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Enlargement of the EU: ECC Report

5.31 p.m.

Lord St. John of Bletso rose to move, That this House takes note of the Report of the European Communities Committee on Enlargement of the EU: Progress and Problems (21st Report, Session 1998-99, HL Paper 118).

The noble Lord said: My Lords, I am delighted to have this opportunity, at the end of my four-year term as a member of Sub-Committee A, to present to the House this report. I am sad that the chairman of the sub-committee which produced the report, Lord Grenfell, is no longer here to move the Motion himself. I sincerely hope that it will be sooner rather than later that he is suitably elevated back into your Lordships' House to resume the enormous contribution which he has made over the years, both in our committees and in the Chamber. I know I speak for all members of the sub-committee when I pay tribute to his chairmanship, which has enabled us to come to grips with this complex issue in the limited time available and, with no hesitation, to reach a unanimous report.

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While I am obviously sad to be leaving the sub-committee, I wish also to express my sadness that it and the House have lost the wisdom and experience of Lord Ashburton. But on a brighter note, I welcome the noble Lord, Lord Tomlinson, who will be the new chairman of the sub-committee.

The inquiry involved a great deal of hard work by all the members of the sub-committee whose names are listed in Appendix 1. We were ably assisted by our specialist adviser, Jackie Gower, who shared with us a wide expertise on the questions we were examining. I am grateful too for the invaluable support and sound counsel of our Clerk, Dr Elizabeth Hopkins.

Sub-Committee A first conceived the idea of this inquiry before the Summer Recess. At that time we thought it would be useful to examine the progress of the five central and eastern European countries--the so-called first-wave applicants--which were negotiating to join the European Union. That followed our previous inquiry and report from two years before in November 1997.

However, the recent announcement on 13th October by the president of the European Commission, Mr Prodi, of the increasing urgency to speed-up the process of enlargement made the subject even more topical than we had originally expected. The day before our first meeting, the Commission published its own report on the progress of all the countries which had applied to become members of the European Union and included its proposals for a significant acceleration of the enlargement process. So, of course, with that in mind, we expanded our inquiry to include those proposals.

The publication of this report and your Lordships' debate on it today could not be more timely. At the end of this week the Commission's proposals are to be considered by the European Council in Helsinki. We are glad that we were able to produce this report in time to contribute to the debate. Our only regret was that the timescale limited us as to the amount of evidence that we were able to take. Our witnesses are listed in Appendix 2 to the report.

We had an extremely valuable session with Mr Nikolaus van der Pas, the Commission's Director-General for Enlargement, who has been leading the negotiating team. We heard also the Government's position from the recently appointed Minister for Europe, Keith Vaz. In fact, that was on the ninth day of his holding that post. We heard eloquent presentations from Ministers from the Republics of Hungary, Poland and Slovenia and received welcome written evidence from the Government of the Republic of Estonia. We regretted not being able to cast our net more widely but time simply did not allow that.

Nevertheless, we believe that we have managed to identify some of the most important points and to express a view on them. The Secretary of State for Foreign and Commonwealth Affairs has been generous enough to describe the report as providing,

    "a thoughtful and perceptive analysis of the issues involved in the negotiation and accession process".

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We are grateful to the Government for that and for the Government's own achievement in providing a response to the report in the unavoidably short time between its publication and this debate. I shall mention some of the major points of the Government's response as I take your Lordships through the report, although you will not be surprised to learn that I do not agree with all of them.

As your Lordships will know, negotiations on accession to the European Union are already under way with five central and eastern European states--the Czech Republic, Estonia, Hungary, Poland and Slovenia--and Cyprus is also included. The Commission now proposes to open negotiations with the other five central and eastern European states--Bulgaria, Latvia, Lithuania, Romania and Slovakia--as well as with Malta. It judges that those countries are ready to start negotiations because they meet the so-called political criteria which were agreed at the 1993 June Copenhagen European Council. That means that those countries are judged to have achieved stability of institutions guaranteeing democracy, the rule of law, human rights and respect for the protection of minorities. In addition, the Commission believes that those countries have proved their willingness to take the necessary measures towards complying with the Copenhagen economic criteria, which are,

    "the existence of a functioning market economy as well as the capacity to cope with the competitive pressure and the market forces within the Union".

Moreover, the Commission judges that it is ready to move towards taking on the obligations of membership, including adherence to the aims of political, economic and monetary union.

Our report welcomes the proposal to speed up the enlargement of the European Union. The recent tragic events over the past two years in the Balkans have made it vital to bring in the countries of central and eastern Europe as soon as possible and to send a positive message to countries such as Bulgaria and Romania which have achieved a lot of restructuring but certainly have not gone far enough to meet the European Union's standards.

As we said in our concluding comments in the summary at paragraph 30, the term "political imperative" is for once not out of place. Peaceful co-existence in Europe is at stake. So we are glad that the Government have been pressing for the process of enlargement to be accelerated. But we caution against raising false hopes and expectations. It is important for the new applicant countries to realise that they will proceed at their own pace and that they will be admitted to membership of the European Union only when they are judged to have satisfied all the criteria. That is not a judgment which will be made simply by the Commission. It will have to be ratified by all the existing member states.

The standards which are incorporated in the acquis communautaire are high. The applicant countries certainly have much work to do in order to meet them, which, in many cases, will take a long time. We did not

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think it would be possible or, indeed, sensible to try to agree a fixed timetable for accession negotiations. As our report states, that does not prevent applicant countries from having their own targets. We agree with the Government that these can be a useful spur to activity in applicants' administrations but suggest that they must be seen more as aspirational. The European Union cannot commit itself to allowing countries to join on the basis of a pre-arranged timetable. I certainly agree with the Government's response that it is important in many areas of the acquis to pursue implementation before accession.

We were also concerned that the first wave applicant countries might be over-optimistic about their target dates for joining. We recognised the enormous efforts those countries are making to transform not only their economies but also their social and political structures. We were particularly struck when the Polish Minister emphasised to us:

    "the people are making the changes, not the Administration and not the Government but the people".

But we concluded that, however hard those countries tried, they could not realistically hope to achieve everything at once. There was still a lot of work to be done, particularly to develop administrative and judicial capacity so that the new legal framework could be implemented in practice.

That brings me to the vexed question of what are transition periods. Should applicants be excused from having to meet the full standards of the European Union in the acquis communautaire immediately, or should that be avoided because it would create a two-tier Europe? In paragraph 169 we urged the Government to recognise the dilemma:

    "there is no point in pretending that this question will not arise. Member states must come to grips with the fact that the price of accelerated enlargement may well be the acceptance of what would amount to a two-tier EU membership for several years to come. We think this is a price which the European Union can and should pay, though we emphasise that such a decision should not be allowed to remove the pressure for new Members to play their full part as soon as possible. If they want the right political outcome, governments--including our own--must err on the side of generosity rather than restrictiveness".

If the process of enlargement is to be accelerated, as the Government say they want, transition periods are bound to be necessary in a number of cases. It is generally recognised that that may be needed in areas such as environmental infrastructure which does not directly affect the single market. But we concluded that they might also be necessary in some other areas directly related to the single market and even in the case of agriculture as a result of the failure of existing member states to face up to the real need for reform. We thought that we had detected, in our initial evidence from the Minister of State for Europe, Keith Vaz, a hardening of the Government's attitude towards allowing transition periods. However, I am glad to note from the Secretary of State's written response to our report that we were wrong and that the Government recognise that transition periods have played a part in every previous accession, including our own.

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I still wonder whether the Government have really come to grips with the difficult choice we pose in our report. I hesitate to use the word "fudge" but it is hard to find a word to describe the conclusion of the Government's response, which states:

    "The acceptance of limited transition periods does not imply a two-tier Europe".

Your Lordships may consider that much depends on the definition of "limited" and, indeed, "two-tier". In our view, if accession is to be speeded up, the European Union will have to allow realistic transition of quite extensive periods for quite a long time. No doubt the noble Baroness, Lady Scotland, will tell us in her reply why the Government do not see that as a problem.

I have concentrated so far on the work which candidate countries have to do in order to apply for accession. However, there is also an enormous amount of work for existing member states to do. The European Union must make the changes to its policies, financial provisions and structures which are necessary to enable it to accept new members.

As far as concerns policies, our report is reasonably optimistic. We judge that the decisions taken at the Berlin European Council in March this year on the future of the structure and cohesion funds are accession-friendly. But we say:

    "we remain convinced that more radical reform of the CAP is needed, and we hope--and expect--that the forthcoming WTO negotiations will bring renewed pressure for this".

We must ensure that enough funding is available to make enlargement possible. The Government assure us that the current arrangements are adequate. We hope that proves to be true. I agree that the own resources ceiling is adequate. However, if the financial perspective turns out to be a constraint in future years, we urge that it should be reviewed so that adequate provision for the costs of enlargement can be made in the annual budget of the European Union.

Finally, it is essential that we adapt the institutions of the existing European Union to reflect the increase in numbers to the fold. We must be ready to receive new members as soon as they are ready to join. At the very least that will mean making difficult decisions on the size and composition of the Commission, the weighting of votes in the Council and the possible extension of qualified majority voting. The Commission and some member states wish to make other changes at the same time. Our concern is that that should not slow down the enlargement process and we are glad that the Government agree. I am sure that your Lordships will agree that it would be most regrettable if candidate countries had to miss their target dates for accession because the European Union was not ready to receive them. The Government should press for the necessary changes to be made quickly.

I commend this report to your Lordships' House. It is not one of our most controversial but it deals with one of the most important issues; that is, the need to promote peace in Europe by speeding up the enlargement of the European Union. I beg to move.

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5.50 p.m.

Lord Tomlinson: My Lords, first, I join with the noble Lord, Lord St. John of Bletso, in paying my tribute to the work of Sub-Committee A and in particular the chairmanship that it received from Lord Grenfell. I am sure that the whole House shares the regret of the noble Lord, Lord St John, that at the present time we do not have the benefit of Lord Grenfell in this House.

I can praise the work of the sub-committee without any element of self-congratulation because of my enforced absence from all but one of its hearings. I therefore feel at liberty to say that it produced an excellent report with sound analysis which has been excellently represented to the House today by the noble Lord, Lord St. John.

Enlargement is a wholly desirable process. One may argue that it is a wholly necessary process in the interests of peace, stability and prosperity in Europe. However, one must qualify that by saying, "but not at any price". Changes need to be put in place within the EU itself, especially concerning the institutional questions. Equally, changes need to be embraced by each applicant country wishing to accede to the Union. Those changes on both sides of the equation are essential preconditions, not merely to enlargement, but to a successful enlargement. For enlargement to happen in an institutionally unreformed European Union, or with the applicants being accepted without fully meeting the Copenhagen criteria, would be a recipe for potential disaster.

First, in relation to institutional reform, it is already clear that European Union decision making is proving increasingly difficult. Each enlargement, from the original six to the nine, to 10, to 12 and then to 15, brought in its wake greater problems. Decision making was exacerbated to such a degree that more and more relatively simple points are being stored up and referred to European councils for resolution. Each enlargement has meant more bureaucracy, more linguistic problems, more commissioners without real roles, more wielders of the veto, ever more members of the Court of Justice and the Court of Auditors without fully meaningful roles. Decision making without institutional reform in a Union of 18 to 20 or possibly more is an unimaginable nightmare.

The intergovernmental conference processes start with the leftovers from Amsterdam, plus whatever else is agreed. We all know from the report of the former Belgian Prime Minister, Mr Dehaene and his two additional aides, the former German President, Mr Von Weizsaker, and my noble friend Lord Simon, that some ambitions for the IGC go infinitely further than those of the Amsterdam leftovers. Were that great agenda to be the agenda for the IGC, then the framework of time needed for decision making would itself be even greater. But as yet we have no timetable and no agenda; all we have is optimistic assertions of completion by the end of the year 2000 and equally optimistic assertions of full ratification of a new treaty in all member states within a year. There seems to be a

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surfeit of optimism and a lack of realism in some of those timetables based on the progress that is currently being made.

I turn to the other side of the equation--the noble Lord, Lord St. John of Bletso, referred to both sides--involving the ability of the applicants to meet the imperatives of the Copenhagen criteria. Clearly nothing should be allowed to dilute the imperative of the Copenhagen criteria. It is necessary to remind ourselves of the awesome burden those criteria contain: stability of institutions in each applicant country guaranteeing the rule of law; human rights; and respect for and the protection of minorities. There is an obligation to a functioning market economy with a capacity to cope with market forces and competitive pressures; and an ability to accept the obligations of membership including adherence to the aims of political, economic and monetary union. That is already set in the Copenhagen criteria as well as the adoption and application of the acquis communautaire which must not only entail formal transposition of European Union law into national law, but also be accompanied by the administrative and judicial capacity properly to implement and enforce such laws.

This is a monumental task made no easier by loose talk by some of enlargement being completed as early as 2002. We, the European Union, will have done well to complete our tasks by then. The applicants would need to have started the new millennium with miracles to fulfil their obligations. It is not enough to have the sort of incantations to which reference has been made; to talk of political imperative or give injunctions to take leaps of faith. Such phrases cannot be interpreted as either reasons or excuses for dilution of the Copenhagen criteria.

I turn to an aspect of the enlargement discussion which needs to be more fully addressed and for which at present both sides seem ill prepared. The fight against crime and racketeering and the need for a single market to protect properly its external frontiers is not at present receiving the attention that the problem deserves. A single market is only as strong as its external border is secure. The present European Union has enough problems with the abuse of the European transit system and with smuggling of goods and people.

Enlargement, to be a success--I do not want it merely to happen; I want it to be a success--needs the active support of our citizens, at least sufficiently to ensure ratification of the intergovernmental conference agreements in all member states. Our citizens will need assurances as regards the security of our borders from several perspectives: migration into the European Union; economic protection of the single market; and certainly concern for our common security and defence interests. The wider the enlargement, the less politically stable some of our new frontier neighbours appear to be. That needs to be addressed with greater urgency than anybody appears to be showing in the discussions at present.

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Enlargement needs to be pursued. Countries freed from totalitarian shackles have a right to see it as part of their destiny. For us it is a vital ingredient to peace, stability and prosperity in Europe. We in the EU must fulfil our duty to prepare, as must each of the applicant countries if they are to accede. Anything less would be to condemn the Union to constant gridlock in decision making in which new member states would neither be able to fulfil their obligations of membership, nor enjoy its benefits.

6 p.m.

Lord Moynihan: My Lords, I, too, should like to congratulate the noble Lord, Lord St. John of Bletso, on introducing this important debate, which, as he pointed out, is most timely in advance of this weekend's European Council summit in Helsinki. I should also like to take this opportunity to congratulate all noble Lords who served on the committee and who produced this comprehensive and insightful report. In particular, I should like to congratulate the noble Lord, Lord Grenfell, whose absence I hope is only temporary from your Lordships' House, on his work as chairman of the committee.

It has been said many times before, but it is none the less true for repetition: enlargement is the historic challenge of our generation. Tonight I intend to focus my remarks on the accession to the European Union by the countries of Central and Eastern Europe. We have an opportunity before us to heal the divisions that have scarred our region, to ensure that the whole of Europe reaps the fruits of peace and to construct a durable framework for peace and prosperity, security and stability across the whole continent. Events in the Balkans, in Bosnia and in Kosovo have translated this duty into a political imperative to deliver enlargement, one which rests squarely on the shoulders of today's European leaders.

The committee's report raises a number of highly pertinent questions on the means by which that enlargement is being delivered. That is not to say that in the past two years, since the Commission published Agenda 2000, which suggested a policy framework for enlargement, important steps have not been taken. Much progress has been made on accession negotiations with the first wave of applicant states. By the end of the Finnish presidency, negotiations on two thirds of the chapters of community law will have been opened with them. But the ultimate decision on whether, and when, these applicants join the European Union depends not only on their readiness to enter, having surmounted all the economic, political and social hurdles demanded of them, but also, and equally importantly, on the readiness of the European Union to receive them, having put in place adequate funding and having completed all the necessary policy and institutional reforms.

These difficult issues must be addressed and difficult decisions taken as a result. It is critically important that the enlargement train is not derailed because of the failures of existing member states. While each of the candidate countries is making such heroic efforts

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to get ready for membership, we must show the same commitment to getting the European Union ready for enlargement. We cannot allow the situation to arise in which those countries, whose people have already made great sacrifices and efforts to meet our political and economic criteria, decide to turn their backs on us and this historic opportunity slips through our fingers like sand, intangibly yet irredeemably.

The opportunity to agree these reforms was missed once before, two years ago at Amsterdam. We cannot afford to miss it again, or future generations will judge us harshly. Given that the Government put the failure of the Amsterdam Treaty to make the European Union's institutions appropriate to an enlarged Community down to the lack of political will among other member states, but not the United Kingdom, and to deadlock in the Council of Ministers as a result of the "intransigence of other partners", what assurances can the Minister offer that the same intransigence will not prevent agreement being reached at next year's IGC?

That is particularly important given the concerns raised in the report that the,

    "most likely outcome"--

of the IGC will be that the,

    "pace of enlargement will be constrained by failure to agree on the detail of institutional reform",

which would be,

    "seriously damaging to the confidence of the applicants".

In the light of these fears, does the Minister share the optimism of the Minister of State that the European Union will indeed be ready by 2002, given that we heard such confidence and optimism from the Government before in 1997, only to have those hopes dashed?

In this context, I should like to say a few words about the Helsinki summit due to take place at the end of this week. The agenda for the IGC has yet to be agreed. This, together with agreement to the next major wave of enlargement, is what the summit will determine. This will be one of the most important items under discussion. It is welcome news indeed to hear that obtaining an agenda, which will keep the IGC focused on enlargement and enable it to be completed within a reasonable timeframe, will be one of the Government's strategic objectives for the summit.

However, the Minister will be aware that the Simon-Dehaene Report recommended a much broader agenda than that agreed at the Cologne European Council in June. I hope that the Minister will concur that any such attempts to broaden the agenda must be resisted. If past experience is anything to go by, these negotiations will prove protracted and difficult enough, without the added risk of a prolonged IGC, which may not be concluded by the end of the year 2000. Therefore, can the Minister give a guarantee that the Government will not allow the agenda to slip beyond the one set at Cologne in June?

The Government have not yet set out a comprehensive negotiating position for the IGC, but rather than press the Minister, again, for answers today on that subject, I should like an assurance from her that the White Paper the Government intend to issue in

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advance of the IGC will set out this position. Suffice it to say, I should like to ask the Minister for an assurance that this country will retain its right to nominate two Commissioners, unless and until a satisfactory agreement on reforms to the voting system within the Council is reached, which both increases Britain's voting strength in the Council and which fairly reflects the difference in population between member states.

One of the aspects of the report that particularly struck me was the sense from the evidence of the Governments of Hungary and Poland in particular that they were isolated from the present running of the European Union. Can the Minister say whether the Government intend to press for observer status for the applicant countries at the IGC, in accordance with the report's recommendation?

I should now like to turn to the issue of timetabling, which the report examines in some detail. This is particularly apposite in the light of the Commission proposals to open accession negotiations with the remaining central and eastern European applicants. As the report states, these proposals recognise the strong political imperative to accelerate enlargement. That is a welcome acknowledgement. We share the Government's desire to see invitations to start negotiations issued to Bulgaria, Latvia, Lithuania, Malta, Romania and Slovakia at Helsinki this weekend. It was also very heartening to read of the strong support among the first wave applicants for the inclusion of other applicants in the negotiations.

Our experiences in Bosnia, and now Kosovo, have taught us the bitter lesson that the continent of Europe cannot be whole and free as long as its south-east corner is wracked by ethnic tensions and threatened with conflict. To Bulgaria and Romania, applicant countries which border this long-troubled region and which have suffered as a result, we owe a particular obligation to ensure that EU enlargement brings peace, prosperity and stability. I hope that the Minister will agree that this obligation includes the critical need to secure the conditions for the unblocking of the Danube, which continues to be the cause of so much economic hardship in these countries.

Yet the proposals to open negotiations with the remaining applicant countries highlight the dangers of setting a timetable for accession. If expectations in these countries are not met and negotiations do not proceed as fast as they would like, the twin phantoms of disappointment and false hope are likely to haunt the enlargement project and bedevil it to the point of collapse. In view of the statements made by the President of the Commission, which have varied from suggestions of setting "a firm date" for the accession of those countries best prepared, to the recent recommendation of a

    "target date for the closure of each chapter of negotiations",

the question of a timetable needs to be clarified.

However, the committee has concluded that the target dates for accession mentioned by both the Commission and the first wave applicant states are, as we have heard, over-optimistic, and may not fully reflect the difficult work which still lies ahead. To what extent does the Minister share this view?

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The report spends some time considering the matter of transition periods. The question of whether applicants should be allowed to join before they have not only adopted but also implemented the acquis communautaire in its entirety is absolutely fundamental; and the answer is surely dependent on the level of political will among existing member states to accelerate enlargement. For whatever agreement is reached on transition periods will critically affect the realism of target dates and will set a precedent for negotiations with the remaining applicants.

Does the Minister agree with the committee's conclusion that it seems clear from the evidence it received that,

    "without adequate transition periods very few applicants could accede soon and some would be unable to do so at any time in the foreseeable future"?

In the light of the concern expressed in the report at the perceived,

    "hardening in the Government's attitude to transition periods"

which, as it points out, is incompatible with support and enthusiasm for enlargement, what assurances can the Minister give that the Government will maintain a realistic and balanced approach to transition periods and does she agree that it is simply not sensible to pretend that no transition periods will be needed?

The Government have prided themselves on leading the debate on enlargement and have described themselves as a champion of European Union enlargement. But the Government have already once allowed a difficult decision to be postponed, and put off for tomorrow what they should have done today. However, the forthcoming IGC offers a second chance to put that right. We, from our Benches, will offer the Government every support in securing an agenda for a focused, practical IGC which takes us one important step closer to the milestone of the realisation of this most symbolic and important of enlargements.

I end by offering an apology that due to a pressing previous engagement I may not be present for the Minister's speech. If that proves to be the case, I know that both the Minister and my noble friend will wind up ably and cogently.

6.12 p.m.

Baroness Williams of Crosby: My Lords, I too congratulate the noble Lord, Lord St. John of Bletso, on the excellent way in which he presented the report. I underline his regret that the noble Lord, Lord Grenfell, who has been a marvellous chairman of Sub-Committee A, on which I had the great pleasure to serve for a while, is not able to be present this evening. I share the view that the sooner the noble Lord returns to this House, the better informed will be our debates on Europe. I believe that in many ways the European scrutiny committees are among the best jewels of this House. This report is another example of the high standard of their contribution to debate on the future of the European Union.

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I turn first to the Helsinki agenda. It is clear that the Government have committed themselves to enlargement as their first priority and have recognised that the inescapable consequence of enlargement--as the noble Lord, Lord Tomlinson, said--is the success of the intergovernmental conference on the necessary reform of the existing institutions. Bluntly, one cannot have enlargement without reform of the institutions and it is no good our pretending otherwise.

As the noble Lord, Lord Moynihan, said, it is important also not to lose sight of the fact that enlargement is a major aspiration to complete the reuniting of a deeply divided and troubled continent and to make it peaceful and prosperous. We should never lose sight of that ambition. It is easy to become bogged down in the many complexities of economic integration and legal difficulties. We should not forget what we are trying to do because, as the noble Lords, Lord St John of Bletso and Lord Moynihan, said, it is an ambition for a generation. It is one that we should be proud of because, if we are able to achieve this ambition, there will never be another iron curtain dividing the Continent of Europe.

However, it is crucial to add that there is something troubling about the way in which the enlargement negotiations have taken place. The noble Lord, Lord St John of Bletso, pointed out--and we all know this--that taking on board virtually the whole of the acquis is extraordinarily difficult for countries that have emerged from years of communist control only in the past decade. It is worth underlining--as the evidence of the witnesses so clearly did--the colossal price we are asking these countries to accept. I give just one example; namely, the probability that up to 40,000 Poles will lose their jobs in a country where unemployment is already much higher than here if the requirement that the steel mills should no longer be subsidised and should be sold off is insisted upon. It may have to be insisted upon, but there must be some understanding of the political fragility that still applies in central and eastern Europe. There must also therefore be some recognition that the transitional period for some of these countries may have to be fairly lengthy, as the noble Lord, Lord Moynihan, said.

I have one other worry about the negotiations which is mentioned in paragraph 154 of the committee's excellent report; namely, that there is not enough dialogue in the negotiations. It is almost as if the acquis is laid down with little discussion of how it might best be handled. That is why I strongly support the radical proposal in the report of Sub-Committee A; namely, that there should be observers at the intergovernmental conference when it takes place at the end of next year. It is simply absurd to exclude from that conference even observers from the countries which are so soon to join the body, for the institutional reforms we embark upon are bound up inescapably with the process of enlargement and how it can be made successful. I do not understand why not listening to those who can explain the difficulties they face will somehow enhance the process of institutional change. We strongly support the provisions of

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paragraph 154, but we also hope that the dialogue may be conducted in a slightly more understanding way. Reading between the lines of the evidence given by the witnesses, there are clear indications of a certain amount of, as it were, "We are speaking and you will listen but there will not be too much listening the other way".

As has been pointed out, the enlargement process requires those of us who are member states of the European Union to understand the depth of the changes that we have to make. We have to change the size of the Commission. We have to change qualified majority voting. We have to recognise the necessity for there to be an opening up of the Council of Ministers, for otherwise all our talk of openness and the Copenhagen principles will be seen as not applying to ourselves. We must also recognise that the incredible complexity of the European Union treaties as they have developed has now become the enemy of the democratic accountability and true public involvement that many of us badly want to see.

We cannot escape facing up to these complexities, only part of which comprises the common agricultural policy. I hope that the noble Baroness, Lady Scotland, will be able to say something in her reply about this morning's rather surprising news that the Prime Minister intends to apply the common agricultural policy to enhance tourism and the environment in this country. Both of those are excellent objectives. She may be able to tell us whether it is a unilateral or collective approach to the common agricultural policy. That is very important for the countries we are talking about today.

I raise one question with the noble Lord, Lord Moynihan, who has once again given an extremely thorough and conscientious speech on which I congratulate him. I believe that he is in some difficulty. The leader of the Conservative Party in another place has consistently indicated his opposition to an extension of qualified majority voting. I say to the party of the noble Lord, Lord Moynihan, that one cannot embark on the institutional changes needed for enlargement, which he rightly recognises as an important and overriding goal, without recognising that his party will find it difficult to accept some of those institutional changes. The way to produce a greater voice for nation states within the process of negotiation and enlargement is to enhance the position of national parliaments in a way which is now being undertaken as regards the proposed charter of human rights rather than trying to set up essentially inescapably shallow and short-lived defences of national sovereignty, for example, by proposing more and more opt-outs which will eventually make the European Union so complex it will no longer work at all.

I wish to address two other points before I conclude. The first concerns the important issue of the relationship with Turkey. I believe that it would be a very good thing for Turkey eventually to join the European Union. I accept what the noble Lord, Lord Tomlinson, said about Copenhagen and, even more strongly, about the Luxembourg conditions laid down in the paper called A European Strategy for Turkey.

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They are very rigorous indeed. We need to try to help Turkey to recognise that some of her problems are perhaps cultural rather than national and at least to see the problem with the Kurds, for example, as having something in common with the linguistic and cultural demands of the people of Wales, where a solution has been found which provides extensive cultural autonomy without compelling the Welsh to abandon either their language or their culture in a manner which they would have found it impossible to carry out. I believe that there are ways in which Turkey can be brought within the ambit of the influence of the European Union and assisted to reach the point where one day she might become a full member. We need to be as helpful and sympathetic as we can. I would like to see as part of the European Union a country with a very great Islamic culture which has contributed hugely to the development of Europe.

Finally, I refer to the countries along the border. My noble friend Lord Wallace of Saltaire will have more to say about that. I declare an interest as president of the Britain-Russia Centre. Russia, Ukraine, Georgia and the other countries of the former Soviet Union are feeling increasingly isolated from the mainstream of European policy. As regards Russia, I believe that the outrageous behaviour in Chechnya is not unrelated to a strong sense in Russia of being encircled, being at risk and being under-consulted in the recent developments which have affected her so far from the expansion of NATO to the agreement to establish a pipeline that specifically excludes Russia from its path.

I conclude with this. It is crucial that those of us who support the development of the European Union and its enlargement recognise the need to begin to establish economic and defence structures which will include Russia in the outer concentric circle of our concerns, including Ukraine, Georgia and the other countries of the former Soviet Union. I plead that because Madeleine Albright has suggested a fairly rapid extension of the European Union to the Ukraine. That does not make sense at this stage. It tells us that we should embark on a long transitional period of association with these countries in order to establish a Europe which goes beyond the continent itself to include its neighbours in new policies that establish and recognise their interests. If we do not do that we might find ourselves establishing a new border in Europe even less porous than the one that has fallen.

6.25 p.m.

Lord Biffen: My Lords, I congratulate the noble Lord, Lord St. John of Bletso, on presenting the Select Committee report and the members of that committee for all the work they put into it. I also echo the sadness that is felt because of the absence of Lord Grenfell, a man vastly experienced in international affairs. I look forward happily to his return to this Chamber.

I take as my starting point, out of deference to the noble Lord, Lord Renton of Mount Harry, remarks that he made. For a long while he sought to gentrify

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my views on Europe. It was particularly pleasing to see that he said at page 37:

    "We are all in favour of enlargement in general terms but when it comes to the principles of how do you create a European Union Commission, Council, Parliament that is actually going to work with 26 members we do not really see an end result that is either acceptable to us individually or acceptable to the members generally".

I thought that that showed an almost delicate conversion to scepticism, but I cannot travel quite that hopefully.

I offer your Lordships four thoughts on the nature of the present relationship and why they should make us ultra cautious. I am very modest in my choice of terms. First, I do not believe that we should have any illusion about the thrust for enlargement whether it comes from the imperial spirit of the new Europe or from the anxiety of the border states which look to the East and feel uneasy.

One thing is sure: for all the arguments, Turkey will be a very strong member for enlarged membership. The other Balkan states like Croatia and the rest will be mopped up. I find it fascinating that Armenia wishes to join the European Union. We shall find there is no cordon sanitaire between Russia and the enlarged Europe which will take its frontiers alongside Russia. In that context, I very much agree with what was argued by the noble Baroness, Lady Williams.

The second point concerns the core structure of Europe and what we have got used to. Whether we have enjoyed it or not, what we have got used to is a highly developed liberal market economy centred around the single market with all the state intervention required to make that effective. That is under the overriding bridge of strict monetary discipline which will be embodied in the ecu.

Do we suppose that that structure will survive the experience of enlargement? I believe that that is highly unlikely. I do not believe that the structure is going to survive in today's European Union. We have gone through a phase in which liberal economics have been high fashion and I have been delighted to ride that particular fashion. But there is now a growing concern about distributive economics, the Social Chapter and the social obligations of business in a way which would not have been true a few years ago. Of course, they will extend to environmental matters and the issues so graphically addressed at the abortive meeting in Seattle.

It is not Oskar Lafontaine one should regard with any degree of apprehension concerning the tensions within the European Union; it is the fact that there is a revival of communism in Poland and Hungary, a revival of a situation where the state is expected to resume much of its traditional role; namely, to provide protection against the consequences of economic change, which is the hallmark of economic liberalism. For that reason, I say to the House, "Watch this space". Do not suppose that enlargement will help to reconcile these tensions and difficulties. I suspect that just the reverse will happen.

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I shall dwell for a moment on the actual size of the proposed expansion. Of course, in the past the European Union has expanded on a number of occasions, but this proposal stands alone in numerical terms for a prospective expansion. The expansion will bring in between 60 million and 65 million people in the first wave, which is now underway; 40 million in the second wave which, it has been indicated, will not be far behind the first wave; and finally, in Turkey itself, 60 million. In aggregate terms, that amounts to about 40 per cent of the existing European Union. Do not suppose that those numbers can be absorbed merely by extending the transitional period. Indeed, the transitional arrangements monumentally underplay the significance of the challenges we now face.

Finally, the difficulties are exacerbated by the difference in living standards. In Appendix 4 of the Select Committee's report, it is shown that, expressed as a percentage of average EU living standards, the Czech Republic has the highest percentage at 60 per cent, then Hungary has 49 per cent and Poland has 39 per cent. I have chosen the three most significant economies. It is staggering to believe that it will be possible to take into Europe's political, economic and social Community nations with such disparate living standards as have been presented. When I examine the detailed figures, I believe that this will be a massive challenge--probably as big a challenge as any free society has had to encompass.

Of course, there are times when such decisions are made, normally under the threat of external pressure--the threat of war. We do not have that threat now. The quite extraordinary and very welcome situation is that peace has now held sway in Europe for generations. There are no external pressures that require these changes. So I look to see where is the crusading spirit to enable the enlargement to be a success.

I shall quote again from the report of the Select Committee. When taking a test of opinion about enlargement, the committee found that the average level of support for the applicant states joining was 42 per cent. In the United Kingdom, support was 40 per cent; but others showed significantly lower support: Germany, 38 per cent; and France, 33 per cent. I thought that we were the reluctant Europeans. Now we have a situation where Germany and France are polling less enthusiasm than are we. I do not have to spell out the argument: those countries have assessed the economics of the situation. They have considered who will be signing the cheques. Those countries are making decisions not on a grand view of pan-European peace but on money. That is not a basis for the kind of sacrifices that must be envisaged by enlargement.

Of course, I wish the Minister and her department well in the negotiations. But I hope that they will not travel too full of hope and that there will not be too much facile optimism in the Foreign Office. At some stage, someone will dust down the print of William Pitt after Austerlitz saying, "Roll up that map" of Europe, because we are at a sea-change in our relationships. We are seeing a future which, despite a veneer of comparability, will be wholly unlike the past. The fear

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should be that the future will not only itself be abortive, but that it will undermine what success has been achieved in the past.

6.35 p.m.

Lord Shore of Stepney: My Lords, it is always a pleasure to follow the noble Lord, Lord Biffen, in debates on European questions because he speaks with great knowledge and authority, and with a realism that is so lacking in many other contributions to European debates.

In the broadest sense, what are we being asked to agree to in this report? In its conclusions it contains three propositions. First, the report concludes that enlargement is a good and excellent thing and that we should go for it. Secondly, as I understand it, the report suggests that it will be very difficult to achieve. Yes, it will be, and that fact has not yet been spelt out anything like sufficiently, and that is why I am so pleased to be following the noble Lord, Lord Biffen. Thirdly, it states that this group of, on the whole, pro-Europeans and pro-integrationists, has been driven to the conclusion that, at least for a time, it will be necessary to have a two-tier Europe, if there is to be any enlargement at all.

That in itself is a good starting point as regards realism. I should now like to address what I believe are the major problems that must be overcome. Some have already been touched upon and I am very glad that that has been done. The first, of course, is the burden being imposed upon the applicant states. My old friend the noble Baroness, Lady Williams, was quite right to refer to the acquis. I believe that the phrase, "ball and chain" was used. Clamp the acquis, in all its magnificence, on to the applicant states and it will be a surprise indeed if they can move forward a single pace. Added to that, we have seen the incredibly bold claims for the Copenhagen criteria, as listed by my noble friend Lord Tomlinson. We should consider those against the background and history of the countries of eastern and central Europe, and in particular the history of the past 50 to 60 years in those regions.

In a previous debate on enlargement in December 1997, the noble Lord, Lord Dahrendorf, reminded us that it would take the Poles 10 years of expenditure of up to 3 per cent of their GDP simply to conform to the environmental, health and safety standards of the European Union. That burden is enormous and anyone who imagines that it can be imposed in any way other than over a very substantial period of time is frankly deluding himself.

I have found that in most of the reports on this matter there is a lack of intellectual rigour and no attempt to go to the heart of the matter. "Fudge" was the right word--indeed, I thought it was very kind--that was used to describe the Government's response to the report. I believe their response was far worse than that. It was a flight from reality. When one rehearses with the existing members of the EU what those countries really have to do in order to make enlargement possible, it is immediately obvious just how formidable and in some ways remote is the objective.

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What are those major problems? The principal one is the CAP and I am surprised that it has not been mentioned more frequently in the debate so far. I am not referring to the almost illusory CAP of Agenda 2000 as presented by the Commission and debated in this House two years ago, but to the CAP after President Chirac had had his fling at the Berlin summit when that document was further weakened by his massive amendments. The idea that we can go ahead with the CAP post-Chirac, post-Berlin and pay for it is nonsense. What do we then find? The Government propose that the most expensive part of the CAP should not be offered to the applicant states. They are to be exempted from the guarantee section. How they will then negotiate with the applicant states the other parts of the CAP, I do not know. Will they really subsidise the export of Community food to Poland and these other countries while they refuse to pay them the level that they are paying its own farmers to put food into intervention? That is nonsense and everyone knows it.

The problem is not only the CAP; it goes much beyond that. Agenda 2000 was also dependent on a GDP growth rate in the European Union of 2.5 per cent per year over the whole period 2000-06. To put it mildly, that looks a very unlikely target to be attained. I have looked at the performance in the past few years of the main states of the European Union. The score goes something like this. In the past six years the French have managed three out of six years over and at 2.5 per cent; the Germans have managed two years out of six at 2.5 per cent growth; the Italians have managed one year out of the six; and the UK has managed about three as well. That does not really suggest that the 2.5 per cent growth rate is likely to be achieved. When you add to that the implications of economic and monetary union and the whole attempt to reduce either the debt/GDP ratio in the case of Italy, and the constraints imposed on Italy to do that, or the 3 per cent GDP borrowing requirement on others, you know perfectly well that deflationary factors will operate in a way that makes that 2.5 per cent growth rate almost impossible. That is the second of the hurdles that will have to be overcome.

However, that is not the end of the story. Part of the story is that there is not exactly great enthusiasm among the other member states, as was pointed out by the noble Lord, Lord Biffen. No, there is not, because, as he rightly said, they will lose something. If there is genuine reform of the CAP, we know who will be the losers. If there is going to be, as there will have to be, a switch of resources from the "poor four", which are doing jolly well, to a new "poor four", which will undoubtedly be there as soon as the applicant states arrive, it is not an attractive proposition for Ireland, Greece, Spain and Portugal to lose the massive subsidies that they have been receiving because they claim to be the "poor four". A good many vested interests will have to be overcome before we can take it for granted that there is a strong will among the governments, let alone the peoples, of the other countries of the European Union for enlargement.

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Finally, there is the IGC and institutional change. My goodness, I have read, as have other noble Lords, the report of the "three wise men", whom Prodi sponsored. I am sorry that the noble Lord, Lord Simon, is not present because it was a report that probably emboldened Signor Prodi to make the kind of remarks he has made--that it is essential to have qualified majority voting over a vast area and that it should be the absolute rule in the new expanded European Union; and also his remarks about how necessary it is to abolish the veto and the unanimity rule for taxation. Anyone who imagines that that IGC will not be faced by a whole mass of demands from Germany and other countries which want British tax policy to be changed and absorbed into the policies of the European Union is living in Cloud-cuckoo- land.

I come to the point. Of course it will be very difficult. We have to face that. The only sensible way out for us is to say that there really has to be flexibility if we are to enlarge--and we want to enlarge--and if we want to underpin the democracies of eastern and central Europe. They are poor countries; they do need help; and they need the help that they can get by opening up the European Union in trade terms--in agriculture and other areas--so that they get capital investment as well. They will not be able to live up to those criteria, and not just within a reasonable period of time. They will have to have a long transition period. But for many of them it is absurd to imagine that they will become part of that integrated Europe which is the Franco-German dream. It will not be Charlemagne's Europe again if you add the first six countries, then add the next six, including Romania and Bulgaria, and the further six of what was once the Soviet Union--the union of soviet republics.

Where does Europe end? The sensible thing now is really to develop those clauses in the Amsterdam treaty which allowed for separate development, to let those who want to go ahead to a tight Union to be free to do so, as the treaty allows, and for the rest of us, particularly the applicant states, to form a separate ring of states which do not share that aim and goal of complete union but wish, on the contrary, to stay self-governing but co-operating in all the areas that really matter for the future of Europe and its prosperity.

6.46 p.m.

Baroness Sharp of Guildford: My Lords, I join others in paying tribute to the noble Lord, Lord St. John of Bletso, for initiating this debate on our report--I was a member of the committee which put together the report; to our chairman Lord Grenfell; to our Clerk, Dr Hopkins, who was of enormous assistance to us; and to our specialist adviser, Jackie Gower.

As other noble Lords have made clear, the report is timely. When we first set to work on the report we had in mind the Helsinki meeting in December. We had not expected Prodi's statement to the European Parliament on 13th October, but in many ways it was Prodi's statement that set the agenda for our discussions. In his speech to the European Parliament on 13th October, Prodi made two things clear. First, he said that the

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negotiations with the six applicant states that were already under way--with Poland, Hungary, the Czech Republic, Estonia, Slovenia and Cyprus--should proceed as quickly as possible and that there was no question of allowing the timetable to slip to 2005 or beyond, although at that time, in the summer, there had been discussions about the possibility of the timetable slipping. No, Prodi made it quite clear that it was not going to slip.

Secondly, Prodi said that proposals would be put to the Helsinki summit to open negotiations with the remaining six aspiring applicants--Bulgaria, Romania, Slovakia, Latvia, Lithuania and Malta--and that discussions would be opened with Turkey. What was new was the acceptance by the Commission of what is called the "regatta principle": that although the start of the negotiations might be the same for each group of countries, the negotiations would then proceed at their own pace; and each country could enter into its own particular negotiations and wait until those were satisfactorily completed rather than having to wait around for a whole batch of countries to complete their negotiations before they proceeded.

It is also clear, as has been pointed out frequently during the debate, that the Commission is prepared to be somewhat more flexible than previously in allowing transition arrangements for aspiring countries. The key criteria--the Copenhagen political criteria--remain; namely, that for the start of negotiations there should be stable institutions guaranteeing democracy and the rule of law, respect for human rights, and protection of minority rights. Although no one suggested during the negotiations that the acquis communautaire should be in any sense modified, it was suggested that allowance should possibly be made for longer transition periods than had previously been accepted. That was an important change of stance on the part of the Commission.

The noble Lord, Lord Biffen, was right to refer to a sea change in relationships. Events in Kosovo were the trigger for the change in stance on the part of the Commission. That was made clear in Prodi's announcement that, if the hard line were pursued, the countries that had made such hard efforts and sacrifices would become disillusioned. Mr van der Pas, director general in charge of enlargement, also made it clear that the situation in the Balkans and the very real sacrifices made by Romania and Bulgaria in that war, and the continuing blockage of the Danube, made it necessary for a "big political gesture" to be made at Helsinki. Although no state would be allowed to begin negotiations until it had met the Copenhagen political criteria, he admitted that, down the line, when it came to the time for accession sometimes a "leap of faith" would have to be made.

As my noble friend Lady Williams has made clear, we on these Benches were delighted with the new initiative from Prodi. It is vital both that those countries that are more advanced in negotiations and those with which negotiations are yet to start should be made to feel welcome. That was brought home to me last summer when I visited Hungary. I went there to talk about the development of that country's science

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and technology system. It was my third visit; I had been there in 1991, and again in 1995. On my two earlier visits, I had on the whole been met with gloom and doom. The Hungarians had had to dismantle their huge academies of science, which housed thousands and thousands of people. They had been the source of scientific research, but had been totally isolated from the universities and factories. On the applied side, there were sectoral institutes of research, which fed through the applied technology but were not linked in any way with the factories. Those from the science and technology community whom I visited said to me, "Oh dear, all our scientists are being dismissed. We are doing no research and development now. We shall never be able to put together the capabilities that we had".

What was so encouraging about my visit during the past year was that, not only was one seeing in the universities the growth of the research base, side by side with graduate and undergraduate teaching, which provides a vibrant research base, but on top of that, large companies, many of them multinationals, were setting up new research laboratories and employing those scientists and engineers who had been dismissed earlier. Perhaps even more significant was that many new small companies were arising in the interstices of the economy, many of them created by those same scientists and engineers. They were indigenous companies, giving back to Hungary what it had had in many senses in the pre-war period; namely, a great vibrancy in its scientific and research community. It is moving back, and will quickly be a major force in our European scientific and technological capabilities.

So I found an extremely interesting and, on the whole, optimistic scenario. The Hungarians are among those who are most ready to join the new Community. I found it fascinating talking to them about, for example, the range of incentives that they might offer in terms of attempting to establish new firms. They were conscious of the limitations imposed by the Community's state aid regulations. "No, we can't do that", they were saying, "because we are not allowed to by the Community". In that sense, those who have described the acquis as something of a burden are perhaps correct. But it also provides them with a wall against the soft options that were always there under Communism. It is extremely important that they have that wall.

However, we should not forget the remark of the Polish Secretary of State at the Ministry of Foreign Affairs, referred to by the noble Lord, Lord St. John of Bletso. He said that it is,

    "the people [who] are making the changes".

That is very much what I felt during my visit to Hungary. Equally, we must recognise that they share our vision of establishing a successful liberal democracy; and that the benefits are not all one way. The market potential in those countries as they move rapidly towards Western standards of living is substantial. The Polish Government said that,

    "Enlargement is not an act of charity--it is in the self-interest of existing members too".

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We should remember that. Perhaps I may quote my colleague, Alan Mayhew, who is at the University of Sussex. In his evidence to the House of Commons Select Committee on European Affairs, he said, that the EU is

    "approaching enlargement in a colonial spirit".

Perhaps it is trying to hard to squeeze applicants into a "perfect west European mould".

The question that arises, and has been given a great deal of prominence by the two previous speakers, is whether the West is prepared to make equivalent changes to those that we are seeing in those countries to accommodate enlargement. There are two crucial issues. The first arises in regard to agriculture; namely, the abject failure of part of the European Union to grasp the opportunity of the Berlin Summit last spring to set in train the necessary reforms to the CAP. Now we see what has happened at the WTO. Last week's fiasco in Seattle leaves the timetable for the millennium round very much in question. Some of the new entrants are ready to join, but are we ready to absorb them? Poland has been offered a shoddy compromise in terms of entry to the CAP. It has not been allowed the full benefits of the guarantee system. How can we possibly contemplate taking in Bulgaria or Romania without sorting out that issue?

Then there is the IGC. As Keith Vaz made clear to us when he came to see us, the Foreign Office wants the IGC to be "short" and "focused". It does not wish to open the full agenda raised by the "three wise men" in their report. It can be short and focused; however, we should be aware that the issues are still substantial: reconstitution of the Commission; discussion of qualified majority voting, with redistribution of votes on the Council; and the whole issue of openness in the Council. Then there is the need to negotiate any package through the European Parliament. These are extraordinarily tricky issues and it is difficult to be confident that we shall be able to handle them in time. I believe that the Foreign Office was extraordinarily complacent to say in its reply that it would,

    "work together with other member states to ensure that sufficient institutional reform takes place to make early enlargement a reality".

We end our report with a section entitled "Difficult choices". We should not kid ourselves that enlargement is in any way a one-way street in which all the difficult choices must be made by the applicant countries. We ourselves have difficult choices to make and, like the applicant countries, we need to face up to those choices now rather than procrastinate, as we have been inclined to do, and leave them for another day. As we make clear in the report, we believe that the long-term benefits of peace and stability and the prosperity of a reunited Europe are substantial and well worth the short-term sacrifices, but we shall not see them if we shirk these difficult choices.

7.1 p.m.

Lord Cockfield: My Lords, this is a very good report except for one matter to which I shall turn in a moment. The successful enlargement of the European

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Union to comprise virtually all the countries between the Atlantic and the borders of the former Soviet Union would be the greatest achievement of the 21st century. I find myself in a somewhat difficult position following almost immediately the speeches of the noble Lord, Lord Shore of Stepney, and my noble friend Lord Biffen. If at some point I appear to agree with them it is simply that I concur with the diagnosis but my view as to what should be done about it is entirely different, and to that I shall turn in a moment.

If we look at the present situation that we face, the movement towards European integration is essentially politically motivated and driven. Unfortunately, it tends to put on one side what I regard as perhaps the most important issue of all: money. Money may not be the root of all evil (if I may be forgiven for slightly misquoting St. Paul) but it plays a vital part in almost every decision that is taken by governments, or at governmental level. One has only to listen to the debates that take place in this House and down the corridor. Time and again one hears, "Have we got the money? Are we prepared to spend it? Will we spend it on this or that? Should we or somebody else spend it?" If one goes to Europe it is far worse because there people spend money without the direct discipline of having themselves to raise what they are to spend.

Having said that by way of introduction, the great difference between myself and the noble Lord, Lord Shore of Stepney, and my noble friend Lord Biffen is that they identify the problems and say that they stop us doing it, whereas I say that they are problems to be solved. I was sent to Brussels. I say "sent" deliberately because I never asked to go, and I was not at all certain that I wanted to go. I was told by my wife that I had to go and therefore I went. That was much more important than any views that might have been held by the then Prime Minister who I shall not name. My remit was to mastermind the single market programme, and as to that I took a fundamentally different view. For 30 years--not 30 days--people had looked at the problem and said that it was too difficult. It was all written in the Treaty of Rome and no one of my generation had invented it.

I know that I shall be unpopular when I say that in four years the Commission under the leadership of Jacques Delors, with me in direct charge of the programme, made immense strides to establish the single market in Europe. Having played a part in it, that is the one thing for which my own party will occasionally give me at least a margin of credit. That is the approach that we must take to enlargement.

There is no question that it is immensely difficult. In a way it is a tragedy that the financial aspect has been pushed into the background. Let us for a moment look at that. Throughout the whole life of the Union, as it now is, going right back to its original foundation under the Treaty of Paris of 1952, only four really poor countries have been brought into membership: Ireland (which came in with us), Greece, Spain and Portugal. In the next five to 10 years there was talk of a first wave of six. On Friday and Saturday of this week in Helsinki

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the six have suddenly become 12. People suggest that Turkey should be added to the list of applicant countries.

On page 40 of the report one sees figures that show the income per head of each of the applicant countries compared with the European Union as a whole. It is a pity that the average for the applicants is not shown in the report. The average for all the applicant countries other than Turkey is 39 per cent of the European average. If one brings in Turkey that is reduced to 34 per cent. Bear in mind that the original aspiration when the regional funds, social funds and later the structural funds (as they are now called) were brought into play was to bring the poorer member states--incidentally, right at the beginning the poorest member state was Italy followed subsequently by the four who came in--up to 90 per cent of the European average. To contemplate bringing these applicant countries up to 90 per cent is a task of enormous magnitude.

That is the real issue which must be faced. There are questions about the institutions, the power of the European Parliament and the number of commissioners. Incidentally, it was Mrs Thatcher who proposed to cut the number of commissioners per large member state from two to one, but I shall not embarrass anybody by quoting what happened. It is much better to rely on imagination when one comes to difficult issues.

All of these were important matters that had not simply been left over from Amsterdam. What was left over from Amsterdam was what had been left over from Maastricht, and in turn what was left over from Maastricht had been left over from the conferences that took place before Maastricht. Therefore, there is a long and well-established tradition of leaving matters if one does not want to face them.

I do not deny that these are very important issues which must be dealt with. But the overriding task is to reconcile what the existing member states of the European Union are prepared to offer with what the applicant countries believe that they shall receive. At present there is a great chasm between the two, compared with which the Grand Canyon in the United States is little more than a minor crack in the ground. To be absolutely honest, the only people who can face that are the heads of government themselves, and they must also knock their heads together. People say that all of this was dealt with in Agenda 2000. But, quite rightly, as the noble Lord, Lord Shore, said--I do not disagree with his analysis but with what he wants to do about it; he wants to lie down, I want to stand up; that is the only minor difference between us--if one looks at Agenda 2000, they have come along and said that they have reformed the CAP. I have known the CAP for a very long time; every time they reform it the cost goes up--and it will go up again this time.

Look at what has happened? The fairly modest proposals put forward by the Commission were promptly whittled down by the farmers' lobby, commonly referred to, more politely, as the Agricultural Ministers Council. What the Agricultural

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Ministers Council agreed was then whittled down by the Berlin summit. The report itself specifically draws attention to that, and I am glad that it does. The same is true of the structural funds. Not enough of significance has been done.

But these are problems which have got to be identified; which have got to be brought out into the open; and which have got to be solved. I think--I hope I am not quoted in the countries concerned--that it is a grave error of judgment to bring in the second six before the first six are on the point of being launched.

One of the other tragedies--this is history, I know--is that we have almost got rid of what was originally intended as the stepping stone to Community or Union membership; namely, the European Economic Area. But it is no good going back over such matters.

There has to be a proper phasing out of these countries. The one good thing that Romano Prodi has said is that, while he wants to get the second wave into negotiations, there will be no question of them all coming in together. When they come in it will have to be when they are right to come in and when they are capable of coming in.

We now face--not only in this country but in the European Union as a whole--a challenge of enormous dimensions. This country has risen to challenges before and I sincerely hope that this is one to which it will also rise.

7.12 p.m.

Lord Harrison: My Lords, it is an enormous privilege to speak after the noble Lord, Lord Cockfield, the author of the publication on the single European market, itself the abiding and defining motor and theme of the European Union.

In commending the 21st Report of your Lordships' Select Committee on European Union enlargement, and in congratulating the noble Lord, Lord St. John of Bletso, on its production, I take the opportunity to enlarge on the benefits of the European Union. After all, why is it that independent countries throughout Europe clamour to join? Except for dissident voices here in the UK, no country wants to leave the European Union. This is a party to which everyone wants to bring a bottle, save those in our own country--some of whom have lost the bottle to fight for an open, democratic and prosperous Europe built on the principle of free and fair trade.

It is important to reiterate the benefits of access to the world's biggest market; of the admission to a forum of democratic legitimacy; of the strengthening of human rights; and, the most attractive prize of all, of the maintenance of peace within the European Union's borders in our own continent.

Some commentators forget that 30 years ago countries such as Spain, Portugal and Greece laboured under debilitating dictatorships. Nowadays these countries treasure their freedom within the European Union. We should celebrate that fact and the role that the EU played in bringing them in from the cold. The transitional arrangements conferred on the cohesion

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fund member states should encourage us to repeat such transitional arrangements with these new EU candidates.

We need look no further than our own British Isles to celebrate the renaissance of Ireland, a success story in part attributable to its beneficial membership of the European Union. Indeed, the European Union has played a significant role--largely overlooked by our domestic media--in preparing the path to peace in Northern Ireland.

So much for the present. What of the future for EU enlargement? First of all, institutional reform. Next year's IGC will return to unfinished business from Amsterdam. Perhaps solutions will be found to teasers such as how many commissioners each member state can have and balancing qualified majority voting against unanimity and the veto. But one issue neglected since the days of John Major is the democratisation of the European Union, and, in particular, the agreement that national parliaments, in conjunction with the European Parliament, should beef up their scrutiny role of the executive, whether national government or the Commission, to the benefit of the European citizen. Your Lordship's House is already pre-eminent in its oversight of European Union legislation. My hope is that that role can be strengthened and dilated, including reinforced dialogue with the European Parliament, especially now that your Lordships' House is itself in the throes of reform. Imperative in all of this is the necessity of ensuring respect for respective parliaments and of not being seduced into believing that our democratic institutions should be rivals. Perhaps that suggestion could be looked at by an appropriate committee of your Lordships' House.

Secondly, I take the opportunity to welcome the change of approach--this was mentioned by the noble Lord, Lord St. John of Bletso, and others--indicated by the Commission in absorbing the current applicant countries. The previous segregating of the Czech Republic, Estonia, Hungary, Poland and Slovenia--the favourite five-a-side team to beat Bulgaria, Latvia, Lithuania, Romania and the Slovak Republic--always seemed to me demeaning. Cyprus as plus one and Malta as plus two made us all reach for our plus fours in trying to understand the bunkers laid in the path of applicant countries driving their way round the golf course of qualification for EU membership. The Commission is to be supported in changing course and dealing with each applicant country separately and at its own speed and maturity. Surely, ripeness is all.

One further plea: it is all too easy to think of these applicants as supplicants; to regard EU states as the professionals in the club house and the candidate countries as novices with overwhelming handicaps still out on the course. Our dialogue with such countries should be two-way; we each can learn from the other. The President of the EBRD, Horst Kohler, recently and rightly suggested that candidate countries have a lot to offer. The transition process has fostered a culture of creativity and entrepreneurship that the European Union would do well to embrace.

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Finally, there is one country left off the invitation list and mentioned by the noble Baroness, Lady Williams of Crosby; that is, Turkey. It is, of course, the case that its human rights record, its treatment of the Kurds and the instability of its democratic process present difficulties in adding it to the candidate list. Its quarrel with Greece over Cyprus and its huge agricultural sector represent further impediments to early entry.

Nevertheless--I repeat views I held before the recent tragic earthquakes in Turkey--I wonder whether other noble Lords believe, with me, that Turkey has been hard done by. Turkey is, after all, part of the land mass of the continent of Europe. Its different religious and cultural traditions could be seen as broadening Europe's profile, not diminishing it. Its stalwart membership of NATO and its recent rapprochement with Greece should also count to its credit. I hope that the Government can develop further the overtures made to Turkey at the time of the 1997 British presidency.

Europe should never be afraid of diversity, cultural or otherwise. Indeed, it is a strength and, arguably, the characteristic which sets Europe apart from other global regional areas. We should celebrate that diversity and give it practical expression in the burgeoning process of European enlargement.

7.20 p.m.

Lord Boardman: My Lords, I congratulate the noble Lord, Lord St. John of Bletso, on introducing the debate so clearly and effectively. As a member of the committee, I also pay tribute to the chairmanship of Lord Grenfell--he is missed very much in this House; I hope not for long--and to the Clerk of the committee and the special adviser who were so helpful in preparing the report in a very short time.

I support enlargement provided--they are large provisos--that it is done at a rational pace and cost and can be brought into effect without being unfair to the other members of the European Union. Subject to that, I share a large number of the reservations expressed by my noble friend Lord Biffen, and the noble Lord, Lord Shore of Stepney. Like my noble friend Lord Cockfield, when one analyses what is happening, and considers the cash and cost, one has to think again about what we are letting ourselves in for. The admission of 26 countries, all of different structures, and so on, into the Community is a tremendous burden.

I ask two questions. Does the European Community have the resources to deal with that? Has it the staff? The report refers to the addition of 240 members of staff. I do not know how far that will go between 13 countries.

There seems to be a suggestion that the applicant countries will have to provide the cash. I have an uneasy feeling that the cash which has to be provided will come from the Community. The pre-accession cash is provided by the Community to help those countries to prepare for entry. I believe that the

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Community will be required to pay to them out of the CAP and so on funds which those countries believe should match ours.

I am mindful that the President of the Community spoke of,

    "the chance to create a Europe in which all the peoples of this continent can live together in peace, security, justice, freedom and equality. A democratic Europe where human rights are respected and the rule of law prevails".

That seems fine. But he then spoke of,

    "an economically integrated Europe which offers growth and prosperity through a single market"--

I am sure my noble friend, Lord Cockfield, rightly welcomes that, as I do--

    "and a single currency".

That smacks of creating a federal Europe which many of us would deplore.

There will be problems among the 13 new applicant nations--the first wave and the second wave. On the cash front, there is the structural and cohesion fund on the one hand; and on the other, the CAP which absorbs roughly half the Community budget. The demands on the structural and cohesion funds will rapidly mount. The new entries will require more and more. But that issue is not as sensitive as the CAP, partly because there is no inter-company trading of the products of the structural and cohesion fund. However, where someone produces wheat with a lot of subsidy, and someone produces another highly subsidised product, it creates competition and dispute between members of the Community.

I declare an interest as I am a partner in a farm at home with one of my sons. The evidence before the committee was that unless the CAP was reformed, no progress could be made on enlargement of Europe. It was anticipated in October that the World Trade Organisation--it was about to meet--would come forward with proposals which would influence necessary CAP changes. As we know, those talks collapsed. So we are back to the very unsatisfactory Berlin European Council settlement. The noble Lord, Lord Shore of Stepney, was right to say that it was President Chirac who carved the whole thing up, and carved away the benefits at one stage. But the settlement resulted in no income support being given to the farmers of the applicant countries while the support remained for present members of the European Union. That was clearly not acceptable. Poland made it clear that it was not prepared to be treated as a second-class citizen. That was repeated by a number of potential members. They insist that if they are to join the enlargement of Europe, they should have the same treatment as those already in the Union.

Slovenia stated that agriculture is not so important in economic terms, but one of the pillars of the Slovenian identity is a great emotional feeling towards agriculture. It does not want to be treated differently from anyone else who joins the European Union.

One of the directors-general of the European Commission, Mr van der Pas, gave some clear and helpful evidence. He pointed out that one of the grave difficulties relates to the terms proposed in Berlin. He

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said that we are talking of billions of euros to give the applicants the support that applied in the European Union. He anticipated grave difficulty and was unable to put forward a solution. There seemed to be a general feeling that all will be well: that the CAP, will have money provided for it from some unknown source. All the evidence we heard made it clear that the CAP, in anything like its present shape, would not be acceptable to the applicant countries; and any alteration of the CAP which meant the present members providing more for others to join would be quite unacceptable.

The Foreign Office expected the WTO round to result in a re-examination of the CAP without which it believed that negotiations on agriculture would be particularly difficult. The table at Appendix 4 of the report, to which my noble friend, Lord Cockfield, referred, shows that employment in agriculture is 42.3 per cent in Turkey and 40 per cent in Romania. It is almost unthinkable that the problem of reducing those figures to a more acceptable level in the economic climate of the EU can be resolved.

I had hoped that sensible proposals would come forward for the reform of the CAP, but I do not see how that can happen. The noble Baroness, Lady Sharp, referred to the Prime Minister's proposals to reform the CAP. I hate to think how he would seek to impose them on the French, for example, or, come to that, on many a British farmer.

The problem is that whatever CAP concessions are made to applicants, it is likely to be at the cost of the EU farming and agriculture industry. The French will not stand for anything which affects their interest and stake inagriculture. We have only to read the daily papers to confirm that. The UK farming industry is desperate and cannot afford concessions.

Therefore, there appears to be stalemate until a reform of the CAP which will satisfy applicants and not inflict damage on present members can be proposed. Enlargement on the right terms and with the cash that is needed--done slowly and not at too rushed a pace--could be good for Europe and the UK, but there are major obstacles to overcome. I was sorry to see that the Government's response to our report did not appear to recognise those or to put forward proposals that would help to overcome the difficulties.

7.32 p.m.

Lord Watson of Richmond: My Lords, the debate and the excellent, lucid, helpful and relevant report on which it is based come at an extraordinary moment in the quickening transformation of the European Union. For those noble Lords who were familiar with eastern Europe before the fall of the wall in Berlin and looked upon that grim edifice from time to time, it is important that we should not lose our sense of wonder at what has happened. This is an extraordinary moment and it befits us in imagination and determination to match it.

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In three days' time, the European Council will meet in Helsinki. The decision on opening negotiations for membership with Lithuania, Latvia, Slovakia, Bulgaria, Romania and Malta is expected. The second wave thus joins the first. Perhaps the EU is encouraged by the Chinese proverb, "Do not leap a chasm in two jumps"; we have decided to do it in one.

The challenge of the subsequent negotiations will be daunting in detail and of uncertain duration. But the factis that the EU will embark irreversibly on a course which in the end will vastly extend its frontiers and its potential role in the world. As the Hungarian government expressed it in their memorandum to your Lordships' committee:

    "The European Union will gain in economic and political strength as well as in global influence".

That at any rate should be our hope and intent and for that reason, as their memorandum argues, this enlargement is ultimately in the common interest of all European nations.

However, the decision to commit to the second wave enlargement in parallel with the first is not driven by optimism or even by general goodwill. The problem of, let us say, 30 chapters of acquis communautaire is far too demanding for that. No, enlargement is driven by necessity.

The committee's previous report in 1997 recognised that:

    "Accession to the European Union is widely seen in the countries of the former eastern bloc as an integral part of rejoining the historicculture of Europe to which they belonged before the tide of communism engulfed them".

Then in a particularly telling phrase it states:

    "It is seen by them as coming home".

Therefore, this report, published two years later, asserts that after,

    "the recent events in the Balkans, it is now even more important to seize the moment--the term 'political imperative' is for once not out of place".

The opportunity of enlargement in the first place was brought about by the fall of the wall in Berlin and the connected events. Kosovo, the second key formative, transformational event of the post-communist period, makes it a necessity. The EU cannot stand still. The consolidation of a democratic Europe requires enlargement. That, indeed, is the imperative.

As we have heard, in practice, this means that of the three Copenhagen criteria for membership--summarised for the committee quite vividly by Mr van der Pas as being, first,the political (the applicant state must be a democracy); secondly, the economic (the applicant state must be able to cope with the competition of the open internal market, what he called "the economic half of European integration"); and, thirdly, that the applicant state must be able to apply the acquis communautaire--only the first must be met for negotiations to begin, while all must be met for negotiations to be concluded.

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That is a bold and clever way forward. It is a response to necessity. It is vital that it does not become a deception. How could that happen? Could the applicant states, both of the first and second waves, be deceived? Finland's Foreign Minister said in a speech to the European Parliament on 1st December:

    "For the enlargement process to advance ... [we must] have the courage to be open and honest to each other and to the applicant countries and their citizens. The Union cannot tell any applicant country the day when it will become a member of the Union".

Rather, the Foreign Minister argued, the European Union must specify target dates for itself and signal clearly what criteria are to be applied. She then went on to signal clearly to Turkey that it still has a long and difficultroad ahead before fulfilling the Copenhagen criteria. The criterion she plainly had in mind was the political one: democracy and human rights.

If there is not to be deception in this process, there will indeed have to be clarity. In recent decades, the Turks have felt deceived; the prospect of membership seemingly tantalisingly close, only later to be made much more distant. There could also be inadvertent deception if negotiations on the economic and institutional criteria lose momentum and are allowed to drag on indefinitely. In those circumstance, there would of course be excuses aplenty: the pain to some EU states of CAP reform and the continuing momentum of the acquis. It is worth remembering that EMU is the womb of acquis to come; and behind the detail will be the interest groups which believe enlargement to be a threat or which can be persuaded to see enlargement as a threat because of fears of competition.

In the United Kingdom we may feel relatively relaxed about the agricultural and low labour-cost competition from the applicant states. However, protectionism has its advocates here also. The fiasco in Seattle was surely a warning to us all that protectionism is alive, well and, in that particular case, kicking. One specific idea has been already mooted here in the United Kingdom. Indeed, it has apparently been adopted as policy by the present leadership of the Conservative Party. That idea certainly carries within it the potential for deception as we face the historic challenge of enlargement.

It is proposed that, unless other member states agree that further European integration be made optional--a proposal which, in practice, would involve amending the treaties and which, if accepted, must therefore threaten the cohesion of the union--the treaty, which would have to be amended for enlargement, should possibly be vetoed by the United Kingdom. In effect, the proposal is that the EU must either dilute itself into an a la carte concoction; a pick and mix club in which we shall all choose the future rules we like and reject the ones we do not, or the United Kingdom will be ready to veto enlargement.

Such an idea, were it ever to become the policy of a United Kingdom Government, would of course initiate the unravelling of this country's position in the European Union. However, it would do more than that, deeply damaging to Britain though that would

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surely be. It would signal a cruel deception that this country has, from the very first moment of opportunity when the Berlin Wall came down, encouraged the hope of applicant states that they would indeed--as this excellent report reminds us--come home to the community of Europe. It would be the worst deception to have encouraged that hope and then to adopt a policy calculated to frustrate it.

I must confess that I was depressed today to read a report in the press of the speech made yesterday by John Maples, the Shadow Foreign Secretary. It is vivid in its language. It refers to the Prime Minister as,

    "plotting to sell us out by stealth in Europe".

Mr Maples said that the Prime Minister is going to Helsinki this weekend,

    "to concede, concede, concede ... to bring his dream of a European superstate ever closer. If Europe is going to continue down the integrationist road, the time has come when Britain has to draw a line".

For many years there has been a soft delusion in the United Kingdom that broadening was an alternative to deepening; that if we could get more members in, we should not have to follow further down the integrationist road. The time for that illusion has run out. If our Union is to be enlarged; if we are to meet the real challenge of the collapse of communism in Europe, we must face the real challenge of building a deeper Europe and not only a broader one.

7.43 p.m.

Lord Pearson of Rannoch: My Lords, I trust that your Lordships will forgive me if I continue the somewhat less enthusiastic tone already introduced to the debate by my noble friend Lord Biffen, the noble Lord, Lord Shore of Stepney, and my noble friend Lord Boardman. Before I do so, I should like to pay tribute to the noble Lord, Lord St. John of Bletso, and his committee for analysing some of the problems that still stand in the way of enlargement.

I must say that I find their report rather optimistic as to the possibility that sufficient solutions may be found in time to save the process. I should have thought that there are at least four stumbling blocks which will not be overcome and which have been referred to in varying degrees by other noble Lords this evening. Those stumbling blocks are adequate reform of the common agricultural policy; adequate reform of the structural and cohesion funds; adequate reform of the EU's institutions; and the eventual acceptance by the applicant countries of the acquis communautaire in full. Personally I should not have believed that there was much chance of the existing members letting in new members gradually or on preferential terms.

So there are reasonable grounds to hope that enlargement will never take place. I believe that that is a very good thing for the continent of Europe and, indeed, for the rest of the planet. It follows that where I find the report wanting is that it simply does not ask the question: is enlargement a good thing? Like its predecessor two years ago, it simply assumes that enlargement is desirable; not only desirable, but

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very desirable indeed. The expression "political imperative" is even justified and has been repeated by a number of noble Lords this evening.

The earlier report entitled The Financial Consequences of Enlargement appears to be the basis for that assumption in the present report. It came out with the entirely unsubstantiated and unanalysed statement:

    "Enlargement, if successful, could lead to unparalleled security and stability for the peoples of Europe. If the opportunity is missed there could be a slide towards the tensions and instability which have so disfigured Europe in this century".

Indeed, similar words are repeated approvingly in the introduction to the present report. Therefore the committee seems to me to have made the basic mistake which is always made by European politicians and Eurocrats who wish to pursue the European dream of the ever-closer union of the peoples of Europe without considering the true eventual cost.

As Herr Kohl put it some three-and-a-half years ago:

    "European integration is in reality a question of war or peace in the 21st century".

Or, as M. Jean-Claude Juncker, the Luxembourg Prime Minister, put it two years ago when defending the EU's arrogant refusal to tell the nation states what their net payments to the EU's annual budget were--the line being that EU membership was so valuable that it could not be measured in mere vulgar taxpayers' money--

    "How can you put a price on one hour of peace in Europe? The cost of one hour of peace is nowhere attributed in the Budget".

Those and many similar statements seem to be tacitly accepted by the committee. It seems to accept that the European Union and its enlargement are good for peace in Europe. Indeed, without them, Europe might slide back into war.

I submit that that position should not be taken for granted. It should be examined dispassionately without the glorious music of Beethoven's Ninth Symphony ringing in our ears and perhaps clouding our judgment. One way to start such an examination, as I have mentioned before in your Lordships' House, is to ask two simple questions, which I hope that your Lordships will not find too simple. First, when did a genuine democracy start a war? Secondly, when have forced or premature conglomerations of disparate nations ended in conflict, especially when the ties which bound them unnaturally together were loosened?

The answer to the first question is, "Hardly ever", and perhaps, although I am not a good enough historian, "Never". The answer to the second question is, "Nearly always". Yugoslavia comes to mind, as do the Caucasus and much of Africa. Therefore, to me the guarantor of peace in Europe is democracy, not the new-fangled and possibly dangerous cocktail of the European Union. If Germany and the other EU countries keep their democracies, they are most unlikely to provoke a war. The same goes for the new democracies in the central and eastern European countries, which of course owe their new-found freedom to NATO and not to the EU. That is the main

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reason why many of us would prefer to see a Europe of democratic nations trading peacefully together, rather than an unnatural European Union with all the signs of autocracy and corporatism already painted all over it. At the very least, I believe that your Lordships' Select Committee should be objective enough to take a look at this dilemma, which is fundamental to the whole European debate, and reach a reasoned conclusion. Your Lordships' committee should not just take it for granted that the EU and its enlargement will encourage peace in Europe and prevent its slide towards the tensions and instability which have so disfigured Europe this century.

I come to a second assumption which the committee seems to have taken for granted; that is, that it would in fact be good for the developing economies of Eastern Europe to join the European Union on anything like the terms now being demanded by Brussels. Here again, the report proudly quotes its predecessor:

    "Accession to the European Union is widely seen ... as an integral part of re-joining the historic culture of Europe to which they belonged before the tide of communism engulfed them. It is seen as a coming home".

Other noble Lords have referred to that--a "coming home". Again, I am not so sure.

I know that the political classes in the CEECs say that they are keen for their countries to join the European Union, although doubts are starting to emerge even there. They certainly like the subsidies they receive while they are queuing to join, and who can blame them? But doubts are growing more strongly among some of the business communities which are starting to baulk at the prospect of having to meet the acquis in full. That is scarcely surprising. After all, three of the five leading aspirants to EU membership have the most competitive economies in Europe in terms of business costs, and of course the economies of the European Union are among the least competitive in Europe. And there are the Polish farmers, whose dissatisfaction is beginning to surface, if one is to believe "Newsweek" last week. Many other areas of the economy of Europe are beginning to have their doubts, too.

I should have thought that all that the CEECs really need is defence from NATO and access to the market, which, of course, is denied them. We must not forget the statement of the German who was to have appeared in front of a European committee, quoted by Mr von Ploetz who gave earlier evidence to the committee:

    "Yes, we are for enlargement, but no Polish potatoes--not one Polish potato".

I am not alone in this view. I have here a serious study which I have recommended to your Lordships before. Indeed, I sent it out as a sort of Christmas present last year to those on the Government Front Bench whose duties take them into or around this subject. I asked them to let me know if they or their civil servants disagreed with its conclusions and why. The study is called A Coming Home--or Poisoned Chalice? It was published 18 months ago by the Centre for Research into Post-Communist Economies and written by the

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distinguished economist, Mr Bill Jamieson, economics editor of the Sunday Telegraph, and by Dr Helen Szamnely, a well- known expert on Eastern Europe.

A number of your Lordships may feel--indeed, I am sure that a number of your Lordships do feel--along the lines of, "Well, these are two such raging eurosceptics that their work cannot be worth reading". But this booklet was widely distributed and no one in the Foreign Office or the Treasury, nor anyone with a europhile tendency, has been able to refute the facts contained in it, most of which are shown in easy graphs and pie charts and impeccably sourced.

Therefore, if the facts are correct, at the very least the question as to whether it really is in the interests of the CEECs to join the EU has to be asked. Here I fear I must be brave enough to take what is only minor issue with something which I believe the noble Lord, Lord Shore of Stepney, said when he seemed to flirt with the idea that enlargement might underpin democracy in the CEECs. I only venture to disagree because I should have thought that after so many years under the evil boot of communism, the last thing they will do is abandon democracy. But that is, of course, only a view.

However, after the debate I shall present the noble Lord, Lord Tomlinson, who I gather is to take over the chairmanship of the Select Committee from the noble Lord, Lord St. John of Bletso, with his free copy of this pamphlet.I hope that it can be taken into account in any similar study by his committee in future. I know of no other study undertaken by the other side which points in the other direction. Likewise, I should be happy to oblige any noble Lord in the Chamber with a free copy if he chooses to ask for it.

I myself go a little further and wonder whether the European Union itself is a good thing, even for its present members. I know that this is somewhat radical thinking in the goldfish bowl of Westminster, when nearly everyone who works here takes the EU for granted and as a long-term and benign fixture. I suppose it is even more difficult for all those who work in Brussels to contemplate redundancy and a Europe unencumbered by the Commission, the Council, the Court and the Parliament. I know that it is not the time to take these thoughts further this evening, but I seem to be among a growing number of people who are coming to see that the Treaty of Rome has spawned a juggernaut which is now out of date, out of control and dangerous. Therefore, I hope that we shall be able to return at some other time to the prospect of a different Europe; of a Europe of democratic nations freely trading in peace together under the protection of NATO. In the meantime, I can only say that I fear it is dangerously naive to assume that enlargement of the European Union is a good thing for the applicant states, for the rest of Europe or for the rest of the world.

7.56 p.m.

Lord Hussey of North Bradley: My Lords, we have had a most interesting and wide-ranging debate on an extremely important subject, enlivened by a series of well informed and pertinent speeches led by the noble

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Lord, Lord St John of Bletso. I stand as number 13 in the batting order, in which I may say I feel most comfortable because I performed as number 11 in every single cricket team for which I played. Therefore, I do not intend to detain your Lordships for long.

I should like to add my tribute to the noble Lord, Lord Grenfell. He was a superb chairman. He numbers among his forebears, poets and field marshals. We saw glimpses of the gentle, persuasive charms of the poet, but we also saw the driving determination of the field marshal. He is much missed for both estimable qualities.

When we reported on the European Bank, some of us wondered how it would work without in any way disputing the objective. I feel much the same about the new phase of enlargement. There are clearly considerable difficulties which the European Union must face if success is to be achieved. Your Lordships have already heard them outlined. The two most fundamental problems are, first, the necessity of a radical reform of the common agricultural policy; and, secondly, we must feel assured that there will be sufficient funds available to support the accession of the six first-wave states and subsequently the second six.

I fully support the conclusion of the committee that we go ahead. However, as we state, it is the responsibility of the existing members to ensure that the European Union has the appropriate structures and policies in place to permit enlargement, otherwise, we shall all be in considerable trouble.

One of the lessons I learned in management was the wisdom of clarifying the potential hazards. We are embarking on an enterprise which embraces all the areas which have been the subject or centre of European wars for the past 1,000 years: Gibraltar, the border between Spain and France, the Low Countries, the Rhine, the Baltic, Vienna, Prague and the Aegean. Perhaps most sensitive is the Bosporus, the trigger point between Europe and Asia. It combines a very large share of the Roman Empire but, thank heaven, not the Middle East nor the northern coast of Africa.

The European Community is making a tremendous leap of faith in believing that we can weld those historically discordant countries into one single whole. The problems which caused the wars must not be allowed to resurface. The potential not just for peace but also for prosperity is immense. The risks are worth taking but we shall not succeed unless the European Union faces up more realistically to the problems which have already been outlined to your Lordships. The opportunity is there. The existing members of the Community must exercise the courage and wisdom to seize it.

8 p.m.

Lord Wallace of Saltaire: My Lords, this has been a constructive debate on an excellent report. In particular, I welcome the speech made by the noble Lord, Lord Moynihan, which emphasised, from the Conservative Benches, the strategic importance of

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enlargement. That is a view which most of us share. We are talking about consolidating democracy, security and prosperity across the former socialist Europe and about the changes in institutions and policies which the European Union needs to make in order to adjust that. We know very well that those will be painful changes. One reason for talking about timetables and urgency is that it is only by insisting that enlargement must not be delayed that we shall push some of those painful changes through the Community. But that is not the agenda of a European superstate, the sort of things which the Daily Telegraph talks about. I very much hope that the leaders of the Conservative Party in the other place read the constructive speeches which their colleagues here have been making on the subject.

Of course, this is a question of dual enlargement. We are also engaged in a process--on which this report does not really touch--of the enlargement of NATO. It is extremely important that we co-ordinate EU enlargement and our approach to it with the enlargement of NATO, which is very much under American leadership, and occasionally an American leadership which does not fully understand the differences between enlarging NATO and enlarging the EU. I felt that Madeleine Albright's remarks about including the Ukraine in the European Union were, frankly, unhelpful in current circumstances, just as the remarks from Washington about the ease with which one might absorb Turkey into the European Union are also not very helpful.

The noble Lord, Lord Harrison, compared the current round of enlargement with previous Mediterranean enlargement. I agree with the report that we must be careful not to make accession more difficult for the new applicants than it was when some of the present member states joined. I remember well Mediterranean enlargement. I was engaged professionally in arguing and writing about it at the time. We were extremely generous to those countries. For those who think that the applicant countries are far too poor to join, I well remember my first visit to Lisbon in 1978. On the plane back, the Greek academic I was with asked why Portugal was applying to join the European Community. He said, "Surely it would be better suited in the Lome Convention". Portugal was an extremely underdeveloped country at that time. There were only two people in Lisbon who began to understand the implications of joining the European Community. Its GDP per head was in the order of 30 per cent or less than the European Community average. If one goes to Lisbon today, one can see what an immense success that has been. One can see how EC membership has consolidated Portuguese democracy and the market economy and has made it a modern state. That is what we must do for the countries of central and eastern Europe and that is what we can do for those countries if we approach the matter with a generous and constructive spirit.

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Transition periods were granted for those countries and, indeed, insisted on in terms of free movement of labour for those countries. Transition periods in the same sense should be offered to the applicants from the east.

One should also remember that Greece was allowed to join the European Community more quickly than Spain and Portugal, and that one of the tragedies of the process of EU enlargement was that Greece managed to join without a proper domestic debate about the implications and obligations of membership and without the administrative preparation necessary to carry out the obligations of membership. We have suffered from that since then, and in some ways we continue to suffer, in the debate about Cyprus and Greece and Turkey, from a Greek government and a Greek political elite who think that EC membership is a one-way trade and not a set of mutual obligations.

In the central and eastern European countries, transition is already well under way. The Polish economy has been growing by between 5 and 7 per cent per year for the past three years. That is real economic recovery. I was travelling around those countries working with the Soros Foundation in the early 1990s and I was struck by the rapid transition being made, particularly economically and socially. When I first went to Romania in the winter of 1990, I found it one of the most depressing countries that I had ever visited. Romania is still a long way behind Hungary, Poland and the Czech Republic but it is much, much better than it was. The market economy is becoming established; there is beginning to be a certain degree of trust in the government; there have been several democratic elections. That is transition under way.

The question which we must now consider is at what point in that long transition period do we allow full membership, and how far we are prepared to permit the completion of the transition after formal membership. I hope that Her Majesty's Government will argue vigorously in Helsinki and later that on questions like environmental standards and health and safety standards, where huge investment must be made over a long period, such transition may be allowed after accession and is not insisted on before accession.

I welcome the signal given to the second group of applicants that they are also to open negotiations. We understand that they will not join at the same time but it was an important gesture of confidence to the states, and in particular Romania and Bulgaria which suffered badly from the events in Bosnia and Kosovo, that they are not to be left outside; that they will follow on in their turn. I welcome also the signals which the Government and the Prime Minister have been making to the small and weak states of south-eastern Europe--Albania, Macedonia and perhaps, in time, also Montenegro and Yugoslavia--that through the Stabilisation Pact, the long-term prospects of membership for them are being opened up.

The noble Lord, Lord Shore of Stepney, asked where Europe ends and how much further enlargement may go. I have two questions on that. The first and the more immediate is about Cyprus and

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Turkey. We have not discussed Cyprus very much during this debate. In some ways, Cyprus is an unexploded bomb in the current enlargement negotiations. I read a report from Brussels last week that the Greek Government are still threatening to veto the whole enlargement process if Cyprus is not allowed in on current terms before the present situation in Cyprus is remedied. We must be extremely careful how we play the whole Cyprus and Turkish dimension.

I could go on, but need not do so, about a number of problems with the economy in Cyprus. After all, money laundering is one of the most prosperous activities in Nicosia at present.

The problems with Turkey are similar to those with Greece. If Turkey becomes a candidate, we must ensure that there begins a domestic debate about the implications and obligations of membership, all the way through from human and civil rights to fully democratic government and civil control of the military. As far as I am aware, that debate has not yet really got under way in Ankara. We must think through very carefully the implications of a European Union which has a direct border with Iraq, Iran and Syria. Nicosia is only 200 kilometres away from Beirut and Tel Aviv. That takes us into an extremely large and complex area.

So we need to develop a strategic approach to the neighbours, to those who will not come in in the foreseeable future. An association pattern which does not imply only dependent status for Ukraine and for Russia is an important part of what we now need to be thinking about. Sadly, I do not yet see any strong indication that Her Majesty's Government or others are yet thinking about it.

I disagree somewhat with the remarks of the noble Lord, Lord Tomlinson, about borders. As far as we can, we must avoid drawing the borders of Europe too tightly. I do not want to shut off Western Ukraine from Eastern Poland. That is the demand which the Germans are, in effect, making of the Poles. The trade between Lublin and Lviv is desirable. The exchanges which take place across that border are important. Somehow we must find a way of shaving the gap between the privileged insiders and the excluded outsiders so that Ukraine and others do not feel excluded in the long run. We therefore need an open association approach and an effective common foreign and security policy.

This is an ambitious agenda. It will be difficult for the European Union to adjust. However, with the greatest respect to noble Lords present, I suggest that jeremiads of the sort we have had from a number of participants in the debate who say, "Woe, woe, it will all be dreadful", and yet offer no answers, are not necessarily the best way forward.

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