---

EU: Recent Developments

My Lords, it is a pleasure to follow the noble Lord, Lord Judd. We are both on the same committee and discuss many EU matters in great amity. However, I have to say that I do not follow him on the financial transaction tax. I make no apologies for focusing the major part of my contribution to today’s long overdue debate on the economic and financial travails of the eurozone, particularly those aspects of the crisis that directly concern this country. This long-running saga still has far to go and, however it ends, will have profound effects on all members of the European Union, not just on the members of the eurozone. That basic reality has been grasped from the outset by the Government. I pay tribute to the firm and repeated conclusion of the Prime Minister and the Chancellor of the Exchequer that it is in Britain’s national interest that the eurozone should surmount this crisis; and to their rejection of the view, expressed on the wilder shores of their own Back Benches in another place, that we could regard the disintegration of the eurozone with equanimity, or even with glee. A second reality, which the Government have been less willing to grasp, is that as a non-participant in the eurozone—in saying that I do not intend to stray into a discussion of the pros and cons of our joining the euro at the outset—our views on the handling of the crisis are neither particularly welcome nor at all influential. There is a lesson to be learnt from this about the consequences of being absent and our subsequent marginalisation in the decision-making processes of the European Union. That lesson leads me directly to the events of last December’s European Council and the serious error of judgment that was made on that occasion. It is first necessary to dissipate some of the myths that have accumulated around that meeting and which now, like layers of varnish on an old master’s painting, obscure the picture beneath. I fear that several more layers of varnish went on in the introductory statement of the noble Lord, Lord Howell. Myth No. 1 was propagated by the Prime Minister himself when, in his Statement to Parliament after the December Council, he said that he had refused his signature on changes to the treaty. No such signature was proposed in Brussels on 9 December; there was no text to sign. The past two months have been taken up by negotiating a text, which is to be signed next month by 25 of the 27 member states, with Britain a mere observer of the process. Why the Prime Minister rejected the tried and trusted precedent set by the noble Baroness, Lady Thatcher, in the context of both the Single European Act and the Maastricht treaty—the practice of participating in negotiations to ensure that British interests were safeguarded, while keeping in reserve the right to refuse to sign if they were not—remains a complete mystery to me. Myth No. 2 is that there was a veto at all on 9 December. All that happened was that the other member states, whose determination to move ahead was not in doubt well before that meeting, felt compelled to use an entirely predictable procedural bypass to achieve their objective of strengthening the fiscal disciplines attached to eurozone membership. Incidentally, the Government have said that they strongly support that objective and believe that it is entirely logical and reasonable. Myth No. 3 is that the treaty to be signed in March is in some way objectionable to the United Kingdom, thus justifying our refusal to sign it. On three successive occasions I have asked three separate Ministers—the Leader of the House, the noble Lord, Lord Howell, and the noble Lord, Lord Sassoon—to state what provisions in the treaty are objectionable to the United Kingdom and on three occasions—alas, a little bit like St Peter—they have each refused to answer. I scored a fourth one last night with an official from the Foreign Office who the noble Lord, Lord Howell, very kindly brought along to brief Members of the House before today’s debate, and who spent a very long time failing to answer that question for the fourth time. I think it is reasonable to draw the conclusion that the honest answer to the question is none. That is not a surprise really since the main safeguards we needed were to ensure that the treaty’s objectives did not have any mandatory effect on non-eurozone members such as the UK unless and until they decided to join the eurozone; and, secondly, that single market issues will continue to be decided inside the normal EU treaty procedures. They are now there, enshrined on the face of the treaty.