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8.6 pm

Sir David Madel (South-West Bedfordshire): Like the hon. Member for Swansea, East (Mr. Anderson), I thank the Foreign Secretary for the helpful paper that he provided to the Foreign Affairs Committee when we met yesterday afternoon to discuss the Helsinki summit.

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We should look at what has happened throughout the current presidency, not just the final summit. In the first two months after Finland took over, the European Commission existed only in a caretaker capacity because of the great row about corruption. It introduced very few initiatives at that time, but the European Union did not fall apart as a result. I have never regarded the European Union as a bicycle that will fall over if we do not keep pedalling. The Commission does not always have to be in overdrive. It was in neutral during the first two months of the Finnish presidency and Europe did not suffer at all.

There have been three very good moves while Finland has held the presidency. I welcome the press release of 29 November on economic and social matters, which said that there should be a reduction in work taxation. Another positive statement was made on the same day at the Labour and Social Affairs Council, stressing the fact that

It was encouraging to have subsidiarity confirmed in that aspect of policy.

However, the most important Finnish initiative was the Foreign Ministers conference in Helsinki on 12 November to discuss the promotion of security and sustainable development in northern Europe. I particularly welcome the fact that the Russian Federation was invited, and participated. In their post-1945 relations with the Soviet Union, which was often in a sullen mood, the Finns gave a dazzling display of how to walk on a tightrope above eggshells scattered on a minefield. It is 60 years since Mr. Churchill described Russia as

He suggested that the key to that enigma was Russian national interest. It is in the Russian national interest to have good relations with the European Union and it is certainly in the European Union's interest--that includes ours--to have good relations with Russia.

We should build on the new Finnish initiative in three ways. First, we must not disengage from Russia and pass by on the other side. Global and European stability is at stake. The nightmare scenario is that Russia might lurch backwards and think that the way out of its problems is to take lots of doses of more Marxist nonsense. Secondly, ordinary Russians must be encouraged to feel that they have a stake in the prosperity and future of their country. That comes only with a genuine free market, which must be underpinned by an intelligible tax system and a legal system which is seen to be acceptable and fair.

Thirdly, Russia needs private investment and European management skills. However, the investment needs to be tightly focused on specific projects, with every effort being made to avoid the clumsy, expensive and over-mighty bureaucracy from which Russia suffers so much and which holds back economic developments and opportunities for the Russian people.

I mentioned that the Foreign Secretary had provided a helpful paper for us yesterday, and this paper was mentioned in public. The Government say that the accession negotiations with Turkey

In other words, Turkey must improve its record on human rights.

Also, what will happen about northern Cyprus? I know talks at the UN are starting on Friday between both parts of Cyprus to try to resolve the problem. However,

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what happens if Turkey says it has improved its human rights record and the EU accepts that? What happens if Turkey says that it nevertheless wishes to stay in northern Cyprus? What happens if there is a plebiscite in northern Cyprus--recognised by the EU as fair and reasonable--and the people of northern Cyprus say that they wish there to be a continuing Turkish military presence on the island? That has to be resolved.

The Government--as the Conservative party did in government--have not said that there cannot be accession negotiations with Cyprus because it is divided. We have said that the fact that it is divided must not be a ban to Cyprus becoming a member of the European Union. The Government need to think about what the reaction of people in northern Cyprus will be if Turkey gets into a position where it is an accredited candidate for membership of the EU.

In the paper on defence, the Government said:

I take it from that that any EU-led operation would be within the European theatre. Presumably there would be no question of any military action or operation east of Cyprus.

As the Government build up the European military capability, they must monitor constantly the attitude of the United States. They must assure the people of this country that, by making this change, there is no weakening whatever of the commitment of the United States to the defence of Europe and of this country. The Government must reassure people, and there are many ways in which they can do that.

When we become the Government in 2001, we will have to look at this matter, but I can tell the Government that one of the cornerstones of the defence of these islands has been the Anglo-American alliance, so well forged by Mr. Churchill and Mr. Roosevelt in 1941.

We cannot get away from the fact that our current relations with our EU partners are not in an easy state. There is no need to dash around from think tanks to focus groups or interdepartmental Government working groups to find out why that is the case. The answer is that the nature of current events--particularly in finance and agriculture--means that our interests and those of our European partners do not coincide at present.

The positive advantages of our membership of the European Union remain well above the disadvantages of our being outside. There is an unanswerable case for our staying part of the EU--there are many economic and industrial benefits. There are also opportunities for British diplomacy in Europe. I ask the Government not to be over-ambitious. The problems that we have had in Europe over the years have been because the Commission and some countries have been over-ambitious. When people get over-ambitious, disappointment and setbacks follow.

Of all the politics on this planet, European politics is simply the art of the possible. It is difficult and challenging, and we must keep at it in this country in our national interest.

8.16 pm

Mr. Dafydd Wigley (Caernarfon): I speak as someone committed to the European ideal. I see nothing wrong at all in arguing that there is a political dimension to Europe,

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as well as an economic one. I see nothing wrong at all either in arguing the case for a federal Europe--although I realise that I would be very much at odds with most Opposition Members in that. It was for that reason that I was a yes voter in the 1975 referendum, and that is why I want to see the European institutions grow and develop democratically, and to have those powers that are appropriate to their function.

As we approach the Helsinki summit, I wish to address some relevant points. The EU has become, and is becoming, increasingly important for Wales and for other parts of these islands. It is certainly an important dimension for those of us serving in the National Assembly. Policies are increasingly determined at a European level, and changes in the structure and the nature of the EU will affect those policies.

The expansion to the east inevitably has a direct bearing on matters such as agricultural policy within these islands. Brussels, more than London, now decides on that policy. We found that out the hard way in October when our calf scheme was blocked by Brussels at the eleventh hour. That taught us a salutary lesson about getting a stronger voice for Wales in Brussels. Clearly, the current arrangements were totally inadequate as a means of ensuring that a scheme proposed perfectly legitimately by the National Assembly could make progress. Our National Assembly will be seeking ways of strengthening our links through UKrep and Wales's European centre to make sure that that sort of mistake does not happen again. The failure of the UK channels within the European Union to look after our interests in Wales on the calf scheme has become a driving force for Wales to develop direct links with the EU.

We are also aware of the massive importance of European Union structural funds to the economy in Wales. Those, too, will inevitably be affected by the expansion of the EU, and properly so. Wales will secure £1.7 billion from EU structural funds over the next seven years. Our challenge is to ensure that London gives as much priority to our objective 1 areas as Brussels gives. The key questions of additionality and match funding have yet to be resolved and need to be soon, so that we can obtain full advantage from the schemes.

At Helsinki, there will be discussions of forthcoming financial and taxation arrangements. No doubt the question of the UK Fontainebleau rebate lurks in the background of those discussions, and was recently debated in the European Parliament. The present arrangements have an unfortunate side-effect which was not fully foreseen at the time of the Fontainebleau agreement. As the current formula works, for every additional £100 million that the UK gets from the EU--for example, through objective 1 money--the Treasury loses about £70 million through the loss of the rebate. The net benefit, then, is only £30 million. Because of the additionality rules and the match funding that is required for some structural funds, the Treasury may have to find an additional £100 million. The UK then gains £30 million net but the Treasury is £70 million out of pocket.

That is a direct disincentive for the Treasury to maximise the take-up of EU funds and colours its attitude to some available sources of European money. Agriculture and regional policy have suffered from that. The Secretary of State conceded the point in the Welsh Grand Committee on 5 May 1998.

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I hope that the UK can maximise its take-up of European Union funds to the point where they are greater than the Fontainebleau rebate, and that the Fontainebleau formula can then be phased out. Until that happens, the mechanisms are contrary to the interests not only of Wales but of any other part of the UK that may benefit directly from EU funding.

Enlargement is another issue looming above Helsinki. Plaid Cymru welcomes the extension of the European Union to take in eastern European countries, but that is bound to have implications for the way in which small nations and historic regions are represented in the European structures, as was recently flagged up by our leader in the European Parliament, Jill Evans.

The Commission told Jill Evans that paragraph 2 of article 190 of the treaty says that the composition of the European Parliament will have to be modified to

It is worth dwelling on that wording. I stress the words "appropriate" and "of the peoples" and ask how the Government foresee the provisions affecting not only the level of UK representation in the European Parliament but the representation in the new structures of Wales, Scotland and Northern Ireland as peoples of Europe.

The enlargement strategy is a main agenda item at Helsinki. The Commission recommends the opening next year of bilateral accession negotiations with all the candidate countries that comply with the political criteria as established at the Copenhagen summit in 1993. If questions arise concerning, for example, the accession of Turkey, what assurance can we have that the UK will insist that the criteria on human rights and respect for minorities must be met before Turkey's accession can be countenanced? Until it treats the Kurds properly, there is no room for Turkey in the European Union.

I urge the Government to be sensitive to the economic and social challenges that will face eastern European states that have only recently emerged from long periods of limited sovereignty. There is a real danger of free- for-all market access undermining their fledgling free economies. We need a sustainable integration policy that takes account of economic, environmental and social challenges in those countries.

We in the more affluent west must accept that a larger proportion of European structural funds post 2006 will have to go to the new member states. If we want the political benefits of a wider united Europe, there is a price that we will have to be willing to pay. We may need a greater European tier of finance, even involving direct taxation--carbon tax, for example, is relevant in this context--to help to finance the cost of helping the new member states.

Asylum and immigration policy, minority language provision and the avoidance of ethnic tensions will clearly have to be discussed at Helsinki. We need a transparency of negotiations so that the new member states and their people, as well as the existing states, fully understandthe implications of those eastern European states' membership.

I am especially concerned about the effect of expansion on agriculture, both for the new member states and for the existing EU countries. We need to have more exchange projects to help to develop an understanding on the matter.

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The safety of nuclear reactors in the candidate states is a key issue.

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