Speeches, etc.

Margaret Thatcher

HC Stmnt: [Dublin European Council]

Document type: Speeches, interviews, etc.
Venue: House of Commons
Source: Hansard HC [175/489-501]
Editorial comments: 1530-1556.
Importance ranking: Major
Word count: 6789
Themes: Agriculture, Parliament, Employment, Monetary policy, Privatized & state industries, Trade, European Union (general), Economic, monetary & political union, European Union Single Market, Foreign policy - theory and process, Foreign policy (Africa), Foreign policy (Central & Eastern Europe), Foreign policy (development, aid, etc), Foreign policy (Middle East), Foreign policy (USSR & successor states), Law & order, Northern Ireland, Terrorism, Transport
[column 489]

European Council (Dublin)


The Prime Minister (Mrs. Margaret Thatcher)

With permission, Mr. Speaker, I will make a statement on the European Council in Dublin on 25–26 June, which I attended with my right hon. Friend Douglas Hurdthe Foreign and Commonwealth Secretary.

The text of the Council's conclusions have been placed in the Library of the House. I will go through the main points in order.

Completion of the single market represents the biggest and most far-reaching change under way in western Europe. Useful progress has been made under the Irish presidency in the transport and energy sectors, on public procurement and on company taxation. In Dublin, we set priorities for the next six months. They include items of particular importance for the United Kingdom; financial services, insurance, further liberalisation of transport and public procurement.

But it is not just a matter of taking decisions. They need to be implemented. The Commission circulated to the Council a chart showing Britain right at the forefront of member states when it comes to implementation. It will in future make regular reports to the European Council on this.

The members of the Council also called on Germany to reconsider its discriminatory tax on lorries, about which the Commission is taking the German Government to the European Court.

The Council continued its discussion on political union. It was agreed that an intergovernmental conference will begin in December. Our determination to see national institutions and national identities fully respected is clearly understood and increasingly shared. The debate is more and more about how to make existing Community institutions more effective. We shall continue to argue that the Community should be involved only where particular objectives cannot be achieved by national action.

In that context, I drew attention to the unnecessary, indeed harmful, proposals put forward by the Commission on part-time and temporary work. If implemented, they would only lead to loss of jobs.

We had a brief discussion on economic and monetary union. We confirmed that an intergovernmental conference on that will begin in December, in parallel with the conference on political union. I commended the excellent proposals put forward by my right hon. Friend John Majorthe Chancellor of the Exchequer. We shall ensure that they are fully considered before, and at, the intergovernmental conference. I reminded my colleagues of the strong opposition expressed by this House to economic and monetary union on the basis proposed in the Delors report.

The Council agreed a useful declaration on the environment, and further steps to combat drug addiction and trafficking. Our proposals for a European drugs intelligence unit and for a conference of eastern and western European countries on drugs issues were endorsed.

The Council underlined the very great importance which the Community attaches to a successful outcome to the Uruguay round of the trade negotiations and our intention to make a full contribution to that. That will be discussed further at the economic summit in Houston. [column 490]

We had a thorough discussion on assistance to the Soviet Union. Britain has constantly been at the forefront in supporting Mr. Gorbachev and his policies of greater democracy and reform. We are very ready to consider various forms of assistance, provided it is clearly linked to economic restructuring, so that we know it will actually be effective. The Council agreed that a thorough analysis should be undertaken of the size of the problem and how the Community and other western countries can help. This will be conducted by the Commission, together with experts from the new European bank for reconstruction and development, the World bank and the IMF, the OECD and others. When that is complete, we can see what needs to be done, and then we can take decisions.

Foreign Ministers discussed a number of foreign policy issues and agreed statements dealing with the middle east, South Africa, Cyprus, nuclear non-proliferation, antisemitism and the Iranian earthquake.

The Council called on all parties in South Africa to refrain from violence and advocacy of violence, which of course covers the ANC's continued support for armed struggle, of which we strongly disapprove. The principle of a gradual relaxation of sanctions, for which we have been pressing for months, was accepted and is reflected in the statement. But the Council was unable to agree to make a start now. We shall look at this again under the Italian presidency, in the light of further progress in South Africa. In practice, several countries have already begun to lift various measures. I am sure that that will continue.

Finally, the Council agreed a statement utterly condemning terrorism and expressing sympathy for the victims of the terrorist bombing of the Carlton club. I am sure that the House will be grateful for the sympathy and support shown by our partners.

It was a useful Council—no dramatic decisions, but steady progress in several important areas. That is how it should be.

Mr. Neil Kinnock (Islwyn)

I welcome the statements made by the Council of Ministers on the environment, terrorism, drugs and organised crime, and nuclear non-proliferation. The whole House will particularly share the revulsion expressed by the Heads of Government at recent manifestations of anti-semitism and racism. All in this Parliament will agree that the crimes of desecration and race hatred deserve strong condemnation and severe punishment.

All Opposition Members welcome the Council's further unanimous endorsement of the social charter. We all support the extension of the mandate of Mr. Delors as President of the Commission and we all derive satisfaction from the fact that it was our Prime Minister who seconded the nomination of notre frère Jacques.

We welcome the decision of the meeting to provide both short-term credits and long-term support for structural reform in the Soviet Union, and we congratulate the Prime Minister on reversing her short-sighted attitudes on that matter.

Will the Prime Minister take this opportunity to state exactly where her Government stand on European monetary union? Is she aware that last Tuesday the deputy Prime Minister described the Chancellor's proposals for a hard ecu as being “perfectly capable” of leading to a single European currency? The Governor of the Bank of England has described the Chancellor's proposals as a “very useful step” to a single European currency. The [column 491]Chancellor and the Foreign Secretary obviously feel the same. Meanwhile, the Prime Minister says that it must not come in her lifetime and yet, on Tuesday in Dublin, she signed up to specific commitments in a specific timetable. How long does the Prime Minister hope to keep up this two-faced performance, especially when it confuses her hon. Friends and does not even impress the neighbours?

In Dublin, the Council of Ministers, in the words of the communiqué, “agreed to intensify the process … of European Union” in economic, monetary and political terms, and to secure “ratification by the end of 1992.” The Prime Minister signed up for all of that, but still she says it is others who are coming into step with us. Is the Prime Minister really trying to tell us that all along she has secretly been in favour of integration on that scale, or is the truth that at last the modern realities of the Community are beginning to impress themselves, even on the lady of Bruges?

Does the Prime Minister accept that it is obvious that, in this European Community of nations, distinctions of national identity and national institutions are of great and enduring value? Does she also realise that the influence of Britain is not advanced, and its interests are not served, by her tinpot, tin drum nationalism?

The Prime Minister

I shall try to answer some of the points raised by the right hon. Gentleman. I noticed what he said about the programme for social action. From what he said, it seems that he thinks it is quite right that the Commission should interfere with rules related to part-time work and overnight work in the United Kingdom, and that he would give the Commission that and such other piffling little powers in the name of subsidiarity. It is for us to decide those things. They come under the doctrine of subsidiarity, which the Commission is always talking about and never honouring.

With regard to giving help to the USSR, I remind the right hon. Gentleman, as I reminded colleagues at Dublin, that there is already in this country a line of credit of £800 million under the Export Credits Guarantee Department which has not yet been drawn upon. Therefore, we do not need any lectures from anyone about making loans available to the Soviet Union. I think that the Soviets are wise to consider before drawing them down. They know full well that what they spend the money on needs to have an effect on their whole future and their capital future. If they spent the money on consumer goods, it would tie a great big debt around their neck and not do them any long-term good. On this matter they are rather wiser than the right hon. Gentleman.

The right hon. Gentleman asked about the single currency. He should read paragraph 26 of my right hon. Friend John Majorthe Chancellor's speech. [Interruption.] I am about to read it out. Speaking about his proposals, my right hon. Friend said:

“They are practical, they are progressive, they offer choice, not prescription. They evolve naturally from stage I and have the potential to evolve further. In time the ecu would be more widely used. It would become a common currency for Europe. In the very long term, if peoples and governments so choose it could develop into a single currency, but that is a decision we should not take now for we cannot yet foresee what the size and circumstances of the new Europe would be.”

[column 492]I do not think that it could develop into a single currency without altering the European monetary fund, which my right hon. Friend also described in detail in his speech.

The right hon. Gentleman then suggested that we had signed up for something merely because we signed a procedural motion at an intergovernmental conference. Perhaps he does not realise that that decision can be taken by a plain, straightforward, simple majority, but that any conclusions reached by the conference must be straightforward unanimity. There is no possibility of not having one because the majority wanted one. We shall reserve our detailed arguments for the intergovernmental conference.

The right hon. Gentleman says that we signed up to economic and monetary union. We signed up to that before we joined, because it was part of the terms agreed in 1972 before we joined the Community, and it was still incorporated in those terms after the Prime Minister at the time, now the noble Lord Callaghan of Cardiff, had completed his renegotiation.

Several Hon. Members


Mr. Speaker

Order. As the House is aware, there is a business statement after this and also a statement on British Aerospace. We then have a debate on the scrutiny of European legislation for which the House has been waiting for a long time. I propose to allow questions to the Prime Minister to continue until 4.20, and then we must move to the other statements.

Mr. David Howell (Guildford)

Will my right hon. Friend confirm that she will not be deterred from her thoroughly sensible proposals for a common currency for Europe and a European monetary fund? They hold out far more promise for the future than a single centralised European bank which would be impossible to operate in the European monetary system. In view of the likely failure of the Uruguay round, can my right hon. Friend say whether there were any firm proposals at Dublin for developing an alternative world trade organisation or expanding the Organisation for Economic Co-operation and Development into an Atlantic-wide free trade and investment area?

The Prime Minister

I am grateful to my right hon. Friend. I agree that the proposals that have been put forward by my right hon. Friend John Majorthe Chancellor of the Exchequer are substantial and right, in that they still leave choice in people's hands as to whether they should go for a common currency or continue to deal only in their own. Those proposals are much more substantial than stage 2 of Delors and quite different.

Many people would have difficulty with locked currencies, as we all had difficulty with Bretton Woods, and many would have difficulty going to Delors stage 3. Not only this Parliament but others could not do it without enormous subventions from other members of the Community. We would not be prepared to do that. The Chancellor's proposal is much more substantial than the present stage 2, and we say that it is the next stage on which everyone could agree. It is not for us to say what may happen in 10 or 20 years because we do not know the circumstances that will pertain then. It would be an effective second stage.

My right hon. Friend mentioned the Uruguay round. As he knows, the agriculture problems present difficulties. Some other Members of the Community are much more [column 493]rigid on those than we would be, and we have made proposals for determining the different level of subsidy in the United States, the Community and Japan through some kind of producer subsidy equivalent. I agree that that will be the most difficult part of the Uruguay round. There is a tendency in some respects for members of the Community to be more protectionist than we are—for example, Germany, with its stance on lorries and its discriminatory taxes. We have not prepared an alternative mode of negotiation. We must strain to make the Uruguay round successful and to increase world trade.

Mr. Paddy Ashdown (Yeovil)

I listened carefully to the Prime Minister's answer a moment ago on economic and monetary union. We all know that the Chancellor of the Exchequer said that his system left open the option of moving towards a single European currency, but that runs counter to the implication of the Prime Minister's comments after the Dublin summit and to her specific answer to my question last week. Therefore, will she how answer unequivocally the question which she has so far dodged: will Britain join a single European currency under her leadership—yes, no or maybe?

The Prime Minister

The right hon. Gentleman cannot have listened to the paragraph of my right hon. Friend John Majorthe Chancellor's speech that I read out, which says clearly that that is not a decision that we should take now. It could not have come from the structure of the European monetary fund set out in my right hon. Friend's speech. If the right hon. Gentleman has read that, he will know full well that the ecu would be issued as a currency only against other currencies placed with that board. That would ensure that it was non-inflationary. It could not be done under that structure. Why do we not get on with things on which we can all agree? It would give those who wish to use a common currency the right to do so. Why does the right hon. Gentleman arrogate to himself decisions that are for future generations in the House to take?

Mr. Hugh Dykes (Harrow, East)

I thank my right hon. Friend for her statement today and for her robust and strong position at the Dublin summit which not only represented and safeguarded Britain's genuine interests but took us further along the road to European monetary union and the formation of political union in whatever form the member states may decide. Does she agree that it is highly likely that the market place pressures will, in reality, produce a common and/or single currency in due course because the market pressures will be great both from institutions and companies, and from consumers, as the ecu develops?

The Prime Minister

Our proposals would lead to a common currency which people could choose to use more or less as they wished, or they could continue to use their own currency. I do not believe that that formula could develop into a single currency. The Delors formula for a single currency involves a board of 12 bank governors with powers over monetary policy and some powers over budgetary policy. Once we surrendered all our powers over monetary and budgetary policy, we would not have a great deal of sovereignty left, and I do not believe that that would be acceptable to the House. Those who advocate a single currency would do well to remember that, because they would be voting to diminish fundamentally the powers of the House—powers which it is for us to uphold.

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Mr. Merlyn Rees (Morley and Leeds, South)

What did the discussion on international terrorism add up to in practice? Did it deal with the vexed problem of extradition?

The Prime Minister

We did not go further on extradition. As I think the right hon. Gentleman will be aware, my right hon. Friend Peter Brookethe Secretary of State for Northern Ireland and the Foreign Minister of the Republic of Ireland are studying the cases of extradition which have been heard recently to see whether they add up to what we thought the law on extradition meant. There was some discussion during one meal and particularly at a press conference. It is important that we have extradition so that people can stand trial in the country where the crime was committed. Just as it is important that no one who is innocent should be found guilty, it is equally important that those who are guilty should be found guilty, properly and duly in the courts of law.

Mr. William Cash (Stafford)

My right hon. Friend is to be congratulated on the immense progress that she has made in continuing to stand up for democracy and accountability, not only in this Parliament but in Europe. The simple questions that arise are: who is to control our economy, and are we to retain the authority of the House on vital public expenditure and taxation matters? Will she accept the congratulations of Conservative Members on her achievement in maintaining the authority of this place?

The Prime Minister

I agree with my hon. Friend that the argument about accountability makes more and more headway every time that we raise it. Many people are very concerned that the Delors stages 2 and 3 do not properly address that question. As others look more carefully into stages 2 and 3, they have very different objectives from that of the deutschmark. It is clear that the objective of some of them is not to maintain the value of the currency and protect it from inflation but to put growth before that, which could possibly undermine the value of a currency. Those differences are coming out more and more. I described what John Majormy hon. Friend put forward. The rest of our colleagues were very interested, and I believe that his proposal will be studied very carefully.

Mr. Nigel Spearing (Newham, South)

In a previous answer the Prime Minister said that she believes that the commitment to economic and monetary union stems from 1972. Does she agree that the then Government took us into the EEC without public mandate, and that she headed a Government who, without public mandate, signed the Single European Act, which for the first time made it possible for the laws of this country to be determined against the wishes of the public, Parliament or the Government? As to political union, has not the Prime Minister now agreed to what she calls a procedural motion without resolution of the House? How does she reconcile such conduct with the defence of the British constitution and parliamentary democracy in the United Kingdom?

The Prime Minister

As the hon. Gentleman knows, the Single European Act extended the qualified majority—it did not invent it—for the purpose of achieving the internal market under article 100A, and specifically delineated areas that would still require unanimous voting. We feel sometimes that those areas are being undermined by [column 495]decisions of the Commission. I do not believe that they have yet been to the courts. It is vital that, in the areas where the unanimous vote is retained, it is clearly upheld.

As for economic and monetary union, it was referred to—as the hon. Gentleman knows that it was in 1972—in the preamble to the Single European Act. In one of the crossheadings, it was defined as economic and monetary co-operation. That is still how I prefer to define it. I believe that that is the right definition.

Mr. Christopher Gill (Ludlow)

What are the prospects of convincing our European partners that, if we are to help eastern Europe to create a free market economy, it is better to encourage the private sector to invest in eastern Europe rather than squander taxpayers' money on centralist schemes of dubious economic benefit?

The Prime Minister

I wholly agree with my hon. Friend. It is much better for the private sector to invest. It would send in good management to show how the private sector operates, which is very much needed. All the people from eastern Europe who come to see us—yesterday I saw Mr. de Maiziere from East Germany, and we have also had visitors from Hungary and Czechoslovakia—are anxious to pursue privatisation. They know full well that it will produce a much more prosperous standard of living for their people than the totally centrally controlled nationalisation under which they have lived to this day.

Mr. John D. Taylor (Strangford)

The Prime Minister confirmed in her statement that she has committed the Government to intergovernmental conferences in December on economic, monetary and political union. Will the Prime Minister confirm that she has committed herself to a process that will inevitably lead to a federal Europe, a single currency and a central bank, and to the eventual diminution of the sovereignty of this nation? If she accepts that, would it not be better to tell the British public the truth now rather than to disguise it until after the next general election?

The Prime Minister

The right hon. Gentleman is giving a false impression. At any time in one of the main councils of the Community, a vote could be put to the 12 present on whether there should be an intergovernmental conference. That vote is decided by a simple majority: seven votes to five would get an intergovernmental conference. That is normal procedure. It was quite clear that there were few people around the table against an intergovernmental conference, and there is no reason why we should not be prepared to go into one about political union, because we have many proposals to put forward about the Commission's accountability for the moneys that it uses, and many other proposals to make the Commission and the other institutions work much better. We wanted a conference so that we could put our proposals forward.

It has been made clear at all times that this House would not accept a single European currency on the Delors plan because that would mean yielding up monetary and fiscal sovereignty; so we would not agree to Delors stage 3, and we have not agreed to stage 2. We were in favour of Delors stage 1, because we were already set on that course before he came out with stages 2 and 3.

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Mr. Robert Rhodes James (Cambridge)

Have discussions been held about the location of the European environmental agency? Is my right hon. Friend aware that I am enthusiastic that it should be in Cambridge, which is a suitable place, and I hope that the Government are pressing for that.

The Prime Minister

There were discussions about the sites of European institutions. As my hon. Friend is aware, whenever we discuss that, the question whether the Parliament should continue to meet in Strasbourg, Brussels and Luxembourg comes up. Those are some of the liveliest debates that we ever have in the Community. Countries which have institutions within their borders wish to keep precisely what they have and do not want change. Unless they are assured of that, they will not agree about where the environmental institution and the trade-mark centre should go. So we got no further. That has happened several times. The matter has been put to the next presidency—which will be Italian. Having got the European bank for reconstruction and development, there is no possibility of our getting the centre for environmental studies.

Mr. Peter Shore (Bethnal Green and Stepney)

Is it not clear, whatever else happened in Dublin, that the Prime Minister has not been able to stem, let alone halt, the Gadarene rush towards economic, monetary and political union in Europe; and that once the intergovernmental conferences take place there is a great danger that this country will be sucked into major decisions against our interests and, as I understand it, against the wishes of the Prime Minister? As we will probably stand alone and say that we disagree with the rest of the EC at the end of that process, will she now make clear to the country—this terribly ill-informed country, with ill-informed media—the dangers and difficulties to the British economy, to jobs and industry and to the Westminster Parliament of being locked into permanently fixed exchange rates in the sort of system that Delors has wished upon us?

The Prime Minister

I must congratulate the right hon. Gentleman; he is beginning to sound more and more like me. I have made that speech several times, and consistently. I am against locked currencies. We have lived with locked currencies and they collapsed. I am against a single currency, and I do not believe that we shall be sucked in—for one good reason: if we were to come to this Parliament with a single currency which deprived the House of its customary authority, I do not believe that it would go through the House. I thoroughly agree with the right hon. Gentleman and with his conclusion.

Mr. Teddy Taylor (Southend, East)

Did the Prime Minister have the opportunity to raise the question of interim relief, decided by the European Court this week? Has not that matter taken on a new urgency in view of the information from the Home Office this morning that the agents for the German state lottery are taking action in the United Kingdom courts in relation to the fact that the distribution of German lottery tickets, is in contravention of the European Court under the Lotteries and Amusements Act 1976? Would it not be a bit ridiculous if people in Britain were forced to subsidise the German health service by buying German lottery tickets, when lottery tickets are illegal under a law passed unanimously by the House?

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The Prime Minister

We did not raise that particular matter. As my hon. Friend knows, we have dealt with it at Question Time, pointing out that our courts had been given the power to override our law in favour of Community law, although to what extent they did so was still a matter for the decision of our courts. We did not go into the matter further at the Council. I understand that the matter that my hon. Friend has raised is at present before the courts, and they will therefore decide it in the first instance.

Mr. Ernie Ross (Dundee, West)

On the declaration on the middle east, the whole House will welcome the Government's affirmation of the untenability of the status quo in the occupied territories and the Government's explicit reference to the obligations on all state parties to the Geneva convention to show respect for that convention. We also welcome the further call for action to ensure that protection. Does the Prime Minister agree that that statement breaks new ground and will give cause for hope that Britain and its European partners are prepared to act to protect the basic human rights of Palestinians on the west bank and in Gaza pending the resumption of a meaningful peace process?

The Prime Minister

I very much agree with the hon. Gentleman's underlying view. It is worrying that we have no negotiations going and seem to have little prospect of negotiations. It is vital that we get negotiations going that respect Israel's right to exist and also respect and uphold the decision of the Palestine Liberation Organisation to recognise article 242, to recognise Israel's right to exist and also to disapprove of violence as a means of pursuing its objectives. I know that there is some ambivalence on that last point, particularly with regard to activities in the occupied territories.

I share the hon. Gentleman's view that it is important for us, both in the Community and with the United States, which can perhaps bring more pressure to bear on Israel than any other country, to try to get negotiations going in spite of all the difficulties. Otherwise we may lose some of the advances that have been made. We disapprove of terrorism or violence, by the PLO or any other organisation, and that makes it more important that, where there are legitimate grievances, they should be addressed by negotiations.

Sir Peter Hordern (Horsham)

I congratulate my right hon. Friend on her evolutionary approach to a European common currency. As the European monetary fund is to be responsible for monetary policy, in the sense that it will determine interest rates, will my right hon. Friend tell us to whom the European monetary fund will be responsible?

The Prime Minister

It will be responsible for interest rates only on the ecu, which is currency board issued. Our interest rates and our own currency are, and will continue to be, matters for us. The fund would be responsible for the deposits made with it and the amounts that it lent out for common currency. We shall still be responsible for our own.

Mr. Jack Ashley (Stoke-on-Trent)

Is the Prime Minister aware that her insistence on the restructuring, of the Soviet Union economy sounds reasonable but could be very dangerous? The Soviet leaders are already aware of the need for restructuring, and any imposition of sudden changes on their crumbling economy could put it in a state [column 498]of chaos and collapse. By all means let us give economic aid and expertise, but the best people to decide the pace of change in the Soviet Union are Soviet leaders, not western leaders.

The Prime Minister

The right hon. Gentleman will realise that the very difficult circumstances which the Soviet Union faces now are a result of 70 years of central power and control, of the nationalisation of practically every decision and of no responsibility or initiative among its people. That is what has virtually brought about the collapse of the standard of living about which the right hon. Gentleman speaks.

The right hon. Gentleman will recall that when we set out to help Poland and Hungary—and now others—we insisted that the International Monetary Fund had a look at their economies and that they took advice to change their economic direction and to have more privatisation and more private enterprise against a proper framework of regulation and law. We did not give the aid until we were certain that that change had been approved, and therefore had some chance of getting under way. The change does not have to be totally complete—that would not be possible or reasonable—but those countries must have got the main change under way.

There are one or two joint ventures and we have some. They do not always work because the raw materials and the semi-fabricated goods which should come to the factory which is part of a joint venture—often from the Soviet side—do not arrive. I think that the best venture in the Soviet Union is probably McDonald's beefburgers, because it has its own farms, its own lorries and the biggest queue. I am sure that it is right to get an economic structural change going.

Sir John Wheeler (Westminster, North)

I am confident that my right hon. Friend will welcome the progress towards improved co-operation to suppress serious crime and international terrorism. Does she agree that the most important way to achieve that is to improve the intelligence arrangements and gathering systems? Can she comment on whether the German Government are willing to amend their constitution to allow their citizens to be subject to extradition to other EC countries to stand trial there?

The Prime Minister

We did not discuss that particular point. However, we did discuss the importance of intelligence among all European countries—even across the European divide—in tracking down criminals, especially those peddling drugs. I entirely agree with my hon. Friend that to get intelligence in time—and to take action on it—is one of the most important factors.

Mr Anthony Coombs (Wyre Forest)

While suporting the vigorous programme of aid and assistance by the EEC to newly democratic eastern European countries, does my right hon. Friend agree that it would be inappropriate—indeed wasteful—to pour a large amount of aid into the Soviet Union until it has not only formed a market economy but has taken a greater stride towards a truly pluralist democracy and shown more sensitivity to the needs of its national minorities in, for example, the Baltic states?

The Prime Minister

The Soviet Union must sort out the powers that belong to central Government and the powers that belong to the separate republics, bearing in [column 499]mind the fact that some of the separate republics are very large and that they are now taking powers unto themselves because they are varied and they dislike some of the decisions of the central authority.

It is important that we get the change with regard to aid. It has been suggested that we put up quite a lot of loan money for the Soviet Union to buy consumer goods to put on the shelves. In my view, that would do no one any good, least of all the Soviet Union. The sum mentioned was $15 billion, which would be equivalent to about $2.5 billion coming to Britain. The idea that that would solve all the problems is ridiculous. It would make them worse, because people would buy the goods quickly. The Soviet people would then be left with a large amount of debt hanging round their necks. Their last position would be worse than their first.

Mr. Tony Benn (Chesterfield)

Is the Prime Minister aware that, while there is widespread feeling that harmonisation between fully self-governing countries is desirable in western Europe, eastern Europe and more generally, there is absolutely no electoral mandate for economic, monetary and political union, which is to be discussed further at the special meeting later this year? There is little public understanding of it, no public support for it and, above all, we have no authority from the voters to move in a direction which would take away power not from the House but from the people who send us here. Sovereignty belongs not to the House of Commons but to those who put us here and can remove us, and the continued operation of the Crown prerogative, which is the only power that the Prime Minister has to agree to any of those things has already rendered the House virtually impotent in defence of the rights of those who sent us here.

In the light of what is happening worldwide—in Quebec and elsewhere—is the right hon. Lady not aware that there is no longer that passion for increasingly large super-power units, whether in Moscow, Brussels or anywhere else, and it is time that she stopped beating the nationalist drum and taking us further into an impasse which, when the people discover it, will lead to great public anger which could undermine confidence in parliamentary democracy?

The Prime Minister

I hardly thought the day would come when I would agree with a good deal of what the right hon. Gentleman says—and I am sure that he is as surprised as I am—but I do not agree with all of it, which perhaps is the saving grace. I am sure that the right hon. Gentleman agrees with increased co-operation between democracies for defence, security, trade and many matters. Co-operation is freely given by nation states, each answerable to its own Parliament—with 12 nation states sitting round the table, we are each answerable to our own Parliament.

I agree with step-by-step, steady, increasing cooperation in those matters on which it is wise to co-operate. I do not agree with giving up our sovereignty and going into anything like a federation of European states. I agree with the right hon. Gentleman that it is evident across eastern Europe that, whereas people thought that they could suppress national identity by a political creed, they have discovered that they cannot [column 500]suppress it. I would go further and say that one should not suppress it. We can co-operate as nations because we wish to co-operate, and that is the way we shall do it.

Mr. D. N. Campbell-Savours (Workington)

I welcome the Prime Minister's robust statement on aid to the Soviet Union. We are talking about taxpayers' money and any money that is allocated must have strings attached in terms of economic reconstruction. However, if she has trouble selling the principle of a two-tier currency system, let me put a suggestion to her. She should give Members of Parliament two options: they can be paid in ecu, or they can be paid in sterling. I am sure that many of my hon. Friends who have been pro-European since the early 1970s would opt for ecu, but I am sure that the anti-European backwoodsmen would have to consider their position very rapidly.

The Prime Minister

I rather agree with the hon. Gentleman on his last point, but at the moment the ecu is not a currency; it is a measure of the value of a basket of currencies. Under the European monetary fund and the system proposed by my right hon. Friend John Majorthe Chancellor, it could issue as a hard ecu only against other European currencies so we would not get inflation. It might be as well to allow people that choice. The hon. Gentleman has made his judgment as to how they would use it, but there is no reason why they should not make that choice.

I am very grateful for what the hon. Gentleman said about aid to the Soviet Union. We were faced with a sudden proposition, a demand for about $15 billion-worth of aid without any papers whatsoever before us, and I was bound to say that that is not the way we do business.

Sir Ian Lloyd (Havant)

As a member of the small but diminishing band that has consistently opposed sanctions for the best part of 25 years, may I congratulate the Prime Minister on her success in persuading some of her colleagues to abandon that bandwagon, on which the four horsemen of the apocalypse are teamed with the World Council of Churches and Mr. Mandela.

On the more fundamental point of political union, may I test the proposition that my right hon. Friend advanced—that European political institutions will be given power and sovereignty only when national political institutions cannot do the job? She will be aware that a Committee of Parliament pointed out that national political institutions simply no longer could deal with air traffic control. Was that discussed in Dublin and, if so, with what result?

The Prime Minister

Air traffic control was not discussed, but we obviously need maximum co-operation right across Europe. It would be difficult if there were one system right across Europe, because a few people going on strike could place the rest of the system in difficulty. We need much more co-operation between air traffic controllers. As my hon. Friend knows, we are installing the latest computers for our system.

With regard to sanctions, the countries are coming our way, and not only in the communiqué. Italy has lifted her ban on investment in South Africa—a very well-judged decision—Spain has set up a new cargo airline for delivering goods to South Africa, and Denmark has returned her ambassador to South Africa. Although they are not formally agreeing to disband some of the few remaining sanctions, they are nevertheless having increasing contact with South Africa, which is the right [column 501]decision. It helps President de Klerk and all those in South Africa to look forward to a higher standard of living in a full non-racial democracy.

Several Hon. Members


Mr. Speaker

I am sorry that it has not been possible to call all hon. Members. Today, I have given some precedence to those who were not called on 1 May and on 12 June.

Mr. Dennis Skinner (Bolsover)

No, you have not.

Mr. Speaker

I have not been able to get them all in, but I shall keep a list and see what I can do next time.