively in the debate on the CFSP. They do not go as far as some partners would wish but all have welcomed them as a constructive contribution to the debate. We regard them as the only realistic way forward.

The noble Lord, Lord Cledwyn, also raised the question of the EC and EFTA. The Community is currently pursuing negotiations with EFTA to establish a European economic area. This will extend the single market to the EFTA countries. We hope to conclude the negotiations in the summer, with the EEA entering into force in January 1993 at the same time as the single market. The United Kingdom strongly supports the EEA and is working hard for a successful outcome. The EEA will bring economic benefits to the UK, the other Community countries and EFTA, and will facilitate future accession to the Community by those EFTA countries which wish to join.

The noble Lord, Lord Annan, asked how the Foreign Office might react to his proposal that Germany should join the UN Security Council. The noble Lord suggested that we should consult our Community partners over the UN Security Council business. I can assure him that we made considerable efforts to brief the EC non-council members in New York. He mentioned the fact that Britain is a member of the UN Security Council. He made no mention of the fact that France is also a permanent member of the UN Security Council. When there is an agreed position of the Twelve we reflect that in our dealings in the Security Council as indeed does France. I am afraid that the noble Lord's suggestion of rotating membership of the UN Security Council is simply not provided for by the UN Charter. When one considers the UN Charter, I am sure the noble Lord, like the rest of your Lordships, took careful note of what the noble Lord, Lord Greenhill of Harrow, said when he reminded the House of the difficulties of reopening the UN Charter.

The noble Lord also mentioned the timing of the inter-governmental conferences. We hope that both conferences will be able to conclude by the end of the year, that is, by the time of the December European Council. That should allow member states to ratify the results by the end of 1992. It is the timetable to which we are working. That said, these are complicated negotiations among 12 nation states, each with their own interests to pursue. We do not underestimate the magnitude of the task.

In conclusion, Britain can and must exert a powerful influence on the Community. We have done so in the past. We are doing so now. The Government will continue to do so in the future.

5 p.m.

Lord Annan

My Lords, I am most grateful to the Minister for having expounded at such length the Government's policy. As a result, I am considerably better informed, although I cannot say that I am any the wiser. That is not the Minister's fault. I want also to thank certain noble Lords who have spoken, including the noble Lords, Lord Weidenfeld and Lord Bonham-Carter, and, notably, the noble Lord, Lord Greenhill, who have a great deal more experience of foreign policy affairs than I have. The noble Lord, Lord Cledwyn, as usual, made an extraordinarily informed and interesting speech.

I was sorry about one thing only—that the ranks of Tuscany were notably absent. I had hoped that someone like the noble Lord, Lord Stoddart, would be inveighing against Europe in general and Germany in particular. But neither did they come to cheer. From time to time we are reminded of the difficulties. I have not dwelt on the negative aspects of Europe; I wanted to concentrate on the positive. But we often face great cultural difficulties in our dealings with Europe. The noble Earl, Lord Longford, and the noble Lord, Lord Monson, referred to the cultural problems we face. One of the greatest difficulties is that we were not at any time conquered by Napoleon. As a result, we do not have a Napoleonic code of law; we have our own common law. That is one of the greatest obstacles we face in understanding why our colleagues in Europe think and behave differently, especially in matters relating to personal freedom. It remains for me to say again how grateful I am to noble Lords for having taken part in the debate. I beg leave to withdraw the Motion.

Motion for Papers, by leave, withdrawn.