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Lord Pearson of Rannoch: My Lords, I wonder if I may raise perhaps a slight note of controversy by wondering whether European enlargement is, in fact, a good thing--not only politically, but economically.

I should like to draw the Minister's attention to a recent publication from the Centre for Research into Post-Communist Economies called European Union Enlargement: the coming home or a poisoned chalice. It is written by the Economics Editor of the Sunday Telegraph, Mr. Bill Jamieson, in conjunction with the well known expert on Eastern Europe and European matters generally, Dr. Helen Szamuely. It is a new analysis of the proposed enlargement of the European Union. The authors use economic data and political facts which expose many of the problems inherent in the proposed process. They examine the effects that enlargement will have on the European Union itself and on the applicant countries. They come to the conclusion that those effects are likely to be very serious for the existing members of the EU and devastating for the newly liberated countries of eastern Europe. They show that western Europe's obsession with the European Union and EMU, and with the unchallenged assumption that the only way forward for the countries of eastern and central Europe is to join the ever more closely integrated Europe, have made it impossible for the West to give the post-Communist countries the help that they need.

The study goes on to look at the poor economic performance of the European Union and concludes that it is far from the right economic model for the Eastern European countries to emulate. Many of them are doing rather better than us at the moment. It sees enlargement

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as a political construct whose influence is likely to set back post-communist economic and political development.

I shall not deal any further with the book. This matter has come to my attention only in the past few days. The work contains some very frightening analyses and statistics about the whole process. I should like to commend it at least to someone of significance in the Minister's department. I shall give the noble Baroness her complimentary copy after the debate.

Lord Wallace of Saltaire: My Lords, I note the paradox that just as 11 countries are doing their best to join the European Union a number of Members of this House would like us to leave it. That is a major change in the whole structure of European integration and leads to the transformation of Europe and its institutions.

I do not believe that this amendment is necessary. The Council and Commission are already committed to annual reports on the progress of enlargement, not simply institutional reform but policy reform. Noble Lords may be amused to know that at a conference of national scrutiny committees of the European Union two days ago the noble Lord, Lord Barnett, made a speech in which he argued that policy reform was at least as important as institutional reform in preparing for enlargement. A French conservative parliamentarian attacked him vigorously and accused him of being a Eurosceptic and said that institutional reform was all that was necessary to prepare for enlargement. We need to address this question but we do not require a national report. We must ensure that this House is given as much opportunity as possible to discuss the long-term questions.

We are also in the process of enlarging NATO. The two institutions go together. I regret that this House has not yet spent enough time discussing the enlargement of NATO, which is a rather faster process at the moment and is also likely to lead to another 10 or 12 states joining NATO within the next 10 years. We must discuss how those two processes of transforming Europe should be fitted together.

Having said that, I ask the Minister who is to reply to assure us that the House will be given every opportunity to discuss these questions in detail as we proceed, recognising that we are transforming NATO and that widening the European Union transforms it. But it certainly does not let us off the hook of strengthening the institutions, as suggested in the rather odd speech made the day before yesterday by Mr. William Hague, the Leader of the Opposition. He said:

    "Deepening the Union is not just a distraction from widening. It is the opposite".

The idea that to enlarge the European Union is to reduce what one needs to do seems to me to be very odd.

Having said that, we shall not vote for this amendment if it is pressed to a Division. However, we believe that this matter is very important. We want the Government to involve the country as far as possible--so far they have not managed to do that--in discussing

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the whole question of how to take the Poles, the Romanians and others into a larger institutionalised democratic Europe.

Baroness Park of Monmouth: My Lords, for once I find myself in agreement with the noble Lord who has just spoken. Like him, I believe that if we are to consider the enlargement of NATO and the enlargement of the Union as accepted fact it must be very carefully thought out and co-ordinated. I said as much earlier at Committee Stage. I support the amendment, however. We are not discussing these matters because we wish to leave the Union but because we wish it to be the kind of Union that works, which has honest standards and does not waste money; and the kind of Union that accepts that it is a group of countries working together, not a supranational organisation.

There is a great difference. We are doing our best to ensure that this institution works as it should, and works well. I strongly support the amendment because it was a great pity that, with the very many other things that had to be dealt with at the Amsterdam Conference-- I freely recognise that that was so--the implicit decision in the reflection group and in the earlier discussions, that there would be early discussion of the institutional framework that will be necessary, has not yet been addressed.

Lord Whitty: My Lords, the noble Baroness, Lady Rawlings, ranged widely when introducing the amendment. I am glad, in one sense, that she did. I am glad that she made it clear that the Opposition, as distinct from the noble Lord, Lord Pearson of Rannoch, are solidly in favour of enlargement. We on these Benches and, I think, the Liberal Democrat Benches, clearly want enlargement. We also want the budgetary and institutional changes necessary for enlargement.

At earlier stages of the Bill parts of what the noble Baroness and her colleagues were pursuing on enlargement would make enlargement conditional. I am glad that she has made it clear that that is not their intention. However, there was a hint in what she said that could slow down enlargement, in the sense that if all the institutional changes to which she referred--some of the genies coming out of the bottle again--which were discussed before Amsterdam, had to be discussed before we moved to the accession of new member states, enlargement would be delayed. That is why I said at an earlier stage that we should concentrate, in terms of institutional change, on those areas which were explicitly left over from Amsterdam.

The noble Baroness ranged so widely that she managed to refer to a speech from the leader of the Conservative Party, which had otherwise sunk like a stone. The noble Lord, Lord Wallace of Saltaire, also gave it new life. It is a speech which the Daily Telegraph this morning said was a speech without an audience, and which the former deputy leader of the Conservative Party said was in danger of losing an important part of the Conservative Party--the centre ground, which I had always assumed included the noble Baroness and the noble Lord, Lord Moynihan. I would be deeply disappointed if either of them left the

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Conservative Front Bench because of their commitment to deepening the institutions in the way the noble Baroness had described.

We made progress on institutional issues at Amsterdam. We did not, however, go as far as we wished. I record how far we did get. Article 1 of the protocol states that when the next enlargement of the Union takes place the Commission will comprise one national of each member state provided--only provided--that the weighting of votes in the Council has been modified to increase the relative clout of the large member states. That is a major advance for Britain.

We made it clear also that the enlargement process would require changes not just in those institutional issues but in the budgetary problems which are now being faced up to by the Council. We are not committed to a wholesale overhaul of the treaties further down the line, only to a limited IGC which will complete the process, and to budgetary reform which will allow enlargement to take place.

The text of the amendment is more modest than the text of the noble Baroness's speech, in that it requires a new form of reporting of institutional changes. The noble Lord, Lord Wallace, referred to the institutional reports produced within the European institutions themselves. I assure the House that the scrutiny process on preparing for enlargement--the institutional dimension and others--will be subject to full scrutiny in this House and in another place. We have, as my noble friend Lady Symons outlined in detail at the beginning of this stage of the process, the normal scrutiny process: the six monthly White Paper on developments in the European Union; regular debates in this House and in another place; consideration of a memorandum from the Foreign Secretary, and oral evidence to the Foreign Affairs Committee in another place before each European Council which considers those constitutional issues. After each European Council a report is made to each House, a Foreign Office Minister gives oral evidence about the meeting to the committee of the noble Lord, Lord Tordoff, and we report regularly to the House on the agenda for the Council of Ministers. Therefore the approach to institutional change will be covered by existing procedures, as the noble Lord, Lord Wallace, indicated.

Once we get into the IGC and changes are agreed and put in treaty form, we shall be back here considering the new treaty on the same basis whereby extensive consideration has been given to this Bill. Whether or not the dramatis personae will be the same, I am sure we all look forward to repeating that process at that stage and completing the institutional changes which were not quite completed at Amsterdam.

The House therefore has substantial opportunity for considering institutional changes and the progress up to that point made in the Council of Ministers and elsewhere in the approach to the limited IGC to which I referred. The Government therefore consider that we have not only made preparations at Amsterdam and since for resolving the outstanding institutional issues on which enlargement depends. We have also made provision for reporting them to this House, and for the

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House to be able to debate fully those changes. The Government therefore believe that the amendment is unnecessary and I ask the noble Baroness to withdraw it.

4.15 p.m.

Lord Renton: My Lords, before the Minister sits down, it is important that he gives some idea of what the Government understand to be institutional changes. He used the phrase time and again, but it is very vague. Can the noble Lord say whether it involves reducing the concept of the superstate, the federal state, and getting away with harmonisation? Those are the two main factors.

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