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Lord Clarke of Hampstead: My Lords—

Lord Forsyth of Drumlean: My Lords—

Noble Lords: This side!

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Lord Forsyth of Drumlean: My Lords, does not the approach of Royal Mail involve the kind of gesture towards the declared policy of the Deputy Prime Minister—of moving traffic from road to rail—with which he himself has been identified in recent days? How can any government which made promises some six years ago to reduce the growth of road traffic stand at the Dispatch Box and say, "We are leaving it all to the market"?

Lord Sainsbury of Turville: My Lords, it has never been part of the Government's policy to require that commercial activities should take place on one kind of transport or another. The aim is to make it attractive for people to do so through grants and other means. However, the policy is not to direct companies to do something but to leave it to them to make their decision on the best possible information.

Lord Ezra: My Lords, is the situation not complicated by the fact that Royal Mail is VAT exempt and therefore cannot reclaim VAT on transport by rail? However, by using its own road transport, it does not incur VAT. That obviously gives an advantage of at least 17.5 per cent in favour of road transport.

Lord Sainsbury of Turville: My Lords, I am not able to say what the exact position is because that affects the position with regard to the particular commercial decision. Again, one must say that it is for the parties involved to make their decision on the best basis. Changing the derogation, which I believe applies in this respect to the Post Office, or changing the VAT arrangement for rail transport are rather big decisions to take simply in relation to this issue.

Lord Clarke of Hampstead: My Lords, does my noble friend recall the time when he steered the Postal Services Act 2000 through this House? Was there any reference to the need for the Post Office to have regard to the environment? I cannot recall the Post Office ever being given that latitude. Could he also say whether the accounting that led to this situation of road versus rail is the same accounting that Postcomm applied when applying its charges for downstream access into the Royal Mail service, which, on recent figures, shows that the Post Office will be subsidising its competitors?

Lord Sainsbury of Turville: My Lords, the two accounting systems are rather different in terms of what they are trying to achieve. In this particular context, again it is for the Post Office to decide what is the best kind of costing basis to use. The House should bear in mind that in the past it has been constant government intervention in decisions taken on a commercial basis by the Post Office which has done it so much harm. Now we have given it the responsibility to make these decisions on a commercial basis, we should stand behind it and let it get on with the job.

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Mr Putin: United Kingdom Visit

3 p.m.

Lord Judd asked Her Majesty's Government:

    What are the principal issues for their discussions with President Putin during his visit to the United Kingdom.

Baroness Symons of Vernham Dean: My Lords, President Putin's principal substantive discussions will be with the Prime Minister. As the visit is still two weeks away, it is impossible to say exactly which areas will be covered. But we expect they will discuss a range of international issues, including Iraq, the Middle East, proliferation and terrorism. The visit will also include a United Kingdom/Russian energy summit and a visit to Edinburgh.

Lord Judd: My Lords, I thank my noble friend for that reply; perhaps she will accept that many of us wish the visit all possible success. Clearly, we want to see Russia as a full partner in responding to the challenges in the century ahead.

Does my noble friend agree that in the context of the discussions on terrorism it will be important to make plain to the Russian Government that by the way in which they are responding to terrorism in the Chechen republic—and undoubtedly there is terrorism there—they are in fact recruiting for the extremists? The climate of impunity in which the Russian army operates, the failure to bring to justice those responsible in the army for alleged atrocities, and the human rights abuses are all grist to the mill of the extremists. If we are to win the battle of hearts and minds against terrorism, what is happening in Chechnya has a significance way beyond that republic itself. Will my noble friend assure us that these issues will be fully discussed with the Russian Government?

Baroness Symons of Vernham Dean: My Lords, I hope they will. I am sure my noble friend Lord Judd will understand that I am in no position to commit my right honourable friend the Prime Minister to the exact nature of the discussion that will take place. As I was careful to say, the fact is that two weeks is a long time in international relations. I am sure that there will be many issues on a very crowded agenda, but I agree strongly with my noble friend that we all want the visit to be a success. Russia is not only a key ally but also a key player on the international scene. It was a member of the quartet that brought forward the road map which we wish to see flourish in the Middle East.

I am sure that any discussion around terrorism must at some point touch upon the issues raised by my noble friend. As he will know, the EU, while acknowledging that some were a little cynical about the recent referendum, cautiously welcomed its result in Chechnya and stressed that the Russians must now honour their commitments to improve the situation on the ground.

Lord Avebury: My Lords, does the Minister agree that it would be a good idea if the Prime Minister took

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the opportunity of his next meeting with Mr Putin to clear up the alarming misunderstanding which apparently arose at the G8 summit? The Prime Minister thought President Putin had agreed to suspend delivery of nuclear fuel to Iran. President Putin declared afterwards that he had said no such thing. Will the Government discuss with President Putin the IAEA's confidential report on Iran's ability to produce nuclear weapons and any actions it may recommend at its board of governors' meeting on June 15th?

Baroness Symons of Vernham Dean: My Lords, as I indicated in my opening Answer, I am sure that the discussions will range around a number of international issues, including Iraq and proliferation.

Baroness Rawlings: My Lords, can the Minister confirm, despite the visit still being two weeks away, that in the course of their talks the Prime Minister and President Putin will discuss not only the threat in common they have from international terrorism, but also specifically Islamic fundamentalist terrorism, which seeks to distort the true meaning and teaching of the Islamic faith? Will they discuss how best our two countries can co-operate to tackle that threat?

Baroness Symons of Vernham Dean: My Lords, I am sure the issues around terrorism are ones that are bound to be discussed by my right honourable friend and Mr Putin. There are serious concerns about the clear links between some extremist groups operating in Chechnya and Al'Qaeda. Those groups have already been mentioned in your Lordships' House. I am sure that the wider reach of those operating in Chechnya and their linkages to other terrorist organisations will also be a matter of mutual concern.

Lord Blaker: My Lords, Russia clearly has influence with Iran. Would it not be useful if Mr Putin were to endeavour to persuade the Iranians not to proceed further with the development of nuclear weapons—the point made by the noble Lord, Lord Avebury—but also to discourage the Iranians from supporting the Supreme Council for Islamic Revolution in Iraq, which was based in Tehran but is now based in Iraq and which is acting as a political party and threatening to boycott the interim government?

Baroness Symons of Vernham Dean: My Lords, as I said in my very brief answer to the noble Lord, Lord Avebury, the fact is that if my right honourable friend will be discussing Iraq and matters of non-proliferation, many of these tangential issues may well be raised. My difficulty arises because your Lordships are urging me to assure them that certain matters will be discussed. I am afraid that it is not in my gift to be able to say that I am absolutely certain that these specific points raised by your Lordships will indeed be matters of detailed discussion. I can tell your Lordships that they are all aiming in the right direction

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when they say that matters concerning Iraq and matters concerning the proliferation of weapons of mass destruction are bound to be on the agenda.

Lord Russell-Johnston: My Lords, does the noble Baroness realise that the remarks by the Prime Minister appearing to give approbation to the referendum in Chechnya were deeply offensive to human rights workers? The referendum was conducted in circumstances in which no fair outcome could be assured. I hope that that will be recognised in the discussions.

Baroness Symons of Vernham Dean: My Lords, I do understand, and I hope I made clear in my answer to the supplementary question from my noble friend Lord Judd that a number of people were unconvinced by the very high turnout in the Chechnyan referendum—some 80 per cent—and the massive majority for the "Yes" vote at some 96 per cent. Those are truly remarkable figures. Although there are some who believe that the referendum was manipulated, the Prime Minister is not alone in having given it a cautious welcome. The majority of European Union countries welcomed the result. They did so very cautiously. In so doing they stressed to the Russian Government that we now expect them to honour their commitments on the ground. That includes moving towards a presidential election in six months' time and parliamentary elections three months after that.

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