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Mr. Andrew Mackinlay (Thurrock): I congratulate the Prime Minister on the negotiations. Using his Warsaw speech as a backdrop and checklist, what progress has been made on the other issues that he raised in that speech, such as the possibility of allowing applicant countries to participate in the next European elections?

The Prime Minster has mentioned the important opportunities for British trade and the banking and financial sector, which has been extremely tardy in becoming involved in central Europe. Why have not any of the three Secretaries of State for Trade and Industry since 1997 visited Poland, Hungary, the Czech Republic, Slovenia or Estonia? [Interruption.] It is time that they did so, bearing in mind that one of them went to Australasia, one to South America and one to India.

The Prime Minister: In respect of the last point, my right hon. Friend the Secretary of State for Foreign and Commonwealth Affairs tells me that he has been to all those countries. As my hon. Friend will know, I have recently been to Poland. However, we shall certainly pass on his point.

What has been called the post-Nice agenda is important for us, because it allows us to mount the arguments on subsidiarity and how to involve national institutions more in the European institutions, which is very important. We also secured agreement--although it was the consensus--

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that the applicant countries should participate in that process. The text specifically stated that it would not be right for that to be an additional hurdle to enlargement.

Mr. Michael Howard (Folkestone and Hythe): Almost everyone agrees that European defence capability needs to be enhanced; the question is whether it should be done inside or outside NATO. Does not the Prime Minister understand the difference between a situation in which NATO chooses not to be engaged--which are the words that he used today at the Dispatch Box--and a situation in which NATO is not engaged, possibly as a result of the decisions of others, which were the words that he read from the presidency report? Might his failure to understand that difference be one of the reasons why he has led the country into such dangerous territory on the issue?

The Prime Minister: I thought that the right hon. and learned Gentleman received a very good response on that from other Conservative Members, which augurs well for the future. However, I hope that he and other right. hon. and hon. Members who have doubts about the matter will talk to those who are engaged in working it out. There is no way in which the force will be a rival to NATO or act in circumstances other than those in which NATO chooses not to be involved. The reason for that is simple: many European Union countries are, like the United Kingdom, NATO members. As I said, in each individual decision, we will all have to choose to be involved. The force will operate only in the circumstances that I have just outlined. The idea that this will be an independent standing force set aside from NATO is nonsense.

The right hon. and learned Gentleman asked whether it was better to develop our defence capability inside NATO. The whole purpose of the proposal is that it will allow us to do that inside NATO as well. That point has been made by our American allies, apart from people such as Richard Perle, who take a different point of view. [Hon. Members: "Bill Cohen."] Bill Cohen did not take the opposite point of view. He said exactly what we have been saying, which is that, provided that the force is not an independent military planning capability and a rival to NATO, its establishment is in America's interest. Countries in the European Union may believe that it should be such a force; we do not. With our American allies and others in Europe who do not share that view, we shall ensure that we succeed. Over the next few months, the final arrangements will be made between NATO and the European Union. Let us debate them again then.

Mr. Bill Rammell (Harlow): Given that the Conservative party has been claiming for months that the Government would be forced to concede qualified majority voting on social security and tax, is it not astonishing that we have not heard a word about that today? Does not the manner in which individual nation states defended what they perceived to be their national interests through the veto this weekend show that we are light years away from the prospect of the European superstate with which the Conservative party is trying to frighten the people of this country?

The Prime Minister: My hon. Friend is absolutely right. We protected our national interests in a way that

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allowed the matter not to become the sole issue of the summit and which prevented us from being painted into a corner. That would not have been in Britain's interests either. We needed to discuss a series of issues, as well as simply to defend our own capability. It is important that we recognise that success.

Mr. Peter Brooke (Cities of London and Westminster): Why does the Prime Minister continue to say that the British rebate under the European Union budget was under threat, when it can be changed only by a free-will decision by the British Government?

The Prime Minister: That can be said about all treaty change. The rebate was certainly under threat, because we had to argue for it fiercely at Berlin. The securing of the rebate was done on precisely the same basis, because the Council could not agree the original rebate unless all the member states agreed. I am sorry to have to remind the right hon. Gentleman, but the constant complaint of Conservative Front Benchers--although not the right hon. Gentleman--was that we would sell out on the rebate. However, a couple of days before the conference, they got worried that that might not happen, and changed their tune. They have done precisely the same on tax and social security this time.

Mr. Denis MacShane (Rotherham): Mr. Speaker, before your elevation, you heard many statements from Prime Ministers on treaties and summits. There would always be one or two Labour Members--on the Opposition Benches at the time--who would welcome them. I hope that, before the statement is over, we shall hear one Conservative Member welcoming this historic accomplishment.

Has my right hon. Friend the Prime Minister seen the reports in today's newspapers that the shadow Foreign Secretary's spin doctor was sent to act as a bluebottle in Nice, spreading the unilateral disengagement from European politics philosophy of the Conservative party? Is it right to spend Short money on that?

Mr. Speaker: Order. The hon. Gentleman should put a question on the statement. I think that the Prime Minister has got the point.

The Prime Minister: I do not think that I need to comment on that, Mr. Speaker, except to say that I gather that the exchanges between my press secretary and that of the shadow Foreign Secretary, the right hon. Member for Horsham (Mr. Maude), were one of the more amusing aspects of the Nice summit.

Sir Michael Spicer (West Worcestershire): Why did the Prime Minister sign up to a new tax which compensates countries suffering from being in the euro?

The Prime Minister: I have already explained that we did not. The articles that have been secured make it clear that the so-called bale-out provision cannot be used in respect of the euro.

Mr. Roger Casale (Wimbledon): I congratulate my right hon. Friend the Prime Minister on the agreements reached in Nice in respect of the rapid reaction force, and on making it clear that the new capability will be

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consistent with our existing defence alliances and complementary with NATO. Is it not further proof of the fundamental lack of judgment of the Conservative party--if further proof were needed--that it chooses to attack the rapid reaction force simply on the grounds that it has something to do with Europe? It has primarily to do with Britain's national defence interests. The Conservative party has demonstrated that it cannot be trusted with our nation's economy, but it will never be forgiven for this demonstration that it cannot be trusted with our nation's defence.

The Prime Minister: It might be helpful to read out the words of Senator Hagel, who is the leading Republican senator on the Senate Foreign Relations Committee:

I could not have put it better myself.

Mr. William Cash (Stone): Will the Prime Minister explain why the annexes to the French presidency report, on which most of the questions relating to defence and European security depend, are not yet available in their current form? In relation to the contentious issue of the planning and military intelligence capability of the European Union, as compared with NATO, will he also explain why it says that in developing this autonomous capacity, there must be due regard for the decision-making autonomy of the two organisations? Does that not make it clear that there is in fact a distinct operational planning and military intelligence system? What is the Prime Minister going to do about it--will we have to wait another three months?

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