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Lord Kennet: My Lords, I hope the noble Lord will allow me to interrupt him. I do not dislike either Israelis or Americans. I dislike some of the policies of the present governments of Israel and America.

Lord Beloff: My Lords, I am sure that the noble Lord's explanation of his own views is the correct one. However, whether he would arrive at that condemnation of policy if he had more affection for, and understanding of, the countries concerned is something one may take leave to doubt.

Perhaps I may give an example. It relates to some remarks made by the noble Lord, Lord Wright of Richmond, with whom, again, I do not always altogether agree and the position of the Palestinians. It is true that the Palestinians are among the most deprived peoples in the third world. They have the disadvantage psychologically of being in a position of poverty up against a society which has a GDP roughly comparable to that of western Europe. So the European Union and other benefactors--some in the Middle East itself--have tried to assist with financial aid. Yet we know that the Palestinian regime, the authority and its leaders, have behaved exactly in the way we have seen in other third world countries. I cite Africa. The aid is scooped up by a small number of members of the elite and the mass of the people whom it was intended to help are no better off than they were before. That is another sad fact about the world we live in. Therefore, one asks: is it ethical to give aid to Zimbabwe in order to enable its army to continue to pursue war in the Congo? Is it ethical to give aid to other elites in developing countries who use it for their own personal benefit rather than for the benefit of the countries they live in?

We come up against the grave problems referred to by the noble Lords, Lord Owen and Lord Wright of Richmond. At what point does the capacity of various governments to do damage outweigh the natural reluctance we have--particularly in an age of modern weaponry--to go to war against them?

I find it difficult to draw an adequate line between the coercion of Iraq to observe the United Nations' demands for destroying its weapons of mass destruction and the conclusion reached by some that so long as it retains its government it is unlikely ever to be so persuaded. Again, if one takes the parallel, the considerable effort which I believe has been made by the Government of South Korea, with American support, to try to reach some kind of friendly relationship with North Korea seems to be faltering. There is in the world no doubt a good deal of feeling in favour of ethics. There is, sadly, a great deal of feeling in favour of malevolence. We must take the world as we find it, alas.

5.34 p.m.

Lord Craig of Radley: My Lords, let us go back for a moment to the narrower subject of defence. In the course of my maiden speech in your Lordships' House during the debate on the gracious Speech in 1991, I

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referred to the special courage which our servicemen and women showed during the Gulf War of that year. I cited the aircrews who had to get airborne and perhaps rendezvous at night in pitch darkness and in radio silence with airborne tankers, to top up their fuel, before flying deep into enemy territory. Each man in his cockpit knew that he would be under constant enemy fire as he approached his targets; yet he pressed on with his mission. I counted it a very special privilege to have been associated with the activity of such brave people who display that special kind of individual courage: to outface danger and conquer fear on their own and often alone.

Only two-and-a-half weeks ago, we had been literally within minutes of expecting our airmen to display similar courage and fortitude. The Prime Minister phones his good wishes to the Tornado crews in Kuwait at the 11th hour, and they are ready to launch into their attacks, strapped into their cockpits and within 15 minutes of take-off. When the attacks were cancelled at the very last minute, the impact on all those who were going to take part must have been dramatic.

Training and professionalism would have been honed to the finest edge. Pin-point attacks would have been expected and after so many months of preparation, they would have been achieved. But I doubt whether anyone was quite ready or prepared for such a last minute cancellation. Modern communications, of course, give governments the chance to make such changes at the very last minute. I am not so confident that the impact on those whom we expect to fight our battles is as simple, easy or straightforward. I do not expect any of them to say so. The "can do", "will-co" attitude will be well to the fore. Nevertheless, I hope that if there are reasons to be concerned, the Government will bear them in mind and not be tempted to try to turn people's emotions and fighting spirit on and off, as though they were a lot of light bulbs. It is not just the servicemen, but their families and friends back home too who are caught up in all this.

One of the other penalties of such last minute changes of mind is that they can all too quickly be likened to indecision and vacillation and perhaps a loss of credibility.

One of the important lessons of that Gulf conflict in 1991, to which I referred in my maiden speech, was the implication of mounting offensive operations at great ranges from these shores and against a numerically stronger foe. Such operations call for a great intensity of effort. Mounted thousands of miles from home, they place enormous demands on logistic support. Fighting forces need large tonnages of fuel and munitions and all the other paraphernalia for waging war.

Since that time in 1991 there have been a number of important changes in our logistic support to all three services. The Strategic Defence Review has taken these forward in a sensible and significant way and once they are in place with the ro-ro ships, the strategic lift aircraft and so on, we shall be better placed than in the past to mount and sustain distant operations.

But they are not with us yet and we are facing serious stretch, trying to be ready to fight in the Gulf once again, as well as dealing with the troubled regions of

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Serbia and Kosovo, Bosnia and the like. I hope that we do not get caught out trying to do too much too soon. As the Strategic Defence Review so rightly said:

    "We need to solve the problems of under-manning and additional overstretch which comes from overcommitment".
I doubt that the Government have yet heeded their own wise words.

There is another aspect to the changes to logistics support foreshadowed in the Strategic Defence Review about which I have misgivings. The concept of a chief of defence logistics, admittedly yet to be spelt out in any detail, is far removed from that of a chief of defence procurement. The latter provides for the services in the future, but logistics is for the day-to-day running and operation of a service. Because of their different methods of operation inevitably there are different approaches to the logistic needs of frontline forces. The SDR acknowledges this but then speaks of developing the three single service logistics organisations into a single organisation. Of course, if Royal Air Force Harriers are embarked alongside Royal Navy Harriers both will need to adopt the naval way of spares provision and on-board storage of them when at sea, but the exception does not always provide the best basis for a general policy. I believe that to argue that more joint operations equals more joint integration is to over-simplify a very complex area. We have long had successful joint operations with our current logistic style. I wait to see how this concept develops. I hope that if there were problems it would be possible to return to the present arrangements that serve the individual frontline well.

The support of operations, particularly when they are far from home, needs a dedicated and expert service understanding and approach that has been honed and developed over many years. I hope that all of that will not be lost in whatever new arrangements Ministers insist upon. I should welcome it if in the course of the defence debate next week the noble Lord, Lord Gilbert, assisted the House on the justification for introducing what appears to be such a major shake-up in this key operational support area particularly when we are so much involved in ongoing operations.

Finally, as they say, has the Ministry of Defence any concerns about the future training of our forces carried out in Wales and Scotland? Defence remains a national responsibility and has not been devolved to the Welsh Assembly or the Scottish Parliament but other responsibilities like tourism and the environment have. While one wishes and expects the regional organisations to work with the grain of national defence policy, what would happen if there were acute political differences between them and Whitehall? Might training and low flying be restricted because of the alleged adverse impact on local tourism, the environment or whatever?

Arrangements for officials to mediate differences--the so-called concordats--are provided for in the Acts, but who has the final say? The Acts do not readily provide for the Secretary of State for Defence to rule on this matter. The services need confidence that their essential training and exercises are able to go ahead as planned; so, too, do those foreign forces, for example

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the United States Air Force, who operate as does the RAF over wide areas of the whole of the United Kingdom. Armed forces need to be trained properly if they are to be committed to operations in the Gulf or anywhere. I hope that none of the many constitutional changes now in hand will add to the problems that our forces already face in finding adequate training in and around our shores. If we want servicemen to fight for us they must be properly trained. Their challenging skills need to be honed to the sharpest of edges in realistic training for such operations.

5.44 p.m.

Lord Sandberg: My Lords, while I welcomed the reference in the gracious Speech to the commitment to economic policies to build stability, the way to achieve this was rather conspicuous by its absence. I mention this because I hope that recent polls which suggest greater public confidence in the economy will not induce apathy on the part of the Government in what still remains a very grave problem in the Far East and Latin America. With a relatively good economy here, and even more so in the United States, it would not be difficult for complacency to creep in. This the world simply cannot afford.

It may be that the worst is over in Asia, but I would not want to hold my breath on it. We should not forget that, for example, Japan suffered an abrupt end to its post-Korean War boom as long ago as the end of 1990 when its stock market crashed dramatically. It still has not found a successful way to bring confidence back to the market. That was eight years ago. Nor has it solved the loan problems of its banking industry. Japan's resurgence is vital to the recovery in Asia in general and Korea in particular. It is to be hoped that the visit by China's President Jiang to Tokyo will focus upon economic as well as political problems in the region. Elsewhere in the area, political instability in Indonesia and Malaysia must be resolved before there can be any upturn in their economies. I do not believe that this country has yet felt the full burden of Asia's economic difficulties.

Latin America, too, has yet to regain confidence, and the terrible damage inflicted by Hurricane Mitch in Central America has only exacerbated its problems. I must declare an interest as a stockholder in a small trade bank with interests in the area. I was heartened to hear in the gracious Speech reference to the Commonwealth Development Corporation. The name of this admirable corporation is misleading as CDC no longer confines itself to emerging Commonwealth countries. During a visit I made earlier this year to Nicaragua, I was very impressed to discover that the CDC had made a foray into what had become a very successful poultry industry. I am very glad that the Government will encourage the CDC, whatever structure emerges from the public/private partnership, to continue to assist the development of the poorer countries in Central America and the Caribbean, including Cuba.

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I was particularly intrigued by the reference in the gracious Speech to the decision taken last year by the Chancellor of the Exchequer to transfer to the Bank of England the power to set interest rates. That was a very brave decision which as a former banker I applauded. But it would be wonderful if well over a year later one could see the Bank leading rather than following. One did not need to be a financial genius to be aware many weeks ago that interest rates must start to come down, but it was not until the Federal Reserve in Washington reduced its rates that the Bank of England took any action. Not surprisingly, the Federal Reserve's move resulted in an increase in the strength of an already overvalued sterling. This overvalue--to some extent now reversed--has been very largely blamed for the difficulties faced by our exporters as dramatically illustrated by recent figures.

If most of us had foreseen that, the Bank of England should certainly have done so. Its position is not helped by the cumbersome procedure under which the committee of wise men which advises the Bank meets only once a month. I suggest that if a public limited company were able to take its important decisions only on a fixed monthly basis it would be in dire trouble. One also wonders whether the make-up of the wise men is entirely satisfactory. That they are men of eminence and integrity is not in question, but I do not believe that the committee should be made up entirely of what may be called professional economists. The trouble is that tertiary educational institutions do not award degrees in common sense. I believe that the Chancellor of the Exchequer and the country deserve more speedy and pragmatic decisions by the Bank.

Finally, I support the anxieties that have been outlined by my noble friend Lady Williams about the appalling corruption in what appears to be a leaderless Russia. In expressing that view, I do not merely join the cynics who complain that the cost of chartering large luxury yachts in the Mediterranean has been pushed up to unacceptable levels by the crime bosses of Russia. I am genuinely worried by the prospects of violent unrest in Russia if that country's economic problems are not faced and corrected.

5.50 p.m.

Lord Cockfield: My Lords, I hope that I may be forgiven if I start with a purely personal reminiscence, but its relevance to the theme I propose to develop will be apparent soon enough.

For the past 50 years or more I have had a contact, in varying degrees of personal unimportance, with both this place and another place. Indeed, I was sitting in the Official Box in this very Chamber when Dr. Hugh Dalton pioneered the present Government's approach to the management of important items of news by informing the press of the contents of his Budget before he got round to informing the House of Commons. Clearly Mr. Alastair Campbell has still quite a way to go. But enough of that.

The one thing that this long experience has taught me is that the capacity of politicians for self-deception knows no limit; and that nowhere is clearer than in the

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case of our relations with the European Union. The latest and sorriest example was in the Queen's Speech on Tuesday of this week. At col. 5 the Official Report of 24th November states:

    "My Government will play a leading role".
That repeats the sentiment which appears in the Prorogation Speech last week, reported on 19th November at col. 1176 of the Official Report which staked out the vainglorious claim that,

    "My Government have taken a leading role in the European Union".
To some of us who had hoped that new Labour represented a break from the past so far as concerns our relations with Europe, and would mark a turn for the better, those words brought back ominous memories of Mr. John Major.

If I may be so unkind as to remind the House, he returned from Maastricht declaring that he had won,"Game, set and match". Very wisely he did not specify which particular game he had in mind. The truth of the matter was that he had sabotaged the efforts of the other 14 member states of the European Union. That accomplished, he then proclaimed that he was "at the heart of Europe", a statement that was clearly accurate if he were wearing his heart on his sleeve.

Against that background let us come to Mr. Tony Blair and new Labour. The claim to take "a leading role in the European Union" is based on the claim that,

    "They negotiated"
--that is, the present Government--

    "and signed the Treaty of Amsterdam".
They signed it alright, but to say that they "negotiated" it is complete nonsense. On 1st May last year when the Labour Government took office the treaty had been fully negotiated and was only being blocked by the Major Government on a number of issues, some good, some bad. What the Labour Government did was to surrender, both where it was justified and where it was not. They cite the decision "to opt into the social chapter" to justify their claim. But that was simply Danegeld paid to old Labour without any regard to Britain's interests or the wider interests of the European Union as a whole. And now we find Mr. Mandelson, for whom otherwise I have neither sympathy nor admiration, attempting to extricate this country from the resulting mess that has been created.

On the basis of that long list of non-achievements, Mr. Blair then proceeded to claim that he was the leader of Europe. The reaction to that ranged from anger to contempt--and in some quarters worse. One would have thought that even Mr. Blair, after 18 months in Government, would have learned better. But not a bit of it. Now we find him closeted with the other Socialist leaders of Europe hatching plans to undermine the European Central Bank and thereby the euro itself; and to substitute discredited and long since discarded plans to boost employment by the device of accommodating inflation, or indeed creating it. Such policies have been tried before and they have always failed, and they will fail again.

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I suppose the kindest thing that can be said about Mr. Blair's concept of leadership is that encapsulated in the apocryphal story of Robespierre's reaction when from his study window he saw the mob following the tumbrils on the way to the guillotine. He exclaimed, "I must follow them. I am their leader".

The simple truth, and we need to accept it, is that this country is unlikely ever to exercise a leadership role in the Union--not in this generation, and possibly not in the next either. That may well be not only in our own interest but equally in the interest of the other member states as well. Our attitude and outlook are too much at variance with those of most of the other members of the Union for us to take a leading role in the growing political integration which is the objective of possibly a majority of the other members of the Union. I must stress that I refer to political integration; economic integration is a different matter. I am referring also to the claim of taking a leadership role. We can and indeed should always co-operate where it is in our interest and the general interest so to do.

Membership of the Union is of immense value to this country, and we can still be effective and valuable partners in what is unquestionably the greatest development this century has seen in the governance of the people, by the people and for the people. With a modicum of modesty we can play our part--a valuable part. We can benefit. We can contribute. But that can only be on the basis of recognising that we are but one of 15, possibly soon one of 20, and ultimately perhaps more; and that the somewhat exaggerated opinion of ourselves held by successive governments--it is why I quoted the record extending over this Government and the previous government--needs to conform to reality.

On some future occasion I shall seek to speak to your Lordships about enlargement where under the unenlightened leadership of the present Commission we are all deceiving ourselves, and in the true spirit of Mr. Micawber we are dependent upon "something turning up". On the euro, the Government are telling us the truth, half the truth and anything but the truth about the real motives why they are dragging their feet. But that must await a future occasion.

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