WEDNESDAY 18 DECEMBER 2002

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Members present:

Mr Jimmy Hood, in the Chair
Mr William Cash
Mr Michael Connarty
Tony Cunningham
Mr Terry Davis
Jim Dobbin
Mr Mark Hendrick
Miss Anne McIntosh
Angus Robertson

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MR DENIS MACSHANE, a Member of the House, Minister of State for Europe, MR PAUL JOHNSTON, Head of Security Policy Department, MR ALEX ELLIS, Deputy Head of EU Department (External), Foreign and Commonwealth Office, examined.

Chairman

Minister, welcome to the European Scrutiny Committee. I am quite used to welcoming new Ministers to this Committee.

(Mr MacShane) And saying goodbye to them, Chairman?

We were just doing a head count before you came in, and we think you are the sixth since 1997. Two have been promoted to Cabinet and three promoted to join the elite on the backbenches. If you get an anniversary out of this job you have done well. So I would like to wish you well in this your first week as Minister.

(Mr MacShane) With your help, Chairman, I am sure I will survive!

As the haemorrhoid doctor said, "I am here to help you". Is the Government content, Minister, with the new ceilings for enlargement-related expenditure agreed for the period 2004-2006? What extra UK contribution might these new ceilings entail?

(Mr MacShane) Mr Chairman, the decision on the financing of the enlargement was made in the context of the Berlin Council decisions on the total EU budget and those have been very firmly adhered to by the Danish presidency in negotiating and at the Copenhagen summit last week. The applicant countries and new incoming Member States of the European Union accepted those decisions. Clearly, there will be some costs in taking 10 new members but the budget for all 10 candidate countries for the next two years, up to 2006, will be less than 1,000^th of the EU's total GDP. So in 2006 enlargement will cost each British citizen around just £2, and I think given that this has been such a core part of UK foreign policy - we initiated enlargement in 1998, the Prime Minister declared the goal of enlargement at the time of the European Parliament elections in 2004, and enlargement has, I think, the support of all main parties (there is no divide in the political spectrum on that) - I think the achievements of democracy, stability and increase in trade is well worth that £2 per head that we will be paying for it.

Mr Connarty

That £2 per head - you mean £2 per head per annum extra.

(Mr MacShane) Yes.

It is quite good to get that on the record. It is not as though we are getting the whole EU settlement for £2 per head. I was at the conference in Slovenia of the applicant countries with the Clerk to the Committee, and they were very buoyed up by the fact that the enlargement process would, in fact, use up the budget that was going to be available to 2006, but they did in fact talk at length about the fact that after 2006 there would be a very sharp rise because it has not been budgeted for in the EU budget. Has any estimate been made of what the cost might be in the next period, two to four years after 2006?

(Mr MacShane) Mr Chairman, Mr Connarty, as you know, from 2006 onwards we are going to have what I expect will be very serious discussions about how the European Union is financed generally, and so naturally every country, not just the applicant countries but anybody who either pays into the EU kitty or gets substantial sums out of the EU kitty, is going to be very focused on the restructuring of EU finances. My own view is that the real problem we face is that there is a $2.5 trillion gap between the EU and its 370 million citizens, soon to go up with the incoming countries, and the United States with its 250 million citizens. If we can get Europe moving again economically, within the ceiling of the EU budget, we can have more money to spend on the good things we want, which is to increase as fast as possible the economic capacity and the administrative capacity of the applicant countries so that they can increase the chances of their citizens to have a full, material life.

So that was "We do not know"?

(Mr MacShane) The answer is that after 2006, Mr Chairman, every country - and Britain will certainly be heavily involved, as you might imagine - will be bringing to the table ideas on how the EU will be financed. No, I do not know what the outcome of those discussions will be today, in 2002.

Mr Hendrick

Chairman, can I ask the Minister: Poland fought particularly hard to secure an improved offer for all the applicant countries. Can I ask the Minister whether he feels the 400,000 euro extra mentioned in the press was actually a good deal for the applicants? Was it fair that the Polish Government was given extra support on farm quotas and more help with its cashflow problems?

(Mr MacShane) Poland negotiated extremely well and when the Polish Prime Minister, Mr Miller, reported to his press conference in Copenhagen, at the end of it he received a standing ovation. I think that is something that British journalists might care to consider when our Prime Minister addresses them in future. In effect, what happened, Mr Chairman, Mr Hendrick, is that the Danes - and, really, we cannot pay sufficient tribute to the extraordinary professionalism and sense of dedication of the Danish civil service and the leadership of their Prime Minister and their Foreign Minister in concluding the last six months of negotiations - at Copenhagen discussed with the Poles some repackaging of their financing. The Poles felt they had a cash flow problem, so rather than money coming under one heading but spread out over a number of years, they wanted more cash up front. I think if that is their demand Europe should try and respond reasonably to national demands. They will have 19.3 billion euros in the years 2004-2006. That is equivalent to 3 per cent of their GDP annually. I do not think there would be many countries around the world who would be unhappy to be told they are going to get 3 per cent of their GDP coming in transfers to help them grow further.

Do you think it is fair?

(Mr MacShane) Yes, I think it is fair. I think all the applicant countries, and I have tried in the few weeks that I have been Minister for Europe to visit as many of them as possible - six in total - had specific demands that they wanted because each has got a different agricultural sector, different needs from the Structural Cohesion Funds and different things that they want out of the European Union. The Poles had what they wanted. They did not receive proportionally more than was available to other countries but what they did achieve was to get the money arriving, flowing into Poland, in a different way that they think corresponds to their needs. I congratulate Prime Minister Miller on being a good negotiator.

Jim Dobbin

How easy do you think it would be for applicant countries to sell the agreed deal to their electorate?

(Mr MacShane) That is a question not exactly for me to answer, though I am going to focus my work in the first part of next year on visiting applicant countries and seeing what we can do to help. However, I do stress that on European decisions people from outside, even with the best intentions and whatever side of the argument they are on, can perhaps do more harm than good. I think that the general support for entry into the European Union has been a consistent factor, again, across the political divide in applicant countries. I think that they are confident that they can win referendums (they are not all going to happen at the same time) and I think they will throw all their energy into obtaining a yes vote.

You have just said you think they will be capable of winning referendums. Are you aware of any specific problems that any of those applicant countries might have which would encourage the electorate to reject the referendum?

(Mr MacShane) Mr Chairman, Mr Dobbin, there are always no-sayers to Europe in every country. I have no doubt that they will be out campaigning in the applicant countries. I find it hard to believe that having made such efforts to get themselves into shape to enter the European Union that the voters are then going to say "No, we want to leave it".

Mr Cash

Mr MacShane, I may just anecdotally observe that when I have actually been into these other countries during their referendum campaigns and campaigned publicly against, for example, the referendum proposals for monetary union and so on, I am glad to note that on each occasion the no voters prevailed. I am not claiming any personal credit for that, by any means, but it is interesting that in those sorts of instances people do not actually object to turning out, they regard it as an extension of European democracy. After all, we are affected by the decisions that they take, particularly in qualified majority voting. So I would suggest that you do go and you do your best to persuade them, though I suspect, if I may follow on Mr Dobbin's question, that there is the potentiality for a serious problem in Poland, for this reason (and I was slightly surprised you did not mention it): that in order for them to have a valid referendum they have to have 50 per cent plus one of those who are entitled to vote. Given the significant resistance and, in my opinion, the understandable resistance of a lot of people in Poland to these arrangements, irrespective of the Polish elite, they could well abstain, in which case they will not reach the threshold, and that would be a significant problem from your point of view, but not from the point of view of the people of Poland who did not want to have a yes vote.

(Mr MacShane) Mr Chairman, Mr Cash, it is difficult for me. I am not so apologist (?), I am not Bob Worcester or Philip Gould to enter into campaign tactics. I have to say, if I may be personal, Mr Chairman, my father, who was a Polish officer wounded in the campaign in 1939 and came to train with the Commandos - which combined with his wound gave him an illness from which he died not long after I was born - I think, wherever he is, would be delighted that his country now has found its full freedom. Twenty years ago (again, if I may be personal) I was in prison in Warsaw because I was taking money to the underground Solidarity (?) and was arrested, and it was literally unthinkable, to me, at the time that Poland would be where she is today. Mr Cash is absolutely right, it is for the Polish people to decide. It is also right to note that the bar for referendum success is higher than a simple majority, but I would be very surprised if, having worked so hard to find their freedom, having worked so hard to get their economy, their political systems and their rule of law systems into shape for Europe, the people of Poland would turn round and say no to Europe. I will take advice from my friends there, not from the elite but from my family and from other people who want Poland to grow and become what it should be - a great, rich, successful European nation playing its full part in today's European Union.

Angus Robertson

I suppose this is a follow-up question to those posed by Mr Cash and Mr Dobbin, and that relates to the Common Agricultural Policy. Do you believe that the new package, as agreed, is perfectly saleable to the applicant countries' farming communities as was stated by Commissioner Fischler?

(Mr MacShane) I do not know a farming community anywhere in the European Union that is not desiring to see a very different Common Agricultural Policy. We had only a few months ago, here, a giant march in London - the Countryside Alliance. Some of it was on the hunting issue but I saw bits of it and it seemed to me that their basic demand was more money for agriculture and for the rural communities. That, of course, in Europe, comes through the Common Agricultural Policy as presently designed. So no, I can imagine that many, many farmers will not be that happy with the agricultural settlements that apply in the applicant countries but they also have to consider whether there is a realistic alternative; whether there is a golden elephant of subsidy (?) that can come out of national budgets and whether the food they produce will find its way to a market if they are not part of the Common Agricultural Policy market and the Single European market. These will all be discussions that agricultural ministers, farmer unions and the media will have to undertake. I repeat again, I think it is in the best interests of the agricultural community of the applicant countries to say yes to Europe.

You will be aware that in the Prime Minister's statement after his return he drew particular attention to the crisis in the fishing industry. I had a look at the summit conclusions, which included important issues for Austria on alpine transport and for Portugal on their agricultural sector, but there is no mention in the summit conclusions about anything to do with the Common Fisheries Policy. Minister, can I ask you whether the Prime Minister raised the current crisis in the fishing industry in the full summit meeting as opposed to the corridors outside? Did he raise that directly with other Heads of State in government, and what did he say?

(Mr MacShane) Mr Chairman, Mr Robertson, what the Prime Minister did was to discuss the importance we attach to the fisheries issue directly with the Commission President and with other relevant people. The Tour de Table, so-called, of the full council meetings - and I was not present at them (it is slightly above my pay grade) - are actually not where you raise these kinds of issues. You can certainly have them put into a Council Declaration, but the only way that the Council would have agreed a Declaration specifically on fisheries would have been to point out that this week, as we know, the Fisheries Council is meeting. That has always been, as I think I have said to you in two debates in the House, the only place where the matter can be resolved. I think that is right. What the Prime Minister did do was to express our deep concern to Mr Prodi and the other key deciders, because this is a Commission matter, that Britain wanted a resolution out of the Fisheries Council that made sense. The underlying problem is that the North Sea can hold about 200,000 tonnes of cod and white fish and, at the moment, there are just 20,000. Either we are going to go straight towards the catastrophe of the destruction of cod fishing off Newfoundland in Canada or we will have to have some decision out of the Fisheries Council that makes sense and, at least, preserves the hope of keeping cod fishing alive.

So if the summit was not the place for special consideration of the fishing industry, why was it the place for specific discussion and agreement on agriculture and transport relating to Portugal and Austria, despite the fact that there are also forthcoming council meetings with transport ministers and agriculture ministers?

(Mr MacShane) The Portuguese regularly bring up, at every summit, their view that they have not got the deal that they feel they should have for agriculture. It does not actually change anything; it does not mean that they get substantial new money, but there is a statement on the record. I think the British tradition has always been to seek to actually achieve something - not a political declaration but actually to highlight the importance that we attach to it. So there was no deal at Copenhagen either on agricultural policy in respect of them or on the problem that Austria has as a transit route between north and south and seeking to protect its alpine environment, to which Austria attaches so much importance. So, yes, Austria and Portugal are in the final Declaration but no, there was not a single millimetre of a step forward in respect of the demands they wanted.

Mr Connarty

Since we are talking about enlargement and not just those countries that are coming in on the Common Agricultural Policy, I think it is clear that the British aspirations were outflanked by other aspirations held by France and Germany. Last night I was at a meeting addressed by Sir Don Currie, who chaired the Government's Food and Farming Commission and is now, in fact, in charge of implementation. I would not want to misquote him but I think I can paraphrase him by saying that what happened in the changes brought about by French and German interests and now into enlargement harm the long-term future of the British food and farming industries. How do you think we can cope with the direct payments that will go to Poland and all the things we thought we would not have to pay in the longer term and, at the same time, realise a real change in the CAP, given that they are now locked into subsidy junkie-ism in the applicant countries?

(Mr MacShane) Mr Chairman, Mr Connarty, it has always been the question that one could not hold the enlargement of the European Union hostage to the issue of CAP reform. What was decided prior to Copenhagen at the Brussels Council meeting was that CAP payments would be frozen till 2013 and spread over 25 countries, not the existing 15. I have been struck by the attachment to CAP - not just by France but by Spain, by Italy and by our friends across the water in Ireland. I have said in another place in other debates that in Britain, of course, we all agree on CAP; there is no difference between the Socialist Worker and the Daily Mail; there is no difference, broadly, between the Conservative Party and the Labour Party. There is a consensus in Britain on CAP. We all talk to each other. What we have to do is start talking French, or Italian or Spanish; we have to link up with NGOs and campaigning organisations and churches and farmers' organisations - the NFU has got to try and persuade its sister organisations on continental Europe or across the water in Ireland, of the need for CAP reform. But, the one crucial thing we keep forgetting, and it was very much a British success at the Brussels summit, is that France, in particular, resisted references in that Declaration to the need for what is called the mid-term review - the proposals associated with Commissioner Fischler - and resisted references in the Declaration to Europe's international obligations under the Doha round to tackle the question of agricultural subsidies. Britain insisted on that and that means that we have got to keep working on CAP reform and that we do not forget that in 1980 CAP took 73 per cent of the EU's budget and today it takes 45 per cent. I would wish it to go down, and I expect every Member of the Committee would, but I, if I may say so, Mr Chairman, and you, as Parliamentarians, have got to make common cause to take our arguments outside the shores of Britain, where we are all agreed, and start persuading a large number of our European partners and (Mr Connarty is absolutely right) start persuading our new friends in Poland, Hungary and Lithuania that becoming a CAP junkie is no good future for their agricultural industry and their rural communities.

Mr Hendrick

Chairman, can I ask the Minister if he can confirm that the UK is the only large country which will impose no transitional restrictions on migration from the new candidate countries? If so, what impact will that have on immigration in the UK?

(Mr MacShane) No, on the contrary, Mr Chairman, we are certainly not the first. I know, for example, that the Netherlands, Denmark, Sweden, Greece and Ireland also take the view that it is much better to allow people from the new European Union Member States to come here and work in a legal and registered way, paying NI, paying taxes, and our experience from other enlargements is that countries that were countries of emigration, once they entered the European Union (and I take Ireland as an example and I can take Spain as an example) people then go back to them; nationals who have previously had to work outside their own country go back because there is economic hope and there are material prospects for them. I am delighted with that decision. It was extremely warmly welcomed as proof, again, of the - yes, I use the word - generosity of Britain in this regard, under this Government, and I am glad that here we are in an excellent progressive camp, if I may put it like that, and friends with countries as varied in their political colour in terms of their government as Denmark, the Netherlands, Ireland, Greece and Sweden.

Could I ask the Minister why he feels that perhaps France and Germany did not take the same line?

(Mr MacShane) Germany has been under immense pressure internally, particularly as the country that has the largest border with the new Member States. Frankly, I think the German trade union movement, seeking to be protectionist about its labour market, has brought undue influence to bear on this. So the Germans demanded and obtained a 7-year transition period. My own feeling is that this may actually not last the full 7 years, but that is entirely a matter for the German Government.

Mr Cash

Minister, I am sure you would agree that insofar as, regrettably, some immigration is accompanied by criminal behaviour, it would be absolutely essential to ensure that we maintained a proper monitoring of those who do come in, if they come in, and who engage in such behaviour and deal with them accordingly.

(Mr MacShane) Mr Cash, I have spent my entire political life trying to disconnect in people's minds the fact that if you are black and an immigrant or you speak with a foreign accent then somehow you are up for crime. I am afraid, no, I reject entirely what you say. Of course, any wrong-doer must be punished. One of the positive aspects of enlargement is that we can now take the whole justice and home affairs agenda and work co-operatively into those parts of the world through which, I fully accept, there have been flows of people, drugs and some aspects of corruption that have done our country harm. If we actually look at the United States, in the last ten years - probably the single, biggest ten-year period of growth and expansion of wealth that America has seen - Americans allowed in 13 million immigrants. They have been the driving motor of energy for this explosion in American wealth. As far as I am concerned, as Europe Minister, I will not associate immigration with crime and I will say that properly regulated and paying their National Insurance, properly registered and paying their taxes, immigrants are a marvellous source of strength and vitality for our nation.

Mr Davis

Can I ask about Cyprus? There was supposed to be a deadline for agreement on the Cyprus problem and the deadline was missed. Why?

(Mr MacShane) The deadline was missed because the Turkish Cypriot leader, in particular, Mr Denktash, who had been recovering from a very serious heart operation in New York, would not put his initials on the agreement that Kofi Annan placed before the people of Cyprus and the guarantor powers - Turkey, Greece and ourselves - last month. I deplore that fact. I think that the Copenhagen summit was a marvellous opportunity to grasp the hem of history, if I may be poetical, for the people of Cyprus and to put, not all their divisions behind them, but to look to a different future. That was the view of the Greek Government, it was the view of the incoming Turkish Government and it appears to have been the view of the Turkish Cypriot people themselves, but their leader decided he wanted more time for negotiations. So we have another couple of months. We will do our best - though it is a decision for the people of Cyprus - to encourage them to accept the Kofi Annan plan. There is an enormous interest and advantage to Turkey in this because, under the plan, if the President is from one community of Cyprus the European Minister has to come from the other community. So that means Turkey, as she looks to starting negotiations and entering into the EU, would actually deal with the Member State, one of whose representatives at the negotiating table was guaranteed to be from the Turkish community. I hope that that message is properly understood in Ankara. I believe it is and I hope Mr Denktash listens to the voice of his own Turkish Cypriot community and moves positively forward. I regret completely this could not be done at the Copenhagen Council.

Did Mr Denktash refuse to put his initials on it because he was ill or because he disagreed with it?

(Mr MacShane) I am not Mr Denktash, so I cannot answer. I think it would be fair to say that he has had the opportunity since his return to Cyprus and to Turkey to say yes, and so far he has not done so.

What do you know about his objection?

(Mr MacShane) His objections are what have traditionally been the objections he has made to any attempt to resolve the Cypriot crisis. Basically, he wants, as I understand it - and I must be cautious in what I say because I do not want to speak entirely for another person - recognition for a wholly independent Turkish Cypriot entity.

That would be a disagreement in principle, not a disagreement about the details of the plan.

(Mr MacShane) It undoubtedly would. Mr Denktash is going to have to decide whether he seeks to make the Kofi Annan plan unachievable, or whether he seeks to help his own people and the Island of Cyprus.

Jim Dobbin

Minister, how much pressure do you think the Turkish Government itself can exert, in the short time available, to have an impact?

(Mr MacShane) I very much hope, and certainly officials have been saying and the Foreign Secretary has been making clear, that it has to be in the interests of Turkey to support the Annan proposals. I have looked at them in some detail. I know Cyprus, I care for Cyprus, and I think that they take everybody significantly forward. There is no solution that will please everybody in all aspects, but the prize of a single Cyprus entering the European Union in 2004 with its international representation so structured that Turkey, as it were, will find someone to talk Turkish to in its discussions on the European Union, I would have thought, from the point of view of our Turkish friends in Ankara, would be a prize they should seize with both hands.

This Committee has recently been to Cyprus and we did see the stark reality of the differences between the north and south. If a divided Cyprus becomes a member in 2004, do you think the Greek Cypriots would oppose Turkish membership?

(Mr MacShane) I genuinely cannot answer that question. We are at this stage of the timetable on Turkey. As you know, the Prime Minister succeeded in pulling the date for the first examination of whether Turkey had complied with the Copenhagen criteria back to 2004, and the commitment that, if the answer then in December 2004 is yes, accession negotiations could start without delay. However, nobody is looking at anything other than a fairly long, hard period of negotiations and it is now on the record that the 25 Member States of the European Union (the 15 existing and 10 that are coming in) have signed an agreement saying "We also welcome the important decisions that have been taken today concerning the next stage of Turkey's candidature for membership of the European Union." So the Cypriot representatives - they are principally Greek representatives, for obvious reasons - are fully signed up to that Declaration, and we expect them to honour it.

Mr Davis

Were the Turks asking for negotiations to start at once?

(Mr MacShane) I think that the Turks would have been happy to see the earliest possible start to negotiations, but they have been told very clearly by this Government's representatives, let alone by others, that a 2002/2003 start was, frankly, not realistic.

What was the earliest realistic date?

(Mr MacShane) When I began this job there were major European states who would have been very happy with 2007/2008. Mr Schroeder, whose party, along with the other partner in the governing coalition in Germany, has always been committed to Turkish admission, wanted an earlier date, and France, which to judge certainly from its press reporting of the issue was much more reluctant, would have been happier with the later date, but they agreed 2005. If I may reveal a secret - and I do not think it is much of a secret - from the dinner of European Ministers prior to the discussion of the Turkish issue last Thursday night, all of my European colleagues were quite happy to leave it until 2005 and some were not entirely sure that it could not be put off for a wee bit longer. I, therefore, was delighted, as a strong supporter of serious consideration of Turkey's admission to the EU, that - thanks, again, I think, to good work by the Prime Minister, but supported by other countries, Greece in particular - we got 2004 into the headline start date for consideration of possible negotiations.

Does the start of negotiations depend on a solution to the Cyprus problem or improvement in terms of human rights?

(Mr MacShane) The Copenhagen criteria - rule of law, democracy and human rights - are the key issues. Undoubtedly, a decision to accept the Annan proposals and the solution in those being accepted in Cyprus and Turkey, I think, would be a very positive and welcome statement of goodwill and, if you like, finding a European answer that the Turks could achieve, in my judgment, would considerably help their status as a potential candidate.

Yes, but is it essential or just welcome?

(Mr MacShane) It is not essential. What we said - at the European Council in Edinburgh, in fact, nine years ago - is that we want candidate countries to achieve stability over institutions, guaranteed democracy and rule of law, human rights' respect and protection of minorities, a functioning market economy and a candidate's ability to take on the obligations of membership of political, economic and monetary union. So quite clearly it would be wrong suddenly to pitchfork into that a new condition in respect of obligations towards a third country and a specific foreign policy obligation. Nobody is in any doubt - and I certainly reinforce that message and so will the Foreign Secretary, publicly and privately - that Turkey's facilitating solution to the Cypriot problem has to stand greatly to their credit for their wider ambitions to be in the European Union.

Mr Connarty

Moving specifically to Turkey's pre-conditions, and the concept of human rights, I just wonder how we could allow the Copenhagen criteria not to include a reduction in the electoral barrier for the representation of parties, given the structure of the population and the percentage of people who are Kurdish. They are unlikely ever to get beyond the 10 per cent barrier and, therefore, will never - unless it is changed to the standard 5 per cent - have representation in their own right in the Turkish Parliament. That seems to me to be something that is not mentioned. Was it mentioned in the discussions? Secondly, the fact that Turkey is the conduit for almost 300 tonnes of pure heroin into Europe from Afghanistan, and it is an industry, is not mentioned at a high enough level because, surely, we must choke off this trail of death and destruction that is coming into our country through Turkey.

(Mr MacShane) I very much agree with you, which is why if it is decided to open full negotiations for accession with Turkey, top, I would have thought, of the agenda must be the need to combat organised crime and the fact that Turkey, as you rightly say, is a conduit for people smuggling, drug smuggling and the rest of it. On the question of insisting that Brussels should decide how people conduct their elections, I would be rather nervous about that. However, if representations are made they will be considered. On the whole, I would be very, very reluctant for (and I use Brussels as a shorthand) any of us to start telling countries what the cut-off point should be for seats in parliament, whether parties should be considered supporters of terrorist organisations or not and whether funding should be given to parties who are felt not to behave in a fully democratic manner. That really is, I think, a question for national governments to decide.

Can I come back, because that is a fudge. Turkey have put a 10 per cent barrier for any party to get a seat in the Turkish parliament. It is quite clear that the Kurdish people can never reach that 10 per cent, even if all of those who can, vote for one party. It is clearly a deliberate barrier to democratic representation of a minority in their population. I worry. I have read the reports that people do not want to discuss this issue. Surely it is all about the fact that human rights must also allow people to be empowered and if we are just saying we are ignoring the plight of the Kurdish people democratically because we do not want to interfere internally, we are abrogating our responsibility to civilised society.

(Mr MacShane) Quite sincerely, Mr Connarty, it was not a fudge. I am not myself in favour of having elections based on simply representation of people according to national or ethnic interests. That is, maybe, because I come from a background that thinks values and ideology are what should govern your affiliation rather than petty nationalism or ethnicity. The Turkish Government have agreed ----

We seem to be willing to go to war over the Kurds in Iraq.

(Mr MacShane) I am not really here to answer questions on Iraq. My judgment is that it is to do with weapons of mass destruction rather than Kurds or Sunnis or Shi'as. Mr Connarty, your argument is a good one in the sense that everybody can have a debate in every EU Member State on cut-off points. Mr Cash referred to the fact that the Poles in their constitution say that to pass a referendum you have to have 50 per cent of people voting. Some of us might think that that was setting the barrier too high, but, again, it really is not, I think, for me here as a Minister, to tell other countries what their voting system should be.

Chairman

That is a very good lead into my question, Minister. How important was the role played by the United States, and what arguments, inducements or threats did the US Government make in the debate on whether Turkey should start accession negotiations?

(Mr MacShane) I can honestly say that since I have been Minister for Europe my 'phone rings a hundred times a day but I have yet to hear an American accent at the other end. As I set out in an article published in The Observer and also published in Liberation in France and El Pais in Spain, my support for Turkish membership is purely on European lines. We have got this fantastic prize of having a Muslim democracy operating under the values, which are very much secular values, and rules of the European Union within the European Union, in due course, if everything works out. We also need to show particularly to the 15 million Muslim citizens of Europe that the European Union is not just a white Christian club. There are obvious, enormous geo-strategic advantages in having secular Muslim democracy inside the European Union. I notice many reports about American's interventions here and there. Well, the United States is a partner and ally of all of us in Europe and it is perfectly proper for it to make its views known, just as we regularly - this Government, the French Government, the German Government, other governments and Brussels institutions themselves - make their views known very vigorously across a range of issues to Washington, and do so sometimes in a very public way.

Was it a coincidence that the Americans' view was supported by the British Government during those discussions?

(Mr MacShane) I can truthfully say that in all the discussions I have had on Turkey, and those preceded my nomination to this post, that it is taken on its merits. It is good for Europe, it is good for Turkey and it is good for the Mediterranean if Turkey turns west to the European Union. Those, for me, are the clinching arguments, not the points of view of any other state in the world.

Mr Cash

Mr MacShane, there was an agreement described in the Presidency conclusions, paragraph 27, as between NATO and the European Union in respect of access to NATO assets. I am bound to say that, although there was a rather self-congratulatory note adopted there, the emphasis is on full conformity with the principles that have already been arrived at in a series of previous meetings which I have taken a certain amount of interest in. In particular, Annex 2 to the Declaration states that these arrangements " ... shall not affect the rights and obligations of EU States in their capacity as EU Members." That is, obviously, a reaffirmation of the degree of single autonomous arrangements which I raised with the Prime Minister at Faro (?) and subsequently in the debates on Nice and so forth. The question is partly one of commitment. We hear about the so-called - and I am using a paraphrase - Pentagon arrangements which are now being proposed with respect to a European defence arrangement, but there is a simple problem here, and that is that without a full commitment by the United States and that arm of NATO the European Defence Policy is rather a feeble operation. Secondly, where is the money going to come from? The Greeks have already got a commitment of 5 per cent (4.9 per cent) expenditure but, on the other hand, they are proposing to reduce it over the next decade to 3.5; the average in Europe is running at round about 1.4 and the Germans are reducing their defence commitment. Where is the money going to come from unless there is a universal tax policy in Europe, which is certainly being advocated by several of the Member States, in order to pay for this? You look very surprised, but I would like you to answer a simple question: where is the money going to come from for these high-flown proposals which ultimately depend, in the last resort, on American commitment?

(Mr MacShane) Mr Chairman, Mr Cash, I looked surprised because to my knowledge I have not seen concrete proposals for a European-wide tax to pay for defence. That, genuinely, is new to me. However, if Mr Cash can furnish me with better and more detailed particulars I would be grateful to see the source for that rather dramatic new proposal. What has happened is, of course, that at the Copenhagen summit the conclusion, to which Mr Cash has referred, was taken down to NATO in Brussels and it is there that they lifted the objections from Member States to what is called, in the shorthand, Berlin Plus. Berlin Plus is very much what our allies and partners in NATO wanted and principally, of course, the strongest ally and partner in NATO which the EU now has, thanks to Copenhagen and NATO last weekend, assured access to NATO's planning and shape, and this is effective immediately, so you do not have to create endless parallel structures. Assuming we have now got access to NATO's assets, we will be going ahead with a joint exercise to test these procedures and we have got great contacts between the EU and NATO staff. Mr Cash says "Where is the money going to come to pay for all of this?" The fundamental problem with European defence is two-fold: we have twice as many men under arms as the United States (I am talking about the European Union in its totality) but the capacity to actually put men into the field in an operational way is, frankly, very, very limited. We will be able to take over from NATO now its obligations in Macedonia and, possibly, Bosnia, which I think would be very welcome to our American partners, as it can relieve them of some of their tasks down there. We will continue to co-operate jointly with NATO. This exactly reinforces what has been a constant British Government position, under this Government, which is that we do not want a divide between Europe and the United States in matters of defence. The European Union's work in ESDP is complementary not rival to NATO and NATO now has agreed to place its assets and support at the service of the European tasks. I think that is a win-win for everybody, except those, of course, who want to divide Europe from America. I agree with you on the point of budgets, Mr Cash. I am happy to place on record that I think we should be spending more in Europe on our defence obligations, especially with the new tasks in terms of security against terrorism. I would wish - I go back to my point about closing the $2.5 trillion wealth gap between Europe and the United States - we generally had more money generated by the European economy which would allow, in the very tough budget decisions that national governments have to take actually, more support for defence. I will continue to take that message - and I think it represents, broadly, the view of the House - forward in my discussions in Europe.

Can I just follow that up by posing another question, which is that it is, to say the least, an object of hope that you expressed, which is that there would less anti-Americanism in the context of the defence question, because after all it is ----

(Mr MacShane) And anti-Europeanism, if I may say so, Mr Cash.

Well, not at all. I would say if you want a secure and stable Europe and you want to be quite sure you have full American commitment, let me put it the other way round, that this degree of enthusiasm on your part and, indeed, on the part of the government for a proper relationship with the United States is laudable but unfortunately is not matched by some of the really serious political differences that exist in some of the other European countries. So I would simply say that if you are proposing that we should have a better relationship with the United States, would it not be far better for the United Kingdom to be more emphatic with its other European partners in getting them to understand that a good and sensible relationship with the United States is to the benefit of everybody and to the security of not only Europe but also the whole world?

(Mr MacShane) Yes.

Mr Hendrick

Minister, if press reports are accurate, the Turks were placed under a great deal of pressure by the French and Germans. Can I ask why this was necessary and was it due to Turkey's concerns that NATO assets could possibly be used against Northern Cyprus?

(Mr MacShane) Turkey has had its objections to the SDP and NATO coming to full agreement under Berlin Plus but, yes, I think it is fair to say that our partners in the United States support the SDP and they made that position clear to the Turks.

Angus Robertson

Minister, the French government had been insisting on EU commanders replacing NATO staff who might be of US or of non-EU nationality in any EU-led operation. What was the outcome of this issue?

(Mr MacShane) Would you mind if I referred to Mr Johnson because that is quite a technical question and I think he is more expert on it than me.

(Mr Johnston) The position is now that there is overall agreement on the Berlin Plus arrangements that, as the Minister says, the EU has the automatic right to have operational planning done by Shape for EU operations which will be conducted with recourse to NATO assets and capabilities, and NATO has agreed that there is a strong presumption, should the EU ask for individual aspects of NATO assets including the command structures, that it will be provided. It will be for decisions on a case-by-case basis by NATO exactly how those would be released and that would include questions of personnel. This obviously happens in parallel now with the transformation of the NATO command structure agreed at the Prague Summit which we very much welcome because we felt it was an immediate response force which would enable NATO troops to respond very quickly to emergencies. It has been agreed that a large element of that NATO response force be provided by European allies which we welcome because we think it will be complementary to the rapid response capability we are trying to develop in the SDP.

Thank you very much. On a complementary tack to that, four of the 14 members of the European Union are neutral or non-aligned states and my understanding is that the UK government's policy is fully supportive and understanding of Ireland's, Sweden's, Finland's and Austria's position as being neutral or non-aligned and this was made clear at the time of the Nice Treaty ratification. Could you put on record the UK's position with regard to the neutral and non-aligned states with regards to the SDP. My understanding is that the UK government fully appreciates and supports their perspective and values them as partners within the ESDP and the United Nations?

(Mr MacShane) Absolutely.

Mr Connarty

Moving to a topic that seems to be close to the heart and mind of our own Prime Minister, the future Presidency of the EU, what conclusions did the Presidency have to draw in Copenhagen about where we might go on that front in getting a change in the role of the Presidency and possibly even a formal President?

(Mr MacShane) May I begin by saying that the British government does not refer to the need for a President of the European Council of Ministers. We think there should be a chair, a chairman, a chairperson, and I put all three terms in front of the Committee. We think that that is necessary to maintain continuity from European Council to European Council because with 25 members the idea that every 12 or 13 years one country will have the Presidency of the Council on the six-monthly rotation basis of today, frankly, is not workable. There are other ideas to do with teams of countries coming together to have a slightly longer term Presidency. Our thinking is that this man or woman would be a chair who would be there for a certain time period, who would work very closely with the President of the European Commission and the President of the European Parliament because we want both the Commission and Parliament to come out stronger from the current Convention discussions and the Inter-Governmental Conference that will then take place. We see him as someone who will go from country to country talking about Europe in a positive way but, above all, explaining the work of the Council to citizens of Europe, someone who can participate in international affairs to represent the Council in a permanent way in relationship to Russia, China, Latin America, Africa and so on. We see this as a person who can add very considerable value, probably someone who can speak two or three languages, my own view is probably someone from a smaller country rather than one of the big countries. What the Copenhagen Council agreed was to put forward a paper to the Convention for consideration. It was not discussed because of time constraints ut I think it makes sense. It sets out three possible models for reform: to maintain the current rotating Presidency of the Council, which, as I say, will leave each Member State with a bash at the Presidency every 12 and a half or 13 years. The second model is to have what is called an Institutional Presidency, the Council as a co-ordinating chain with a rotating or elected chairmanship for some Council activities and a team Presidency so you put together two or three countries but still retain a six-month rotation. The Council also agreed to suggest to the Convention that one needed to strengthen the role of the high representative charged with common foreign and security policy but, of course, there could be some potential, as I said, for a new chair of the European Council if that is decided. In essence these are matters for the Convention. There are a lot of ideas on the table, a lot of divisions between different Member States, and it is something I will certainly pay attention to because having seen a couple of these Council meetings I do not see how they can function without some continuity. I think that continuity would best be provided by an elected chair who had the authority, experience and support of the Council who could add very considerable value to the general work of making the European Union function effectively.

Mr Cash

Moving on to the Convention on the Future of Europe, Mr MacShane, I am sure you would agree with me that if an elephant comes and parks itself in your drawing room it is likely that you would notice it. On that basis, would you not agree that the proposals for a European constitution are now so firmly embedded in the discussions that are going on, the British government having conceded the issue in principle and all of the other participants with a small minority of people, who probably have more in common with the populations of Europe as a whole, being completely out-numbered, that against that background it is absolutely essential, in my opinion, to say no to a European constitution altogether, but in the light of the propensity of all of other Member States who are representatives at this conference, plus also the commitment of the United Kingdom government, to make it absolutely certain that there is a referendum on these constitutional proposals before the Inter-Governmental Conference itself? Why is it that we hear that the United Kingdom government is against any such referendum and what was the main message in the report from Mr Giscard d'Estaing on progress in the Convention?

(Mr MacShane) I have sat in nearly every debate on Europe in the House in the eight-odd years that I have been a member and again and again from all benches and perhaps even, if I look through the records, from you Mr Cash, I have heard demands for clear and precise rules of how the European Union should operate, and that of course is what a constitution would provide. Currently new treaties are long, complicated, confusing and overlapping so we see the need for a clear and concise constitutional declaration which will clarify what the EU is, what it does, how it does it, and perhaps also what it does not do in the role of nations and regional authorities within that, so I think that would be a very positive outcome from a Convention or Inter-Governmental Conference, although you are quite right it is not the government's view that we should have a referendum either on the final outcome of the Convention or once the Convention's work is taken up by the Inter-Governmental Conference on its outcome. Our position is that it will be a Treaty change ratified after strenuous public debate covering all the details in the House of Commons. The work of the Convention so far has been good. I think there has been very considerable British input. I pay tribute to my predecessor Peter Hain and I express my delight that he has kept that job because it frees me up to discuss this in the capitals of Europe and indeed in the provinces of our own country. Mr Giscard d'Estaing has put up some ideas, Mr Prodi has put up some ideas, Mr Fischler has put up some ideas from Germany, everybody is putting up ideas for the Convention to discuss and I look forward to the next six months or so of its work.

I am sure you would agree with me that one of the more obvious examples of the rule that you expressed, which is that we do not have referendums in this country, is of course the referendum which the government is committed to on the single currency which of course ultimately would be rolled into the whole of this constitutional arrangement. It would be disingenuous, Mr MacShane, I am sure you would agree to suppose that, for example, incorporating the idea of a legal personality into the European Union and a whole range of seminal questions which I do not think we have got time to go into today ---

(Mr MacShane) That is a great shame, Mr Cash!

Chairman: Do not tempt him, Minister.

Mr Cash

Do not tempt me and of course we have had the opportunity to discuss these with Mr Peter Hain on a number of occasions. The totality of this elephant I referred to is not just a question of re-organising the wording of the Treaty, it is not consolidation, it is actually an extension and expansion of the arrangements which, by any standards, will have a fundamental impact on the democracy of this country and the way in which our system of government functions. So that is why I would dispute your rather optimistic view that it would simply be a mechanical operation without really making very much difference and that in any case it would necessarily be for the good. I would disagree, I think it would be a total disaster.

(Mr MacShane) Mr Cash, I think I am here to give evidence rather than debate in a formal way but, as I did say, the British tradition is that when it involves Treaty changes, which is what the outcome of the Convention and then an Inter-Governmental Conference would require, then it is Parliament that debates and decides whether to ratify. Yes, we have referendums on other issues. As you mentioned, we have referendums also in component parts of the United Kingdom, as colleagues in Scotland, Wales and Northern Ireland would be well aware. I think that on the issue of a legal personality there are advantages of this in terms of the simplicity of the EU's international profile, but we have made clear that this does not extend to foreign and security policies and, of course, Member States will retain their current rights in terms of representations on international bodies.

Chairman: Minister, we will now move on to the Middle East Peace process. Mr Davis?

Mr Davis

Minister, I noticed at the meeting last week they issued a Declaration about the Middle East and the sharply deteriorating situation in the West Bank and Gaza, but it did not seem to have any suggestions about what should be done to reverse that deterioration. Do you have any idea? Is it just omitted?

(Mr MacShane) I do not think that is quite fair. What the Declaration points out is that the EU will continue to provide the budgetary support for the Palestinian Authority. Obviously we reaffirmed our condemnation of suicide bombings and reaffirmed the appeal to Israel to stop the excessive use of force and to reverse its settlement policy and immediately freeze all settlement activity. We are part of the so-called Quartet of partners and we want to work on a road map for the establishment of a Palestinian state. We also this week have seen the announcement of the Prime Minister of the conference he is organising and Britain will host early next year, with Israeli elections to go through. I think that while we would all wish some decisive step that would, as it were, bring peace to the Middle East, the European Union, as expressed in its Declaration in Copenhagen, is taking very, very seriously its responsibilities in that part of the world.

You referred to this meeting on Friday of the United Nations, the United States, Russia and the European Union but it is made quite clear in the Declaration that the purpose of that meeting is to prepare what in the jargon is called a "road map" for the establishment of the Palestinian state by the year 2005. What is the relevance of that, very welcome though it is, to a sharply deteriorating humanitarian situation now?

(Mr MacShane) I think the relevance is that those elements in the Middle East, those people in the Middle East who want support for the idea of negotiation and a peaceful way out of the tragedy have the support of the European Union. You are right, Mr Davis, to say that the Declaration from Copenhagen is not going to stop suicide bombings or stop the use of excessive force by the Israelis. Similar declarations from the United States do not produce that desired effect. I wish it were otherwise.

Mr Connarty

Is there any possibility that the Quartet will actually look at the outstanding resolutions on settlements and the main cause of the conflict which I have seen first-hand in the four or five times I have been there, Israel appears to behave as though the UN resolutions have never been passed, that they have not been supported, at least in theory, by the United Kingdom and United States, and continues to rebuild Israel by more and more incursions into the Palestinian areas?

(Mr MacShane) Mr Connarty, you are right, I think a strict reading of the resolutions dating from immediately after the Six-Day War in 1967 called on all parties to, as it were, respond without use of violence. The Israeli people face a very real, present terrorist threat which I think in any of the countries in the European Union faced in terms of the wanton killing of young people in discotheques and bus stations by suicide bombers, the internal political mood would perhaps not be as amenable to peaceful negotiations as one might wish sitting here in the security of the House of Commons. But, again, I say to the Committee, Chairman, that the Copenhagen Declaration is absolutely clear. It says that Israel should not only freeze all settlement activity but reverse its settlement policy and that is the British government's position, that is Europe's position, and if Israel wishes to conform with what the European Union want to happen that is what the Israeli government should abide by.

Chairman

Minister, thank you very much. It has been a very useful evidence session. I took a note when Mr Cash was giving you some good advice and I am sure you will take it on board, not to invite any elephants into your dining room! I look forward to our next meeting with you. Thank you very much to you and your colleagues for coming along this morning.

(Mr MacShane) Thank you, Chairman. Can I say that this is the thirteenth event in which I have participated in the House of Commons in the barely six weeks I have been Minister in terms of debates, scrutiny committees and standing committees, so when I hear that the House of Commons has little interest in European affairs, I would say it is very difficult for me to travel Europe because of the demands placed upon me, and I welcome that because I want this House to be fully involved in the structure of Europe. I have enjoyed this session and thank members for their questions. I wish everybody a very happy Christmas and a very successful and prosperous New Year.

Chairman: I hope you were not superstitious when you came along this morning, Minister!