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Energy for Democracy (Serbia)

1 pm

Mr. Bowen Wells (Hertford and Stortford): I quote from a fax sent by Ms Emilja Kiel to the UK Committee for Peace in the Balkans, made available to me by the hon. Member for Halifax (Mrs. Mahon). The fax states:

The family of the little girl had been ethnically cleansed from Kosovo and left unprotected by NATO and the United Nations. At present, Serbia and Kosovo are covered in snow, with temperatures down to minus 20 deg centigrade; that is to be expected each year in that part of Europe and is thus predictable. Indeed, it was predicted by the Select Committee on International Development in our report on Kosovo. The situation was not unforeseen.

The European Union imposed sanctions against Serbia during the bombing, including a ban on oil exports that it has steadfastly refused to lift since the bombing ceased. Council regulation No. 2111/1999 of 4 October confirmed the prohibition of the sale and supply of petroleum products.

The EU has knowingly deprived Serbia of the capacity to keep its people warm. It has thus endangered the lives of young children and the elderly by exposing them to hypothermia. That was a deliberate EU policy, supported by the UK Government. We have bombed Serbian power stations and oil refineries. By bombing the bridges, we have blocked the main supply line--the Danube.

The objective--although it was steadfastly denied--was to depose President Milosevic and his party from office in the former Republic of Yugoslavia. However, the EU action has had the opposite effect. NATO and the EU are blamed for the suffering of all the people of Serbia and the estimated 900,000 refugees in Serbia--100,000 of whom have been ethnically cleansed from Kosovo.

Cynically--or perhaps from feelings of guilt--the EU decided to launch a programme entitled Energy for Democracy, supported by the UK. The programme is described as humanitarian and is thereby exempt from the EU's own sanctions.

I remind hon. Members that humanitarian aid must have two characteristics. The first is that it must be administered impartially to all people in need regardless of whom they support. Secondly, those who administer humanitarian aid must do so with the consent of all authorities on all sides of a dispute. The obvious example is the work of the International Committee of the Red Cross which, without such an agreement, would be unable to operate on both sides in a conflict or dispute.

One definition of the objective of humanitarian assistance states that it should be

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    race, religious beliefs, class or political opinions; resource allocation being guided solely on the basis of needs of individuals, prioritising the most urgent cases of distress."

The principle of independence follows from that:

    "The ability of humanitarian organisations to operate legally and safely in a conflict situation is determined by their ability to demonstrate their independent character. Actual and perceived involvement of a donor government in the workings of international humanitarian organisations potentially compromises this independence."

We offend against those principles of humanitarian aid. In particular, the Energy for Democracy programme offends against them on almost every count. It aims to supply 350 tonnes of heating oil to two Serbian towns--Nis and Pirot. That was the first part of a 4.4 million euro project to supply the cities until April this year. The reason that those two cities were targeted was that their mayors did not support the Milosevic Government. NATO and the EU wanted to demonstrate to the people of those cities that NATO cared for them and that the alliance's quarrel was only with the Milosevic Government.

I might have some enthusiasm for the objective of subverting Milosevic, but that NATO action cannot be called humanitarian. It is partial and it is not administered with the agreement of the authorities in Serbia. It is certainly not impartial; nor is it independent.

Where does the money come from? After much research, I found that it was provided from the European development budget, to which the UK Government make a significant contribution--as the Chamber has already discussed this morning. The appropriation comes from a budget designed for the reconstruction of parts of former Yugoslavia--later Kosovo.

The appropriation of such money for bluntly and blatantly political purposes is almost certainly illegal. It will have to be referred to the Court of Auditors, which has, sadly, become accustomed to the gay abandon with which the European Commission spends our money on projects that are unauthorised by this Parliament or by the European Parliament.

If we are sincere about trying to help Yugoslavia in its reconstruction, we should ensure that all those who have suffered from the Milosevic regime and the NATO bombing have sufficient heating oil to keep them warm this winter. That would be a truly humanitarian and magnanimous gesture to the people of Serbia. It might begin to heal some of the wounds and begin the reconciliation and reconstruction necessary for the achievement of the just Balkan settlement for which our Prime Minister agreed to bomb Serbia--one of his major aims in the war against Serbia. However, this partial, illegal and cynical gesture of the Energy for Democracy programme is more likely to exacerbate the hatreds and jealousies within Serbia and against the EU and NATO.

I ask the Minister of State to answer the following questions. First, why have the Government not tried to lift the EU sanctions on heating oil supplies to Serbia? Is it because we are acting as the poodle of the United States in those matters?

Secondly, why have the Government agreed to break their own sanctions by supplying heating oil to Nis and Pirot? Thirdly, how can supplies of heating oil to those

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cities be justified as humanitarian aid when no such supplies are provided to the rest of the Serb population and when they do not have the approval and agreement of the Serbian Government?

Fourthly, what assessment was made of the likely reaction of the Serbian Government of President Milosevic to the initiative? Fifthly, why did the United States refuse to support the Energy for Democracy scheme? Sixthly, how do the Government justify the use of aid money, voted for the reconstruction of the former Republic of Yugoslavia, for blatant, cynical, political blackmail?

The Government claim to have won the war against Serbia by bombing that country. They are certainly losing the peace by such ill-considered, blatantly political, possibly illegal schemes as the Energy for Democracy programme. A Government who were truly pursuing a humanitarian aim would support France, Greece, Italy and other EU nations in lifting EU sanctions for the whole of Serbia, and in permitting the supply of heating oil throughout Serbia on humanitarian grounds during the extreme weather conditions that are always experienced in the region at this time of year. That would prevent the black market and the entry to Serbia of Russian-supported oil supplies via Hungary and Romania. The distribution of those supplies is of course controlled by President Milosevic--thus increasing his grip on power and his ill-gotten wealth.

1.9 pm

The Minister of State, Foreign and Commonwealth Office (Mr. John Battle): We thank the hon. Member for Hertford and Stortford (Mr. Wells) for initiating the debate. I was tempted to say "again", because we discussed the matter during the debate on Kosovo in which our colleague my hon. Friend the Member for Halifax (Mrs. Mahon) also took part.

The hon. Gentleman is the most appropriate Member to raise matters of humanitarian aid and assistance and to remind us of what the term may mean in practice. He has a long and honourable record on, and experience in, overseas aid and development matters. He speaks on them with a disinterest and seriousness that sets an example so I take seriously his contribution to our deliberations on the topic. I shall do my best to reply to the 10 or more questions that he asked.

In this short debate, we do not need to go over the cause of the traumas in the Balkans or the role in Serbian history of Slobodan Milosevic. I want to approach the subject from another angle and to point out that, on the figures for gross domestic product, Serbia is the poorest country in the whole of Europe--it is now poorer than Albania. Given that Yugoslavia was one of the wealthiest countries in the socialist bloc in the 1980s, we must focus on what has happened, why it has happened and on the future and rebuilding. In that spirit, I shall try to address the issue of how people keep warm in winter and the relationship between fuel supplies and sanctions.

I want to say something elementary about the difference between the central and eastern European countries that emerged from the Soviet bloc in the first

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half of the 1990s and Serbia under the direction of Milosevic. In a sense, the essential services, commodities and state monopolies were used to secure the loyalty of his key supporters in the Socialist party of Serbia, the SPS.

Let me provide a practical example. The present boss of Jugopetrol, which controls the import and distribution of oil and oil derivatives on a national basis is a man called Dragan Tomic. He is also the Speaker of the Serb Parliament and, of course, a key figure in the SPS. Basically, he has been put in charge of the oil industry as a reward for loyal service to Milosevic and he is now making--I dare suggest--massive profits from the sale of imported oil and petrol. He does not use the prescribed channels and state petrol stations, in which the price is set by the Government, but uses the black market to provide him with his profits. That is a key fact. The problems of the Serbian economy relate not just to analyses of economic mishandling, but to such direct manipulative interests.

In the short time that I have left, I shall discuss the Energy for Democracy programme. That European Union programme was first proposed by an independent group of Serb economists, the G-17 group, in the summer of 1999 in the aftermath of the Kosovo conflict. Its idea was for the EU to show its solidarity with the people of Serbia--as opposed to the regime--by donating mostly heating oil to Serbian towns, which were expected to struggle to provide sufficient heating for their citizens through the current winter. The idea was taken up by the member states of the EU and turned into an official EU programme in the autumn of 1999. The United Kingdom played a supportive role and it helped the G-17 group to visit several European capitals, including London, to explain and spell out its ideas. We have since supported that programme.

The programme began in November 1999 with the pilot project towns of Nis and Pirot, and I emphasise that it was a pilot. The towns have received regular tankers of heating oil since December and the EU is now switching to rail transport to improve the speed and reliability of the deliveries. Supply has been running behind schedule because of administrative difficulties, but, by the end of January, those towns had received more than 2,000 tonnes of heating oil.

One misunderstanding about the Energy for Democracy programme needs to be cleared up. It is not designed to compensate for a shortage of oil in Serbia; it is designed to compensate for a shortage of money to buy that oil. That difference is crucial. In other words, the municipal authorities that have been the beneficiaries of the Energy for Democracy programme have always been free to import oil and oil products from certain neighbouring countries or from further afield, but they have not had the money to do so. The programme involves the donation of heating oil.

Mr. Wells: The Minister referred to the towns' capacity to buy oil, but would they not have to buy it outside the European Union, because the EU has imposed sanctions against the supply of oil to Serbia? Is that not right?

Mr. Battle: The hon. Gentleman has put his finger on the precise point, so I shall try to spell out where supplies

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come from and where the EU anticipates that they will come from. I hope that that will become clear. However, if the hon. Gentleman wants to press me on the matter, I shall be more than happy for him to intervene again.

The EU oil embargo on Serbia has been changed specifically to allow the sourcing of oil from EU countries for the Energy for Democracy programme. In practice, however, imports have all come from refineries in Macedonia. Had the municipal authorities been given adequate funding by central Government, they could simply have bought oil supplies from domestic suppliers or imported what they required for their needs from Macedonia or perhaps Bulgaria.

The hon. Gentleman asked on whose authority the EU introduced sanctions on the Federal Republic of Yugoslavia in 1998. It did so on its own authority using the established procedures of the EU common foreign and security policy and the competences vested in the EU by the treaty of Rome and subsequent treaties. The sanctions included the specific oil embargo on the Federal Republic of Yugoslavia. In September 1999, the oil embargo was lifted in respect of Montenegro and Kosovo.

From the very outset, a humanitarian exemption was written into the EU oil embargo. That still applies. In other words, any organisation that wants to import oil or oil products into Serbia from a member state of the EU may do so, having submitted an application to the European Commission explaining that the oil is for humanitarian purposes. I hope that that goes some way to answering the hon. Gentleman's question. Such imports have taken place in at least one case.

The Belgrade office of the United Nations High Commissioner for Refugees applied to import 40,000 tonnes of heating oil from Germany, and this application was approved on humanitarian grounds. It is possible for oil to be bought from European countries, and approval is a relatively simple process. Any international humanitarian organisation operating in Serbia is free to follow that route. I hope that my answer goes some way to allaying the hon. Gentleman's worst fears. It can happen, it does happen and it can continue to happen.

I stress that the EU has not broken its own sanctions, as the hon. Gentleman put it. Apart from the humanitarian exemption that is written into the embargo, the EU has also changed the text of the oil embargo regulation to allow EU companies to supply oil under the Energy for Democracy programme. In practice, however, the heating oil supplied by the EU has been purchased from Macedonia for reasons of efficiency. Macedonia and other neighbouring countries, such as Bulgaria, do not have national restrictions on selling oil to Serbia. The EU oil embargo applies only to EU member states, and to those associate member states that choose to affiliate themselves to it.

The EU anticipated that the Energy for Democracy programme would be vulnerable to administrative obstruction by the Serbian authorities. That was the primary reason for beginning the programme with a pilot project of just two towns. As we suspected, the Serbian authorities made life as difficult as practically possible on the border, and we discussed that here in our previous debate on the subject. There were blockages, but they did not persist, not least because of local

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popular pressure. The delay of more than two weeks that the first consignment suffered has not been repeated. The first trucks were greeted with cheering in Nis and Pirot, and Milosevic has not dared to make himself even more unpopular by restricting or blocking the import of heating oil--it is getting through.

I am glad to say that, contrary to some reports, the United States has offered political support for Energy for Democracy. Indeed, in the autumn Mrs. Albright mentioned in public that she hoped that the programme could be extended to the town of Cacak. The US has been supportive of the programme during the EU's discussions with the US and Yugoslav opposition in the so-called trilateral process. Cacak became the third town to benefit from the programme when Norway decided to support Energy for Democracy with a programme of deliveries of heating oil.

Apart from the Norwegian bilateral contribution, Energy for Democracy has been funded by the European Commission from the Obnova regulation budget, which exists to fund projects in the Federal Republic of Yugoslavia. Obnova is not a budget for classic humanitarian aid, as it has been defined by the hon. Gentleman. The EU's aid programme in Serbia is run through the European Community humanitarian office in Belgrade, which has not been involved in Energy for Democracy. The humanitarian office is responsible for Serbia's and Montenegro's share of the total regional allocation for south-east Europe in 1999 of 378 million euros.

Energy for Democracy is humanitarian in motivation, but it is not classified as strict humanitarian aid, as the hon. Gentleman spelled out. Imports of heating oil by the municipalities in question are treated as straight commercial transactions. The municipalities pay the customs duties, and the external suppliers invoice the European Union direct. I am glad to say that the UK's Crown Agents have been involved in the logistics of operating Energy for Democracy.

The humanitarian dimension of the programme is obvious: the imports of heating oil have been used to keep residential accommodation, schools, hospitals and municipal facilities warm through the depths of the winter in Nis and Pirot. Not all dwellings in those towns are connected to the municipal heating system, but most citizens will still have benefited. I understand that the Norwegian programme in Cacak and the prospective EU programme in Kragujevac will concentrate on schools, hospitals and similar institutions. In an ideal world, we would be supplying fuel for warmth to the entire population of Serbia, but clearly we have to prioritise.

Mrs. Alice Mahon (Halifax): How does one prioritise when a child is dying in a bombed-out concrete factory? How does one say that one town cannot have oil while another town can? That is not humanitarian, and I am shocked that my Government are going along with something as obscene as deciding who lives and who dies in Serbia.

Mr. Battle: I defer to my hon. Friend's insistence that we keep people's names and faces in front of us so that we do not make judgments that put people's lives on the line. However, there are practical problems.

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Not all dwellings in my hon. Friend's town of Halifax have heating connected to a central system. That technical difference is important because we have chosen towns where an oil-fired municipal heating plant is the key source of heating. Unlike Britain, the former Soviet Union has combined heat and power systems that work. That means that if we put oil in the central boiler, all flats are heated. That is not the system in Britain, where we would have to heat houses and flats on an individual basis with a separate fire. Not every house has a chimney, so we could not supply coal to every house to keep it warm.

Technical challenges are posed by the heating systems, so there is not a deliberate decision about who lives and who dies. We have chosen towns where a working oil-fired municipal heating plant is the key source of heating or where other facilities need oil for generators. Provision is linked to the location of the generators; it is not done house by house.

There are three reasons why we have so far limited the programme also to municipalities run by the parties of the democratic opposition. First, they are much less likely to be corrupt than municipalities run by the SPS and its allies. Secondly, opposition-run municipalities have been the subject of systematic discrimination by the central Serbian authorities, which have limited their funds and done everything possible to damage their standing in the eyes of the electorate. Those towns are usually last on the list for the distribution of Serbian state oil supplies.

Thirdly, the regime-linked municipalities have largely refused to co-operate with Energy for Democracy. A questionnaire sent out by the Association of Free Towns and Municipalities asking for technical details of their heating systems for the Energy for Democracy programme was ignored by every SPS and allied town.

On the general international humanitarian effort in Serbia, I can confirm that the International Committee of the Red Cross and Red Crescent, the UNHCR, UNICEF and others are active in Serbia, with our support, along with numerous other charities and non-governmental organisations. The Department for International Development works alongside and maintains close links with the UN agencies and other

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bodies. The UNHCR has supplied some 40,000 tonnes of oil to Belgrade and the whole of Serbia, while Energy for Democracy has supplied 2,000 tonnes. The UNHCR has therefore been providing the bulk of the supplies. We have supported those programmes.

Mr. Wells: Why, then, do not our Government support the lifting of sanctions, at least on oil for heating, throughout Serbia?

Mr. Battle: The block sanctions remain for the whole of Serbia. This is an exception which means that we can get energy through, but we have to choose where it goes. I set out the three reasons why it is not apposite to send oil everywhere--it would be lost in the corrupt system and would not reach the people who need it, to whom my hon. Friend the Member for Halifax referred. That is why we focus supplies on two particular towns.

The EU General Affairs Council, which met on 24 January, concluded:

The humanitarian exemptions written into the EU sanctions regime on Serbia and the EU's commitment to the Energy for Democracy programme have shown that we care about the fate of the ordinary people of Serbia and are not indifferent to their plight. Thankfully, the threatened humanitarian disaster did not transpire this winter--action was taken to pre-empt it--but we have no illusion about the economy of Serbia, which is in a bad state.

As I said at the outset, Serbia is now the poorest country in Europe. Living standards have plummeted. All that can start Serbia back on the path of economic recovery is a change in the regime and a strategy for the nation's well-being. There is not much evidence of that. Those factors were the source of the conflict in the first place. The Energy for Democracy programme is a small but serious effort to ensure that the poorest and hardest hit do not always pay the highest price.

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