Examination of witnesses (Questions 1
- 19)
TUESDAY 30 NOVEMBER 1999
THE RT
HON ROBIN
COOK, MR
EMYR JONES
PARRY, CMG and MR
NIGEL SHEINWALD
Chairman
1. Secretary of State, can I again welcome you
on behalf of the Committee and your two colleagues, Mr Jones Parry,
who was with us very recently indeed, and Mr Sheinwald, director
of the European Union. This is our traditional meeting on the
eve of a European Council and equally it informs, we would hope,
the parliamentary debate which will follow tomorrow. It had been
assumed—and this was covered in the helpful paper which
the FCO supplied to us as the background to the Council—that
the key themes would be enlargement, the intergovernmental council
and the European defence identity with Turkey obviously linked
to the enlargement process; since when an amendment may have been
moved. That is that the withholding tax now, it is said, threatens
to not only affect the atmosphere of the Council in the sense
of souring the atmosphere and turning some of our colleagues against
the British position, but also it is said that there are problems
with Spain in relation to Gibraltar and Spain is digging in on
that. Let me ask first about your assessment of the extent to
which the conflict over the withholding tax could eat up time
which might have been used perhaps more productively and will
also lead to a souring of the atmosphere at the Council.
(Mr Cook) It certainly is not we who are saying that
the issue of the withholding tax will sour the atmosphere at Helsinki.
Our understanding is that the presidency currently envisages that
there should be a special meeting of ECOFIN either on the first
day or on the eve of the Helsinki Summit to look again at this
issue. The issues of substance are well known. We are concerned
that a withholding tax must not affect the attractiveness of the
City of London as a place for international bond dealing. This
is an issue not of competition between us and the rest of Europe;
it is a competition between Europe and the rest of the world.
That market came from New York in the 1960s when a similar tax
was imposed by the Americans. We would not wish to see it leave
Europe because of such a European tax. That is why we have proposed
a number of different ways in which our concerns on the withholding
tax will be met without undermining the objective of the Germans
and others who wish to make sure that tax is not avoided by people
putting it in other countries where they cannot tax the interest.
2. Will you propose a working paper showing
ways in which the taxes generally can be harmonised and evasion
avoided while still retaining the benefits to the City of London
of that tax?
(Mr Cook) We have made a number of proposals of other
ways of handling it. If I can go back to first principles, we
believe that the better way in which the problem identified by
Germany could be handled is by increased banking transparency.
The problem for Germany is that it is unable to work out where
deposits may be put by German savers and therefore unable to reassure
itself that they are properly taxed. Greater banking transparency
between the members of the European Union would therefore be one,
in our view, practical way of tackling that problem. If the alternative
route is favoured of imposing a Europe wide withholding tax, there
are measures by which we can make sure that the international
bond market in London is exempted and saved from the effect. We
have put forward a number of proposals for that. They are still
before the Committee. We will continue to work with the Committee
to try and find a solution.
3. If there is no movement, we would veto any
proposal?
(Mr Cook) We are not going to agree to a directive
that will impose a tax on the international bond market in London,
no.
4. The assumption is that this will go to heads
of government?
(Mr Cook) As far as I understand at the present time,
it will certainly go to an ECOFIN meeting in the margins of the
summit. In what shape or form or when it will appear on the heads
of government agenda, I myself at the present time do not know.
5. This course has already been covered without
any serious compromise being acceptable.
(Mr Cook) It is not unknown within the European Union
for discussions to continue to the last minute.
Chairman: I would like to turn to another area
which may be souring relationships.
Mr Mackinlay
6. I think there is growing concern right across
the political spectrum in the House of Commons about the interests
of Gibraltar and the feeling that they are not sufficiently being
considered by Her Majesty's Government in relation to EU matters.
Also, there have been recent reactions of the Spanish Government
and perhaps too great a robustness by the Foreign and Commonwealth
Office and probably of Parliament here. To what extent are Gibraltar's
interests going to be raised at this conference and what opportunities
have been there for the Gibraltar Government to make representations
to you about this agenda?
(Mr Cook) There is no part of the European continent
which receives more of my attention per capita than Gibraltar.
I would vigorously rebut any suggestion that its interests are
in any way neglected. Secondly, we have made very strong representations
to both Spain and the European Commission on behalf of Gibraltar
and we will continue to do so whenever there is an appropriate
cause to do so. Thirdly, there is nothing directly on the agenda
at Helsinki which would have the word "Gibraltar" on
it. We are of course pursuing our request to become incorporated
in certain aspects of Schengen, and it is a limited application.
We have made good progress on that with the Commission and with
other Member States. As you are aware, Spain has concerns about
the extent to which Gibraltar can be incorporated in Schengen.
We have been engaged in negotiations with the Spanish Government
for some months now. I cannot be certain we will reach agreement
before Helsinki. It is a possibility but the Committee will understand
that there is a limit to how much I can be drawn on what at present
are the confidential negotiations between us.
7. I accept as a fact that you spend, in terms
of energy, a disproportionate amount of time on Gibraltar.
(Mr Cook) I would not say a disproportionate amount.
It richly deserves it. It does get a lot.
8. Nevertheless, the fact is, as we speak, there
is a continuing affront to the rights of United Kingdom citizens
and the people of Gibraltar as well in one part of the European
Union, namely on that border. I do not think it is a matter of
dispute between us and the Foreign and Commonwealth Office that
it is not the normal border controls; it is a standard hour. It
does not matter if there are a lot of people going there or a
small number of people going through in vehicles. That simply
is not tolerable, is it? Did there not really ought to be this
being raised at this because it is affecting our interests in
a very substantial way? It is the gravity of it that I am trying
to flag up.
(Mr Cook) I absolutely agree with you on both the
objectionable character in principle of what has happened at the
border and on the practical effect on the people not just of Gibraltar
but also of tens of thousands of Spanish citizens who live on
the Spanish side of the border who also wish to have free movement
to Gibraltar. You will be aware that many of the local communities
have protested to Madrid about the impediment to trade and to
the free movement of people that results from the obstructions
at the border. We are seized of that matter. We are committed
to pursuing it. I would only advise the Prime Minister to raise
it at the Summit if I felt that that was the best way of unblocking
the problem. In the meantime, we have pursued it first of all
with both the previous and the new Commission. Indeed, it has
been raised with Commissioner Vitorino who is responsible for
this aspect of Commission law. We will continue to press the Commission
to take action against Spain for what, in our judgement, is a
clear infringement of European Union law. Secondly, we continue
to be in dialogue with the government of Spain and are looking
for ways in which we can find a political solution, in the absence
of which we will have to consider a legal one.
9. If I can move on to enlargement, Slovenia
probably could be absorbed into the European Union and could fit
it like a glove now. Estonia certainly could be absorbed because
it is very small. Is there any likelihood of Slovenia and Estonia
being given admission accession in advance of Poland, Hungary
and the Czech Republic and would you consider that desirable?
(Mr Cook) I would want to see as many countries admitted
as quickly as possible but the answer to your question is, "it
is possible." When we identified the first six countries,
Poland, the Czech Republic, Hungary, Estonia, Slovenia plus Cyprus,
we were quite explicit that this was not a block process. In other
words, they would not proceed at the rate of all six together
and they would not necessarily all be admitted as all six together.
It was open to whichever of the applicant countries made the most
and the swiftest progress to get in ahead of the others. Equally,
ones who were not in that first wave would have the right to overtake
if they made progress in catching up. In principle, the answer
to your question is yes, any two of those six could come in before
the others, but it would be invidious to try and speculate at
this point which they might be.
10. When the pre-ins are approved, is there
a difference between them and Poland, Hungary, the Czech Republic,
Slovenia and Estonia? Is it not just a bigger group, as it were?
Should we think in terms of that tranche?
(Mr Cook) I would try and dissuade people from thinking
in terms of a group and rather to think in terms of what are 12
individual countries with different characteristics. For instance,
Slovakia, in terms of economic reform, is as well placed as, say,
the Czech Republic. Slovakia was not included in the first wave
of six because at the time the government of President Meciat
was one which did not abide by the Copenhagen political criteria.
The new government has made very rapid progress on remedying some
of that democratic deficit and that brings Slovakia hard on the
heels of those earlier ones. In the case of Malta, which is likely
to be approved also at Helsinki, Malta put its own application
into abeyance as a political decision which has now been reversed
following their general election. It is possible that some of
those six, with application, could catch up on some of those who
were ready in the first place.
11. The other area which the Committee are concerned
about is Ukraine. I see at this Summit we are going to have the
strategy for Ukraine. Why has it taken so long? I wonder what
your thinking is about the pivotal nature of Ukraine, both in
terms of the market, but also politically because I think amongst
many colleagues here there is a feeling that there is a danger
of it literally being left out in the political and commercial
cold and this could have profound consequences for both Ukraine
and Europe in years to come. I am expressing concern really.
(Mr Cook) I would dispute, first of all, that it has
taken a long time. If I recollect rightly, the concept of common
strategies only stems from the Amsterdam Treaty and therefore
since May of this year it has only been legally possible to draw
them up. The first one we decided was in relation to Russia and
I am sure that was the right priority. Ukraine is quite high up
in the queue as we move quite quickly to adopt a common strategy,
but on the substance of your question I have a lot of sympathy.
I think we have to try and perform a feat of imagination, of looking
at how the map of Europe will be drawn after enlargement and at
that point Ukraine becomes our next neighbour. That is why it
is important that as the process of accession for those who are
in the process of application goes forward we should also look
at ways in which we can strengthen and deepen our ties with those
who would then be our neighbours. There are some highly relevant
questions about movement across the borders between Poland and
Ukraine which will need to be resolved as part of that.
Mr Chidgey
12. I want to talk to you a little about some
of the concepts of enlargement with the smaller states. I have
had some feedback from those countries—particularly, for
example, Estonia—that they are finding in the electorate
at large in those countries there is some reticence now about
the benefits to those smaller countries of joining the EU. I wondered
whether you had come across this in your good offices and what
reaction you might have to it, particularly the concern about
loss of sovereignty and the loss of their independence in terms
of currency. They have only recently recovered from their escape
from the other empire to the east. I wonder whether this is an
issue that has been brought to your attention or the Foreign Office's
attention and what reassurance we can offer for the benefits to
the Union, apart from defence of course.
(Mr Cook) Membership of the European Union does not
of course produce a commitment to collective defence. That would
be a matter for NATO. I cannot say that any of the applicant countries
at any level have expressed concern to me about joining the single
currency because to most of them, quite rightly, that is a second
stage. Membership of the European Union would not necessarily
imply membership of the single currency and frankly I would have
thought it unlikely in the early stages for many of these countries
to do so. Of course in some countries there are those who have
concerns about what it is necessary to do in order to become a
member of the European Union.
13. Changing their legal system and their laws?
(Mr Cook) The process of economic reform is not an
easy one and some of it is painful and there are casualties along
the way. In the case of one or two of the countries, of which
Estonia is one, we have had to require quite substantial changes
in the treatment of ethnic minorities, particularly in their case
the Russian speakers. I think that has been good for Estonia.
There are a lot of people in Estonia who would argue that for
their country to succeed a third of the population of Russian
speakers must feel part of that state and it has helped to reduce
tensions with Russia, but I do not deny that there are people
in those countries, including Latvia for instance, who are not
best pleased at what the European Union requires by way of the
Copenhagen criteria.
Sir David Madel
14. Enlargement will be expensive. Will we have
to give up our rebate as a consequence of enlargement?
(Mr Cook) No, we have no intention of giving up our
rebate. Indeed, the whole point of the Agenda 2000 exercise at
Berlin was to try and create the financial headroom for enlargement.
That is why we sought to reduce the spending of both structural
funds and the CAP. Your Committee will recall that as part of
that package the British rebate was rolled forward for another
financial perspective, so it is not technically possible for anybody
else to reopen the question of the British rebate until 2006.
15. When Mr Prodi was asked about this by Der
Spiegel as to whether we would have to give up our rebate
and he said, "I assume so" that is faulty journalism?
(Mr Cook) No. I am perfectly prepared to believe that
Mr Prodi said such a thing. Mr Prodi would probably be against
the rebate whether or not there was enlargement. The rebate does
not have much continental support but it is important to Britain
and we succeeded in keeping it at Berlin.
16. When we talk to countries who wish to join,
are we making it clear to them that the European Union is economics
and politics and there is no defence on the agenda; it is entirely
an economic and political organisation?
(Mr Cook) I think that is well understood. Indeed,
a number of these countries—I think probably the majority,
if not all of them—also have parallel applications to NATO
so they understand the distinction.
Mr Illsley
17. Could I ask whether there has been any movement
in the application on the part of Cyprus and whether the difficulties
still exist in relation to the divided island? Could I further
ask you to expand on the points you put in your paper to us regarding
the Commission perhaps recommending Turkey to become a candidate
country and proposing a programme for Turkey in relation to accession
partnership, screening and so forth?
(Mr Cook) We will be strongly supporting the recognition
of Turkey as a candidate for membership of the European Union.
We had a very full discussion of this among the foreign ministers
of the European Union at our informal meeting in Finland in September.
I think it is fair to say that the great majority view there was
that Turkey should be recognised as a candidate, but that it would
not be possible to proceed to negotiations for accession until
Turkey was in conformity with the Copenhagen criteria on democracy,
human rights and the treatment of ethnic minorities. To be fair
to the new government of Turkey, in the last few months some very
interesting things have happened on that front. For instance,
there has been a release of a number of people who were imprisoned
under the media laws. There have been moves to restrict the passage
of banned political parties, to remove the military personnel
from the judges in the security court and also the proposal to
remove the immunity of officers of the government, particularly
police and prison officers, from prosecution has actually been
very helpful. These steps are encouraging. There is a lot further
to go, but we and Europe need to encourage those who are doing
it and they look to Europe for their inspiration and their aspiration.
I think the package by which we offered Turkey candidate status
but only offered negotiations following further movement on these
issues of democracy and human rights is one that would be valuable
to Turkey and sensible for Europe. Cyprus remains very much the
related question. Talks will commence on Friday in the United
Nations about the division of the island. We have worked hard
to get those talks started and it was very much Britain that pushed
in the G8 for that initiative to start rolling earlier this year.
I hope they are successful and in our judgment it would be easier
to absorb Cyprus into the European Union as one single, undivided
island and that is what the Cypriots want for themselves. At the
same time, we are quite clear that an end to the division of the
island must not be a precondition of Cyprus's membership of the
European Union; and that it would be unfair to the government
of the Republic of Cyprus not to consider their application on
its merits if we are unable to get agreement with the Turkish
Cypriot sector to an end to division.
18. Is there any cause for optimism for the
Council that Turkey might be persuaded over its opposition to
Cyprus's membership, thereby alleviating the Greek situation as
well?
(Mr Cook) We would certainly expect all candidate
countries not to stand in the way of the application of any other
candidate country.
Dr Godman
19. How important is the question of the death
sentence imposed on Abdullah Ocalan? If that were to be carried
out, would it not strengthen the hostility of numerous Member
States with regard to Turkey's candidacy?
(Mr Cook) Britain and I think most of our partners
individually and all of us collectively have stressed to Turkey
our principal opposition to the death penalty in all circumstances
and in all cases. Mr Ocalan has now lodged an appeal to the European
Court of Human Rights. It is likely to be some time before that
case is disposed of. I would just plead with the Committee a little
bit for understanding here because we have all made very clear
our position to Turkey and to the Turkish government. We none
of us want to see Ocalan executed. It would be unhelpful in achieving
that objective if we were to shout that message from the rooftops.
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