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European Council: 23-24 March 2006

My Lords, I am grateful to the Minister for repeating this fairly detailed Statement. After the rumpus at the summit about language, perhaps I should make it clear that I shall respond in English and not in French—I say that without apology. We welcome the comment at the end of the Statement about Gibraltar. That is very good news, and certainly shows progress. As to the main body of the summit, the presidential conclusions asserted that the Lisbon strategy is being relaunched again—and again and again. Looking at the language in the conclusions of the presidency, one cannot help feeling that the lesson has not really been learnt by all governments—maybe not by any EU government—that planning for growth top down by more and more hopeful strategies of this kind is a hopeless cause. Economic growth and a ““dynamic environment””—to take another phrase from the presidency conclusions—come from deregulation, more competition and light taxation. Those are the sort of things that the Chancellor of the Exchequer is now in the habit of pointing out once a week. He is absolutely right to do so. Of course, we are totally in favour of increased competition throughout Europe, but is it not now, sadly, clear that some governments are very near the limits of the powers that they are prepared to surrender to higher pan-European or EU-wide authority? One points to the example of the Spanish resistance to the takeover of Endesa, the French resistance—to the fury of Mr Berlusconi and the Italians—to the takeover of Suez by Enel, the Luxembourg and French resistance to the merging of Arcelor, their global steel giant, and, in effect, the block—it is very nearly a block—on further progress with the services directive. The tendency for a return to some degree of economic nationalism seems to be expressed no more vividly than when it comes to the attempts by the European Union to develop a common energy policy. Of course, that has been a virtual fiasco. All that has emerged from the summit, as we have heard from the Statement, is a strategic energy review, which is a poor outcome for such high-flown hopes. Is not practical co-operation in Europe, which is necessary in our region on energy matters, all covered very thoroughly already by the International Energy Agency? Everything to do with the stockholding of oil, the storage facilities for gas, the common approaches to safety and the regulation of nuclear facilities is covered by the IEA and has been for many years. I once had the honour of chairing that organisation, so I can confirm that. Secondly, governments are reluctant to cede strategic power in areas as sensitive politically as daily supplies of gas, electricity, light, warmth, transport, gasoline, petrol supplies and so on for the very simple reason that failure or interruption in any of those areas can involve an instant thumbs-down from the voters, who naturally want people close by their own governments to be held to account rather than to be told that it is all the fault of some more remote authority. I would like to have heard in the Statement much more about the United Kingdom. Should the UK not be very careful and steer clear of the José Manuel Barroso plan for closer EU-Russian co-operation on energy links and gas supplies? The other day, we learnt from bitter experience that when the going gets tight, particularly in gas markets, the continental monopolies—which we hope will be replaced by competition, but that is only a hope—with a certain amount of political pushing and shoving, make their markets the priority for Russian gas, rather than ours. Besides, in the longer term all the energy planning, including the Government’s own planning, forecasts that in a few decades the UK will not rely on Russian gas—we will have other sources—whereas, by 2030, France will rely on Russian gas to the extent of 30 per cent, Germany by about 80 per cent and Austria by 95 per cent. In short, do we not have a totally different pattern of energy needs evolving in the future compared with large parts of continental Europe? We must maintain the freedom to make our own arrangements and to maintain our own patterns of diversity; we must not be locked into some new bloc ambitions for a Europe-wide energy policy. As for the services directive, which I have already mentioned, what progress was made? The Statement talks about a way forward, but what is the way forward? The conclusions of the presidency say that,"““the internal market of services has to be fully operational while preserving the European social model””." Those two things are incompatible, as we have all discovered. So what is going to give if there is to be progress—as there should be and as undertakings have been given that there should be—on the realisation and fulfilment of the services directive? We are bound to be disappointed that there is no further word on the constitution, whether it is dead or about to be replaced, or whether Ministers, including British Ministers, are putting forward alternatives. Have they put forward any alternatives? I do not know. Certainly other countries are busy proposing all kinds of arrangements to replace the old ones or to carry forward the governance of Europe by different means. We would very much have liked to have seen signs of more vigorous proposals by our own Ministers and the Foreign Office about how we see the governance of Europe in the future and how we want it to be shaped in a more fruitful direction than it is going at present. I would also have liked to hear a little more—although I realise that this was mostly an economics-focused summit—about the failed Iran diplomacy and where we go next in that frightening scenario. It would have been useful to hear more how the EU is going to handle Hamas, which is about to take government, and the funding dilemma there. How and to what point do we support it if it continues with its present propositions and stance? One cannot avoid the conclusion that much of this summit is sadly out of touch with the great issues that the European people and the world now face. It would have been good to see our Ministers take a more forward, creative and imaginative position on how Europe should now move. There is an overwhelming sense that in Europe we are allowing things to drift away from us, while the Prime Minister says that they are going our way—they are not. We would like to have seen Ministers being more vigorous and we feel that once again they have failed on this front.