Select Committee on European Communities Report


20.  KOSOVO : EC MEASURES AGAINST THE FEDERAL REPUBLIC OF YUGOSLAVIA (FRY)

Letter from Derek Fatchett MP, Minister of State, Foreign and Commonwealth Office, to Lord Tordoff, Chairman of the Committee

  I am writing to inform you of a case where it is likely that the United Kingdom will need to agree a Community regulation before the normal process of scrutiny has been completed. This relates to EC implementation of measures in a Common Position on Kosovo.

  The Common Position was agreed on 19 March and was published on 27 March in Volume 41 of the Official Journal of the European Communities. It strongly condemned the use of force against the Kosovar Albanian community, and acts of violence and terrorism employed by the Kosovo Liberation Army. It sought to urge the FRY authorities to bring about an end to the violence and to seek a political solution to the problems by imposing certain restrictive measures. It agreed member states would:

    —  reaffirm the existing EU arms embargo against the FRY;

    —  ban the supply of goods which might be used for internal repression of terrorism;

    —  implement a moratorium on Government-financed export credit support for trade and investment;

    —  deny visas to a named list of FRY and Serbian representatives.

  While the arms embargo and visa ban were implemented through Common Position, action on exports credits and other goods needs Community legislation. At the time, it was envisaged that UN action would be undertaken on the areas covered by the Common Position, and that Community legislation would wait until the precise terms of UN resolutions were known. In the event, however, UN action on areas other than an arms embargo has not been forthcoming. Consequently, EC legislation is now urgently required to follow-up earlier commitments.

  It is clear that to be effective both practically and politically, the implementing EC legislation needs to be in place at the earliest opportunity. The first opportunity will be at the General Affairs Council on 27 April. With the Commission still to adopt a text of its proposal for a regulation, it is also clear that the normal process of scrutiny will not be completed in this case if a 27 April timetable is to be met. I hope that you will agree with me that the UK would not wish to block such important legislation in these circumstances. Consequently, I have reluctantly concluded that the UK should vote in favour of the regulation if it is presented before scrutiny can be completed.

  I enclose a draft non-paper which has formed the basis for limited discussion in Brussels since Easter. This remains subject to further discussions between member states, and internally by the Commission. We will certainly keep you informed of how matters develop and provide an explanatory memorandum as soon as possible.

20 April 1998

Letter from Lord Tordoff, Chairman of the Committee, to Derek Fatchett MP, Minister of State, Foreign and Commonwealth Office

  Thank you for your letter of 20 April letting me know that you expect to have to agree to a Community regulation on the above matter before the normal process of scrutiny has been completed.

  I shall bring your letter to the attention of the European Communities Committee at its next meeting on Tuesday 28 April.

  I understand your reasons for not wishing to hold up agreement to a regulation of this nature, and I am grateful to you for keeping me informed. I look forward to receiving an Explanatory Memorandum in due course.

21 April 1998

Letter from Lord Tordoff, Chairman of the Committee, to Derek Fatchett MP, Minister of State, Foreign and Commonwealth Office

  In my letter of 21 April I said that I would bring your letter to the attention of the Select Committee. At its meeting yesterday the Select Committee considered the draft Regulation and the explanation given in your letter. Two questions arose to which I would be grateful to have your response.

  The first concerns Article 1 of the draft Regulation and the difference between the scope of application of paragraph (a) (which relates to Serbia and Montenegro) and (b) (which only relates to Serbia). The Select Committee would be grateful for an explanation of the reasons for this.

  The second question arose from an article by James Pettifer in yesterday's Times, War crimes suspect "builds businesses to beat sanctions". The Committee would be grateful if you could explain the extent to which the prohibitions in the draft Regulation would apply to the activities of Arkan described in the article.

29 April 1998

Letter from Doug Henderson MP, Minister of State, Foreign and Commonwealth Office, to Lord Tordoff, Chairman of the Committee

  In his letter of 20 April, Derek Fatchett promised that we would keep you informed of developments relating to EC implementation of measures against the FRY. I am also taking this opportunity to reply to your letter of 29 April.

  As foreseen in Derek's letter, the Council did indeed (on 27 April) adopt a regulation implementing certain measures at the Community level. As promised, I enclose an Explanatory Memorandum. The text of the regulation was subject to last-minute changes. The final version will be deposited in the usual manner. However, I enclose a draft version which I hope will be of further help to the Committee.

  EU Foreign Ministers are now considering what additional measures might be taken to encourage FRY Government compliance with the international community's agenda. As before, matters are likely to move ahead quickly. Among the measures currently under discussion are a freeze on FRY funds held overseas and a ban on new investment. While responsibility for scrutiny of any implementing EC legislation in these areas may lie outside the FCO, I can assure you that my officials will endeavour to ensure that Whitehall colleagues keep your Committee fully informed as the situation develops.

  Your letter of 29 April asked about the differentiation in the Regulation between Serbia and Montenegro, and about The Times article of 28 April.

  In imposing measures against the FRY, the EU has been anxious to limit, as far as possible, negative impact on the progressive administration of Prime Minister Djukanovic in Montenegro. Mr Djukanovic is pursuing the kind of policies on democracy and economic reform which the international community wishes to encourage. Indeed, the EU has recently adopted a Joint Action providing 3 Mecu to help his administration meet immediate social welfare commitments. Article 1 of the Regulation deals with export of goods where it is not possible to distinguish between exports to Serbia or Montenegro without compromising tight controls. However, on credit support we are able to make a distinction as support is targeted at specific projects where the beneficiary can be identified. I hope this explains the difference.

  On the Times article, we are of course well aware of this kind of activity from previous sanctions regimes. The Regulation does cover indirect export where this can be identified and could therefore restrict some of the activities mentioned in the article. However, it remains possible for unscrupulous individuals to seek to circumvent EU measures (which apply to the EU only) by using third country sources. We are encouraging non-EU members to follow the EU lead and adopt similar measures. Encouragingly, the Central European Associates have already aligned themselves with the EU Common Position on Kosovo of 19 March. The EU is actively exploring with neighbouring states on how best to ensure that arms and other prohibited goods do not flow into Kosovo from their territory. It is worth bearing in mind that the EU still has an arms embargo covering the whole of the former Yugoslavia (except Slovenia) in addition to the UN arms embargo against the FRY.

6 May 1998

Letter from the Rt Hon Alistair Darling MP, Chief Secretary to the Treasury, to Lord Tordoff, Chairman of the Committee

  In his letter of 6 May, Doug Henderson mentioned that EU Foreign Ministers were considering additional measures to encourage FRY government compliance with the international community's agenda. These included a freeze on funds held abroad by the FRY and Serb governments, and a ban on new investment. Doug Henderson suspected that matters might move ahead quickly.

  In the event, the EU approved a common position on 6 May which confirms that funds held abroad by the FRY and Serbian governments will be frozen. This follows the Foreign Secretary's statement to the House of 10 March. The nature of this freeze on funds and its policy implications will become clearer when the details of the freeze are set out in a draft EC Regulation. The European Commission is in the process of drawing up such a draft. This will be submitted to Parliament as soon as it becomes available, together with an Explanatory Memorandum.

  A common position on the investment ban has not yet been drafted or discussed. It is likely that any draft common position on an investment ban will also move ahead extremely quickly. A draft will be submitted to Parliament as soon as it becomes available. As with the freeze on funds, the nature and policy implications of this proposal are likely to become apparent when a draft EC Regulation is drawn up by the European Commission. This will also be submitted together with an Explanatory Memorandum as soon as it becomes available.

  I hope that these arrangements are acceptable to your Committee, and that they provide the maximum scope for scrutiny in what has proved to be a fast-moving and sensitive area. I will endeavour to keep your Committee fully informed of these proposals as they develop.

18 May 1998

Letter from Lord Tordoff, Chairman of the Committee, to Doug Henderson MP, Minister of State, Foreign and Commonwealth Office

  Thank you very much indeed for your letter of 6 May in response to mine of 29 April.

  Sub-Committee A considered your letter at its meeting today, and asked me to write to thank you for keeping us informed of developments relating to EC implementation of measures against the FRY.

21 May 1998

Letter from the Rt Hon Alistair Darling MP, Chief Secretary to the Treasury, to Lord Tordoff, Chairman of the Committee

  In my letter to you of 18 May, I explained that the Council might soon be adopting a common position agreeing to ban new investment in Serbia, and that I would submit the Commission's proposed Regulations implementing this and the agreed freeze on funds held abroad by the FRY and Serb governments as soon as they were made available.

  On 8 June, the Council adopted a common position on the investment ban. I am enclosing a copy of this (not printed). The Commission has not yet proposed a draft Regulation implementing this measure.

  On 10 June, the Commission confirmed that they had formally adopted the attached draft proposal for a Regulation implementing the freeze on funds held abroad by the FRY and Serb governments. The Commission's proposal has not yet been published officially. I am enclosing an Explanatory Memorandum on this proposal.

  In response to escalating troubles in Kosovo, events have moved quickly in Brussels. The Council is in the process of considering the Commission's proposal, and a finalised Regulation is likely to be adopted shortly.

15 June 1998

Letter from the Rt Hon Alistair Darling MP, Chief Secretary to the Treasury, to Lord Tordoff, Chairman of the Committee

  In my letter to you of 15 June, I explained that the Council was in the process of considering the Commission's proposal for an EC Regulation freezing the funds held abroad by the FRY and Serb governments, that events were moving quickly in Brussels, and that a finalised Regulation was likely to be adopted shortly.

  The Commission has now amended its proposal in the light of discussions with the Member States. I am attaching a copy of the amended proposal, which is supported by all Member States, and which differs marginally from the earlier version. You will see that the freeze on funds has not now been rolled together with earlier adopted EC regulations implementing other elements of the Kosovo package (the ban on export credit support, and the ban on exporting goods which might be used for internal repression or for terrorism).

  The Commission's latest proposal matches the Council's common position more closely than did the Commission's initial proposal. In particular, persons and entities owned, controlled, or acting on behalf of the FRY and Serb governments will not now have their funds frozen at the outset, but they can be punished by other means if they circumvent the regulation. If it transpires that such persons or entities are being used to circumvent the regulation, the Council may consider adopting additional measures against them in future (including freezing their funds). With persons and entities not covered by the freeze of funds at the outset, the Commission has dropped its proposal to establish a committee whose primary function would be to identify such persons and entities. The list of exemptions to this regulation has also been modified slightly, to allow for possible future contingencies (such as any possible future EU humanitarian actions).

  Given the rapidly deteriorating situation in Kosovo, and the practical and political need to adopt these agreed measures as soon as possible, the Government would like to support the adoption of this proposed EC regulation. The next opportunity for this EC regulation to be adopted will be the Research Council on 22 June. I am aware, however, that the normal process of scrutiny will not have been completed by then. I hope you will agree with me that the UK would not wish to block such important legislation in these circumstances. Consequently, I have concluded that the UK should vote in favour of this regulation if it is presented before scrutiny can be completed. The UK's failure to support this legislation would send the wrong message to our EU partners, and to Mr Milosevic. I hope this is acceptable to your committee. Unless I hear from you otherwise, I therefore intend to signal our agreement to this proposal.

22 June 1998

Letter from Lord Tordoff, Chairman of the Committee, to the Rt Hon Alistair Darling MP, Chief Secretary to the Treasury

  Thank you for your letter of 15 June, and for the attached Explanatory Memorandum on the Commission's draft proposal for a Regulation implementing the freeze on funds held abroad by the FRY and Serb governments. Your letter and the attached documents were considered by Sub-Committee A (Economic and Financial Affairs, Trade and External Relations) at its meeting on 30 June, at which the Sub-Committee asked me to write to you in the following terms.

  There is one matter on which I would be grateful for further clarification. I understand that it is unusual for sanctions to be introduced in the EU without the backing of a UN Security Council Resolution. As this appears to be unlikely in the present case, it would seem that autonomous Community measures are envisaged to implement the investment ban. I believe that the United Kingdom has not, in the past, accepted that the Community has an exclusive competence in this area. The common position states that new investments in Serbia are prohibited, but does not indicate if this is to be achieved by Community action alone. Can you please clarify the Government's present position regarding the Community's competence for introducing such a ban?

  Given the speed with which this proposal is likely to move, this letter lifts the scrutiny reserve.

30 June 1998

Letter from the Rt Hon Alistair Darling MP, Chief Secretary to the Treasury, to Lord Tordoff, Chairman of the Committee

  Thank you for your letter of 30 June.

  It is true to say that it has not been usual for sanctions to be introduced in the EU in the absence of a UN Security Council Resolution. However, both the freeze on funds and the proposed ban on new investment are based on Article 228a and Article 73g of the Treaty, and the Community's powers under these Articles are not dependent on prior UN action having been taken.

  The EU does not have exclusive powers to act in this area. This is reflected by the fact that before the Community can act, a common position or joint action must firstly be adopted by unanimity in the Council in accordance with the second pillar of the Treaty, which deals with common foreign and security policy.

  Member States retain the competence to act unilaterally where the Community has not acted. In the field of financial sanctions, this is expressly reflected in Article 73g(2) of the Treaty. Unilateral sanctions may risk creating conflict with the Community's Single Market rules on the free movement of goods and capital. For this reason, the UK agreed with other Member States that Community action would be appropriate in the present circumstances.

10 July 1998

Letter from Doug Henderson MP, Minister of State, Foreign and Commonwealth Office, to Lord Tordoff, Chairman of the Committee

  In my letter to you of 6 May, I undertook to endeavour to keep your Committee fully informed as EC measures in pursuit of a settlement in Kosovo came on stream. I am grateful to Alistair Darling for helping to fulfil this undertaking in his letters to you of 18 May, 15 June and 22 June—primarily covering EC action to freeze funds held in the Community by the FRY and Serbian governments.

  In his letter of 15 June, Alistair enclosed a copy of a Common Position undertaking to implement a ban on new EU investment in Serbia. I now enclose a copy of the draft Council Regulation tabled by the Commission and our explanatory memorandum covering this issue. The draft Regulation is still under discussion at working group level in Brussels. Member States broadly agree that some of the provisions of Article 1 need to be tightened-up to ensure that they accurately reflect the aims of the Common Position. But we do not expect any changes to be a problem for the United Kingdom.

  It remains unclear when the Regulation will be presented to the Council for final agreement. However, given the up-coming recess in Brussels during August, I expect matters to go forward quickly. In the circumstances, I hope you will agree with me that it would not be in the UK's interest to stand in the way of an agreed text of this Regulation should it come to Council in the near future. I shall, of course, continue to keep you informed as the situation becomes clearer.

  The next stage of EC action is likely to be the implementation of a ban on flights by FRY carriers to EU destinations. A Common Position on this was adopted by the Council on 29 June - I attach a copy. The Commission are now considering adopting an implementing Regulation.

14 July 1998

Letter from Lord Tordoff, Chairman of the Committee, to Doug Henderson MP, Minister of State, Foreign and Commonwealth Office

  Thank you very much indeed for your letter of 14 July, and for the attached Explanatory Memorandum on the new proposal for EC sanctions against Serbia. Sub-Committee A (Economic and Financial Affairs, Trade and External Relations) had in fact been discussing the possible effect of sanctions on Montenegro at its meeting on 14 July, and had asked for further information about this. The arrival of your letter was, therefore, particularly timely.

  Sub-Committee A considered your latest letter, and the proposal, at its meeting on 21 July, when it was pleased to note the Government's concern to minimise any negative impact which sanctions against Serbia may have on Montenegro. I am sure that Sub-Committee A will continue to take a keen interest in this very important and sensitive area. In the meantime, this letter lifts the scrutiny reserve.

21 July 1998

Letter from Joyce Quin MP, Minister of State, Foreign and Commonwealth Office, to Lord Tordoff, Chairman of the Committee

  Doug Henderson's letter to you of 14 July undertook to keep your Committee fully informed as EU measures against the FRY in response to the situation in Kosovo were implemented.

  Since then two new measures have been adopted: the ban on new EC investment in Serbia and the ban on flights by Yugoslav carriers to the EC.

  The Council Regulation EC 1607/98 banning new EC investment in Serbia was adopted on 22 July. I enclose the final version. It contains some small revisions from the draft version which Doug Henderson sent you on 14 July, but the essence is unchanged; our Explanatory Memorandum of 14 July remains valid.

  The Council adopted a Common Position on 29 June which provided that flights by Yugoslav carriers between the FRY and the EC would be banned. The Commission brought forward a draft implementing Regulation on 29 July. The Regulation was adopted on 7 September. We imposed an immediate ban oncharter services and on 9 September we gave notice of termination of our Air Services Agreement (ASA) with the FRY. On 16 September we decided to implement the ban with respect to scheduled flights with immediate effect.

  I enclose an Explanatory Memorandum on the flight ban Regulation and a copy of the Regulation (not printed).

  The continuing repressive actions of the Serb security forces and the Yugoslav Army in Kosovo have caused numerous civilian casualties and have displaced up to 300,000 people from their homes. In order to increase the pressure further on Milosevic to cease hostilities and enter into a genuine political process, we are pressing EU partners to extend the scope of the existing freeze on FRY and Serbian government funds, and also to extend the selective visa ban on FRY and Serbian government officials. In this regard, EU Foreign Ministers at the General Affairs Council on 5 October instructed officials to ensure that the EU makes the fullest possible contribution to the international community's pressure on the FRY. I shall of course keep you duly informed as this progresses.

  The UN Security Council has also adopted a further resolution on Kosovo, UNSCR 1199 of 23 September. This was adopted under Chapter VII of the UN Charter—ie where the Security Council has decided there is a threat to international peace and security—and should increase the pressure on Milosevic still further. It is particularly important that Russia voted for it.

15 October 1998


 
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