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Mr. Hill: The media will obviously play a part in the municipal elections in September, which my hon. Friend the Minister has not yet mentioned. Is he satisfied that the Organisation for Security and Co-operation in Europe has the resources and experience and is the appropriate body properly to oversee those elections? Will he give an assurance that the British Government and the other Governments involved will apply the closest possible scrutiny to the activities of the OSCE in the period leading up to the municipal elections?

Mr. Lloyd: I apologise to my hon. Friend: he raised that matter earlier and although I intended to reply directly, I have not done so.

I sympathise with my hon. Friend's critique of last September's elections. We accept that there were shortcomings, but it was inevitable that there would be difficulties in holding elections less than a year after a ceasefire in a country with relatively limited democratic traditions. The outcome was far from perfect and we have to ensure that the lessons learnt then are put into practice so that future elections in Bosnia conform far more closely to acceptable international standards.

We believe that the OSCE is indeed the proper body to monitor the forthcoming municipal elections, which are scheduled to take place on 13 and 14 September this year. Voter registration is under way and it is important to note that refugees--including those in the United Kingdom--can register to vote, either where they were registered in 1991 or in the municipality in which they intend to live in the future. The UK has so far provided 48 core supervisors, trainers and registration supervisors, two long-term observers and 14 secondees to the OSCE mission in Bosnia. We have also contributed £2 million to the OSCE's budget and my right hon. Friend the Secretary of State for International Development is currently considering what further support we can give.

Those who are monitoring events on the ground in Bosnia are confident that the lessons of the previous elections have been learnt by the OSCE mission and that the forthcoming municipal elections will be more free and fair as a result. However, it is right to say that all of us owe an obligation to the people of Bosnia and Herzegovina to ensure that the OSCE is charged with the importance of monitoring the elections in an acceptable manner and we will play our role in that. The municipal elections must be carried off in an acceptable way as part of the process of civilianisation. I cannot overemphasise the importance of the electoral process and of ensuring that the elections pass without difficulty and are deemed to be as free and fair as possible.

The problems of Bosnia have to be set in the regional context. The European Union has made a good start with the elaboration of a regional approach to the development

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of relations with the countries of the region, making progress for the individual countries dependent on both their support for peace implementation in Bosnia and Herzegovina and their own internal policies. We must insist on that and build on it.

In the longer term, regional stability will be best served by drawing the countries of former Yugoslavia into Europe's political, economic and security architecture, rather than by keeping them outside it and trying to distance ourselves from the vagaries of that volatile region. The Balkans are European and we must ensure that they are integrated into the processes of Europe. Only through integration, both within the region and between the region and the rest of Europe, can the people of Bosnia and Herzegovina and the surrounding countries put the past behind them and begin to plan for a peaceful and prosperous future. If we want to build a just and lasting peace in the Balkans--as we do--that regional process is the only way to achieve it.

12.14 pm

Sitting suspended.

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European Union Enlargement

12.30 pm

Mr. Andrew Tyrie (Chichester): My purpose in calling this debate was simple. Having been unable to speak in the European debate last Monday week, I decided to try to hold one of my own. I was lucky in the ballot; and as it turns out, this is a particularly pertinent day for the debate. Yet again, this time in Amsterdam, the leaders of the EU have dragged their feet on enlargement, on which I shall say more in a moment.

This is my maiden speech and I should like to say something about my predecessor. Tony Nelson made an enormous contribution to this House. Talking to hon. Members, I have come to realise how popular he was with his colleagues. He also made notable contributions as a Treasury and then as a trade Minister. But it was while campaigning that I realised the full extent of his contribution to politics, because I met so many people on their doorsteps whom, in his quiet but effective way, Tony had helped over the years. I am fortunate to be taking over from him.

I am fortunate, too, to be able to represent Chichester. The city itself has enormous charm, not least because the restrictions on the height of new constructions have preserved the mediaeval views of the cathedral from most directions. The destructive planning zeal of the 1960s was kept at bay in Chichester.

In terms of population, the city is only a little over a quarter of the constituency, which is primarily a rural seat stretching more than 30 miles, all the way from Linchmere and North Chapel on the Surrey border to Selsey and the Witterings on the south coast. The constituency contains elegant country towns such as Petworth and Midhurst, and incorporates a great swathe of the south downs, sprinkled with some of the most delightful villages in the whole of England.

Certainly, Chichester could scarcely have been more beautiful than it was as the first pink fingers of dawn came up behind the cathedral on 2 May, soon after the declaration. I was also reminded that one is never far from the countryside when, driving the three miles home to Bosham from the count, I disturbed deer on the road.

The need intelligently to restrain the pressure for development and more housing, and the need to conserve the beauty of the area, will no doubt be high on my agenda in the years ahead--as will the concerns of the horticultural and farming communities.

I am also fortunate to have contested Chichester, in the obvious sense that I was standing on a piece of blue ground high enough to avoid the red tide of 1 May--high enough, indeed, to send me here with a majority of nearly 10,000. But I would rather have half the majority and twice the number of colleagues.

The Conservatives were defeated not because they espoused the wrong policies. On the contrary, it was only when Labour adopted both Conservative rhetoric and Conservative policies, lock, stock and barrel--even going as far as to accept the ceilings on public expenditure, programme by programme--that it became electable. The Conservatives were defeated because they appeared divided, above all on Europe.

It is a curious fact, and a tragedy for the Conservative party, that so many of the points made on both sides of the so-called Europe divide are right. I believe that there

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is much to commend the commonsense approach to many of these issues of my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke). But there is also no doubt that a huge number of the criticisms of the EU voiced by so-called Euro-sceptics are also correct. The EU's budget is often wastefully, sometimes corruptly, spent, as successive Court of Auditors reports have revealed. Absurd and ill-thought-out regulations pour out of Brussels. EU Commissioners would do well to heed the strictures of that great free trader, Richard Cobden--incidentally, he went to Midhurst grammar school in my constituency--who said:

    "With how little knowledge we enter upon the task of regulating the concerns of other people."

As for economic and monetary union, whatever its economic merits--and there are some--the challenge of preparing for it is now bringing about a dangerous competitive deflation between France and Germany.

In the months ahead, the Government may seek to create the impression of a new and more positive policy towards Europe, but I believe that the policy, whatever the tone, will remain much the same. At Amsterdam another opt-out has been negotiated, this time on immigration and asylum--although it is dressed up differently.

There has of course been one change--signing the social chapter. I believe that that is a profound mistake, but I shall develop my reasons for thinking so on another occasion.

The social chapter excepted, I believe that the Government will be forced back to broadly the same policies as the former Government pursued on Europe. That is simply because all the logic points to them. And, despite a good deal of watering down by the Foreign Office, those policies amount to a demand for fundamental reform of the European Union. Above all, the British agenda has been, and should continue to be, to abandon the drive for federalism and replace it with a framework of close co-operation between independent states: a framework loose enough to accommodate the needs of the newly liberated states of eastern Europe.

The European Union desperately needs fundamental reform. It was created to do one job in the post-war period, and it should now be doing another for the 21st century. There were three original tasks: to create an institutional framework for Franco-German reconciliation after the horrors of the last war; to provide an economic framework of co-operation that could prevent a repetition of the economic crises of the 1930s--crises which did so much to bring about the rise of Hitler and Nazism; and thirdly, the European Economic Community, as it then was, was created to act as a bulwark against the spread of communism. It was an economic counterpart to NATO. It is worth recalling that until the withdrawal of Soviet troops from east Germany in the early 1990s, they were as close to my constituency as Aberdeen.

Today, none of these objectives is relevant to Europe's peace and prosperity. Few people believe that the French and Germans are going to start another war, or that we will be plunged into another bout of 1930s-style protection. As for the communist threat, the Soviet Union has collapsed into 16 more or less independent countries.

In my view, the great issues facing the continent of Europe in the 21st century will have little to do with those that led to the creation of the European Community. In a nutshell, there are two of them. First, there is

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the imperative need to restore Europe's global competitiveness. Britain may be doing better than most, but the whole continent is slipping behind the far east, in particular.

Secondly, the countries of the EU should be finding a way quickly to re-integrate central and eastern Europe in the family of western democracies. That can be achieved only by building institutions that fall short of the federal goal. Only the most lunatic Euro-federalists believe that there could be a federation from Britain to Belarus.

There is plainly an unsustainable tension between widening and deepening. The countries of central and eastern Europe have an understandable desire, for the first time in over half a century, to express their national identity, and the German objective of subsuming Germany's national identity in a wider European framework holds no appeal for them. Their applications for membership are motivated by something quite different: by the need to bolster their new-found independence, by the need for recognition as part of the family of western nations which membership of western institutions brings, and by the fear of exclusion from a zone of economic prosperity.

I believe that it is in both Britain's and western Europe's interests that wider should come before deeper. We all have a huge geopolitical stake in consolidating the stability of eastern Europe.

I speak as a convinced European but one who believes that, of all the post-war institutions, the EU is the one which has shown the least imagination in adapting to the revolutions that have swept across our continent in the past eight years. One of the saddest spectacles of all was the sight of leaders of the EU carrying on with exactly the same agenda for reform of the EC after the Berlin wall came down as the one they had been pursuing before. That is rigidity and myopia on a grand scale. How can it be that at Maastricht and still at Amsterdam the leaders of western Europe are ignoring the dramatic events taking place around them, and instead are carrying on with further bids to complete the outworn agenda drawn up in the 1950s?

The plain fact is that the challenge of completing the 1950s agenda is an act of faith for several of western Europe's leaders, particularly those whose views were moulded by the searing experiences of the last war.

Of course, there are also many practical reasons why the countries of the European Union find enlargement indigestible, among them the fear of increased competition, worries about labour mobility and concern about the cost of enlargement. It is not lost on some countries that they would be turned from net recipients into net contributors.

Real though those concerns are, none of them should be insuperable. Most of the countries of central and eastern Europe have a strong commitment to free markets and a capacity to implement internal market laws at least equal to those of the newer entrants from the southern tier.

As for the budgetary costs, those worries are also an opportunity; many of them are generated by the common agricultural policy and regional policy, both of which desperately need root and branch reform. The European budget is one of the scandals of our time.

The old agenda is also sustained by the varied but very practical objectives of some of the key players in the EC. I saw that at first hand, in my own small way.

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In 1990 and 1991, shortly after I left my job as adviser in the Treasury, I was sent out to try to sell the so-called "hard ECU proposal".

I well remember a lunch--a very good lunch--in the guest restaurant in the top of the Tresor. When the wine was flowing, the French official said to me, "Look, Andrew, we need EMU because that is the only way we can control the Germans. We must get our hands on the Bundesbank, and Britain must help us." French policy, moulded by three invasions in the past 120 years, is dedicated above all to the need to control Germany.

A few weeks later, I was in Rome, having another excellent lunch--there are some compensations for being a salesman for the hard ECU proposal--and I asked my host, a former senior adviser to the Italian Government, why Italy was pursuing EMU so vigorously, when it would obviously be so difficult for the Italian economy to adjust. He replied to the following effect: "You must understand, Andrew, that government in Rome is little short of a disaster. Even government from Brussels is better than this."

And the small countries have their own motives. How else could Luxembourg, with a population about the same size as that of my birthplace, Southend on Sea, obtain a vote in the Council of Ministers and even a veto on many issues?

In contrast, for most British people there never has been a big political subtext for membership; nor, like Germany, have we needed it as a badge of international respectability. It has always been seen by most in Britain simply as a vehicle for greater economic prosperity.

I began by saying that the Europe issue had a lot to do with my party's defeat at the last election. The future of the European Union, however, is not just a problem for my party or even for Britain; it is Europe's problem. I believe that the countries of Europe should discard the outworn agenda drawn up in the 1950s with an eye on the last war, which is still directing policy.

The EU should start to address the new agenda that I have outlined briefly, and it should do so quickly, instead of offering subtle protection as a reaction to the loss of competitiveness and stalling measures to delay membership to the central European countries. I saw both of those first hand when I was working for the European Bank for Reconstruction and Development. I fear that more stalling tactics on enlargement were in evidence at Amsterdam.

If the EU does not reform itself, it will at best make itself less and less relevant to the problems of its citizens, and at worst, the pursuit of federal conformity will threaten the social stability which the founding fathers of the EU hoped that it would underpin.

I fervently hope that this Government, like the previous one, will not shirk the task of pressing the EU to change direction and accelerate enlargement; nor should they allow official advice to conjure evil spirits from the notion of a multidimensional Europe.

It is time to discard the idea that members of the EU should move forward together on everything, or not at all. That has long been a myth, anyway. Britain's interests lie simply in being in that ring, tier or dimension--call it what one wants--which is consonant with the greatest degree of market freedom and economic prosperity.

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I have given some of the reasons why the Government may face an uphill struggle in putting the case for swifter enlargement. Even if the leaders of some other countries are not prepared to address that agenda, I hope that the Government will not be afraid to use all the tools at their disposal to press their case.

Britain's huge financial contributions to the EU are a powerful lever in negotiations. Withholding those contributions may eventually have to be considered. If such a policy were to succeed in triggering reform of the EU and swifter enlargement, then 20 years of large net contributions to the Community would at last be seen to pay a dividend.

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