Select Committee on Foreign Affairs Minutes of Evidence

Examination of Witnesses (Questions 280-289)


13 JUNE 2006

  Q280  Mr Purchase: There is certainly a growing understanding by the Chinese of how world capital markets work; that is for certain.

  Margaret Beckett: And everything else.

  Q281  Sandra Osborne: In relation to Sino-Japanese relations, despite the very strong economic relationship between the two countries there are, as you are aware, both current and historical tensions between the two countries. Could you foresee a situation where this could lead to confrontation in relation to economic and political influence in East Asia, and what could the UK Government do to ease those tensions?

  Margaret Beckett: I very much hope not. We have very good relationships, as I have said several times, with China. We also have with Japan and we are doing everything we can to encourage two countries with both of whom we have such positive relationships to maintain more positive relationships with each other. You are right to identify the existing concerns and indeed some of the historical difficulties, which are always problematic, but let me give you a very simple example which I think is widely understood now. China has this enormous need for energy. It also, sadly, uses energy quite inefficiently still. The greatest experts in the world on energy efficiency are probably the Japanese. There are all kinds of areas where these countries could help each other to their mutual benefit and that is something that we are trying to encourage in terms of recognition of these things in the hope that that can lead to better relationships.

  Q282  Sandra Osborne: That is interesting. When the committee was in China I asked them about clean coal technology, coming from a mining area myself, and they were saying that the UK Government was sharing its expertise with China in that regard, which was very good to hear. Could I ask you about Japan scaling back on its pacifist requirements within its constitution and also expanding its military operations, talking about joining NATO or entering into a partnership with NATO? How does the United Kingdom Government view these developments?

  Margaret Beckett: We are supportive of Japan's wish to have a better relationship with NATO. Obviously, the issue of how they handle their constitution and so on is for them but certainly we have quite welcomed the fact that the Japanese have felt able to contribute to some of the peacekeeping forces and things of that kind. We believe there is a useful role that they can play and would not be hostile to seeing them play it. This is an area where Japan could perhaps now begin to make a contribution that they have been inhibited from making in the past. For example, I have a feeling they are in Sudan. They are certainly in some of these peacekeeping policing roles, certainly in Iraq.

  Mr Keefe: Iraq and Afghanistan.

  Q283  Richard Younger-Ross: Turning to central Asia, with Moscow's retreat in the early 1990s China led for the formation of the Shanghai Five and has now set up the Shanghai Co-operation Organisation in 2001 which now includes China, Russia, Tajikistan, Kyrgyzstan, Uzbekistan and Kazakhstan with Iran, Pakistan and India having observer status. Can you outline our view of the Shanghai Co-operation Organisation and in particular do you feel that it is going to lead to an eastward drift in terms of influence not only in central Asia but also in western Asia and in fact in other areas of the Middle East?

  Margaret Beckett: It is a little early to tell but we do not really think so. It is quite a young organisation, three to four years old, I think.

  Q284  Richard Younger-Ross: It was set up in 2001.

  Margaret Beckett: Yes, but it only got going, I think, in 2002 and then began to set up some permanent bodies. It was established formally in 2001 but has only really got going in the last three or four years. It is a youngish organisation; it is still evolving. Why we do not really think that we will see a great deal of expansion is that although there are a number of other countries which have observer status there does not seem to be any appetite—any consensus anyway—within the existing body to expand the membership. Indeed, it is my understanding that the legal framework of their rules does not allow for the addition of new members. It is a little hard to judge what contribution it will make in the long term but we do not see it yet as being something we think is going to expand and grow and have a major impact.

  Q285  Richard Younger-Ross: Secretary of State, we have the members of the EU and there are countries who are not members of the EU that have special arrangements with the EU. Is it not possible for them to set up such arrangements?

  Margaret Beckett: It is possible but, let us face it, in the EU the central body is the major group and then there are a small number of others who have arrangements but in this case it is quite a small central core, so if you have a small central core and lots and lots of outreach that does not sound like a very strong body to me. Only time will tell, I think. You asked me how we see it at the moment; that is how we see it at the moment.

  Andrew Mackinlay: In that brief you have there Sir Michael Jay and his colleagues will have put, "Mackinlay will go on about Kyrgyzstan", and how right he is, and if he did not he should have done because obviously I am not trying hard enough. The fact is that in this area we are poorly represented. We have no embassy in Kyrgyzstan. Indeed, I put it to you that you might go back and ask these people who do prepare the brief why we have this abysmal failure in what is a fragile area by the standards of the region and democracy whereby, stubbornly, Sir Michael and his colleagues refuse to advise the Secretary of State to open a mission there. We have an ambassador working from Kazakhstan, the size of Western Europe, and apparently he travels to Kyrgyzstan. I just want to leave that with you. This line of questioning has clearly opened up an area where you are not too briefed on this, and I have no criticism of yourself, as you know, but I just do put it to you, Secretary of State, that this is sheer cussedness and stubbornness by the Foreign Office on this region.

  Q286  Chairman: You have made your point. Now perhaps the question can get answered.

  Margaret Beckett: I readily admit to the committee that it does not say anything in my brief—and I have read all of it—either about Mr Mackinlay or about the fact that there is great concern about the lack of an embassy in Kyrgyzstan, but of course I take due heed of that.

  Andrew Mackinlay: I am a happy man now.

  Chairman: I am glad you are a happy man.

  Q287  Mr Illsley: Could I come on to a question which my colleague, David Heathcoat-Amory, touched on earlier, and before I do that can I apologise for coming to the meeting late? I had a constituency engagement. China's economy is growing at an incredible rate. I think when the committee made its previous visit to China we were told that the Chinese economy needed to grow at around 7 to 8% per annum simply to stand still and accommodate its increasing population. We have seen over the last few years China involving itself in areas where it can identify new markets or new sources of products. Given that China has a bit of a history in Iran and Saudi Arabia with their weapons programmes, and in Iran's case with its original nuclear programme, is there any danger or fear on the part of our Government that China might be looking to stabilise or ensure its oil supplies by entering into contracts with countries in the Middle East which could colour its judgment in terms of western relations or the UN's views particularly of Iran? Is there any danger that China's judgment in the Middle East is likely to be clouded by its desire to feed its internal economy?

  Margaret Beckett: Obviously, as you say, China has need of substantial resources to fuel its growth needs and that is leading it, as we were saying earlier on, to look to areas where it can sign contracts and so on and that will lead, I suppose, to some difference in relationships. First of all, I do not at present see much evidence that China's attitude to international relations and global affairs generally is as yet bound or influenced by such steps and, indeed, in a sense part of what we were discussing earlier on is China's tendency to stand aloof from such things and simply say, "We have got a commercial contract with you; that is the end of it". If that is their attitude, even though we might seek to encourage them perhaps to be more proactive in their approach to some of the regimes they deal with at present with regard to trying to encourage developments we might wish to see, I think it will be some time before one might think that China might be influenced in a reverse direction, if I can put it that way. I am sure that China will, of course, take careful account of her overall interests but think it would be a brave country or business or group of people who thought that they had in some way got China over a barrel with regard to the attitudes that she would take because of such relationships.

  Q288  Chairman: I am conscious we have got almost one minute to go and I wanted to ask a question on Africa, building on what you have said earlier, if we have time for that. Can I ask you about governance and the Africa Commission? We have pressed for good governance, yet the Chinese are in Angola where they are basically allowing the Angolan Government not to comply with international standards as regards transparency and other issues. They are in Sudan, and you have mentioned Zimbabwe already. Does in effect China's voracious appetite for raw materials and markets in Africa undermine the good governance agenda the rest of the world has been trying to pursue?

  Margaret Beckett: I do not think it necessarily does but I think there is that potential danger. I also think the Chinese are an extremely intelligent and skilful people and it seems to me—and I hope this does not sound cynical—there are two reasons at least why countries across the world have increasingly focused on the issue of good governance in Africa. One is the issue itself, the sheer horror of seeing countries' natural resources despoiled by corruption, seeing their natural advantages wrecked because of appallingly bad and incompetent governments let alone any kind of criminal approach, and that in itself is a good enough reason for wanting to encourage good governance. But I also think that over the years there has been a growing recognition by the international community that it is not in anybody's interests—it is not in the interests of investors or people who wish to benefit from the natural resources that some of these countries have—to see this appalling governance, because for one thing that in itself is not sustainable and it is inefficient and it is to everybody's mutual disadvantage. China is much too wise not to see that that thinking and that concern applies to Chinese investments just as it does to investments from anywhere else in the world.

  Q289  Chairman: Thank you. On that optimistic note, hopefully, I would like to thank you very much for coming, and I would particularly like to thank you for your brief answers which allowed us to get through a wide number of subjects. Thank you very much. We will see you next week.

  Margaret Beckett: Thank you. I will look forward to that.

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