Select Committee on European Scrutiny Minutes of Evidence

Examination of Witnesses (Questions 1-19)




  1. Minister, welcome. It is nice to see you again. Would you mind introducing your colleague who is with you.
  (Peter Hain) Nick Baird is head of our European Union Department (Internal). He has to bail me out if I get into trouble!

  2. I am sure you are not going to get into trouble, Minister, and we look forward to this session. I can remember when you were here for the first time when we said we looked forward to further meetings and this will be one of many we are going to have in the next three months or so, and later on we have the Standing Committee on the convention which will be interesting as well. On 10 July, the Commission put forward radical proposals to reform the Common Agricultural Policy so that the link between direct subsidies and production would be cut and payments would be gradually reduced by 20 per cent, allowing the money saved to be used for the broader rural development measures. The Poles made clear to us during our visit the importance they attach to parity of treatment in direct aid to farmers. If the Member States do not accept the Commission's proposals for reforming the CAP, will this undermine their stance on direct aid in the accession negotiations? What do you envisage as the outcome of the negotiations on direct aid and agricultural quotas?
  (Peter Hain) First of all, thank you for inviting me again; I genuinely welcome the opportunity to have these exchanges and also to read of your reports and no doubt we will come to that later. The first thing to emphasise is that the budget for CAP is not going to increase; there has been a ceiling put on that. That under pressure of enlargement is going to require huge reforms in any case, but it is important too that there are no first or second class citizens or Member States within the European Union in respect of agriculture or any other matter. So, even though there will inevitably be transitional measures as the Commission has in its negotiations on the agriculture chapter made clear, people will not come in on a level playing field with existing Member States on day one. Nevertheless, where it ends up must be on a level playing field which means a reduction in direct payment assuming the system remains the same, and we want to see it radically reformed, and then the Poles will get the same according to the criteria as British farmers do and French farmers do.

  3. What do you see as the outcome of the negotiations on direct aid and agricultural quotas?
  (Peter Hain) There is quite a long way to go on all of this, but we want to see a situation where direct payments supporting production, often wastefully and artificially, are replaced by development assistance to support the rural economy, rural enterprise including agriculture, diversification, value added products and so on, so that Europe's agriculture sector becomes much more modern and competitive, and that is the way we would want to see it go. So, we would like to see direct payments in the current form replaced by that support mechanism which would create a much more diverse form of rural support and actually create a more modern rural and sustainable rural economy in the process.

  4. Is there a risk of creating a new block of countries with a vested interest in blocking CAP reform?
  (Peter Hain) That block expressed itself recently in that we, the Germans, the Swedes and the Dutch have been most clear in wanting CAP reform, but other countries, particularly France and Spain, want to retain the status quo. In my view, the status quo is not tenable with enlargement and it is certainly not desirable. So, there will be reform and the Commission's proposals were very encouraging in promoting a shift towards environmental and rural support rather than production, as I said earlier, and also a focus on quality food. A very important factor in all of this which is often neglected is opening up markets to developing countries. If we are serious about poor countries in Africa, for example, being able to generate strong economies and create strong economies which make them less dependent on ourselves for aid and help them to escape from poverty, then we need to have a Europe which is not a fortressed Europe against poor countries but one that lifts its tariffs and its agricultural barriers including massive bloated subsidies.

  5. Is there not a problem with this perception, or certainly a perception which might be a weaker one, because we saw clear evidence when we visited Poland that there was an impasse, and strong objections to the Commission's offer of 25 per cent by some of the political parties? Do you not see that there is a risk, if this impasse is not solved pretty quickly, of it influencing people's support within the candidate countries for joining the European Union?
  (Peter Hain) There are all sorts of risks and that is certainly one of them. Europe has a habit of solving these problems one way or another and I think that the pressures and the imperatives for reform are now so great that even those with, as you say, Chairman, a vested interest in maintaining the status quo are going to have to accept a combination of enlargement (because the CAP will not bear the weight of enlargement in its current form) on the one hand and pressure for reform on the other. For budgetary reasons, I think that reform will take place. Whether it is entirely on our agenda remains to be negotiated.

Mr Connarty

  6. George Soros was in the House at the beginning of last week and was as critical of the European Union's CAP as he was of the United States's and its impact on the development of the poorer countries of the world.
  (Peter Hain) I am happy to agree with Mr Soros.

  7. I did actually find, for the first time since he stole £1 billion, the plummet of the pound acceptable! He is not going to get his £1 billion! Twenty per cent disappointed a number of people including myself. Do you think that 20 per cent reduction in direct payment, which is what they are talking about and what the Commission proposed, is enough? Should we not just stick at that which means that we would freeze the CAP at a slightly lower level but with still the same fundamental flaw, that they are still getting direct subsidy for over-production?
  (Peter Hain) It is not sufficient but it is important that the Commission has actually at least faced up to the fact that it has to be reduced. Of course, overall CAP support has already fallen as a proportion of the total EU budget from 80 per cent to under 50 per cent, so we are going in the right direction. I just see the Commission's proposals as an important first step, a welcome opening shot at the negotiations from which we must build.

Jim Dobbin

  8. I have a two-pronged question. Are there other issues which may remain to be settled after the European Council in October and with which candidate countries? The second part of my question is, do you expect any candidate countries to complete negotiations ahead of any of the others especially pertaining to agriculture?
  (Peter Hain) There are a number of candidate countries—I am thinking of Cyprus and Slovenia—where, on the agricultural chapter, there is really not a lot of problem in them completing their negotiations, almost whatever happens, save for equity on the agricultural support chapter. Remember that 95 per cent of the agricultural support chapter has already been agreed and negotiated and is there. It is the five per cent on the support mechanism payments where there is a difficulty. The European Council, in its informal meeting, will have to resolve this. We were very determined before Seville that we did not have a situation, as a number of countries including France wanted, whereby effectively the outcome of the medium term review's draft proposals, which is what you have just had from the Commission, were preempted by the decision the Council took on agricultural support in the chapter. Specifically, that it committed itself to direct payments as a number of countries with vested interests wanted us to do. We succeeded in postponing that decision until October or early November or whenever the informal Council might actually take place, so I think that puts us in a better position to resolve this issue.

Mr Connarty

  9. Turning to the topic of enlargement and administrative and additional capacity, having visited a number of the African countries both with the Committee and independently and having spoken to people from the private sector, often what we see is that there is institutionalised corruption in the economies and in the administration of the countries that are seeking to come into the EU. So, when we are talking about improving administrative and judicial capacity, we are talking about bringing them into a state of being open and non-corrupt in both economic behaviour and in administrative behaviour in public services. The Seville conclusions stress that the candidate countries must bring their administrative and judicial capacity "up to the required level". What do you believe "the required level" should be and how will a continued lack of capacity affect the Council's attitude to a candidacy? I suppose my sub-question to that is, will we accept countries where it is still obvious that they still have institutionalised corruption in their economy and in their administration?
  (Peter Hain) They have to comply with the acquis and in negotiating all the different 30 chapters. That has been agreed to and the reforms have been put in place and implemented. So, when the Commission reports in the informal council in October, as it is currently planned, they will make a recommendation as to which countries are virtually there. Obviously corruption along with judicial reform and a number of other key criteria are part of that. It is clearly obvious that those countries that were in the Soviet Empire until 12 years ago have a long way to go to reform themselves especially in respect of corruption. So, I think that this has to be an absolutely high standard that we have to adhere to.

  10. It has been said by some people who have studied the problem that it will take a generation. We are talking about access to these countries coming in during 2004. Are we really prepared for a generation to work out their institutionalised corruption in the system?
  (Peter Hain) I think it is already being worked out of the system and that we just have to keep at it. I think the prize for all of us in terms of increased stability, increased prosperity, greater security from terrorism or people-trafficking or drugs trafficking or organised crime is completing enlargement on time. That is the supreme prize. That is not to say that the performance of all the 10 candidates due to come in will not be uneven in different areas, whether it is in economic reform, corruption, agricultural modernisation or whatever it might be. You cannot expect countries to just transform themselves overnight. When Spain, Greece and Ireland came in, they came in as very poor countries. They did not become rich immediately at EU standards but they now are. I think we can expect that kind of progress to happen. Corruption happens in all countries, even from time to time in ours though thankfully it is very limited now. So, I just think that we have to keep a beady eye on it, but we must not make a total obstacle. Provided all these countries satisfy the acquis and provided they immediately negotiate the criteria, they should be allowed in but, as I say, with a beady eye kept on them.

Mr Hendrick

  11. Chairman, in a letter dated 3 July, the Minister for Europe said that the gap between the Greeks and the Turks had narrowed substantially and the Seville Council had asked the Greek presidency (because of the Danish defence opt-out) to continue the work with the Secretary General/High Representative Javier Solana. This was likely to mean that bilateral discussion between the Greeks and the Turks would take place. Minister, to what extent might improved relations between Greece and Turkey affect the outcome of the Cyprus talks and is there a realistic possibility of a comprehensive settlement before December?
  (Peter Hain) We are certainly hoping that there is. I have visited Cyprus and was due to visit Turkey next week but that was impossible to secure for various reasons, and of course there is a certain impasse there governmentally. However, it is really, really important that we do get a settlement and that a united island is admitted into the European Union as we want. We have been working on an almost day-to-day basis through our special representative, Lord Hannay, and, at ministerial level, the Foreign Secretary and I have sought to engage at quite close quarters to try and exert what influence we can to promote a settlement because there is no doubt that although we will stand by the Helsinki Agreement that the Republic of Cyprus will be admitted if it satisfies all the normal accession negotiating requirements, it is not going to be easy but it is by a million miles a better solution to admit a united island. So, that is crucial to focus on.

  12. To follow up, do you expect the EU to take over from NATO in the former Yugoslavian Republic of Macedonia or might it take longer for relations between Greece and Turkey to improve sufficiently to allow the question of EU access to NATO assets to be settled?
  (Peter Hain) The European Union cannot take over NATO's peace-keeping role in Macedonia if there is continued disagreement between Greece and Turkey. That is simply the case. The European Union would need access to NATO planning if it is to take over and any operation would need to be closely involved in NATO presence in the region, particularly for communications and logistics and air space. So, the short answer is, no. If that stand-off continues, then it would be very important that we achieve the very desirable objective of the EU taking over with NATO's full agreement and indeed request. At the present time, that is not going to be possible.


  13. What is the view of the Foreign Office regarding the difficulties in Turkey at present? Do we see that as a hindrance or helpful to the negotiations that have been going on in Cyprus at present?
  (Peter Hain) No, it is not helpful at all. If there is a sense of impasse in Ankara, that allows those both in Cyprus on the Turkish side and in Turkey itself to create difficulties in terms of progress. What we want is a strong Turkish Government that sees that it is in its own best interests and in the interests of Turkish Cypriots to settle this before the Copenhagen Summit in December. I have said both to the Turkish Cypriot leader, Mr Denktash, when I was in Nicosia some months ago, in April I think, and also to the Deputy Prime Minister of the Turkish Government, Mr Yilmaz, that Turkey is in its most powerful position in terms of achieving a settlement of the Cyprus question between now and the Copenhagen Summit. After the Copenhagen Summit, it is in a much weaker position and I think there is a dawning recognition of that on the Turkish side now and they really ought to roll up their sleeves much more effectively and negotiate with President Clerides and bring every pressure to bear to get a solution. Obviously we expect the Greek Cypriots to be willing to compromise as well because this will take compromising on both sides.

Mr Connarty

  14. Turning to the EU/Iran trade and co-operation agreement, there is the single largest Early Day Motion going round this moment in the House on one side by 380 members expressing serious concern at the behaviour of the present administration in its second term in Iran with accusations of 1300 people being given the death penalty and 13 stonings of women and with half of the newspapers in the country being closed down and, although it is not referred to in the Seville conclusions, the EU are entering a stage of what is of political significance and there is a deep concern on the part of many people who would like to see Iran come into the modern world. Given the complex political circumstances in Iran, what grounds do you think the Council has for believing it can contribute to a process of political and economic reform when it is clear to those people who have been watching that there is no difference between the present government and the previous governments in Iran?
  (Peter Hain) I take the view that our Government's policy of engagement with Iran and the European Union's policy of engagement with the Khatami regime is absolutely vital. There is and has been now for a number of years—you referred to the Khatami regime's second term—a balance of power, a struggle going on in Iran between the reactionaries, mostly identified around the mullahs and so on, and the reformers in the government. Yes, Iran is very far from meeting the complete democratic criteria but there have been big advances in terms of freedom of expression, reforms and so on. So, I think the European Union's objective must be to support that reform process by a process of association and through the ways that you have indicated, trade agreements, association agreements and other forms of dialogue in order that we encourage reform. If we pull up the drawbridge and say "no", then I think that would encourage the forces of reaction who are actually opposed to the engagement of the West and I think we should put ourselves and Europe has put itself so far on the side of the reform process, although going into it with its eyes wide open, and recognising that there are lots of abuses of power, not all of which can be attributed to the reactionaries who have largely got control of the judicial system there which is the problem. The Government does not have that influence. That needs to be seen in that context. Chairman, I do not know which EDM is being referred to, but there has been a very vociferous lobby by one faction in Iranian society which has pretty dubious links to the Baghdad regime and other pretty sinister forces. I do not know whether it is the one that has been lobbying for this particular Early Day Motion or not, but I think sometimes we need to be very careful as to which EDMs we are signing, however good they may look on paper.

  15. The EDM has been circulated by fax by Lord Corbett and I have actually written to the Iranian Government to ask for an explanation of the accused . . .
  (Peter Hain) I used to sign a lot of EDMs myself and I am in favour of that practice. I am sure if it has been circulated by Lord Corbett it does not have that taint, but there is an organised lobby around the Commons at the moment and I think people should look at it very carefully and look at the origins of the group; it has pretty dubious connections.

Roger Casale

  16. There is an issue about how to make the economic weight of the European Union more of a force for good in the world, whether it is by way of the stick of trade sanctions or by way of the carrot, for example by holding out particular association agreements or by other means. Many people would argue that the European Union should do more to punch more above its weight. That agreement applies in the context of the discussion we have just had about Iran. Some would say that it also applies to the Middle East, both for example through the aid European Union provides to the Palestinian authority or as reflected in the call for trade sanctions against Israel. What is your view about that, Minister? How much clout does the European Union have in the world as a result of deploying its economic might and how can the EU increase its clout in the future?
  (Peter Hain) Obviously it has a considerable influence as we saw at Doha in negotiating the trade round where Pascal Lamy was absolutely pivotal in getting progress towards a much more progressive trading system which would favour rather than penalise and exploit the poor world. That still has to be carried through. So, there is that area. The European Union, especially after enlargement, is the largest single market in the modern world and the most powerful and richest economic bloc. In respect of trade associations of a positive kind, North African countries, Euromed agreements and so on on the one hand or sanctions on the other, I just think that we have to look at its merits. I do not see any virtue in proceeding down the road of sanctions because I think what that would do, although there were some demands for it from some Member States, would be to simply deprive the European Union of any influence. In fact, under Javier Solana, the high representative, Europe has quite a purchase in the Middle East which it has never had before.


  17. I wonder if we could move on to the question of the Convention. Can you give us your view on the Convention's progress so far and the prospect of a successful conclusion.
  (Peter Hain) We have just completed the listening phase of the Convention as the Convention President, Giscard D'Estaing, described it, and we had the youth convention last week, so we are now in the more analytical phase where we have working groups—I represent the Government on the subsidiarity working group—and the existing batch of six working groups are due to report in the early autumn. A second stream of four working groups will open up in early September or in September at any rate and are due to report within a couple of months. So, the drafting phase is expected to start really around the end of the year. So far, I think a lot of the wind that has been developing from the Convention floor is blowing in an encouraging direction, which is in a British direction, if I can put it that way. So, I am quite encouraged so far but there is a long and heavy way to go.

  18. What role are you seeking to play in the Convention and who are you co-operating with mostly?
  (Peter Hain) It depends on which issue we are thinking about. I am seeking to represent the Government directly and negotiate a consensus on some of our key concerns: council reform—you might want to go into this in some detail and I would be happy to do so—the charter of rights where we are very concerned about pressure to incorporate it wholesale and unamended; subsidiarity and common foreign security policy where the intervention I made last Thursday provoked probably the most heated debate of the Convention so far and a real exchange of strong views with myself arguing, as it were, an inter-governmentalist position on CFSP and others saying that it should all be communitised and handed over to the Commission. Regarding alliance, I would say that we are probably most in tune with France, Italy, Sweden and Spain and to some extent with Denmark and with most of the candidate countries who, having recently escaped from the Soviet tyranny, have enjoyed their own independence and freedom over the last 10 to 12 years and are not about to give it up to some fantasy of a Brussels superstate any more than we are. So, there are fruitful allegiances and alliances being built there.

  19. What are the Government doing to stimulate public debate on the work of the Convention?
  (Peter Hain) It is quite difficult to do that. I am in the process of a whole series of tours between the nations and regions of Britain. I have visited Scotland, Wales, Northern Ireland, South Yorkshire, the West Midlands and the North-West in the last nine months or so and, in the most recent ones since the convention has been sitting, I have actually been talking about the Convention in some detail. It is not an easy subject for people to get into. It becomes very anoraky very quickly. Mind you, your Committee, Mr Chairman, is well versed with the anoraky nature of the European . . .

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