Examination of witnesses (Questions 1 - 19)
TUESDAY 21 JULY 1998
and MR SIMON
1. Welcome once again to all of you. This
meeting is a bit later than we would have liked but I dare say
you have been briefing madly after the Cardiff Summit. I think
perhaps we ought to try, if possible, to get a date fixed for
our next meeting after the Vienna Summit or wherever it is going
to be. When is it?
(Mr Henderson) 10/11 December.
2. Is it in Vienna?
(Mr Henderson) Yes.
3. Do you want to make an opening statement?
(Mr Henderson) Just really to thank you again
for your invitation. You did me a favour by having deliberations
because I was slightly late. I have been meeting the President
of Azerbaijan and I could not find the bicycle lane from the Foreign
Office to here, so I had to speed across. I have with me today
Emyr Jones Parry who is now Political Director. He has been promoted
since the Cardiff Summit. He was formerly Director for the European
Union. Simon Gass is the Head of our European Union Department.
The last time I met the Committee I think we agreed it would be
preferable if you were to lead off on questions rather than me
read out a text and I am happy to do that again.
4. As usual we want to go wider than just
a rerun of the Summit. I think perhaps we might start by asking
what do you think were the principal achievements of the UK Presidency
and what were the disappointing bits of the Presidency?
(Mr Henderson) I think the achievements were many,
and you would expect me to say that. You have to separate them
into two categories. You have got to separate them into the category
of achievement where there was business which whoever was President
of the European Union would have had to conduct and there were
other issues where we felt there was a priority and therefore
we gave them a bit of a push during our six months. On the first
category, undoubtedly the establishment of the single currency,
or the framework for the single currency, at the beginning of
May was a major achievement. I know there has been a bit of press
comment about the difficulties on Saturday in Brussels when some
of the Heads of Government were kept in the dark for a few hours
on the state of negotiations. I think we have managed to subsequently
cement relationships with those who were a little concerned at
the time. I believe that major achievements were obtained that
day. We set up the currency on the timetable that was envisaged,
with the tough rules that were envisaged, to the advantage of
those who wished to join the currency at this stage on 1 January
next year and with the support of those who may wish to exercise
their opportunity to join the currency at a later stage. I think
that was a major achievement and will have very, very long-term
effects on the future of the European Union and indeed beyond
that. The second issue was the question of the enlargement of
the European Union. I think it would have been easy to have derailed
that, it would have been easy to have made mistakes on that. I
think the general comment of our European partners is that the
Brits did the business on enlargement. We established the European
Conference on time in the middle of March and people like the
Romanian Foreign Minister described it as an historic day when
they could convey to their populations that they were now part
of a wider Europe and were in the frame for a date in the future
joining the negotiations for accession to the EU and all that
kind of thing. At the end of March we had a two day session in
Brussels where we had first of all the launch of the accession
process for the 11 countries and then we had the opening of the
negotiations the next day for the six countries. We actually had
six IGCs in the morning. I was told to be terrified of IGCs when
I took on this job because once you open them up they are a devil
of a thing to shut down. We managed to do six of them that morning.
We then quickly opened the screening process, which is the process
whereby the 11 countries can identify what they think they need
to do to progress towards membership of the European Union and
the Commission can identify areas where they think there is a
need for change and where they may be able to help with the partnerships
which were also concluded in March. I have had one or two foreign
officialsnot ministersconvey to me that we were
too speedy and we got off the mark too quickly and some of their
officials were not able to do the necessary preparatory work.
I plead guilty to that and I am happy that we have received that
criticism. We have now managed to persuade those who were critics
on that score that it is very much in their interests that we
do act speedily. I think they now appreciate that and if you talk
to them a lot of progress has been made. We set up the stage for
the Austrian Presidency to consider at some time in the autumn
the whole question of when negotiations should begin with the
six countries based on the screening that has been done and the
number of chapters that have been done so that a recommendation
can be made to the Council in December. These were two main achievements.
Other achievements where we pushed an agenda which we thought
was important, you know of course of our priority given to employment
during the Amsterdam Treaty, IGC, also in the Luxembourg Special
Conference last November and in the Summit in December. We have
kept the momentum of that going. Employment is a key issue in
each of the European countries to the extent that the Austrians
have made it a top priority during their Presidency. Each country
produced plans of how they think they might tackle the particular
problems of youth unemployment and middle aged unemployment, in
addition to the other questions of equal opportunities to try
and raise employment levels and so on. I think there was a major
achievement on that score. On the anti-crime front we continue
to press and a lot of progress has been made there. On environment
we made a number of important breakthroughs from things like a
new Directive on Landfill, which of course is important to people
throughout the European Union, to dealing with the emissions of
light vans and the big issue about how do the European Union countries
spread round their obligations under the agreements reached at
Kyoto on the reduction of CO2 emissions by 2010. These were major
achievements. Regrets that we did not achieve: the main regret
was that it was not possible to make progress on Turkey's relationship
to the European Union. There has been a little progress over the
last couple of weeks of our Presidency and the first couple of
weeks of the Austrian Presidency but not nearly as much as we
would have wanted. It would have been good for Turkey to have
taken part in the European Conference and to have prepared the
way for their eventual joining of the accession process. That
was not possible and that is a regret.
we might lead on from that into enlargement.
Baroness Hilton of Eggardon
5. You mentioned the six and the five. Do
you see them as keeping to the timetable that has been laid down?
Do you think there will be differences between the six and the
progress that they make? What are your feelings? Having been to
Czechoslovakia and Romania I am not terribly hopeful about the
pace at which they will make progress but perhaps you are.
(Mr Henderson) I am optimistic generally about
the commitment of those countries to change the way they do things.
In summary: to establish a political system that is democratically
acceptable to the European Union; to confirm human rights that
have not been confirmed, and to get the changes in the economy
necessary for them both in a regulatory sense and in a restructuring
sense. I have found them all very committed. It is clearly much
more difficult for a big country like Romania or Poland to make
especially the economic changes which take time. You cannot restructure
the whole of the coal industry or the steel industry because of
an act of political action, it takes a lot of other effort by
a lot of other people usually over a longer period of time. I
think there are problems there but I do not think they are insuperable.
I find in countries like the Baltic States, countries like Slovenia,
smaller countries, a tremendous spirit and tremendous will to
change and do things that need to be done. I am generally optimistic.
These countries know what they want to do. The other encouraging
thing is that it is not a party political thing in any of these
countries. I think I am right in saying that. It is largely accepted
by all the different political strands that, therefore, they can
now make changes in government, as has happened in the Czech Republic
in recent weeks and in Hungary, without any real change at all
in the relationship with the European Union or without any encumbrance
on the work that is currently being undertaken by the European
Union on the screening process or whatever. So I think that augurs
well. I look forward to a relatively early completion of screening
and the negotiation and then there needs to be an assessment of
how the actual process and engagement in the European Union takes
6. The major obstacles are the legislative
programme, are they not? They have to change an enormous amount
of regulatory law and institute inspection systems and so on,
particularly on the environment front, which is what I am interested
in. It does seem to me that they are not actually making a tremendous
amount of progress in those areas because it is so extremely complex.
(Mr Henderson) I think they began to make progress
before the autumn of last year, and then as a consequence of the
major change in society in 1989 or 1990 or 1991, whenever the
change took place in the particular country. I think when you
compare the changes that they made then in establishing an embryonic
democracy and the scale of those changes compared with what existed
before in comparison with the changes that need to be made now,
they are actually relatively small, the changes that need to be
made now, albeit they are complex. So I think that now they know
where they are in either the accession process or the negotiating
process, and now that the screening process is under way, they
can now turn to the detail of what needs to be done: how do they
improve the sanitary regulations in the cities, how do they improve
the food regulations, all of this detail which needs to be done,
put in place the legislation and put in place the necessary public
service to administer the environmental protection at a local
level. I think they can do that reasonably easily. The difficulty,
in my view, is the economic change that has to be made in the
structure of the economies, because these things take time and
there are usually short-term costs and often medium-term costs
and you have to hold the society together as you make those changes.
I think that, certainly in the case of the larger countries, is
the biggest challenge that we face.
7. You are talking about five years as a
(Mr Henderson) I do not like to put dates on it.
I think it is terribly depressing to those countries if people
like me make predictions and they are not able to honour them,
or they honour them and they are not able to deliver it. What
we have to say is that we are all determined to make as much progress
as is possible as early as possible.
8. Do you not fear that there is perhaps
a bit of over-optimism in some of these countries in terms of
the timing, and that disillusion may set in when they find they
are not getting there as quickly as they hoped and when politically
their electorate finds it is having to put up with all sorts of
stringent penalties to get in and they are not getting in quickly
(Mr Henderson) The problem with this Know-how
Fund money is it is actually working. It is actually making all
their negotiators pretty aware of the way we do things. So they
"hype up" their position as a negotiating position.
I do not know what their real expectation is but the negotiators
are very impressive people who understand the way that you have
to set out your stall and there needs to be a bit of modification
from it. I think that is what we are currently going through.
None of us knows exactly when the political circumstance will
be right to say, "Right, the changes have all been made.
They can now join the European Union."
9. We have had a lot of visitors, of course,
during our Presidency, so we have met quite a number of people,
particularly from the countries seeking access. There were one
or two feelings from some of them that the Austrian Presidency
would, in fact, try and slow down the process. Would you give
that any credence at all?
(Mr Henderson) No. The second Presidency in a
year is a short Presidency because by the end of July things slow
down and they do not begin to pick up till the end of September
and then they slow down about the middle of December. So there
are really only about three months of hard work and so second
Presidencies do not often get through the detail that gets undertaken
in the first Presidency over a year, though sometimes the big
decisions are taken in the second Presidency. It depends where
they fall. So I do not detect that the Austrians do not want to
push the train along the track, which they know has travelled
reasonably speedily under the British Presidency. They do not
want it to be said of them at the end of their Presidency that
they slowed the train down when the train had a good momentum
at the beginning of the six months. So I think they will keep
it on the track.
10. Would you say that that was one of the
priorities of the Austrian Presidency?
(Mr Henderson) Yes. They have articulated a number
of priorities: continuing to make progress on environmental protection,
jobs, making sure that the single currency is established properly
on 1 January, but also that the enlargement process should continue
to make progress. It is very much, of course, tied up with Agenda
2000 issues about the reform of the agricultural policy and structural
funds and so on, and they are mindful of their responsibilities
in that regard.
11. One of the more thought-provoking events
of the last few weeks has been the speeches made by Chancellor
Kohl about his desire to reduce the German contribution to the
common budget, and I wondered if you had any reactions to give
us to those remarks? Presumably he is thinking of some kind of
many-sided version or multilateral version of our own budgetary
mechanism, but that could, of course, have a severe effect on
the budgetary support needed for enlargement. Do you see this
as a serious development in that regard or in other respects?
(Mr Henderson) I think you have to separate the
issue of who pays what to the budget and the question of how much
the European Union existing members consume of the budget and
how much of it is available for help and for the countries that
wish to accede. On the first question, our position is that we
are always happy to talk to people. If there are suggestions about
how we can better make our contributions to the budget, then of
course we will talk to people about the proposals, but one thing
we have made absolutely clear in the negotiation is that, as the
eleventh richest country making the fifth largest net contribution,
we are not really in the business of making our relative position
poorer in that regard and we are firm about that, but we are very
enthusiastic that, having come to an agreement on who should contribute
what, there should be a significant proportion of the European
Union funds set aside for assistance to the countries that wish
to accede to the European Union. There are different figures which
have been bandied about but we are absolutely clear that we support
that principle. What we want to see is a fair share of the resources
which are still being spent within the existing Member States.
12. But meeting the costs of enlargement
was going to be a considerable strain upon the common resource
anyway and if the Germans are going to run the risk of Kohl not
being able to be elected, if they were to run it hard that would
make the problem worse, would it not?
(Mr Henderson) There are rules that are currently
in place and that has consequences on who pays what. There is
also the 1.27 per cent (of EU GNP) budget limit. There may be
one or two countries who will not sign up for that right at this
moment but I think there is a general consensus. So that is the
top limit for expenditure. Obviously the absolute sums are dependent
on the wealth of the Community. So the Germans know what their
responsibilities are within that. What we also have to decide
is of that 1.27 per cent. how much is spent on helping the Central
and Eastern European countries and Cyprus as part of their accession
13. But you are getting pressure, are you
not, from particularly Spain and Portugal not to dip into the
regional funds in order to pay for the enlargement? It seems to
me there is a bit of a nutcracker here.
(Mr Henderson) I think this is a difficult area
of negotiation but if my assessment is accurate, other countries
are saying 1.27 per cent is the top whack on budget, so all our
arguments have to be resolved within that. I think it would be
very disruptive for Spain and Portugal to say, "If that is
the case, we veto everything to do with enlargement." It
is not long since Spain and Portugal were part of the enlargement
process themselves and received funding. I make the point to British
industrialists that we have increased our real level of trade
with Spain since 1986 by over three times. That is a great marketplace
for people. The Spaniards potentially have the same opportunity
to penetrate the markets of Central and Eastern Europe but it
requires a bit of assistance in the first instance to develop
the economies to give them wealth so that they are then purchasers
on the European front. That argument has to be made with Spanish
colleagues and we frequently make it, but I am not pretending
it would be an easy negotiation.
14. I gather the Prime Minister announced
recently that there is to be a review of European policy. Can
you tell us anything about the timing and the scope of that?
(Mr Henderson) I think The Financial Times
announced it that the Prime Minister had intentions to review.
There is an on-going review of European policy and things change
quickly in the European Union often, circumstances change, and
we must all respond to them. We have all known that we have to
respond to potential enlargement of the Union. That raises questions
about the size of the Commission, the voting systems, about how
you bring people in contact with the institutions of the European
Union? These are questions that we have known for many years.
When we were in Opposition we discussed these issues and the previous
Government discussed these issues. They were largely unresolved
in the Amsterdam Treaty where we were committed to some changes
under the terms of the Treaty but what we have now got to do is
address these issues. That is what we are doing in the build up
to first of all the Foreign Ministers' informal meeting in September
in, I have forgotten where it is, somewhere in Austria, Salzburg
I think it is, secondly the informal meeting of Heads of Government
on a lake side somewhere in Southern Austria, the name of which
I forget, in the middle of October, and then the Vienna Council
in December. That is three opportunities for substantial discussions
on those points. I think it is a realistic time perspective. We
are talking in the longer term rather than in the shorter term
in resolving these matters.
15. I wonder whether I might refer to the
Cardiff Conclusions referring to the President of the Council
calling a meeting of Heads of State or Heads of Government together
with the President of the Commission. What will be the purpose
of that? What will be their agenda? Might it include some of those
thorny topics such as the size of the Commission in the longer
(Mr Henderson) I think the initial discussions
will be concerning the general point of what needs to be done.
There is a feeling that subsidiarity is a key issue and we have
got to get that right and, of course, the Amsterdam Treaty takes
us further down that road when it is eventually implemented. That
is a key point to many of the governments in the European Union.
One of the things that needs to be done is to separate what requires
legislative change and what would require co-operation to change.
If the items can be divided on that basis by the October Summit
then a lot will be achieved. It then allows more discussion of
substance at the December Summit. I think that probably is a better
time span. There is a bit of a dummy run at the Foreign Ministers'
informal meeting. There is then this deeper discussion with the
hindsight of the discussion at the Foreign Ministers' level in
October preparing the way for further progress in December. It
may be that we should look at options, what kind of voting system
or alternatives to the current voting system, what kind of Commission
structures or alternatives. If we can begin to identify these
things then I think a lot will have been achieved.
16. Will there be any documents prepared
in advance of that and, if so, will there be any documents that
we can see before you get to the meeting, or is it all done on
the back of envelopes?
(Mr Henderson) It is all back of envelopes now
that people do not have cigarette packets largely. The meeting
is of an informal nature. It is not impossible that there will
be a formal paper to the December Council, although I think it
is probably unlikely. There might be a draft which could become
a Conclusion subject to the nature of discussion in December.
At that stage the papers will be public and available for discussion.
17. Minister, what impact either are the
German elections having or would you anticipate they will have
on all of this?
(Mr Henderson) They have affected the timetable.
No major change can be made without the German Government having
a very big say in it and, therefore, at the time when the German
Government are putting themselves up for re-election to the German
people and their opponents, particularly in their case it is probably
inappropriate that the European Union jumps to major decisions.
The next German Government should be in place by the beginning
of November. That means that there can then be hard negotiation
from then through the Vienna Summit. There is an expectation in
the Cardiff Conclusions that the question of the Structural Funds
and Agricultural Policy, Agenda 2000 issues, should be brought
to a conclusion in March 1999 which then allows the European Parliament
to discuss the matters in April 1999 before they break up for
their own elections. In some cases the Parliament has to be consulted
and in other cases it has to give its consent.
18. I am not asking you to anticipate the
results of those elections, I do not think that would be fair
on anybody, but would it be fair to say that if the current opposition
took power in Germany that would in itself slow down the process
even more? If the Government is not in being until November it
is hardly likely that a Government of a new political persuasion
will be in a position to join in radical decisions in December.
(Mr Henderson) We were elected six weeks before
Amsterdam, the Irish three weeks and the French ten days and we
still managed to put a Treaty together. There will be a delay
up to the beginning of November but beyond that the general policy
outlook of the SPD, if they were the principal partners in another
German Government, is not miles away from the attitude of the
existing German Government on various positions. I assume that
would be the basis of the manifesto to the electorate in September.
I think they would be able to get to grips fairly quickly with
what had to be done and the real negotiation among the 15.
19. Just going back to Agenda 2000 for a
moment and the thought that there is some sort of deadline now
set for March of next year. Frankly that does not seem very realistic,
particularly in relation to CAP. I am sorry, incidentally, that
none of our Sub-Committee D people, none of our farmers and fishers,
are here today, they are all off in Norwich looking at genetically
manipulated things. I am sure they would have asked you about
the likelihood of there being any movement of CAP in relation
to Agenda 2000 by March of next year, which is a fairly short
(Mr Henderson) In my 14 or 15 months in this situation
I have found it is necessary to set deadlines. They are not always
met but if you do not set a deadline it is a general round table
discussion. If you set a deadline there is a certain political
and moral obligation to try and say your bit before the end of
the deadline, make it clear where you stand, which then allows
a process of negotiation to take place. This is the biggest one
that we have had to deal with over the past year or so. It will
be more difficult to achieve. It will be setting out the financial
provisions for the first seven or eight years of the next century.
I think it will be a difficult job. If we set the deadline minds
are concentrated. One has to have optimism that we can get a deal.
If we do not get a deal by March and the European Parliament cannot
consider the matter at that time then it is likely that it will
not be able to consider it until about October 1999 at the earliest,
which is pretty tight to the deadline of 31 December 1999 when
the current Structural Fund regime runs out. Everybody wants to
try and get the job done by March of next year.
Chairman] You mentioned
the institutional question and I do not propose to go into that
any further today, we have banged on about the lack of progress
on institutional things, but I think Lord Hoffmann would like
to ask something.