Examination of Witnesses (Questions 80
- 99)
THURSDAY 18 NOVEMBER 1999
MR EMYR
JONES PARRY,
SIR JOHN
GOULDEN, AND
MR BRIAN
DONNELLY
80. Were you going to add?
(Mr Donnelly) Simply to comment on the way that society,
sadly, works in Serbia at present. Milosevic in a sense feeds
off visits by important international figures. What happens is
that you would see on state television (which is basically the
only television) a ten or twenty minute sequence showing Milosevic
meeting people. You never have interviews with the individuals,
you just have a voice-over which tells you what Milosevic has
said to them. There is very rarely an opportunity to hear what
they say to him. And the impression that he likes to give is of
someone who is an international statesman who does business with
the rest of the world and the net effect on the democratic opposition
in Serbia is a very debilitating one because they have no adequate
means of replying to that kind of performance and their press
conferences simply would not be relayed in Serbia.
81. Can I just ask a practical question. Should
anything be done about bridges that were blown up and are blocking
the Danube? Because of course that has had quite an effect on
trade. Should we leave the bridges there or is there a case for
at least starting to clear the Danube?
(Mr Jones Parry) There is a very strong case for clearing
the Danube. Indeed we have asked the Danube Commission to come
up with proposals to do that. It has to be said the main reason
Danube is not being cleared is because of Milosevic's response
to it and if we start to clear the Danube we need to talk to Milosevic.
He has also made it clear that we cannot clear the debris unless
we are prepared to reconstruct the bridges and that is a condition
we are not prepared to accept.
Chairman: What I would like to do is continue
with some other areas Montenegro, Serbia itself, Kosovo and then
the Stability Pact. Mr Rowlands first on Montenegro.
Mr Rowlands
82. From what I have read Montenegro is in a
sense a de facto state and seems to have authority over
almost everything that one would call a state and one is now talking
about having a parallel currency, the Deutschemark. Can you tell
us what you see as being its status? I know the formal status
but in practice is Montenegro almost semi-detached or totally
detached from the FRY?
(Mr Jones Parry) Can I ask Mr Donnelly to answer that
because he is in regular contact with President Djukanovic.
(Mr Donnelly) I think semi detached would be a fair
description but with no decision as to whether they wish to become
detached. Federal structures which only have two countries in
them are fairly unusual and not the most stable institutions particularly
when one has ten million and one has 600,000. Perhaps even more
so when you look at the way in which the Montenegrin Government
has emerged because in 1989 at the end of the Cold War when the
Communist Party was being transformed in Yugoslavia and elsewhere
in central and eastern Europe what is now President Djukanovic
and his main opposition Mr Bulatovic were at that point partners
if you like in the new Socialist party that emerged from Communism.
What happened in between of course was that they fell out. Mr
Djukanovic won the elections for the Presidency and then last
year in parliamentary elections his coalition won a parliamentary
majority and those elections were ones in which he invited the
OSCE to come into the country to help in a sense draw up the election
law and be there and present throughout the elections. I was there
and I visited a number of the polling stations and it was really
refreshing to see how enthusiastic people were for working these
procedures which gave them the chance to express themselves freely.
What we had emerging in Montenegro was a government which they
would not claim to be perfect but which at least respected many
of the norms which we would hope to see spread to Serbia. With
that came an increasing sense of frustration in terms of economic
development of Montenegro. They were inhibited by the international
sanctions that were being imposed on the FRY. The result is that
Mr Djukanovic has tried in a number of ways to escape from the
shackles that are presently imposed on him by the federal structure
without wishing to precipitate a formal division. One of the difficulties
he faces is that following the parliamentary elections Milosevic
had never acknowledged the change that came with that in the Federal
Parliament of Yugoslavia and, as a result, Montenegro has essentially
not recognised the Federal Government's decisions because the
new political situation in Montenegro has never been reflected
in the Federal Parliament. Essentially what Mr Djukanovic has
been trying to do is obtain reasonable freedom to conduct the
kind of economic and social policy that he would like to see in
Montenegro and which the constitution of the republic does allow,
which is a fairly considerable amount of autonomy for the two
republics. You mentioned a parallel currency. This was the most
recent step which the Montenegrins have taken which was to legalise
the Deutschemark as a parallel currency with the Dinar. They did
that a couple of weeks ago and the intention again was to try
and give them a little bit more economic freedom. So yes there
is a set of incremental steps. The background to this of course
is that there is within Montenegro a strong body of opinion that
would like to see political independence. There are two political
parties which have it actively as their objective. All the evidence
from the opinion polls and from talking to politicians is that
opinion is probably split about 50/50 in Montenegro as to whether
that would be the right course to follow or not. Mr Djukanovic—and
you will have the chance to talk with him next month—is
very realistic about the implications of heading in a direction
where only half the people might want to go. So what he is trying
to do is provide opportunities for people within the FRY which
meet their aspirations but where he runs up against obstacles
emanating from Milosevic and the current regime he is doing his
best to try and work round them.
83. The formal duties of a federal state are,
for example, border controls and Customs. Who runs the border
controls and Customs?
(Mr Donnelly) At present the Montenegrins have taken
over Customs and in practice they also run the border controls.
84. What about taxation? Whatever taxation exists
is purely Montenegrin?
(Mr Donnelly) In practice there is virtually no exchange
of revenues between the Federal Republic and the state. This is
largely in response to Milosevic simply not returning the revenues
to Montenegro from previous years which they felt they were entitled
to.
85. Is there a FRY army presence in Montenegro
still? There was a large one, if I remember rightly.
(Mr Donnelly) There are about 10,000 to 12,000 troops
stationed in Montenegro. It is a Federal army and the line of
command for those troops goes back to Belgrade.
86. They are an ominous presence, are they?
How are they seen by Montenegrins?
(Mr Donnelly) It probably depends on which 50 per
cent you see yourself in. For those who look towards Montenegrin
independence they are certainly seen as an ominous presence. Not
the army, per se, because a lot of those in the forces
will be Montenegrins but the control through Milosevic is seen
as ominous, not least because there should be a Federal Defence
Council, which includes the Presidents of Serbia and Montenegro
as well as the Federal President, and which traditionally although
not by statute has operated by consensus. What the Montenegrins
saw was Milosevic not abiding by that convention and so increasingly
they felt they were having no control over the activities of the
Federal army in Montenegro.
87. What would the collective position of ourselves
or NATO be if, for example, we got any evidence that there is
an attempt to subvert or undermine the Montenegrin Government?
Have we made it absolutely clear that would be cause for NATO
action of one kind or another?
(Mr Jones Parry) NATO at the Washington Summit made
it very clear that any move by Belgrade "to undermine the
Government of President Djukanovic will have grave consequences."
We have not yet spelt out what those consequences are. There is
a balance in this argument between giving support (which we do
very strongly) to President Djukanovic but encouraging restraint
also and on the other hand sending signals to President Milosevic
that we are encouraging independence or that we would not react
if Milosevic were to do something. It is a careful balance between
not encouraging one or the other to be extreme.
88. What are the levers? Clearly we are not
going to invade a country where 50 per cent of the population
believe in the Federation. There is no stomach for that. Already
Serbia is subject to the full range of sanctions, are there any
instruments left?
(Mr Jones Parry) Quite a lot of instruments on President
Djukanovic in the sense that he has a close relationship with
Western Governments and he has been very responsive to the approaches
which have been made. I think he has behaved very responsibly.
That side of the equation is much easier. The other side of the
equation, Chairman, as you say, is there are not that many direct
levers and we have put out one particular statement, we are monitoring
the situation very closely. We have encouraged restraint and I
think it would be wrong of me to speculate as to how we would
react to any particular scenario at this stage.
Mr Rowlands: We are not going to misread Mr
Milosevic again? On this one he has the message loud and clear.
Chairman
89. Great things we shall do which are unspecified.
(Sir John Goulden) What we are doing is we are monitoring
at NATO, extremely closely. We are briefed on this, as we are
on other Balkan issues, every week. We are watching very, very
closely. I cannot say more than that.
Mr Rowlands: Was there some doubt when the Prime
Minister came back from one of the statements he made to the House
whether Montenegro is caught by the banning of any form of support
for rehabilitation or reconstruction etc which applies in Serbia?
What about investment and support for rehabilitating Montenegro,
is it caught by the same ban that applies to Serbia?
(Mr Jones Parry) Montenegro is getting quite a lot
of support. I need to check the figure but I think it is of the
order of 16 million euros being made available by the European
Union over a period of time.
Chairman
90. There is money going to NGOs but, as I understand
it, International Financial Institutions cannot give help because
it is not a sovereign country?
(Mr Jones Parry) Absolutely right, Chairman. In terms
of the IFI's in Washington, the European Bank in London is being
more constructive and is in a dialogue. The Commission is at this
moment in a dialogue in terms of how to respond now to what is
being done on the currency side. We have also exempted Montenegro
quite specifically from the flight ban. Montenegro Airlines fly
into European Union destinations.
Mr Rowlands
91. Is it our policy to build up Montenegro
in every possible way and respond positively to any of their requests?
(Mr Jones Parry) Very much so and we have made provision
also that Montenegro attends not as a sovereign state of course
but attends meetings of the Stability Pact.
92. We are saying it is a de facto state, are
we not?
(Mr Jones Parry) You may say that.
Sir David Madel
93. Are the Russians being helpful and understanding
as to our policy?
(Mr Jones Parry) They understand the policy. They
are certainly not doing anything I am aware of to undermine that
policy.
94. They are not doing anything to encourage
Mr Milosevic to do anything foolish?
(Mr Jones Parry) I think in fairness to the Russians
they have throughout encouraged President Milosevic to be anything
other than foolish. The advice I think they gave him throughout
the Kosovo conflict was to rein in and to stop.
Chairman
95. Final question on Montenegro before I go
to Dr Starkey. Is it the view of the Alliance that the customs
administration, on which they rely substantially for their revenues,
is an honest one?
(Mr Jones Parry) I think it is fair to say the Alliance
does not have a position on an issue like that.
96. Have you consulted the Italian Government?
(Mr Jones Parry) The Italians may well have a view
but NATO as a whole, I am sure, does not.
Dr Starkey
97. In the Foreign Office memorandum you say
that the successor states of Yugoslavia are hostile to tolerance
and suffering from "systematised ethnic hatred, political
gangsterism and mismanaged economies". I suspect that would
apply to a few other countries in the region as well, including,
for example, Albania. I wanted to ask about the EU strategy to
try to bring these countries into what one might call European
values and European economies. Essentially, as I understand it,
the European strategy is to provide among other things for increased
trade liberalisation with the aim of a free trade area within
ten years. In other words a gradual approach, carrot approach,
if you behave you will be able to come in. I want to contrast
that with a view which has been put across by the Centre for European
Policy Studies which is that one of the motors for criminality
within this region is precisely customs barriers and borders which
are then exploited by criminal forces as enormous generators of
money which they then use to fuel their illegal activities and
that a possible way forward might be to do this integration thing
backwards, actually to get rid of the borders, to get rid of the
opportunity for customs dues across these borders and in and out
of the EU, to pay the governments—the governments—a
sum of money to compensate them for the lost revenues and by abolishing
these barriers to actually remove this huge potential source of
money that can be used to fuel the criminal economy. I would like
to know whether the British Government has thought of that as
a strategy, thinks it has any merit whatsoever and thinks the
other EU Member States could be persuaded that this might be a
good way to go instead of this very, very gradual carrot approach?
(Mr Jones Parry) If I can begin, Dr Starkey, by just
setting the European Union's relations with part of the countries
in conflict. We have for the last ten years tried to evolve a
pattern of agreements and I hope in January we will have 12 countries
in negotiation for membership. We have gone through this building
up of economic corporations, financial assistance and, above all,
reducing barriers to trade and liberalising trade. That is a well
established pattern and it comes with a heavy conditionality,
what we expect these countries to do, as you put it in your question.
That underpins the approach to the Balkans. The Commission in
a communication which we did quite a lot to contribute to the
raw material for has proposed a new form of agreement, the Stability
and Association Agreement, which would build up the different
elements but would look forward, as you say, to the liberalisation
of trade over ten years. That is the best way we judge to produce
prosperity. Now, that we have to do and we would prefer to do
that sooner in terms of trade liberalisation. The trade liberalisation
is a bit distinct from removing all barriers. If you remove all
barriers then what that means for movement of people, what it
means for customs duties and so on is really very significant.
Part of our problem is that we are getting exports of a not always
desirable sort from that part of the world. I think we do need
to be vigilant.
Chairman
98. Such as what?
(Mr Jones Parry) Some of the organised crime, some
of the prostitution which certainly hit Italy really is deeply
unattractive. It is also the case that a large number of people
illegally have entered. If you count the numbers the Union has
something of the order of 600,000 plus at the moment. It would
be far better over a period of time, the sooner we can make it
the better, to bring these countries to the position where legitimately
they could take on the responsibility of the membership. Moving
towards a premature membership would, we think, dislocate these
countries rather more than not doing it. One has got to be cautious.
Whether or not dropping all barriers—
Dr Starkey
99. Customs barriers, not to people?
(Mr Jones Parry) Customs ones.—means on our
side, of course, we would lose a certain amount of revenue but
our argument is let us drop the barrier, let us go to liberal
trade as soon as possible. That barrier we do not have too much
of a problem about. The assumption somehow that organised crime
and what they do on the border only stems because there is some
sort of law and the need to make payment, I think distorts what
is happening there. What is happening there would still be for
the large part illegal even if you drop the barrier, what you
have got is organised crime, ruthlessly exploiting situations
where central administrations have lost control of the borders.
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