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Baroness Knight of Collingtree: My Lords, I rise briefly to give warm support to the amendment because I feel that we do not know anything like enough about a matter which will not only affect this country for many years to come but change our country totally and completely. I must say to the noble Baroness, Lady Williams, with whom I sat for many years in another place, that it is not something to marvel at that a group of countries gets to the starting post; what is to marvel at is if they succeed in the race that is to follow.

I have heard little about the concerns expressed by economists. What about the letter which went out from 153 leading economists in Germany some three months ago saying that they were very worried indeed about how economic and monetary union would be brought about? Economists in other countries have expressed their concern. They have said that it is rather as if the leaders of great countries are saying that such and such a thing must happen, without recognising that there are enormous problems in making it happen.

We have to recognise that there are many problems on the monetary front. Our unemployment figures and cost of living figures are totally different from those of other EU countries. Furthermore, we are the only country in the whole of Europe that is a net exporter of gas and oil. Therefore, changes in the prices of petrol, gas and oil will affect us in a completely different way. It is all very well to say that we will join when economies converge, but how do we know that they will lock? I cannot see that they will.

It is important to know about the constitutional impact of what is proposed, but I am also worried about what the effect will be on our foreign policy. I think back to a recent occasion when we supported America over the difficulties with Saddam Hussein. We were the ones who did. France was very much against us. What rows there would be if we joined in a European currency.

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I cannot see that happening unless we have a federated United States of Europe and I am quite certain that most people in this country do not want that.

Finally, I am certain that all of us and many thousands outside the House will want to know a great deal more about how it is proposed to bring economic and monetary union about.

Lord Bruce of Donington: My Lords, in the few remarks I was able to make some half an hour or so ago I mentioned the importance given in the Treaty of Amsterdam to democracy and the rule of law. I wish to concentrate on the rule of law in addressing myself to the subject matter of this amendment.

Your Lordships will recall that a Statement was made in the House on 5th May concerning the deliberations of the Council of Ministers, the heads of state, the European Council, or whatever it may be, on 2nd May. Your Lordships will recall that at the conclusion of the exchanges on the Statement I mentioned the fact that the appointment of Herr Duisenberg was, strictly speaking, unlawful because the provisions of the treaty, in particular those of Protocol 18 to the Maastricht Treaty and of Chapter III, Article 11, were not adhered to.

I do not think that we can be picky and choosy about this. If we believe in the rule of law--we apparently believe in the rule of law when it suits us--what was decided on 2nd May does not seem to have been an admirable way in which to approach the treaty. Your Lordships will recall that I drew the attention of my noble friend the Lord Privy Seal to this matter. He ventured to suggest that my interpretation of the article concerned was wrong. He said:

    "I shall consider Chapter III, Article 11.2 of Protocol 18 of the Maastricht Treaty. I do not know what opinion I shall arrive at, but I suspect that my opinion will probably be on the side of the Council".--[Official Report, 5/5/98; col. 521.]

I do not see how that can be because the terms of the protocol and, indeed, of Article 112 of the amended treaty are quite specific. They do not mention, as Herr Duisenberg himself pointed out, any designation of a person by nationality as probably going to be the next holder of the post. Nothing in the protocol or the treaty refers to the nationality of the person to be appointed or the person next to be appointed. The text is quite clear:

    "Their term of office shall be eight years and shall not be renewable".

Either the text of the treaty is right or it is wrong. There is no question of fudging this in the same way as various other issues were fudged.

The noble Baroness, Lady Williams, mentioned some points which she thought to be of general interest in determining our attitude towards monetary union. I would have expected her above all people to have been mindful of the law, particularly in the light of the matters that I ventured to raise and which are incorporated in the treaty. But she did not. She confined herself to, if I may say so with respect, the usual generalities, with which we are familiar, about the broad arguments for monetary union. She did not mention that there are 20 million unemployed people in Europe at the present time and she did not mention, when assessing

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her own country's contributions to the Community, that we subscribe £2.5 billion annually out of taxpayers' funds. That did not seem to attract her attention in the slightest.

I hope that we are able finally to lay to rest the question of the legality of the appointment of Herr Duisenberg. Quite clearly, I am right and the treaty is right. It would at least ease the position if we could have a complete admission of that, bearing in mind, as I ventured to mention at the time, that the Government have had the opportunity to amend the clauses at a number of stages ever since Maastricht and right up to the intergovernmental conferences which led to the new Amsterdam treaty, but they did not. Protocol 18 remains and Article 11.2 remains. I invite the Government to confirm that in presenting those facts to the House I was absolutely correct.

The Earl of Clanwilliam: My Lords, so 11 nations have signed a piece of paper and the booming baby euro has suddenly been born and is expanding at a vast rate. However, many dissensions belie the sense of unity. Much has been said already on this issue, so I shall proceed straight away to the point that we should remember, which is that the bank has no political input or agreed basis of operation except the authority of its own expertise. There is no effective parliament to which the central bank has to report. Therein lies the heart of the democratic deficit that is bugging the whole prospect.

One is tempted to fantasise on the contents of the reports that are called for by this amendment. Certainly, they will not contain any information from the European Central Bank because Mr. Duisenberg has said that it will not publish any reports for probably 16 years. We do not want to have any part of such a bank.

A country that has a new interest rate imposed on it without any definition as to why it is being done may become out of line with the bank's requirements. The Commission will then impose the rigours of the stability pact, which will further weaken the ability of the country in its efforts to repair its economy. In the meantime, unemployment and rising inflation will cause unrest, as has already been mentioned, and the government will probably fall--not the euro--followed by an administration cobbled together by a group of warring politicians. We will have Italy all over again. What a happy scenario!

There will be no effective mobility of labour through lack of a common language, and the prospect of the transfer of manufacturing facilities, prompted by cheap labour in the failing country, is a delusion, as firms will not transfer their plants to unstable economies. At the same time the minimum wage will be a further disincentive to the transfer of manufacturing facilities.

We should instead enlarge the single market, as has been said, and create a stable industrial base in line with the World Trade Organisation agreements by reorganising the common agricultural policy and the common fisheries policy. We should allow the single currency to develop alongside national currencies. We could all use the euro. It could be a universal currency

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that we can put in our pockets. Any firm could have it and put it in the bank against its use in trading facilities with Europe. We should allow the currency to develop alongside our own national currency in the manner of the hard ecu which was originally suggested by Mr. John Major. We would then be in a position where everyone could use the ecu without any problems.

6 p.m.

Lord Grenfell: My Lords, I shall be brief because I know that the debate on this amendment has gone on for a long time. I wish to make a few points directed to one or two statements that have been made.

The first relates to what the noble Lord, Lord Beloff, said. He said that the French people will not long tolerate having a powerful neighbour dictating economic policy to them. Precisely--but that is exactly what EMU will remove. The noble Lord smiles, but that is the case. Economic and monetary union will remove the kinds of influences that he was so concerned about, such as Germany having power over economic decision-making in France.

Lord Beloff: My Lords, I am grateful to the noble Lord for giving way. I believe that he misunderstood me. My view is that it is not so much that the bank will be an instrument of German control over France, but that unelected bankers, with the kind of philosophy which Mr. Duisenberg has already revealed of keeping everything to himself, will create the kind of social discontent in France which is evident daily for anyone to see who goes to that country. There are strikes, demonstrations and other movements. I sometimes wonder whether noble Lords ever read the newspapers.

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