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Commons Chamber

Volume 21: debated on Wednesday 31 March 1982

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House Of Commons

Wednesday 31 March 1982

The House met at half-past Two o' clock


[MR. SPEAKER in the Chair]

Oral Answers To Questions

Foreign And Commonwealth Affairs



asked the Lord Privy Seal if he will make a statement on the latest proposals of the contact States relating to elections in Namibia.


asked the Lord Privy Seal if he will make a statement on any consultations that Her Majesty's Government have had concerning the holding of elections in Namibia.

Most of the constitutional principles have been agreed by all concerned, but agreement has not yet been reached on the Five's proposals concerning the electoral system for the constituent Assembly. These proposals are fair to all parties and groups. The Five hope to resolve this question as soon as possible, with the co-operation of those directly involved, and to move on to phase 2 of the negotiations without further delay.

Is the Minister aware that the South Africans have frustrated a settlement in Namibia for nearly a decade and a half? Does he agree that the propositions advanced by the contact States about the electoral process are enormously complicated, especially for an unsophisticated electorate that is unused to elections? Does he agree that that is a sign that the contact States are preparing to appease South Africa because of that Government's obstruction?

It is an exaggeration to say that the system now being discussed is enormously complicated. Not only in Europe, but in African countries, there are a variety of systems in which a number of votes are allowed for. We are here working towards a mixed system of proportional representation and single-member constituencies, although we are now working through the contact group to see whether there are further ways of simplifying the system. We are in close touch with all the parties concerned.

Is the Minister aware that the proposal to appoint Mr. Mishra, an Indian diplomat, as United Nations ambassador for Namibia is reported to have been opposed by Britain and other Western States, as being likely to delay Namibian independence? Will he deny that report, because if it is true it must surely mean further appeasement of the South African regime by the contact States?

No, what the hon. Gentleman says is absolutely the case. The Government do not believe that filling the post of United Nations commissioner to Namibia is helpful to the current negotiations. Neither the United Nations Commission nor the United Nations Council for Namibia has a role to play in the present negotiations. We do not believe that the present position is helpful when we already have a United Nations representative to play a role in the transition and when the Five are working extremely hard to achieve a settlement.

Does the Minister accept that many Conservative Members agree with his reply to the hon. Member for Newcastle upon Tyne, West (Mr. Brown)? Does he agree that it is SWAPO which is now holding up progress towards the independence of Namibia, as it does not accept the election proposals advanced by the contact group? Does he further agree that it is important that the United Nations should remain impartial if there is to be any meaningful and constructive settlement?

On my hon. Friend's latter point, as I said to the hon. Member for Hackney, Central (Mr. Davis), it is essential when we reach phase 2 to discuss the impartiality of the United Nations. That is an important factor in a successful transition.

On my hon. Friend's first point, SWAPO has expressed anxiety about the election method. We are discussing that with SWAPO and the front-line States. I do not believe that the procedures are complex. It is possible to find a simple procedure and we are working on that now

Is the Minister aware that the whole basis of the negotiations is a resolution that was passed unanimously by the Security Council in 1976? How can he claim that the United Nations has no role in the matter? Will he acknowledge that the dual system of voting is widely regarded as a trick to exclude the majority of the African population in Namibia from real power in an independent State?

The hon. Gentleman cannot have listened to my earlier answer about the United Nations commissioner. That is quite different. The Government fully support Security Council resolution No. 435, which allows the United Nations to play a key role in the transitional phase. However, we opposed the appointment of a United Nations commissioner this week. That is a different matter and we believe that it further complicates the process. That should be made clear.

Suppression Of Terrorism (Convention)


asked the Lord Privy Seal what is the policy of Her Majesty's Government towards seeking the adherence of those States which are parties to the international convention on genocide but not the European convention for the suppression of terrorism, to the latter convention.

We strongly support the European convention on the suppression of terrorism, and would like all eligible States to become a party to it.

As the convention on terrorism is just as consistent with the general principles of international law as the convention on genocide, and as both conventions deny to political offenders the right of immunity from extradition, are not the Government of the Irish Republic hypocritical, considering that they have already signed the convention on genocide, to assert that they cannot sign the convention on terrorism on constitutional grounds? If that is a demonstration of their sincerity, what reliance can be placed on their promises to respect the will of the majority in Northern Ireland?

My hon. Friend's question is really for the Irish Government. I can only say that we hope that they will find a way through the constitutional difficulties that they seem to see and will join the convention.



asked the Lord Privy Seal whether he will make a statement on the Foreign Secretary's visit to Israel.


asked the Lord Privy Seal if he will make a statement about the Foreign Secretary's visit to Israel


asked the Lord Privy Seal whether, in the visit of the Secretary of State for Foreign and Commonwealth Affairs to Israel, he has yet discussed the priority attached by the Israeli Government to security as an essential part of the peace process.

My right hon. and noble Friend arrived in Israel only last night. Today he has had talks with, among others, the Israeli Prime Minister, Foreign Minister and Defence Minister.

Is my right hon. Friend aware that Conservative friends of Israel in the House send good wishes to Lord Carrington on his important mission and hope that he will be received with courtesy and warmth in Israel, because we believe him to be a fair-minded man who is genuinely seeking peace?

I am very grateful to my hon. Friend for what he has said. It is in exactly that spirit that my right hon. and noble Friend is in Israel.

During his visit to the Holy Land, will my right hon. and noble Friend take every opportunity to promote trade between this country and Israel, particularly with a view to overcoming the pernicious Arab boycott?

I think that my hon. Friend knows the Government's position on that. We in no way approve of the boycott, but we think that it is a matter best left to the judgment of the firms concerned.

Will the Secretary of State, during his visit to Israel, assure the Israeli Government that no representative of the British Government will meet representatives of the Palestinian Liberation Organisation so long at it remains committed to those clauses of its convention that call for the destruction of Israel?

We have contacts with the PLO at official but not at ministerial level. We use those contacts to urge the PLO to recognise Israel's right to exist and to make it absolutely clear to Israel that the PLO would fully accept the existence of Israel if Israel accepted self-determination for the Palestinians.

Will the Foreign Secretary tell the Israeli authorities that, despite the many injustices that Jewish people have suffered in previous years, the way in which they are establishing settlements on occupied Arab land in Jordan, and their dictatorial policies on the West Bank, only exacerbate tensions in the area and are against the long-term interests of Israel?

Our views on the settlements have been frequently stated. In the past few days we have made a statement deploring the present activities on the West Bank. A statement was made by the European Council yesterday to the same effect.

Will the Secretary of State represent to the Israeli Government that actions such as the dismissal of elected West Bank mayors and councillors by the illegal occupation forces are not only contrary to the Geneva convention but unacceptable to all fair-minded people in the United Kingdom?

Does the Minister agree that my right hon. Friend might suggest to his hosts that if they are serious about improving relations between Britain and Israel they might desist from publishing on postage stamps likenesses of prominent Jews who have murdered British subjects?

I am not sure that that particular point will come up, but I have a good deal of sympathy with what my hon. Friend says.

Is the Minister aware that we support the Foreign Secretary's visit to Israel, because it keeps open lines of communication in a difficult situation, but that most Arabs believe that the Israelis are on the point of annexing the West Bank and the Gaza Strip? Will the Foreign Secretary therefore associate himself completely with the EEC statement on this yesterday and tell any Israelis who are thinking of annexation that we would regard such a move as very dangerous and prejudicial to a peaceful settlement in the Middle East?

Is the Minister also aware that we would associate ourselves with his right hon. Friend's statement about the dismissal of the West Bank mayors and with the views of the Israeli Labour Party in the Knesset on 23 March, which were vigorously critical of the current Israeli Government?

As the right hon. Gentleman has said, any attempt at annexation of the West Bank would certainly be very dangerous, but we have no actual evidence that that is being contemplated.

Contrary to what the right hon. Member for Lewisham, East (Mr. Moyle) has said from the Labour Front Bench, have not the disturbances on the West Bank been instigated and organised by the terrorist PLO precisely because the Israeli Government are beginning to make headway with moderate Palestinian leaders?

I advise my hon. and learned Friend not to accept any such simple explanation. What has happened on the West Bank is the outcome of one incident feeding on another, leading to a cycle of violence and repression. As other countries, including ourselves, have known, this is a consequence of a regime of military occupation. It is for the Israelis to consider, as they are now clearly doing, whether such a system provides the best foundation for the security of Israel.

El Salvador


asked the Lord Privy Seal what reports he has so far received from the observers sent to the elections in El Salvador on 28 March.

How can there be free elections when anti-junta candidates do not stand because they are afraid of being murdered and when voting is compulsory? Secondly, do the British Government intend to recognise the Right-wing extremists now in the saddle in El Salvador?

As I have said, we have not yet received the report of the two observers. They will return this week and report to my right hon. and noble Friend. Their report will then be published. I think that it would be sensible to wait and see what they have to say. That is why we sent them there—to see whether the elections were a valid test of opinion and to learn about the form in which they took place. On the first evidence, with more than 1 million people reported to have voted, we should be very cautious of insulting the people of that country who wish to use the ballot box rather than the gun.

Although the result of the elections may not seem entirely satisfactory, does not the very large turnout show that there is a majority in El Salvador that favours the ballot rather than the bullet? Ought not the results of the elections to be respected both inside and outside El Salvador?

I very much appreciate what my hon. Friend has said, as I know that he has been in El Salvador with an all-party team. It appears from the first evidence that the poll has been high. I should have thought that anyone who believes in democracy would condemn those who use the gun to try to intimidate those who wish to use the ballot box.

Does the Minister agree that 1 million voters is well under half those of electoral age and that many of those who voted did so out of fear of being punished by the Government, because voting is compulsory? Does he further agree that, unfortunately, my predictions have proved true and the situation after the elections is infinitely more difficult? Does he also agree that the only alternative now to negotiations, as suggested by the Mexican President, is continuing suppression of the people by a Government in El Salvador who have no respect whatever for human rights and have indeed boasted of that fact?

I find it difficult to understand how the right hon. Gentleman, sitting in the House, can come to such sweeping conclusions at this stage. Surely it is more responsible to wait to hear what the observers have to say. Let us then read their conclusions and discuss them.

The hon. Gentleman's figure of those who voted is well under 50 per cent. of those of electoral age. We all know that those who have not voted are breaking the law in El Salvador, yet about 60 per cent. chose to break the law rather than to vote, unless they were forced into emigration by the actions of the previous Government. Does the right hon. Gentleman agree that the majority of voters voted for parties of the extreme Right wing, led by a man who has described President Duarte as a tool of international Communism? Is that the right hon. Gentleman's view?

I am surprised by the rather unconstructive way in which the right hon. Gentleman seems to be approaching this problem time and again.

Yes, perhaps I should not be surprised. I am trying to help the right hon. Gentleman. I remain surprised by the attitude that he has adopted. Let us wait to hear what the observers have to say. In the meantime we note that the figures suggest that about 60 per cent. of the electorate has voted. If the right hon. Gentleman believes in the use of the ballot box, surely he should be supporting and encouraging that process rather than encouraging those who have used the gun to try to intimidate.

Is my hon. Friend aware that those of us who had the privilege of visiting El Salvador find it hard to arrive at the same sort of certitude as the right hon. Member for Leeds, East (Mr. Healey) has expressed, without having been there? Will he accept that, whatever the result of the election, the main attack on human rights has come from those who sought to prevent people from going to the ballot box in peace? Secondly, does he accept that we should have the greatest admiration for the courage of the Salvadoran people who risked their lives to prosecute an election by the ballot and not by the bullet?

Is the hon. Gentleman aware that not all of those who went to El Salvador entirely share the views of the hon. Member for Bury St. Edmunds (Mr. Griffiths)? The evidence that we received from the man who was organising the elections showed that the techniques involved would allow the police in El Salvador to identify those who vote and those who do not. As those who do not vote are guilty of a crime, punishment may follow.

When the observers' report is available it will be published in full. It will be available to the House, to the press and to the British public. We shall be able to study in great detail what the observers have to say. They have been in El Salvador for a number of days and they have observed the elections. Let us wait to hear what they have to say.

United Nations Special Session On Disarmament


asked the Lord Privy Seal what ministerial representation Her Majesty's Government will have from his Department at the United Nations special session on disarmament.

As my right hon. Friend the Prime Minister told the House on 16 March, she plans to go to the second United Nations special session on disarmament. There are at present no plans for a Foreign and Commonwealth Office Minister to go as well.

Does the Foreign Office think it wrong that the Heads of Government should be meeting in Geneva at the same time as the United Nations disarmament conference takes place? Surely it would be a good idea for the Heads of Government of all countries throughout the world, including those from the NATO and Warsaw Pact countries, to attend the session and for Britain to submit constructive proposals for nuclear disarmament, for reducing the sale of conventional weapons throughout the world and for diverting the massive expenditure of £500 billion on the arms race to deal with the problem of world poverty, which would be a better way of bringing peace throughout the world?

The hon. Gentleman's argument about dates is a thin one. The NATO summit will last for one day whereas the United Nations special session will sit for five weeks. Many people, including my right hon. Friend the Prime Minister, plan to go to both.

Will my right hon. Friend say something more about the shape of the session? Does he see its purpose as being to deal with particular hot-spots around the world or to try to take a global view of disarmament?

Certainly the second. The preparations are still continuing. We have tabled with some of our friends a draft programme for comprehensive disarmament that we think is realistic. We are discussing it with others who have other ideas and we hope that it will be possible to reach agreement at the special session on a framework that will act as a spur and a stimulus to the different negotiations on arms control and disarmament that are taking place and are in prospect.

The House will commend the Prime Minister on her decision personally to attend the United Nations special session, although it may have some reservations about the fact that during the five-week session there will be no Forign Office Minister in attendance with the right hon. Lady. The House will hope that she will use the occasion, not for unhelpful rhetoric, but for exerting some political muscle to beak the deadlock that has been reached in disarmament negotiations. Will Her Majesty's Government use some of their influence to try to avoid the complications that will arise from the clash of dates between the Geneva summit and the United Nations special session, bearing in mind the widespread feeling on the issue?

As I have tried to make clear, there is no clash. We intend to take a lively part in the special session. It will not be a negotiating occasion but it might give a stimulus to those who are doing the negotiating in the different places where that is happening.

While I welcome my right hon. Friend's presence at this most important conference, can my right hon. Friend assure the House that the Government will bring forward fresh initiatives to encourage and promote multilateral disarmament? Will he ensure that the public are kept in touch? He must recognise that there is deep anxiety to see these initiatives stepped up.

I agree with my hon. Friend. We take initiatives where we think that it is sensible and useful to do so. We have done so recently in respect of chemical weapons. My hon. Friend is right about public information. We have recently published what I think is a reasonable pamphlet entitled "Peace and Disarmament". We shall do our best in the coming months to take our full part in public discussion.



asked the Lord Privy Seal if he has had any recent discussions with the Foreign Minister of France concerning the aid given and the policies pursued by France in respect of Nicaragua; and if he will make a statement.

No, Sir, but my right hon. and noble Friend has recently had discussions with the French Foreign Minister, M. Cheysson, on many issues, including Central America.

Is it not a fact that the French Government are recognising the freedom and independence of the Nicaraguans? Bearing in mind the overwhelming sympathy of the British people towards the Nicaraguans and their independence, is it not about time that the Government gave a lead to all the super Powers in urging them to allow the Nicaraguan's to have the freedom to which they are entitled?

We can all say that we want to see freedom and independence in that part of the world. The Government have noted with some concern that the Nicaraguan Government have decided to suspend all civil rights and to declare a state of emergency. We regret that very much. There are some indications that the Nicaraguan Government are not entirely independent, as the hon. Gentleman suggests. The actions that they are taking against the Miskito Indians causes great concern to those of us who have respect for human rights, as I am sure the entire House has. We want to encourage the consolidation of a pluralist society in Nicaragua. I have had two meetings this month with the Nicaraguan ambassador. The discussions have been extremely useful.

Has my hon. Friend heard, through the press or direct from the Nicaraguans, whether they plan to bring their proposed elections forward from 1985? If they are to continue to have a plural society, it will be helpful to have elections so that people with different political views can be elected to a Nicaraguan Assembly.

I agree entirely with my hon. Friend. I think that the outside world would be encouraged if there were evidence that the Nicaraguans were prepared to hold early elections and thereby demonstrated their wish to have a pluralist society. This is something that we have urged upon them in our recent discussions.

Is the hon. Gentleman aware that on many occasions the United States Administration has made threats of direct intervention in the affairs of Nicaragua? It has been widely reported and not denied that the CIA has had a plan accepted costing $19 million for destabilisation of the regime in Nicaragua. As the United States has twice this century intervened by military force in Nicaragua, it is immensely important that Nicaragua should know that it has friends other than those in the Communist world who are prepared to support its desire for independence.

As was said in an earlier debate, the Government have no knowledge of the use of any particular United States funds through the CIA. We have also noticed that on a "Panorama" programme earlier this week ambassador Bosworth of the United States denied that the United States had any intention of military intervention, or the use of troops. We should take note of the fact that Secretary of State Haig has repeatedly said that the United States wants to foster and encourage democracy in that part of the world.

Is the Minister aware that many of us have had opportunities to talk to Mr. Bosworth on this issue, and while it may be the case that the United States does not intend to send its troops to Nicaragua, it has made threats, widely reported in the American press, and supported by members of Congress and the Senate, of an organised campaign to destabilise the Government in Nicaragua? Does the hon. Gentleman not know that Nicaraguan terrorists are being trained in the United States for intervention inside Nicaragua? That, too, was recorded in the "Panorama" programme to which the right hon. Gentleman referred.

I do not think that the right hon. Gentleman and I disagree. Any actions that are taken by countries interested in stability, whether in Nicaragua or any other part of central America, would be to help to do what we can to foster greater stability. That is our objective. All I was saying was that I had noted, and I hope that the right hon. Gentleman has noted, that the United States Government's objective is to try to foster and encourage democratic Government. That is something with which we ought to agree rather than disagree.

While no one in the House can doubt that the replacement of the Somoza regime by the Sandanista revolution was a step forward, does my hon. Friend agree that the injection of French weapons into the situation is not helpful? Does he accept that there is grave disappointment in Nicaragua about a Government who have allowed their revolution, which had much support, to go sour in the suppression of civil rights, to bring about the militarisation of the country and the use of Nicaragua as a base for the destabilisation of surrounding countries?

The British Government do not believe that it would be helpful to sell arms to Nicaragua. We condemn and criticise the suspension of civil rights as a result of the recent declaration of emergency and we express concern about the substantial build-up of the military in Nicaragua beyond any requirement for their own defence purposes.

However, it is the desire of Her Majesty's Government to do whatever is possible to encourage and foster stability. We are in touch with Governments such as the Mexican Government and other Governments who play an important role in that part of the world.



asked the Lord Privy Seal what progress there has been in the intercommunal talks in Cyprus since his reply to the hon. Member for Tooting (Mr. Cox) on 3 March, Official Report, c. 182.


asked the Lord Privy Seal what further discussions in the intercommunal talks on the future of Cyprus have taken place since his reply to the hon. Member for Tooting (Mr. Cox) on 3 March, Official Report, c. 182.

There have been regular meetings throughout March. Some progress has reportedly been made towards an agreed statement making use of the evaluation tabled by the United Nations Secretary General in November. I understand that, at a meeting on 17 March, the Secretary General's representative opened a new phase in the discussion, to deal with freedom of settlement, movement and property.

Is the Lord Privy Seal aware that international opinion generally agrees that intercommunal talks have reached a dead-end? Is he also aware that when President Kyprianou visits Rome next week for discussions with the Secretary General of the United Nations it will be put to the latter that the opinion of Cypriots is that they can make no further progress. Under these circumstances, and knowing that the Turkish Government have no intention, even after eight years' occupancy, of withdrawing their troops from Cyprus, has not the time come for the British Government to intervene if any progress is to be made?

It may be the hon. Gentleman's view that the talks have come to an end, but it is not the view of those taking part in the talks. In particular, a new phase of discussion has been opened by Mr. Gobbi. I do not know what President Kyprianou will tell the Secretary General of the United Nations next month when they meet. However, the talks are continuing. It is our view that they form the best basis for progress, and we wish to do everything that we can to support them.

Is the right hon. Gentleman aware that the patience of the Greek Cypriot people is fast running out in their attempts to reach a possible honourable settlement? In view of the Minister's reply to my hon. Friend does he not think that the British Government should be putting pressure on the Turkish Administration to remove some of the many thousands of troops that they have on Cyprus? When will the right hon. Gentleman, or his right hon. and noble Friend the Foreign Secretary, visit Cyprus so that he can see at first hand the tragedy on the island?

With regard to the second part of the hon. Gentleman's question, Mr. Rolandis will be coming to see me in about four weeks' time. That will be a useful start, and I hope to go to Cyprus shortly afterwards. With regard to the Greek Cypriots' patience running out, I should draw the hon. Gentleman's attention to the fact that they are still engaged in talks with Mr. Gobbi.

Is my right hon. Friend aware that the intercommunal talks have now been going on for 15 years and that the results have been wholly ineffectual? How long are we and the people of Cyprus expected to continue with this form of negotiation? It has been fruitless up till now, which should surely lead us to the belief that a new initiative is required.

It has been made clear to us that a new initiative from us would not be welcome. My hon. Friend speaks of the talks having gone on for a long time. They have, but the evaluation tabled by the United Nations is only four months old.

Will my right hon. Friend recognise how welcome his statement about his proposed visit to Cyprus will be to many people on both sides of the House? When he is in Cyprus, will he take the opportunity to listen to both sides of the community, as he will find that what links them is much greater than what separates them? Will he continue to bear in mind the fact that despite the apparent relative non-success of the United Nations negotiations Britain still retains a responsibility as a co-guarantor and should take a major role in settling once and for all the affairs of this island?

We shall not forget our role as co-guarantor, but we believe that it is our duty to make our best efforts to further the efforts of the United Nations. Both President Kyprianou and Mr. Denktash are meeting the Secretary General next month, and I hope that this will prove that this is the way forward.

El Salvador


asked the Lord Privy Seal whether he will make a statement on the situation in El Salvador.

The results of the elections are not yet final. No one party appears to have an overall majority.

As the House knows, Her Majesty's Government take the view that if El Salvador is to achieve peace and stability, there is a need for peaceful rather than violent change and full respect for human rights and further progress on social and economic reform.

In view of the legitimate concern of Her Majesty's Government that there should be a concerted European response to the problems of Poland, Afghanistan and the Middle East, why do Her Majesty's Government not take the same view when it comes to a response to the problems of Central America? In particular, will the Minister say why we fell out of line with our European neighbours on the vote on human rights in the United Nations on 16 December, and why we broke the line on the question of observers?

It is right and important that the members of the European Community should continue to exchange views about Central Latin America. This will become increasingly important in the forthcoming weeks. What really matters if peace and stability are to be achieved in that part of the world is that the important nations such as Mexico, Venezuela and others, as well as the democratic nations such as Costa Rica, Honduras and so on should play a key role. It is their region, they have important views to express, and it is important to keep in touch with them.

May I congratulate my hon. Friend on having the wisdom to stick by his decision to send observers to the El Salvador elections so that the House may be informed independently of the nature of those elections and their outcome? With the apparent result of the elections, will my hon. Friend and the Government now support a negotiated settlement with all parties interested in the El Salvador problem?

We shall do whatever we can in our own way to try to foster peaceful change, social reform and respect for human rights. I was due to leave for Mexico tonight for discussions with the Mexican Government. I have decided to postpone my visit temporarily, but it will be helpful for us to have an exchange with them.



asked the Lord Privy Seal if he will raise at the United Nations Israeli conduct in the occupied territories, which is contrary to internationally accepted conduct on the part of occupying powers.

The United Nations Security Council is discussing the situation in the occupied territories at this moment in response to a Jordanian request. We have made clear our grave concern at recent developments on the West Bank, including the dismissal of the three mayors, and our hopes for an end to the violence which can only harm the prospects for a settlement.

In addition to those points, and recognising that many matters could be so raised, will the Government make a special point of raising the forcible and illegal closure of Bir Zeit university with the harassment of staff and students, which has now occurred for the fifth time in five years?

The action at Bir Zeit is one of the factors, although not the only one, that has built up this unfortunate situation. In New York, we are now trying to reach agreement on a resolution that can be carried by the Security Council which might help remedy this problem.

Does my hon. Friend agree that we are concerned not only about the closure of Bir Zeit university but about the closure of many other university and education establishments? Surely it is the wider aspect as well as the specific one that the Government should be drawing to the attention of the United Nations in the context of any resolution.

As I tried to explain in answer to my hon. and learned Friend the Member for Burton (Mr. Lawrence), we believe that many elements have built up this explosive situation on the West Bank, and through the Security Council and by other means we are trying to see what we can do to reduce the temperature.

The hon. Gentleman will be familiar with the Geneva convention, which deals with the rights and practices open to an occupying power when it militarily occupies another territory. We believe that some of the activities of the Israeli military Government in recent months have run counter to that. We also believe that it would be sensible for all concerned in the area to accept resolution No. 242, which calls for withdrawal from occupied territories, and to accept the right of Israel to exist in security.

Nuclear Weapons (Geneva Talks)


asked the Lord Privy Seal if he will give a progress report on the Geneva talks aimed at limiting the number of intermediate nuclear weapons held by the Soviet bloc and the West.

In the first round of negotiations, which concluded on 16 March, the United States tabled a draft treaty embodying NATO's proposal to ban all the land-based intermediate range missiles of most concern to each side. The Soviet Union proposed limited reductions which would allow 300 such systems in Europe, but which would permit NATO no equivalent deployment. The second round of these negotiations will begin in May.

Will NATO's special consultative group again be brought into action to consider the next stage of the negotiations? In my hon. Friend's view, is the zero option still on the table or is it a dead letter?

The special consultative group, and the whole system of consultation within NATO, and between the United States and its allies, is working well in this area. The zero option remains on the table. It is embodied in a draft treaty. It is much the most radical and peaceable proposal on this subject that has been put forward by anyone, and we hope that everyone in this country concerned with the process of disarmament and arms control will support the zero option and do what they can to persuade everyone else to do the same.

While I welcome the Government's attachment to the zero option, does the hon. Gentleman agree that the planned Polaris D5 force will have the same number of warheads as the current SS20 force of the Soviet Union and, therefore, is difficult to ignore in any negotiation on European-based nuclear missiles?

Not only is the right hon. Gentleman confusing Polaris with Trident, but he is also confusing intermediate and strategic weapons. We hope that it will soon be possible also to start negotiations on strategic weapons. We believe that that will be an important part of the process of seeking disarmament through balanced and verifiable measures.

I welcome that statement. Does it imply that the Government are prepared to throw the Trident D5 force into the START negotiations?

Does my right hon. Friend agree that the right hon. Member for Leeds, East (Mr. Healey) seems to be ignoring the fact that the D5 option is related to the mid-1990's and that there are presently about 300 SS20's in position?

My hon. Friend is right. The House discussed this matter in great detail on Monday. The question of my hon. Friend the Member for Newbury (Mr. McNair-Wilson) related to the intermediate force negotiations now proceeding in Geneva. Surely it must be sensible to see whether we can make progress in this area. For that purpose, the United States, on behalf of the alliance, has made a very radical and worthwhile proposal.

Should the right hon. Gentleman not request the United States to defer deployment of cruise missiles in Europe at the end of next year if there is any possibility of agreement being reached? If that decision is not made clear at this stage, are we not presenting the conference with a fait accompli?

It is up to the Russians. They have presented the alliance with a fait accompli by deploying the SS20s week-by-week in this period. If they now not only freeze that but are prepared to do away with this type of weapon, of course there will be no need for cruise and Pershing. That has been clear since December 1979.

European Community

I shall not ask the question, Mr. Speaker, because I hope to catch your eye to put a supplementary question on the statement to be made later by the Prime Minister.

European Commission (British Nationals)


asked the Lord Privy Seal if he will make representations to the President of the European Commission about the situation whereby fewer British nationals are employed by the Commission at all grades above A7 than nationals from the Federal Republic of Germany, France and Italy.

I raised the problem of British under-representation in the Commission services, which in fact applies only to certain levels, with the President of the Commission when I called on him in October last year, and wrote subsequently to the Commissioner responsible for personnel matters. Since then we have been in frequent touch with those concerned in the Commission at many levels, most recently with Mr. Pisani, Commissioner for Development, when he was in London on 16 March. The Commission recognises the existence of the problem and is taking steps, with our encouragement, to redress the position, for example through the open competition now in progress.

As there is now no reasonable doubt about the permanence of our membership of the EEC, should not British participation in the institutions of the Commission reflect our size and importance? Is it not absurd that at every level, except the top, the number of British civil servants in Brussels is not much more than half that of France, Italy and Germany? Is there a shortage of British applicants for those important jobs?

There is no shortage of applicants and agree that our nationals are under-represented. That is the point that I made to the President and to Mr. Pisani. They recognised the problem, which is not confined to Britain. Other more recently joined nations have the same problem and they are taking steps to set it right. That is a slow process, because vacancies do not occur all the time.

Can the Lord Privy Seal give us more. information about whether British people are applying for the jobs? Is there not also the problem that top civil servants employed by the British Government in Brussels are paid more than those who are employed by the Commission? The Commission people are overpaid, but we pay our people, for example, £36,000 as against £32,800. Is it not time that the rates were brought into line and the overpayment reduced all round?

The principle of the rate for the job should be applied throughout the Commission. I can tell the hon. Gentleman that there is no shortage of British applicants.

In a number of areas, especially industry and commerce, do not British interests sometimes lie importantly with Brussels? If so, is it not even more important that Britons should hold a fair share of responsible posts within the Commission?

Yes, Sir. That is the purpose of our representations, which are slowly having an effect.

Has this not, unfortunately, gone on for some years? Will the Lord Privy Seal have a word with the previous President, who has attended the House only when being introduced, to see whether he has any suggestions for saving British taxpayers' money and helping the British Government?

Council Of Ministers (Meetings)


asked the Lord Privy Seal what additional meetings have been arranged by the Council of Ministers of the European Economic Community for the months of April or May; and for what purposes.

The forecast of business for the month of April was placed in the Library of the House on 29 March. In May it is expected that there will be meetings of the Agriculture, Steel, Social Affairs, Finance, Fiscal, Foreign Affairs and Energy Councils. As I told the House on 24 March, Foreign Ministers are to meet on 3 April to carry forward their discussions on the mandate.

Will the Lord Privy Seal confirm that it is the Government's intention that, whatever arithmetical agreement is reached, there will be a review clause at the end of the determined period? If so, is it satisfactory that we must renew our contribution to the EEC on a lease every four years?

We believe that a settlement of the problem should be for a period of five years, or more if we can get it. However, I agree that a review at the end of whatever period is determined is essential.

To what extent can I pass on to my constituents who are engaged in fishing an assurance from my right hon. Friend that something will be resolved definitely in the next nine months to protect their interests and prevent them from losing their livelihood by the end of that period?

I hope that the matter will be resolved. As my hon. Friend knows, we are awaiting the Commission's proposals on the total allowable catches and quotas, which I hope will be forthcoming soon.

Will the Government give an unequivocal assurance that there will be no question of further cutting Britain's capacity to make steel at the proposed Steel Council meeting?

Reform And Structuring


asked the Lord Privy Seal what propress has been made in the negotiations designed to reform the structure and policies of the European Economic Community since his reply to the hon. Member for Southend, East on 3 March, Official Report, c. 188.

The Foreign Affairs Council devoted 23 March to a detailed discussion of the budget problem, the outcome of which I reported to the House on 24 March. The subject was further considered at the European Council and my right hon. Friend the Prime Minister will be reporting on this shortly. Foreign Ministers will meet again on 3 April and will take as a basis for their discussion the suggestions that have been put forward by the Presidents of the Council and the Commission concerning the method of dealing with the United Kingdom's budgetary problem.

As about two-thirds of the total CAP expenditure was concerned with disposing of surplus foodstuffs to Russia and elsewhere, as most Common Market countries—including Britain—are finding ways of evading the CAP, and as the CAP is the basis of the continuing British budgetary problem, is my right hon. Friend at least willing to discuss with his colleagues in Europe the possibility of scrapping the CAP so that we can resolve many problems and begin to co-operate on matters in which we have common interests?

As my hon. Friend knows, our aim is not to scrap the CAP but to reform it. I agree with him that one reform that is needed is that not so much should be spent on producing goods in surplus.

To what extent does my right hon. Friend anticipate that the likely accession of Spain and Portugal will assist the process of reform on which our minds are set?

Before Spain and Portugal accede, we should have solved our immediate problems, because it would not be in the interests of the Community to enlarge without solving those problems.

Policy Co-Ordination


asked the Lord Privy Seal if he plans to pay an official visit to the European Economic Community Commission in Brussels to discuss policy coordination matters.

I paid an official visit to the Commission in October last year. I have no immediate plans for another formal visit, although I regularly meet the President and other members of the Commission in the course of normal Community business.

Although a fair and proper resolution of our budgetary problems is essential and must be obtained as soon as possible, does my right hon. Friend not agree that it is remarkable that even Labour Party spokesmen accept that if we scrap CAP aid our domestic farm prices support system would cost over £2 billion?

Will my right hon. Friend advise the House whether, as of today, we have received full reimbursement of the moneys due under last year's European budget?

We have received nearly all our money. I believe that a small amount remains to be paid, but we should receive it soon.

Without anticipating what the right hon. Lady the Prime Minister will say, can the Lord Privy Seal tell the House whether the Government are turning their attention formally to what is likely to happen if the French dig in their heels, if we do not reach an agreement on the budget, and if—rightly—we do not agree to the farm price increases without an agreement on the budget? What are the Government likely to do? Is he aware that so long as the Government stand firm, the Opposition will support them? We do not want any backing down whatever on this question.

I take note of what the hon. Gentleman says, and I am always grateful for his support. I shall not give him details of any plans that we might have in mind if there were a total breakdown in the discussions, because it is our hope and belief that there will not be such a breakdown.

Reform And Structuring


asked the Lord Privy Seal whether, in view of his statement in the Official Report on 3 March, c. 267, he has anything further to add on British budget contributions; and if he will make a statement.

I refer the hon. Member to my reply earlier today to my hon. Friend the Member for Southend, East (Mr. Taylor).

Is the Minister aware that when Britain entered the Common Market we were told that, irrespective of budget contributions, unemployment would be reduced? Throughout the five-year transitional period, when we were paying less than the others, we were told that that would also assist Britain to reduce unemployment. During the referendum campaign in 1975 we were also told that, whatever the budget contribution, unemployment would be reduced. We were also told that the refund that has just been mentioned would help Britain to bring down the level of unemployment. Is it not a fact that the Common Market, coupled with this Tory Government, is an unmitigated disaster, whatever the budget contribution?

It seems to have escaped the hon. Gentleman's attention that countries outside the Community also suffer from unemployment.

Will the Lord Privy Seal at least remind his colleagues in Europe that since we joined the EEC we have paid net more than £3,000 million, or more than £1 million every day of the week, including Saturdays and Sundays?

My hon. Friend has used those figures before. I remind him that our total net contribution last year was £55 million. That is an improvement, and the present discussions taking place in the Community are designed to secure the position for the future.

Does my right hon. Friend think that the nature of questions tabled by the Opposition in any way reflects their disappointment that the Labour Government were unable to achieve what the Conservative Government have manifestly done—secure a major reduction in the amount that we pay to the EEC?

I am sure that it does, and the Labour Party has a great deal about which to be disappointed

As the right hon. Gentleman is so scathing about the alternative of the guaranteed deficiency payments system that Britain operated before making such massive contributions to the CAP, will he say what calculations have been made by his Department on the possibility of again embarking upon a guaranteed deficiency payments system?

No. Because our efforts at present are designed to reform the CAP, and we believe that we shall be successful.

European Commission (President's Interview)


asked the Lord Privy Seal whether he will obtain a transcript of the interview with M. Gaston Thorn, President of the EEC Commission, during which he made comments upon the Prime Minister and Her Majesty's Government; and whether he will publish this in the Official Report.

No, Sir. The hon. Member will have noted that the Commission has issued a statement which makes it clear that Mr. Thorn was misreported. I understand that the radio station concerned has since confirmed this.

The original statement contained some rude and offensive remarks about our Prime Minister. That is now supposed to have been withdrawn. Why cannot we be told what the original statement said? If there was a correction, why should we not be told the facts? We have not yet seen the official details. The Minister has them. Why cannot he place them in the Library?

I did not say that the statement had been withdrawn. It could not have been withdrawn, because it was never made. Mr. Thorn's office and the radio station have confirmed that it was misreported. If the hon Gentleman wishes to see precisely what Mr. Thorn did say, I shall arrange for that information to be made available.

As Mr. Thorn is obviously embarrassed about this, will my right hon. Friend seek his. help and advice to establish what I am unable to establish—the view of the Commission and the EEC about our legal rights to keep EEC fishing vessels out of British waters after 31 December this year?

I do not think that matter arises from this question, but I shall pursue my hon. Friend's point.

European Council Meeting

3.30 pm

With permission, Mr. Speaker, I will make a statement on the meeting of the European Council in Brussels on 29 and 30 March, which I attended with my noble Friend the Foreign and Commonwealth Secretary.

At the end of the meeting, the President of the Council issued a statement of his conclusions on the economic and social situation and the 30 May mandate. Agreed texts on political co-operation were also released. I have placed copies of these documents in the Library.

The Council devoted most of its meeting on this occasion to the economic and social situation, both within the Community and in the world at large. We agreed that, although the specific characteristic of the situation in each member State might call for varying policies, all the member States had the same interest in combating unemployment and restoring economic growth, while preserving monetary stability and ensuring the competitiveness of their economies. The council expressed its concern at the level of productive investment in Europe, especially in the industries of the future, and agreed that the Community and the member States would take whatever steps were open to them to improve that level, while recognising that an increase in investment would mean a reduction in consumption.

During our discussions, I laid particular stress on the need to complete the Common Market in the services sector. We have made disappointingly little headway with the liberalisation of services such as insurance and air transport.

We also discussed the role that the Community can play in the development of information technology and the vital contribution that small businesses can make to the provision of new jobs.

On youth unemployment, which was a matter of special concern, we agreed that each member State would strive to ensure over the next five years that all young persons entering the labour market for the first time would receive vocational training or intitial work experience.

In our discussion of external policies, the Council looked forward to the Versailles economic summit in June. We agreed that our aim at that summit should be to encourage increased co-operation between the major industrial countries. In particular, we agreed that the persistence of high real interest rates in the international markets, combined with inadequate economic activity, was leading to a significant reduction in productive investment and made unemployment worse because of the squeeze on company liquidity and profits.

The Council urged Japan to open its market so as to integrate it more fully into international trade. We also urged Japan to follow an economic, commercial, monetary and exchange rate policy which was more compatible with the balance of responsibilities to be borne by the whole of the industrialised world, thereby contributing to economic recovery.

On the mandate, we had a relatively brief discussion in the light of the recent suggestions put forward by M. Tindemans and M. Thorn. We and most other member States were prepared to accept these proposals as a basis for negotiation. I emphasised the need for a solution to the United Kingdom budget problem which gave us a fair scale of compensation, which was sufficiently flexible to take account of either an improvement or a deterioration in the underlying situation and which would last for a substantial period.

I underlined the conclusion we had all reached in London in November that decisions on all aspects of the mandate must be taken together, that is to say decisions on the budget, the common agricultural policy and the industrial and social affairs of the Community. At this point the President of France stated that he could not accept the Thorn—Tindemans proposals as a basis for discussion.

As the Presidential conclusions indicate, foreign affairs Ministers have been asked to do all in their power to secure early decisions. The Ministers will meet in Luxembourg on 3 April.

The Council also had a very full political agenda. We spoke about transatlantic relations and welcomed the very warm message sent by President Reagan on the 25th anniversary of the European Community.

We discussed the economic and commercial state of East-West relations, in the light of the significant role played by Community trade with the Soviet Union and Eastern Europe. We agreed that these matters, including the related credit problems, should be studied further by the European Community and member States in close consultation with other members of OECD.

We also discussed the situation in Poland, where martial law continues in force, many thousands of persons are detained, and a dialogue with the Church and with Solidarity is still suspended.

We agreed that it was essential not to lose sight of the tragic sufferings of Afghanistan. There can be no solution except on the basis which two-thirds of the United Nations have endorsed, and which the Soviet Union alone has so far frustrated.

On Central America, our main conclusion was the need to support any intiative that could bring an end to the violence, and we noted proposals by Mexico and Honduras, among others. We agreed that economic aid given to Central America and the Caribbean should be coordinated and, where possible, increased.

This was not the moment for a major statement of policy on the Middle East. We expressed grave concern about the situation in the area, especially on the West Bank. The Council welcomed, as a contribution to the achievement of a just and lasting peace in the Middle East, the participation of four member states in the Sinai multinational force. My noble Friend the Foreign and Commonwealth Secretary is paying an official visit to Israel today and tomorrow.

This was a very busy Council in its discussion, both of Community affairs and of international problems. While we were all disappointed and surprised at the attitude of the French Government on the mandate, the same realism will have to be applied to decisions on those problems as was applied in the wider discussions during this European Council.

First, I shall refer to what the right hon. Lady said about the mandate and discussions on the budget which were, of course, briefly referred to in the communiqué.

The right hon. Lady referred to her capacity for stubbornness in these matters. We all recognise that she has that capacity. As long as she is stubborn in defence of the legitimate interests of the British people, she will have some support from the Opposition. [HON. MEMBERS: "Some?"] It will be considerable, and much more generous support than ever my right hon. Friend the Member for Deptford (Mr. Silkin) received when he was also defending the legitimate interests of the British people in discussions at the European council.

The right hon. Lady also has no difficulty about a mandate from the House on this question. The mandate was given to her on two or three occasions. She should demand a zero net contribution. That was the proposal—indeed, demand—in the resolution passed in the House on 16 July 1979. That still stands as the opinion of the House of Commons and is the view that we believe must be translated into action.

The right hon. Lady said that she was surprised at some of the attitudes she had heard in the Council over the past day or two. She cannot have taken account of the full debates in the House, when many hon. Members prophesised that we would have to face these difficulties. That is a reason why more and more people all over the country are looking to see whether it would be better to try to settle some of these important matters with our allies, not in the Common Market context, but in an altogether different context.

An important aspect of the discussion was the general economic situation. The right hon. Lady referred to the necessity for a much bigger investment programme, but she is reported as saying at her press conference that there was a recognition that job-creating investment could be achieved only through lower consumption—through either increased taxation or wage restraint. We know that that may be her view, but that is one of the views that is impeding economic expansion in Europe. Those views might apply to full employment, but we are far from full employment at present. There are not merely 3 million unemployed in Great Britain but nearly 11 million unemployed in the Community countries as a whole. What is required is a much bigger concerted expansion and investment programme than anything that the right hon. Lady has been prepared to contemplate. We can understand how she fails to advocate those policies in Europe when she is not advocating them in Britain.

Would the right hon. Lady be prepared to consider a more open, adventurous and ambitious policy on those matters in preparation for the Versailles economic summit? The world is suffering from appalling unemployment. Unemployment figures are rising on both sides of the Atlantic. It would be of great advantage to the world if the Versailles economic summit could be turned into a success, but it would be a disaster for the world if nothing more were offered at the end of the economic summit than what was offered at the end of the meeting that the right hon. Lady has attended over the past few days. Nothing concrete or expansive has been proposed. Nothing of that nature appears in the communiqué. It does not appear that any solution comparable to the needs of the situation has been proposed by the Government in the discussions. [HON. MEMBERS: "Too long".] The right hon. Lady is still answerable to the House on the economic questions. We want her to explain why she has not been prepared to advocate in Brussels any proposals that would deal with large-scale unemployment.

I do not propose to cover all the general political questions to which the right hon. Lady referred, important though they are, because we wish to debate many of the matters such as Poland and Afghanistan in the House. However, there is one immediate question that I wish to ask the right hon. Lady. I am glad that at the meeting there were discussions on El Salvador.

Yes, I have mentioned Afghanistan on many occasions.

With regard to El Salvador, I am glad to see that the right hon. Lady says in her communiqué that she has joined others in Europe in welcoming any new initiative. That is a considerable advance on what was said by the Government in our debate a few weeks ago. We urged the Government that they should accept and act upon the new initiative. [Interruption.] I am referring to what the right hon. Lady said in her communiqué. We urged that the Government should try to act on the basis of the new initiative for mediation from Mexico. The right hon. Lady and the Government refused to do that. Instead of doing that, they supported the gruesome fiasco of the election in El Salvador.

We are glad to see that the right hon. Lady has now been prepared to join some other countries in Europe in trying to seek a more intelligent way of escaping from the horrific war in El Salvador. We hope that the right hon. Lady will be able to build upon the proposals that she made, which have been belatedly agreed with some of her allies in Europe.

With regard to the mandate, I have made it clear that Britain is prepared to make a modest net contribution to the budget of the European Community. I think that that is reasonable and fair. During the time of the right hon. Gentleman's Government, there were occasions when a modest net contribution was made. This year we shall make a modest net contribution, but only last week some £813 million of refunds were returned to this country in respect of last year's budget. More will be coming. That is our money, which the previous Government would have left us to pay to Europe but for our negotiations. They talked a lot about it but did absolutely nothing to negotiate on the mandate.

If we do not succeed in getting an agreement on the whole mandate this year, the arrangement that we made at the last negotiations will persist through this year and would apply in respect of refunds that we should receive in the first quarter of next year. Nevertheless, we regard it as urgent to achieve a full and satisfactory solution, but it has to be on all three parts of the mandate at the same time—the budget, the common agricultural policy and the industrial and social affairs policies of the Community. I am afraid that the decision not to go ahead on the Thorn-Tindemans formula will hold up agreement on all three parts of the mandate, whereas we wished to come to a conclusion.

With regard to the investment programme, we were realistic about solutions to the unemployment problem. The right hon. Gentleman is looking for a magic wand in the absence of any practical policy put forward by his party. In a prolonged discussion, we said that all countries were affected by severe unemployment. In some countries unemployment is rising faster than in this country. There is no magic wand. If we are to have increased investment, there must be reduced consumption. The only alternative would be substantially increased interest rates. We all agreed how important it was to keep down interest rates. To pursue any policy that would increase interest rates would be the best way of aborting any early economic recovery.

With regard to Central America, we have welcomed before the initiative of the Nassau group, including Mexico and Honduras. Unlike the right hon. Gentleman, we also welcome elections in El Salvador.

I do not understand why the right hon. Member for Ebbw Vale (Mr. Foot) is so reluctant to have the democratic process in that country and why he is so reluctant to urge the guerrillas to drop the bullet and take on the ballot instead, as we did in Rhodesia. We are glad that many other countries took the same view as we did about elections. The Pope was much in favour of them. A number of countries have sent observers to El Salvador to see the elections. What confounds the right hon. Gentleman is that, in spite of the difficulties, the turn-out in the El Salvador elections was greater than anyone ever thought it would be.

The right hon. Lady referred to a reluctance to have elections in El Salvador. Why does she connive at denying to the people of El Salvador what the British Parliament and Government insisted on for Zimbabwe, which was that the fighting had to stop before the elections took place? The elections in El Salvador are a mockery of anything that can be called democracy. For the right hon. Lady to lend the reputation of this country to those elections is to debase the name of democracy.

The right hon. Lady seems to be departing from some of our democratic traditions. With regard to the mandate, I know that some hon. Members do not care about the resolutions that are passed through the House. We do. The House of Commons has passed a resolution on two occasions supporting the zero contribution. The right hon. Lady has departed from that already in her replies today. She is talking of a modest net contribution. Why did she not put that proposal before the House of Commons? Let her put a motion on the Order Paper of the Council amending the very resolution to which she agreed and for which she invited general support in the House. I suggest that she should do that before she agrees to any modest net contribution.

What about a permanent solution of this problem? The right hon. Lady seems to have lost sight of that altogether. In spite of the stubbornness that she preached at her Press conference, it seems to me that she is yielding already. I ask the right hon. Lady to go back to Brussels and tell them of the resolution that was unanimously passed by the House.

Perhaps it has escaped the right hon. Gentleman's notice that El Salvador is a wholly independent country. Rhodesia was a British colony, which put us in charge of the elections which took place there. I may say that, alas, all the fighting did not stop before the elections took place there. I am glad that the right hon. Gentleman is very much in favour of past British imperialism.

Had we been left with the contribution formula to the Community from the Labour Government, we should have paid over£1 billion in net contributions in 1980, and over £1 billion again in 1981. Fortunately, we negotiated a very much better arrangement than the Labour Government had ever been able to negotiate. They have never liked that and they do not like it now.

Is the right hon. Lady aware that the agreement with the EEC, about which she was complaining a few minutes ago, was one to which she herself put her name when she was part of the Government that agreed it?

Has the right hon. Gentleman forgotten that his Government re-negotiated it, including some of the Budget provisions?

Is the right hon. Lady aware that the mass of people in Britain derive encouragement and hope from reports which say that the Prime Minister is willing to maintain our national interests, whatever toes she may have to tread on, and that she will protect our right to take our own economic decisions on matters which vitally affect Britain?

That is the position, and I am grateful to the right hon. Gentleman.

Will my right hon. Friend first say whether there were discussions about trying to encourage elections in Nicaragua? Can she say what implications there are throughout the economy of Europe and Britain in trying to reduce the level of real interest rates and to increase the economic demand that she was talking about?

We did not go into detail about any particular country in Central America. The discussion was about Central America as a whole and we did not discuss Nicaragua in detail.

With regard to reducing real interest rates, in order to do that, we have to get down both inflation and the budget deficit. Countries that have done that have a much lower real interest rate. Countries that have either a high inflation rate or a high deficit tend to have very much higher real interest rates—for example, Ireland, Italy, France and Belgium. There is no magic in the formula. Both inflation and the budget deficit must be kept down.

Order. The hon. Member for Bolsover (Mr. Skinner) must not conduct a running commentary from a sedentary position. That will not be tolerated from anyone.

The right hon. Lady referred to the industries of the future. Was there a useful discussion at the European Council on the hard warning fact that, so far as the micro-electronic industry is concerned, Europe has 30 per cent. of the market and 15 per cent. of the production? If that continues—it will continue unless there is substantial Government and Community intervention—it is a severe warning sign that Europe as a whole will not be a major economic power by the end of the century. [Interruption.]

Secondly, will the Prime Minister bear in mind—

Order. I got to my feet because the hon. Member for West Stirlingshire (Mr. Canavan) was shouting below the Gangway and I think that that is exceedingly unfair. This House stands for free speech and we will have it.

Secondly, will the right hon. Lady bear in mind that she should give her full support for Britain paying a fair contribution and nothing more? A small contribution is inevitable, given the fact that the major part of our aid to the Third world goes through the Community. Therefore, to talk about a nil cost makes a mockery of the position of the right hon. Member for Ebbw Vale (Mr. Foot) vis-a-vis the Third world.


Thirdly, will the right hon. Lady tell us why, in the present circumstances, while nobody wants ill-directed investment, it is essential, particularly on a European basis, that increased well—directed investment should be accompanied by decreased consumption?

On the right hon. Gentleman's first point, we did not go into detail about microelectronic industries. He will recollect an occasion when we had a very effective paper before us which set out all the facts and figures which he has mentioned briefly today. We were very much aware that we should co-operate across countries in Europe—from firms in one country to firms in another—if we were to take best advantage of the large market that there is in information technology.

We are also aware that investment on its own is not necessarily good. There has been quite a lot of investment which has not been productive in any way. Therefore, our comments were all directed towards productive investment and to finding the markets of the future.

I am grateful to the right hon. Gentleman for what he said about making a modest net contribution. We must make a modest contribution. We must at least contribute to the administrative costs of the Community.

With regard to what the right hon. Gentleman said about aid to the Third world, he will remember that that is dealt with in a wholly different aspect of the budget. Our aid to the Third world which goes through the European Community is dealt with not on our Common Market budget but within our aid budget.

With regard to the right hon. Gentleman's third point, there was considerable agreement among Chancellor Schmidt, Mr. Spandolini, Mr. van Agt and myself that we had to have increased investment either by increasing taxation so that we could direct it towards that particular end or by asking for reduced wage increases so that we had money available to go towards investment which had not already been used up on wage increases, or it would have meant increasing the borrowing and increasing interest rates. As one of the objectives at the moment is to hold down the deficit—a number of countries are already in difficulty as a result of having pushed it up further—and because we are conscious of the effect of the interest rate both on agriculture and on small businesses, we are not prepared to do anything to push up interest rates.

Order. I propose to allow questions to run until 4.20 pm, which will give 50 minutes on the statement. I hope that we shall have short questions.

In view of the concern expressed by the Council of Ministers about Afghanistan, will the Prime Minister say whether any consideration was given to the massive exports of cheap subsidised food to Russia, which broke all records in 1980, and which, according to recent figures, have exceeded that total in the first six months of 1981?

We had a brief discussion about the whole commercial relationship between the Community, the Soviet Union and the Eastern bloc, concerning both what we are exporting and the credit policies that we have so far been pursuing. As my hon. Friend knows, those credit policies have led to enormous deficits on the part of the Eastern bloc. Some of them are having difficulty meeting those deficits, even in paying the interest upon them. We have to meet later to consider rescheduling the Polish debts again.

We have set in hand, through the EEC and the member States in consultation with the OECD, a whole study of our commercial relationship with the Eastern bloc, both as between individual countries and the Community as a whole. That will be dealt with in that study.

When the Ministers discussed the deficit with Japan, did they discuss the United Kingdom's deficit with the Common Market, which in 1980, in manufactured and in semi-manufactured goods, amounted to £2 billion, and has cost us many jobs? When we entered the Common Market there was a campaign run by the right hon. Lady's friends called "Jobs for the Boys". That was the claim made for the Common Market—

Will the Prime Minister now accept that we cannot reform the Common Market, as the negotiations to improve our position have clearly shown? Before the Prime Minister says that she has done better that the Labour Government, will she remember that she supported every bit of the negotiation that the Labour Government undertook?

We are in balance with Europe taking manufactures and export of commodities into account. [HON. MEMBERS: "That is with oil."] Oil is a very important part of our trading capability and we are in balance. If something is a very important part of our trading capability, why not take the whole of it into account?

With regard to manufacturing industry, our trade with Europe has declined less rapidly than trade with the rest of the world. In other words, we have done rather better with Europe. I remind the hon. Member that our balance of payments last year was almost at an all-time record. He will not like that. He and his hon. Friends never like good news.

With regrd to jobs in Europe, perhaps the hon. Member has seen the CBI estimate that about 2½ million jobs depend on our membership of the Common Market.

Was there much discussion concerning the French economy and the medium-term effect on unemployment of Socialist policies, which have brought about interest rates of over 20 per cent., a currency at an all-time low, and accelerating inflation?

For reasons which my hon. Friend will understand, we did not discuss in detail the French economy. Several of us had it very much in mind in some of the proposals that we were putting forward to reduce inflation and to keep down deficits.

Would there not be much less antagonism between the United Kingdom and France if we both followed our own internal policies and paid for them ourselves?

For the vast majority of our budget we do follow our own internal policies. For the rest, we are seeking some advantages from Europe which we have not yet obtained, particularly in services. If we had a full and free internal market in services, it would be greatly to our advantage.

In view of the importance of the Thorn-Tindemans proposals to increase investment and improve the employment outlook, was my right hon. Friend able to discern any good reason why the Socialist Government from France were so obstructive?

No, Sir. We were both surprised and disappointed at the suddenness of the intervention.

Is the Prime Minister aware that in answering questions today the Lord Privy Seal said that he hoped that there would be a five-year agreement concerning the budget arrangement? Will she agree that continual bargaining every five years is wholly unsatisfactory, as it means that in the intervening period the United Kingdom is a client State?

Do not the arguments in favour of withdrawal continue to grow, while those in favour of membership diminish each year?

No. Certainly the United Kingdom is not a client State. We wanted a five-year agreement, with a review at the end of five years. I am the first to say—I have said in that forum on many occasions— that we want a solution so long as the problem persists. The problem persists because of the way in which the common agricultural policy works, which we are trying to change, and because of the relationship between world food prices and Community food prices, which varies from year to year. That is why this year we have had some unexpected results in the budget. We shall try to get a five-year agreement, with a review at the end of it. What I do not want is a constant argument about this matter. We are also simultaneously trying to secure appropriate changes in the common agricultural policy, which is part of the mandate.

Does my right hon. Friend know how the Opposition Front Bench have the gall even to talk about the Common Market deficits when their own record in Government on this matter was so absolutely abysmal? Is she aware that she will have the full support of Conservative Members in trying to sort this matter out, in view of the excellent progress made three years ago?

I am very grateful to my hon. Friend. May I make the matter absolutely clear? I cannot stress too often—we have stressed to our partners—that it is not only a question of getting a good result on the budget. We cannot go ahead with the proposals on the common agricultural policy or the others unless we get an agreement on the budget. The three must go ahead together. Unless we get reasonable results on the budget, a great deal of the Common Market forward proposals will be held up severely.

Why does not the Community, with its undoubted trade weight, go beyond merely urging Japan—the word "urging" was used twice in the communiqué—to open its domestic markets? Why is not the Community more even-handed in also criticising the United States of America for its interest rate and trade policies?

The Foreign Ministers agreed that the Community would take action with regard to Japan, and we are hoping to invoke article 23 of the GATT.

It ill behoves some of our partners to criticise the United States for having a high deficit. One cannot criticise someone else for having a high deficit if one is pursuing the same policy oneself. I am at liberty to criticise the United States for having a high deficit because we are running a low deficit.

As the United Kingdom is a permanent member of the Community, should not its budget contribution problem receive a permanent solution?

Will my right hon. Friend also accept that there will be very general support for the firmness with which she defended the idea that the Common Market should extend also to services?

I am grateful to my hon. Friend. The Common Market should extend to services, and it is a condemnation of some of our partners that they have not so far been able to agree to the directive with regard to services, particularly insurance and air fares. We have asked for and said that it would be very much better to have the kind of formula which tied the solution to the existence of the problem. We would then not have to look at it again, except, perhaps as a matter of form, to review it after a considerable number of years. We must still continue to try it for that, but I doubt whether we shall be wholly successful. Therefore, if we could get a settlement for five years, it would be an advance on what we have had hitherto.

The right hon. Lady described the summit conference as a busy conference. Would it not be correct to describe it as a bitchy conference, bearing in mind the remarks by Mme. Cresson about the right hon. Lady being a terrorist and the discussion between Mme. Cresson and the Minister of State, Ministry of Agriculture, Fisheries and Food? They were slogging at each other on the BBC "World at One" programme? Has it not yet been brought home to the Prime Minister that European unity will be best achieved outside the Market instead of inside the Market, with the perpetual quarrelling about finances, agriculture and so on?

Mme. Cresson was not at the conference. There were only two women present at the conference. One was myself and the other was Mme. Flesch. She did not speak, and anything that I said was fully justified, as it usually is.

In discussing the problems of unemployment in Western Europe, was any conclusion reached by my right hon. Friend's colleagues and herself as to why the unemployment rate in Norway, Sweden, Austria and Switzerland is only 1 or 2 per cent., while it is more than 10 times as much as that in the Common Market, although 12 years ago we were all enjoying full employment? Can it be that the common agricultural policy is having some cumulative effect in misallocating resources?

Switzerland has run very low inflation policies and very orthodox financial policies. On that basis, and with very co-operative industrial relations, Switzerland and Austria have both done extremely well. Norway, like a number of Middle Eastern countries, has massive deposits of oil and gas and a very small population, yet even Norway is finding considerable difficulty in some of its industries.

In EEC matters, as in other matters, the right hon. Lady has exhibited, if I may use the words of the Home Secretary, an extraordinary degree of patience. Will she tell the House how long it will be before she realises what are the legitimate and reasonable interests of Britain in this respect and recommends that unless they are satisfied she will withdraw from the whole charade?

I am extraordinarily patient—provided I get my own way in the end. I have not done too badly so far. On the budget, we are now receiving refunds in respect of last year. In the absence of a fresh agreement, the same formula will continue, so we shall receive refunds at the beginning of next year in respect of this year. We were hoping to overtake that agreement with a much longer one—preferably one that lasts as long as the problem lasts, which would be the only sensible way to do it. If patience gets the right answer, it is the right quality.

Following the Prime Minister's statement that the CAP was discussed, can she say whether there were any discussions during the conference on the finalisation of the common fisheries policy, in view of the serious problems faced by fishermen at present?

There were not discussions during the full conference, but on the margins of it I made strong references to the need to achieve a common fisheries policy and not only that, but one that was fully fair to our fishermen.

Will the Prime Minister reflect on the serious omission from her statement of a reference to the position of the OPEC countries? The fact that the Council of Ministers has met and, apparently, not discussed the issue is a sign of its insularity from international events. Will the Prime Minister concede that the Community should try—I know that it would be difficult—to have meetings with OPEC countries to see how their production can meet the demands of the Western industrialised countries so that we can avoid the cyclical events that we experienced in 1973 and 1979?

The hon. Gentleman is reviving the old idea of the Euro-Arab dialogue. It has never got off the ground because the OPEC countries have not wanted it. It takes two to have a dialogue. With regard to what we discussed, the subject of oil prices came up a great deal in the context of future economic and social affairs. We were all conscious that we have had two world recessions because of a sharp increase in oil prices. While a reduction in oil prices may mean that some of the OPEC countries have less to spend on imports, which will affect high exporting countries, we all agreed that on balance, the reduction in oil prices augured well for the world economy and gave the prospect of increasing expansion which would not otherwise have been there.

Returning to the subject of interest rates, was there a discussion on the likely impact, perhaps later this year, on the diminishing interest rates in Europe of a further rise in American interest rates? Did the summit come to an agreement on how we could manage to isolate Britain and Europe from the adverse effects of an upward movement in interest rates on the other side of the Atlantic?

We had a number of discussions, which included American interest rates. At the moment some European interest rates are actually higher than American interest rates. One cannot attack someone else's policies if one is also pursuing them with the same disastrous results. We cannot insulate ourselves wholly from American interest rates. We can try to do our best to keep our own interest rates down by pursuing policies which reduce inflation. Countries which pursue low budgetary deficit policies have a lower interest rate than those which do not.

Despite today's royal presence, will the Prime Minister agree that the Afghanistan problem must be resolved? It has been raised already. Will the right hon. Lady not accept that Babrak Karmal's offer is worthy of consideration? As the right hon. Lady will know, he has offered to send Soviet troops out of the country provided that he is given certain guarantees. Will this question of negotiations not figure in the thinking of the EEC? Is the matter not important enough to invite the gentleman to London even if such a visit only exposes his offer as unworthy? Is the matter not important enough—

Order. The hon. Member for Edinburgh, Leith (Mr. Brown) has asked that question three times now.

We are not likely to deal with a puppet Government which is held in power by an occupying force. The way to deal with Afghanistan is the way that the United Nations suggested—for the Soviet troops to withdraw. That is being frustrated only by the Soviet Union.

Will my right hon. Friend accept the congratulations of the House on her statement regarding the Middle East, because it is the desire of the House to have peace in that area? Will she acknowledge that the State of Israel has honoured the Camp David agreement? It has sacrificed 50 per cent. of oil production, its natural gas and Yamit, a town in that area, as a token of peace. Will my right hon. Friend tell the House how she sees the position in Israel, particularly as the Foreign Secretary is there today?

We are all anxious to have a lasting peace in the Middle East which does justice to Israel's right to live in peace behind secure borders and does justice to the legitimate claims of the Palestinian people. We are concerned about the grave incidents that are taking place on the West Bank. I agree with my hon. Friend that when the withdrawal from Sinai is secured under the Camp David agreements, that will be a considerable step by Israel to yield some of those territories. I am aware that Israel has already given up some of the oil and gas wells. It is not possible to say precisely what will be the next step when the withdrawal has taken place. Doubtless my right hon. Friend the Foreign Secretary will be discussing that in Israel today. I am sure that his visit will be welcomed by the Israeli people and that he will come back with some constructive ideas.

Will the Prime Minister tell the House what type of mechanism will be used by the Common Market countries to bring down interest rates, as the Community is based on the free movement of capital and labour? Is the right hon. Lady telling the House that, contrary to her views about lack of Government intervention in Britain and leaving matters to market forces, she acknowledges in respect of the Common Market that because of the high interest rates in America and prime rates elsewhere it will be necessary to intervene massively in order to bring down interest rates and to give the industrial economy a chance to breathe and reduce the ability of the casino economy that has proliferated across the Western hemisphere—

Order. The hon. Member for Bolsover (Mr. Skinner) is merely preventing one of his hon. Friends from being called, because these questions will stop at 4.20 pm. The hon. Member has made a long statement rather than asked a question. Does the Prime Minister wish to reply?

The Prime Minister