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Lord Glentoran: My Lords, I support the amendment moved by the noble Lord, Lord Cope. It seems eminently sensible that Northern Ireland

11 Nov 1998 : Column 822

Ministers should become Crown servants or should be known as Crown servants. More particularly, the Official Secrets Act should clearly cover all those mentioned in the amendment. I support it.

Lord Dubs: My Lords, this amendment which has been proposed by the noble Lord, Lord Cope, would have the effect of including junior Ministers under the Official Secrets Act. Our own Amendment No. 223 has the same effect.

This amendment also alters the way in which Ministers or junior Ministers are brought under the scope of the Official Secrets Act. Previously, Northern Ireland Ministers under the Constitution Act 1973 were to be appointed by the Secretary of State. It was therefore appropriate for them to be defined as Crown servants for the purposes of the Official Secrets Act.

Under the Belfast agreement we are introducing a wholly new system for the appointment of Northern Ireland Ministers. The Northern Ireland Bill makes clear that they will be appointed automatically in proportion to party strength under the d'Hondt procedure. Junior Ministers may also be appointed from among members of the Assembly in accordance with procedures specified by the First Minister and Deputy First Minister. Since they are not to be appointed by Ministers of the Crown, it is necessary to bring them under the scope of the Official Secrets Act by a different means.

It is of course important that we ensure that Ministers are covered by the Act in the same way as those defined as Crown servants. I can assure the noble Lord that this outcome is achieved.

In the Scotland Bill, First Ministers are appointed by Her Majesty and other Ministers are appointed with her approval. As I indicated, Northern Ireland is different and under the agreement Ministers are selected by the procedures defined in the Bill. However, the outcome is the same: all Ministers will be covered by the Official Secrets Act.

Lord Cope of Berkeley: My Lords, I am not entirely persuaded to go along with the Minister. However, I shall not pursue the matter, and I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Dubs moved Amendments Nos. 223 to 226:

Page 80, line 1, at end insert ("and junior Ministers").
Page 80, line 30, at end insert--

("Civil Service (Management Functions) (Northern Ireland) Order 1994 (S.I. 1994/1894 (N.I.9))

. In Article 3(1) of the Civil Service (Management Functions) (Northern Ireland) Order 1994, for paragraphs (a) and (b) substitute "which, by virtue of a prerogative order made under section 21(3) of the Northern Ireland Act 1998, is exercisable by the Department of Finance and Personnel".").
Page 81, line 4, leave out ("and (8)").
Page 81, leave out line 6 and insert--
(""52.--(1) Schedule 5, except paragraph 7(a) to (c), shall have no effect.
(2) In paragraph 7(a) to (c), for "Secretary of State" wherever it occurs substitute "Department of Health and Social Services".".").

11 Nov 1998 : Column 823

The noble Lord said: My Lords, this is a series of minor and consequential amendments to the Bill. Amendment No. 223 subjects junior Ministers as well as the First Minister and Deputy First Minister and Northern Ireland Ministers to the provisions of the Official Secrets Act.

Amendment No. 224 is consequential on the amendments being made to Clause 21. Amendments Nos. 225 and 226 modify this schedule to preserve elements of the Disability Discrimination Act which would otherwise have been extinguished. I beg to move.

On Question, amendments agreed to.

Schedule 15 [Ministerial offices]:

Lord Dubs moved Amendments Nos. 227 to 231:

Page 82, line 16, after ("made") insert ("and approved").
Page 82, line 20, at end insert--

("Junior Ministers

. Any of the following made before the appointed day--
(a) a determination of the number of junior Ministers to be appointed;
(b) a determination of the functions to be exercised by the holder of each junior Ministerial office; and
(c) an appointment of a junior Minister,
shall have effect on and after that day as if it had been made and approved under section 17.").
Page 82, line 20, at end insert--
("Department of First Minister and deputy First Minister

. Any Northern Ireland department established before the appointed day under the charge of the First Minister and deputy First Minister acting jointly shall be treated on and after that day as if it had been established by an Act of the Assembly under section 19.").
Page 82, line 20, at end insert--
("Prerogative orders

. Any prerogative order made by the Secretary of State under the Letters Patent of Her Majesty dated 20th December 1973 before the appointed day shall on and after that day have effect as if it had been validly made under section 21(3) by the First Minister and the deputy First Minister acting jointly.").
Page 82, line 24, at end insert--
("Statutory committees

.--(1) Any committee of the Assembly established before the appointed day to advise and assist a Northern Ireland Minister in the formulation of policy with respect to his responsibilities as a Minister shall be treated on and after that day as if it had been established by standing orders under section 27.
(2) Any appointment of a member, or the chairman or deputy chairman, of such a committee made before the appointed day shall have effect on and after that day as if it had been made under section 27.").

On Question, amendments agreed to.

Lord Dubs moved Amendment No. 232:

Page 83, leave out lines 1 to 5.

The noble Lord said: My Lords, Amendments Nos. 232 and 233 are purely drafting amendments moving the entry about the Comptroller and Auditor General in Schedule 15. I beg to move.

Lord Cope of Berkeley: My Lords, I have no comment on this amendment, but as it is the last group

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of amendments I wish to thank the Minister for his courtesy and patience in dealing with us throughout the discussions on the Bill.

On Question, amendment agreed to.

Lord Dubs moved Amendment No. 233:

Page 83, line 15, at end insert--

("Comptroller and Auditor General for Northern Ireland

. Any appointment made by Her Majesty under section 36(1)(d) of the Northern Ireland Constitution Act 1973 before the appointed day shall on and after that day have effect as if it had been an appointment made by Her Majesty on the nomination of the Assembly under section 62.").

On Question, amendment agreed to.

Lord Dubs moved Amendments Nos. 234 to 236:

Page 83, line 19, at end insert--

("Certificates by Secretary of State

. Section 84 shall have effect--
(a) in relation to any act done before the appointed day, as if the reference to section 22 were a reference to section 19 of the Northern Ireland Constitution Act 1973 so far as relating to a member of the Northern Ireland Executive or other person appointed under section 8 of that Act or a Northern Ireland department;
(b) in relation to any act done before the commencement of section 72, as if the reference to that section were a reference to section 19 of that Act so far as relating otherwise than as mentioned in sub-paragraph (a); and
(c) in relation to any such act as is mentioned in sub-paragraph (a) or (b), as if--
(i) the reference in subsection (1)(b) to a certificate were a reference to a certificate purporting to be signed by or on behalf of the Secretary of State and certifying that an act specified in the certificate was done for the purpose of safeguarding national security; and
(ii) subsection (3)(b) were omitted.").
Page 83, line 19, at end insert--
("Devolution issues

. In relation to any time before the first appointment of the Advocate General for Scotland, paragraphs 22, 23, 33 and 34 of Schedule 11 shall have effect as if references to him were references to the Lord Advocate.").
Page 83, line 42, leave out from beginning to end of line 11 on page 84.

On Question, amendments agreed to.


6.46 p.m.

Viscount Waverley rose to ask Her Majesty's Government what measures they are implementing to improve bilateral and trading links with Iran.

The noble Viscount said: My Lords, my attempt tonight is to put this subject into a broad international perspective, taking into account the best interests of the United Kingdom, including the Middle East, Caucasus and central Asia. Every country in that region is important.

Iran is a country that evokes strong emotions with complex issues that are easily misunderstood and often misrepresented. I felt in July that our official bilateral

11 Nov 1998 : Column 825

policy required scrutiny and so conducted a number of in-country assessments. In addition, I participated in an in-depth round table in Washington where I took the opportunity to call on the offices of Congressman Lee Hamilton, who has called for reconsideration of America's Iran policy, and Senator Brownback, chairman of the Middle East sub-committee.

I left Iran convinced of the need to adopt a differing approach and enter a new chapter in relations. As it happened, events superseded with the New York initiative and as a result we are now able to plot a clear future path together--developing political and practical co-operation. Make no mistake, geo-politically Iran is pivotal in a region of crucial strategic importance and was always too large, with its location, to be ignored or isolated.

The United Kingdom shares many areas of overlapping interests. With Afghanistan, for example, Iranian pressure is crucial to curb the excesses of the Taliban, pressing them to recognise the rights of minorities and prevent that country becoming a safe haven for terrorists and a centre of narcotics production.

As regards central Asia, Iran seeks stable borders and has sought influence based on economic exchanges. Other areas of real shared interest include the combating of drugs trafficking, for which Britain has an assistance programme, and the dire need to support continued efforts to integrate the large number of refugees.

Some argue that a trade-driven agenda is the most healthy of all and cements any relationship. In my capacity as chairman of the British-Iranian Chamber of Commerce, I was able to lay the foundations of a joint chamber with the Iran Chamber of Commerce, with all the benefits that would flow from bringing the business communities of our two countries together.

In addition, and in the spirit of the essential need to assist in the expansion of the non-oil sector, I have invited, on behalf of the chamber, 15 Iranian industrialists, particularly those representing the small and medium enterprise sector, to join us in London in February with the purpose of establishing joint ventures.

I also envisage a key role for the United Kingdom in assisting in any privatisation process in Iran--an area where we have considerable experience. In addition, the chamber has been invited by the Department of Trade and Industry to pull together a June trade mission. Certain it is that the United Kingdom has a lot to do to regain its trading partnership status of old. Iran is sitting on large oil and gas reserves and ranks as a leading exporter. There were times when Britain was the number one trading partner with Iran, but over the years it has lost that position and now ranks as number six.

It is perceived that the major hindrance to British industries to expand in Iran is the lack of proper finance for which everyone blames the lack of full ECGD cover. I recognise that cash terms were recently announced but that is not sufficient. If ECGD opens the door to Iranian cover, British banks would follow suit and so by extension our trading performance would improve.

11 Nov 1998 : Column 826

Of Iran's internal situation, President Khatami was elected with the legitimacy of popular support. His election heralded change. His popular standing and ability to fulfil election promises, including a more democratic and accountable government, respect for the rule of law, and a freer social and political climate with gender issues high on the agenda, will be determined by the impact he makes on the country's economic situation. Care must be taken not to weaken the hand of the moderates while recognising that there are those who follow a more hard line agenda and are applying constraints to the liberalisation and reform process. The conservatives who could in effect dismiss him must weigh the risks of Khatami's liberalisation policies against the risks of continued economic stagnation and deterioration. Structural reforms will be painful and divisive but necessary.

If I may offer a word of caution at this point to British Ministers, we must be sensitive to Iranian politics and not overly encourage an agenda that is too hasty or overtly political. In reality the West has little chance of influencing domestic developments with their complex political system, the leader effectively having more power than the president and controlling the military, judiciary, state radio and television.

I have paid particular attention to western concerns in the areas of weapons of mass destruction, terrorism and opposition to the Arab-Israeli peace process. On the Iranians' scepticism to the peace process, I am satisfied on two points: President Khatami would support any agreement acceptable to the Palestinians and, importantly, Iran would positively consider recognition of the state of Israel as and when Israel recognised an independent Palestinian entity. Iran, however, must address in its best interests perceptions held in western capitals of possible support to groups who have as an agenda obstruction of the process.

We are all becoming exasperated with the peace negotiations. Israel often defends its security concerns by citing Iran. The difficulty I have is that I suspect that the United States and Israel have long engineered a programme of disinformation and the time is fast coming to ask: where is the evidence to support their many allegations? I have been briefed in Jerusalem for example by Israeli officials responsible for the detail of monitoring security in relation to Iran. I left singularly unimpressed and believe the evidence to be lightweight compared with the seriousness of often-voiced allegations.

Any programme in pursuit of weapons of mass destruction needs tighter definition. I have little doubt that everybody here tonight would support the ideal of a weapons-free environment but, being realistic, Tehran understandably fears a repeat of the experience of being the target of Iraqi chemical weapons with little reaction from the international community. A plausible case can be made that it is in the centre of a region dominated by countries with nuclear capability and active weapons programmes. It therefore needs a deterrent and a means of offsetting weaknesses in conventional weapons. Iran is probably confused by President Clinton's announcement this week to lift sanctions against India and Pakistan for developing a nuclear strike capability.

11 Nov 1998 : Column 827

Iran is a signatory to the majority of relevant international instruments banning these weapons as of course is the United Kingdom.

In the area of terrorism I would encourage clear statements from Iranian officials unequivocally denouncing terrorism from whatever source, ensuring that Iranian ministries are dissociated from any such activities, including governmental control over special agencies.

The whole region, I believe, is made up of double standards and suspect hidden agendas. Israels Mossad carried out state-sponsored terrorism recently in Amman. Who is drawing up the ground rules? Why does Washington with its scant intelligence appear to oppose for Iran technology that it actually provides to North Korea as peaceful technology? There can be little doubt that a policy that sought to influence Iran with penalties but without incentives failed. What Washington for example seeks from Iran is technically unrealisable and politically unrealistic, although I sense that the position on sanctions against Iran is changing.

What now must, I believe, be achieved is a raft of bridge-building measures. The upgrading to ambassadorial exchange is most welcome. However, urgent consideration must be given to ministerial exchanges without necessarily waiting for an ambassadorial exchange although of course that would be preferable. In addition there must be an immediate easing of the visa regime, most particularly for the business community who are being severely hampered by the current time to process visas, and recognition of the benefits of educational, parliamentary and cultural exchanges. I would particularly encourage for example early re-establishment of the British Council in Tehran. Failure to adopt these measures in my view will hinder the rapprochement process. Other issues of a more international nature could include developing such areas as support for an expanded Gulf Co-operation Council and Iranian candidates for posts in international organisations and encouragement of cultural representations such as the British Council and parliamentary exchanges.

Certainly, the need to ensure that economic and environmental logic prevails in determining a pipeline route from central Asia to the Gulf and the encouragement of the United States to end support of a tightened embargo on Iran on national security grounds would all be constructive. Finally, give the moderates something tangible such as indicating a readiness to discuss Iranian frozen funds.

Only yesterday I heard of a licence application by a British company being turned down in Tehran simply for being British. I do not take unnecessary umbrage, but clearly that is not helpful. Our officials will have to instil a spirit of friendship to all sections of ministries and ensure that they are sensitive to the rapprochement process.

I see everything to work for with Britain having a clear goal and an interest in helping Iran with relations with the international community, allowing our two nations to work together in a spirit of mutual co-operation, respecting the internal affairs of the other,

11 Nov 1998 : Column 828

while concentrating on the priority issues in our relationship, balancing the strengths and experience of each.

7 p.m.

Lord Desai: My Lords, I am grateful to the noble Viscount, Lord Waverley, for bringing the matter to our attention. I had thought that in the post-Rushdie atmosphere there would be a long list of speakers. I have prepared a brief speech, believing that three minutes would be my limit. I shall stick to those three minutes despite everything.

I have only a few points to make. We must not only welcome the New York initiative--it is a big breakthrough in British-Iranian relations--but also the fact that in a sense Iran, having gone into a Fundamentalist Islamic mode, has drawn back from that brink, although it is not entirely free from it, as the noble Viscount pointed out. There is still a mixture between what the state does and what the religious clergy do. But at least President Khatami is there; and there is a woman vice-president. That is a welcome fact. I met her recently when I was in Seoul for a conference. She is responsible for an important ministry--the environment.

However, there is still a fragility about Iran of which we must be careful. As the noble Viscount pointed out, the overlap between the state and the clergy means that, although the Rushdie fatwa has been officially disowned, fatwas cannot technically be withdrawn. Once they are issued, they are issued. So we have to be very careful. We must ask for constant assurance that any attempt made by any private members of Iran to pursue it will not be encouraged by the Iranian Government.

The noble Viscount has expertise on the business side and has covered the topic well. I agree with him that business opportunities are opening up. Regardless of the American embargo on Iran, there is opportunity for openings for European business, not only British business, and I think that they will be welcome.

In August 1998, Iranian diplomats were captured in Afghanistan; and there was trouble on the borders of Iran. British policy has to consider carefully not only the western side of Iran but also the eastern side. Both Afghanistan and Pakistan are somewhat fragile states at present. We have to be friendly to Iran as part of a general package in seeking to restore peace in that region. Peace and democracy are extremely important.

7.5 p.m.

Lord Phillips of Sudbury: My Lords, I hope that your Lordships will forgive me if I speak anecdotally. Just over a year ago, with my son, I pulled into the fabulous city of Isfahan at three in the morning on a public coach, not knowing where I was to spend the night, nor speaking any Persian, and, frankly, feeling rather lost. A young Iranian invited us, in broken English, to his home for the night. We were extraordinarily hospitably treated.

At breakfast an appallingly disabled young man was introduced to us who spoke good English. After initial greetings, he engaged us in a debate about Britain's role

11 Nov 1998 : Column 829

in the Iran-Iraq war. I think it not inappropriate on this special day of special days, our own Day of Remembrance, to recollect what few of our countrymen know: that the Iranians suffered more deaths and more casualties in the Iran-Iraq war than the whole of the Allied Forces in the First World War.

I need hardly remind noble Lords that Britain backed Saddam Hussein in his land grab for part of Iran. Many of the bombs, bullets and poison gas canisters were marked "made in England". Frankly, if one travels in Iran, as I have had the good fortune to do three times over 30 years, one finds that proud people utterly without comprehension as to how the West, having acted as they did in the Iraq-Iran conflict, could jump a few years later onto the highest of high moral ground when the same ghastly man made a land grab in Kuwait.

That episode is a deep, dark stain on our relations with Iran. I do not feel that we sufficiently face up to it; and as a matter of honour as well as real polity we should do so. My experiences and impressions in Iran--I travelled rough last year and met ordinary people--are that the Iranian people are going through the most sorely trying time. It is a time of deep depression because they wish that so many things were different. But it also a time of some little hope through the election of President Khatami. The hope is always in fine balance with depression and pessimism.

Only last month, for example, three-quarters of the seats for the Assembly of Experts which appoints the supreme leader of the country fell to the conservatives in the election. None the less I sincerely urge the Minister and Her Majesty's Government to be as liberal, open-handed and encouraging as possible with the Government of Iran, knowing full well the difficulties: the fatwa which has not been completely lifted; the terrorism; and the arms build-up. If the boot had been on the other foot in terms of the Iran-Iraq war, I warrant that our own reactions and suspicions would be no less, and possibly greater.

It is a proud country with a proud history. It needs encouragement. The majority of people in that country are looking for President Khatami's tender initiatives to go on bearing fruit. I hope, therefore, that the Motion moved by the noble Viscount, for which I am extremely grateful, can be interpreted as improving not only bilateral and trading links but also cultural, political and other links with Iran.

7.8 p.m.

Lord Fraser of Carmyllie: My Lords, when I was a Member of Parliament for South Angus in the early 1980s, one of my constituents, Miss Jean Waddell, was badly assaulted and detained without charge or trial for an unconscionable period. She had committed no crime and had only remained loyally in Iran to do her duty to her God and Church. That incident, the storming of the United States Embassy, and the taking of hostages, reflected badly on Iran at the time. It coloured my views for some period after that, as I believe it coloured the views of most people in this country. Indeed, I would suspect that for a large number of people those attitudes

11 Nov 1998 : Column 830

have not shifted since the early 1980s. However, the noble Viscount was correct to point out that since then Iran has changed significantly. It may well be that that change is proceeding at an accelerating pace. Clearly, we welcome that and I hope that tonight's brief debate will underline it.

The noble Viscount was also correct in offering wise words of caution when he said that we should be sensitive to Iranian politics and should not overly encourage an agenda which is too hasty or too overtly political. However, I say to the Minister that we, too, welcome the upgrading of relations to ambassadorial level following on the reassurances and clarification which the Foreign Secretary received in September that the Iranian Government would take no action to threaten the life of Salman Rushdie; nor would they encourage or assist anyone to do so.

If, as the noble Viscount indicated, it is correct that the British/Iranian chamber of commerce has been invited by the Department of Trade and Industry to pull together a trade mission for the middle of next year we would also welcome that useful initiative.

However much we share the aims of improving bilateral and trading links with Iran, there is no point in disguising the fact that concerns remain over Iranian policy; not least a concern over human rights and its record, particularly of the treatment of religious minorities. Nor can we disguise a proper alarm over the attitude to terrorism and the peace process in the Middle East. However, there may be some grounds for believing that a welcome change in relation to the peace process is underway. The Minister might give a view as to whether that is an unrealistic assessment. If there are grounds for optimism that would be a further basis for the warming of relations.

We also understand and support the concerns over the supply of weapons of mass destruction which have been expressed both by the European Union and the G7. The United States clearly shares those concerns, although the logic of the conclusions which it reaches on that basis are less easy to follow. The Minister may be aware of a speech made by the Secretary of State, Madeleine Albright, to the Asia Society in New York in June this year. She said:

    "The United States opposes and will continue to oppose any country selling or transferring to Iran materials and technologies that could be used to develop long-range missiles or weapons of mass destruction. Similarly, we oppose Iranian efforts to sponsor terror".
I doubt whether there is anyone in your Lordships' House who would quarrel with that statement. However, the Secretary of State went on to say:

    "Accordingly, our economic policies, including with respect to the export pipelines for Caspian oil and gas, remain unchanged".
I have a real respect and admiration for the robust intellect of the Secretary of State, but with regard to US policy on the export pipeline for Caspian oil and gas, I have difficulty in seeing how it logically follows from its concerns over weapons of mass destruction and terrorism. On the contrary, one would have thought that the United States' concerns for political and economic stability in Central Asia and around the Caspian, and its concerns for wider environmental issues, would have led it to exactly the opposite conclusion.

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It may be a little too early to invite the Minister to offer an assessment, but I ask whether she considers that, following on the recent elections in the United States, in particular one notable senatorial defeat, attitudes to the Iran-Libya sanctions Act might be softening in Washington. Clearly, that would be most desirable. I acknowledge and appreciate that significant negotiations were undertaken successfully by the European Union to ensure that the United States agreed to grant individual waivers for companies within the European Union, but it still seems to me that that approach is not wholly satisfactory. I have no doubt that EU companies, if they have to approach the United States authorities for individual waivers, will do so with some concern. I certainly recollect my time at the Department of Trade and Industry when comparable approaches had to be made over Cuba. Those companies did not wish to indicate to the United States Government that they had any intention of investing in that country. I have no doubt that comparable attitudes will obtain in relation to Iran.

This has been a most useful short debate and I very much appreciate all that the noble Viscount had to say. We share his desire for an improvement in bilateral relations. There may be some issues which remain to be addressed and we should face up to them. However, we certainly wish to see an improvement in trade and I hope that the Government will do all that they can to bring pressure to bear on the United States to ensure that there is a rational approach to trade with Iran. We certainly wish the noble Viscount in his capacity as chairman of the chamber of commerce every success in bringing about an improvement in these bilateral and trading relations.

7.16 p.m.

The Parliamentary Under-Secretary of State, Foreign and Commonwealth Office (Baroness Symons of Vernham Dean): My Lords, I, too, am grateful to the noble Viscount, Lord Waverley, for this opportunity to discuss the United Kingdom's relationship with Iran at this important juncture when Iran is undergoing potentially significant and far-reaching changes. I commend the noble Viscount for the personal interest he has shown in helping to promote closer ties between the two nations. We have already made progress on some of the issues which have troubled our relationship over much of the past 20 years and in the process we have begun to overcome some of our historical suspicions of each other's intentions. The noble and learned Lord, Lord Fraser, referred to that.

I have listened carefully to the arguments put forward tonight. I, too, recognise and welcome the recent positive steps taken by the Iranian Government in certain areas of their policies. In particular, I welcome the assurances given on 24th September over the safety of Salman Rushdie. These assurances have removed a major obstacle in the way of our bilateral relationship. However, we and our European partners also have continuing concerns, particularly over human rights and weapons of mass destruction.

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I turn to the more positive developments in Iran. In the domestic arena, we welcome the Iranian Government's commitment to develop an Islamic civil society based on respect for the rule of law. There is now much greater freedom of expression than a year ago. There is a lively political debate in Iran's media. There have also been some modest improvements in the situation of women, notably with the appointment of Iran's first four women judges and, as the noble Lord, Lord Desai, reminded us, of the first woman vice-president. I was pleased to hear what the noble Lord said about his meeting with her.

Iran's decision to allow Amnesty International to accompany Mary Robinson to attend a human rights conference earlier this year--not, as I said on 2nd November, early next year--was a significant step towards much greater transparency. Mrs. Robinson said afterwards that positive forces were at work within Iran which should be encouraged, particularly among women, where she had been surprised at the independence and willingness of the women she met to speak out.

We are also encouraged by Iranian foreign policy initiatives, in particular its attempts to reduce tensions with its Gulf neighbours. Similarly, we welcome Iran's decision to ratify the nuclear non-proliferation treaty and the chemical weapons convention and hope that others in the region will follow Iran's example.

We welcome also Iranian statements condemning terrorists' attacks in Algeria and Egypt and terrorist attacks on all civilians. Those are very welcome and significant developments. We share President Khatami's goal of increased understanding between the western and Islamic worlds, as highlighted recently by the Foreign Secretary's call for a dialogue with Islam. The Foreign Secretary makes an important point as regards having that sort of constructive relationship with our Islamic friends.

But of course not everything has changed in Iran. A considerable number of human rights problems still exist. We remain particularly concerned about the discrimination practised against religious minorities like the Baha'is and the Christian minorities to whom the noble and learned Lord, Lord Fraser of Carmyllie, referred. In your Lordships' House in the past couple of weeks or so we have discussed the Baha'is as well as the problems presented by the death penalty and other unacceptable forms of punishment still practised in Iran.

Her Majesty's Government will continue to urge the Iranian authorities to allow Mary Robinson's special representative, Maurice Copithorne, to visit Iran. We and our EU partners will ensure that Iran's record is reflected accurately in this year's UNGA resolution on Iran, recognising the improvements in some areas of Iran's human rights records, as I indicated, but maintaining also pressure on those areas which still genuinely cause concern to the Government.

I turn to the question of Salman Rushdie. We welcome the statement of Dr. Kharrazi, the Iranian Foreign Minister, in New York on 24th September in which he made clear that his government will take no action whatsoever to threaten the life of Salman Rushdie

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or anyone associated with his work; nor will the government of Iran encourage or assist anyone else to do so.

We have long sought those assurances. The Foreign Secretary has accepted them as an extremely positive step. Dr. Kharrazi has also made his government's position on the bounty very clear. They have disassociated themselves from the bounty; they do not support it. Again, we welcome that as a very positive development.

Those assurances have finally addressed a long-standing cause of difference between our two countries, as we in this House have had occasion to discuss in the past. It makes possible a better relationship between the United Kingdom and Iran and should allow, we hope, the opening of a new chapter in our relationship, hence the decision by the two Foreign Ministers to upgrade the level of our diplomatic relationship to a full ambassadorial one. I thank the noble and learned Lord, Lord Fraser, for the welcome which he gave to that development.

However, as my noble friend Lord Desai said, we are aware that there are some in Iran who do not necessarily take the same view. That is not surprising. However, such dissent has tended to come from those who are far removed from the decision-taking processes in Iran. Of course we regret that there was an increase in the bounty on Salman Rushdie and we have made our concerns about that known to the Iranians. I assure my noble friend Lord Desai that the Iranians have confirmed that the assurances which they gave in the New York agreement are supported by the Iranian authorities as a whole.

Progress on the Salman Rushdie issue has therefore paved the way for a much more constructive relationship. As the noble Viscount, Lord Waverley, pointed out, Iran is a regional power and a country with which we share many important interests. There are many regional issues--for example, Iraq and Afghanistan, to which the noble Viscount referred--where our views are close, and there are many areas in which we should like to develop practical co-operation with Iran, for example drug trafficking, to which the noble Viscount referred in his speech to your Lordships, and the humanitarian assistance which we can give to refugees. Such practical co-operation in those areas is a valuable way of developing the habit of working together and working at a practical and co-operative level.

But as the noble Viscount pointed out, trade is another extremely important area in which we must develop co-operation. We welcome Iran's increasing readiness to accept foreign investment, which will help to integrate Iran into the global economy. To that end, we are increasing the number of outward missions and exhibitions supported by the Department of Trade and Industry, as the noble Viscount indicated. During the period from April 1999 to March 2000, the DTI will support five outward missions and three exhibitions. The Government actively supported the formation of the British-Iranian Chamber of Commerce, as the noble Viscount knows, and we continue to seek agreement

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with the Iranians on an investment, promotion and protection agreement which, when agreed, should provide UK investors with added confidence to invest in Iran.

The noble Viscount was right to remind us that Iran is an important and, indeed, historic trading partner with the United Kingdom. UK exports to Iran in 1996 and 1997 reached just under £400 million. The Government support civil trade and investment with Iran and provide assistance to exporters wishing to do business there. Since December 1990, we have seen that growing in the trade exhibitions to which I referred. At this year's event, the International Trade Fair, the UK had the second largest national presence, with over 70 British companies participating. Senior Department of Trade and Industry officials also attended in support of the UK exhibitors and undertook a series of meetings with Iranian officials with a view to strengthening the commercial relationship. The Department of Trade and Industry will support next year's Oil, Gas and Petrochemical Fair. We are also encouraging Iranian exports to the UK. We believe that that programme of events which has begun and is being seen through next year and into the year 2000 should provide the encouragement which lies at the basis of the noble Viscount's thinking in putting forward the debate this evening.

The noble Viscount was concerned about ECGD cover. I am very aware of the business community's desire for medium-term export credit guarantee cover and overseas investment insurance to be extended for Iran. Any decision by the Export Credit Guarantee Department (ECGD) must balance the need to encourage trade with protecting the taxpayers interest. I am sure that the noble Viscount would not have expected me to say anything different on that. The ECGD's experience of debt problems in that region points to the need for a measured assessment of the risks which may arise.

The noble Viscount, Lord Waverley, and the noble and learned Lord, Lord Fraser of Carmyllie, referred to Iran's role in relation to terrorism. That has been a point of concern in the past. Since the election of President Khatami we have noted significant developments: Iran has strongly condemned terrorist attacks in Egypt and Algeria and rejected attacks upon civilians anywhere. As well as those encouraging signals, we have detected positive changes actually on the ground. But we still have concerns about Iran's links with groups who seek to undermine the Middle East peace process through violence and about Iran's negative attitude towards the peace process. But overall we believe Iran is moving away from this policy. We are pleased to see the positive developments which I have been able to detail to your Lordships in that respect.

The other points about which noble Lords have been concerned relate to weapons of mass destruction. We understand that Iran has legitimate security concerns. We have not forgotten that Iran herself was the victim of horrifying chemical weapon and missile attacks by Iraq. We believe that we have a joint interest in ensuring that UNSCOM and the International Atomic Energy Authority complete their work in dismantling Iraq's

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arsenal of weapons of mass destruction so that Iran and Iraq's other neighbours are never threatened again by Saddam. As the noble Viscount reminded us, unlike many states in the region, Iran is a signatory both to the nuclear non-proliferation treaty and the chemical weapons convention. In calling for her to stop a weapons of mass destruction programme, we are only asking Iraq to abide by the agreement which she has already freely entered into.

The noble Viscount raised too the question of visas. I must say this. We would only consider lifting a visa regime when we were satisfied that there was no threat to our immigration controls. We take the view that, where nationals of a country are subject to a visa regime, it must apply equally to all citizens of that country. The noble Viscount put forward the suggestion that perhaps something different could apply for businessmen. We do not believe that that would be appropriate. If there is a regime, Her Majesty's Government believe rightly that the regime must apply equally to all citizens of the country.

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The noble Viscount raised the question of the British Council. That is something for the British Council to consider. As relations improve, the British Council will want to consider its position. But as the noble Lord pointed out, there are some sensitivities on the Iranian side in relation to cultural contacts. We would hope for a gradual development on that and a gradual improvement.

Her Majesty's Government therefore are encouraged both by recent positive developments in Iran, in our relationship with Iran and the improvements we have seen in that bilateral relationship. We hope that those will pave the way towards a new and more constructive relationship both with the United Kingdom and the European Union. We want to see Iran resume its proper place as a major regional power and a respected member of the international community. Her Majesty's Government are interested in developing practical co-operation to help achieve that end, including enhanced contacts between our two governments. We look to Iran to adopt the same constructive approach.

        House adjourned at twenty-seven minutes before eight o'clock.

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