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The Lord Privy Seal (Viscount Cranborne): My Lords, with the leave of the House, I pay tribute to the noble Lord, Lord Richard, for an act of, I think, the very greatest generosity of spirit in drawing your Lordships' attention officially to the death of my noble friend. His action is in the very best traditions of your Lordships' House. I agree with the noble Lord. Rules, particularly in this House, are there to be broken, if the House allows. I can think of no better occasion than this to do so.

I know that all of your Lordships will have been very shocked and saddened by the news that my noble friend was taken ill yesterday and died this morning. As the noble Lord, Lord Richard, said, her presence in this House and her valued contributions to our proceedings will be greatly missed. I remember in particular my noble friend's look of deepest distress when she used to come to see me to explain that on one particular issue on which she was an acknowledged expert, once again she could not support the Government. But her distress in no way deflected her from her absolute determination to pursue what she thought was right. Her independence was a quality which above all distinguishes Members of your Lordships' House. However awkward that may be for the Government from time to time, we must always value it and I trust that it will always be an integral part of your Lordships' nature.

Above all, apart from my noble friend's independence and deep knowledge of the matters in which she took an interest, she radiated a quality of kindness which is extraordinarily rare in humankind. I know that my noble friend had great faith. That faith was reflected in her name. I particularly mourn her because she never ceased to point out that one of her 19th century relations was the rector of my home town in Hertfordshire and that

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I should follow more often his example and my noble friend's example rather than the dictates of my party. The whole House will miss her and we should be grateful to the noble Lord, Lord Richard, for what he said.

While I am on my feet, perhaps your Lordships will allow me to mention one other matter. The shock which ran through the country at the unprecedented news from Dunblane this morning was palpable. With your Lordships' permission, I shall convey to the town of Dunblane, which I happen to be fortunate enough to know fairly well, to the families of the victims, and to the people of Scotland, the absolute horror of this House at what has occurred and our deepest sympathy for the families.

The Secretary of State for Scotland and the shadow Scottish Secretary left this morning to travel together to Dunblane. They will return tomorrow and a Statement will be made in another place. In the normal way, at that time an opportunity will be given to your Lordships to have the Statement repeated. I hope we shall then be in a position to answer in full and factually any questions which your Lordships may have.

Lord Jenkins of Hillhead: My Lords, I associate myself and my noble friends with the exceptional tribute which the noble Lord, Lord Richard, paid to Lady Faithfull. She was an exceptional servant of this House and of the public good. Her death has a particular poignancy for me, as I am sure it does in differing ways for many Members of your Lordships' House, because as I was coming into the House yesterday afternoon I saw her in a chair in the yard being moved into an ambulance. I shall never forget the smile of patient serenity on her face. That was perhaps an appropriate last memory of her. We associate ourselves very strongly with the remarks of the noble Lord, Lord Richard, as we do with the remarks made by the noble Viscount the Leader of the House about the terrible incident in Scotland.

Baroness Hylton-Foster: My Lords, on behalf of the Convener, who I believe does not know that this sad event has occurred, and the Cross Bench Peers, I join with all that has been said about Lady Faithfull. I know that she will be particularly missed by those who served on the all-party children committee where she did such wonderful work. She is one of those rare people whom everybody loved and nobody knew how to disagree with because she was generally always right. On behalf of the Cross-Bench Peers, we send our condolences to her family.

Lord Elton: My Lords, as a Back-Bencher who for some years was a Minister dealing with matters in which Lady Faithfull took a close interest I noted that she sat immediately behind the Dispatch Box. Therefore, one could not ever see the effect of what one said but one got the result in a way which made me say to her in the Lobby on one occasion that my back was full of her darts. She said that she never threw darts at me. It is true that all she was doing was protecting the interests of children with courage, fortitude and no regard to any other loyalty. That enormously enhanced the reputation of this House and the quality--I have the humility to say--of some of the legislation I helped to put through it.

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There is a sad irony about the fact that children were the victims of the atrocity to which my noble friend the Leader of the House referred. It makes it all the more fitting that the heartfelt sympathy of your Lordships should be sent to the families of the victims.

Lord Brougham and Vaux: My Lords, I spoke to Lady Faithfull yesterday morning at 11.30 on a matter of common interest, namely, my group on youth clubs. We were to meet this afternoon because she said there were three defects in my proposal. I shall now never know what they are, and I shall sadly miss her.

Lord Hughes: My Lords, living as I do less than 20 miles from Dunblane, when I heard the news on the radio at 11 o'clock this morning I was terribly shocked. As the Leader of the House said, Dunblane is a beautiful place. If there is any place on earth where one would not expect an atrocity of this kind, it is Dunblane. All the people there will take this terrible tragedy as a personal loss.

Consolidated Fund (No. 2) Bill

3.17 p.m.

Brought from the Commons endorsed with the certificate of the Speaker that the Bill is a money Bill, and read a first time.

Business of the House: Debates this Day

Lord Strathclyde: My Lords, I should like to say a few words about today's debates standing in the names of the noble Lord, Lord Wallace of Saltaire, and my noble friend Lord Campbell of Croy. In the first debate, other than the mover, Front Bench spokesmen and the Minister replying, speakers will be limited to nine minutes and, in the second debate, 14 minutes. I might also remind your Lordships that, when the digital clock shows nine minutes, the full nine minutes have elapsed and the speaker is already trespassing on the time of others.

European Union Enlargement Proposals

3.19 p.m.

Lord Wallace of Saltaire rose to call attention to the implications of the European Union's commitment to open negotiations with 12 potential member states within six months of the conclusion of the forthcoming Intergovernmental Conference; and to move for Papers.

The noble Lord said: My Lords, in introducing this debate--and I am very glad to be able to do so--I wish to draw your Lordships' attention to the fact that it is very much a "call attention" debate rather than one which is intended to come to any conclusion. What I hope to suggest is that it is time that the European Communities Committee of this House should again look at the broad question of enlargement, some four years after it last did so.

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When that committee last considered the matter it said at paragraph 144 of its 1992 report that enlargement potentially,

    "confronts the Community and its Member States with an historic opportunity and a challenge: their response will go far to determine the shape of European politics into the next century. The States which have emerged from decades of Soviet military domination and communist oppression are looking to the Community as an anchor for their fragile democracy, security and independence and as a source of strength for their ... economies".
In the White Paper published yesterday, the Government reinforced that view and said on page 3 that,

    "the European Union is the basis upon which we must consolidate democracy and prosperity across the whole of Europe, healing the historic divisions which scarred our continent through the Cold War, and cementing peace. Enlargement poses formidable challenges not only for the applicants, who must be ready and able to take on the obligations of membership, but for the existing European Union which must adapt its structures and its policies, including the Common Agriculture Policy and Structural Funds, to ensure that enlargement is successful and affordable".
We have, then, a major task--not simply a matter of minor adjustments--and an historic responsibility; perhaps the greatest responsibility facing the European Union in the next 10 to 20 years and thus also, I would argue, the greatest priority for British foreign policy. We are, as both of those quotations suggested, talking about the transformation of the European order over the next five to 15 years.

Of course, the transition is under way. It is some six years since the Berlin Wall came down. Those countries which have applied are already into their second or third governments. Happily, some of them have already got through the worst of the transition and their economies are now growing again at 3 per cent. to 5 per cent. a year. But I suggest that we need to look ahead and to ask ourselves in this debate what sort of European order we wish to achieve in five, 10 or 15 years' time, and how we need to adapt the European Union to cope with that challenge.

I suggest that there are four major tasks for the European Union in the next 10 years. I suggest that strongly because so many people seem to think that there are only two--namely, monetary union and a bit of institutional tinkering. Apart from monetary union, enlargement is the overwhelming priority for the European Union to manage. Enlargement carries with it major implications for foreign and security policy to cope with enlargement, and to cope with the fact that the European Union will have a boundary on the Black Sea and a long land border with Russia and the Ukraine. Institutional reforms should be discussed in terms of what we need to cope with that, rather than in abstract in themselves and with regard to some of the odder doctrines of the British unwritten constitution.

As noble Lords will know, 12 states have now been accepted as applicants for entry: the four Visegrad states of Poland, the Czech Republic, Slovakia and Hungary; the three Baltic states of Latvia, Lithuania and Estonia; two Balkan states; Slovenia (not yet quite a Europe agreement state because of an outstanding disagreement with Italy); and two Mediterranean islands, Cyprus and Malta. Behind them, of course, is the shadow of further applicants: Albania, Macedonia and, in time, Croatia and the remains of the former Yugoslavia; and, perhaps,

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when they have changed their minds--if they do so again--the remaining EFTAN countries, Norway, Switzerland and Iceland.

We are talking about a very major transformation. The 10 Europe agreement states and Cyprus and Malta account for some 107 million people. That adds one-third to the European Union's population and adds a further one-third to the European Union's land area. Therefore, it also adds substantially to the extended security commitment which implicitly comes with Community enlargement.

The speed with which the whole process is moving is quite remarkable. I have to say that I was rather surprised to see in the 1996 report on the IGC of your Lordships' Select Committee on the European Communities a statement in paragraph 233 which reads:

    "A Union of 27 Member States, including a number of small Member States, is an eventual possibility".
I wish to put forward the argument to your Lordships that that is not only an eventual possibility but that, indeed, it is quite likely to happen bit by bit in the foreseeable future. We have met the pressure from those post-Socialist states with an initial reluctance which has given way, European Council by European Council, to an acceptance that they can move fairly rapidly towards membership.

In the Essen European Council on December 1994 we agreed to what was called a "pre-accession strategy" whereby those states would be encouraged to adapt to Community legislation and practices before we open negotiations for membership. We also agreed to what was called in Community jargon a "structured relationship" with the applicant states whereby officials and Ministers sit in on a number of Community meetings each year.

At the Cannes European Council last June it was agreed, in order to get the association agreement with Turkey off the ground, that Malta and Cyprus would be allowed to open their negotiations within six months of the end of the coming intergovernmental conference. At the Madrid European Council last December, after a good deal of pushing and shoving, it was agreed that other applicant countries would open their negotiations within the same time-scale as for Cyprus and Malta.

I suggest to your Lordships that that means that it is possible to see a movement in which the IGC ends in the summer of 1997 with all of the applicant countries meeting the European Union in January 1998 for what I gather in Brussels is called the foto en famille, when they all group together and are photographed as potential, full-scale European Union members. But, having already worked through quite a lot of the dossier on the pre-accession negotiations, I foresee after that two years of entry negotiations which conclude at the end of 1999, together with a further year of ratification. We could then see the first new entrants coming in in less than five years' time in January 2001. We can perhaps allow a little more slippage than that and say January 2002, but that is still not too far distant.

Of course, not all of the applicants will come in at the same time. I believe that we will most likely see some three to seven members in the first group--Poland

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being the most important with, perhaps, the Czech Republic and Hungary coming necessarily with Poland, Slovenia, Estonia and one or more of the two Mediterranean states, with the others following some five years later. There would also be a long period of transition after membership.

Some of your Lordships may wish to ask whether it is important for us to accept all of those applicants. Could we not perhaps just have one or two and leave the others outside for the foreseeable future? It is not inevitable that all will succeed in their negotiations. The formal procedures mean that the Commission will be asked to give an opinion after the IGC on how far the applicant states have fulfilled the conditions of membership in terms of aligning their laws, their taxation systems, their competition policies and the capacities of their administrations, as well as meeting the criteria set out in the Copenhagen European Council for political acceptability--namely, democratic conditions for membership.

Poland is evidently the key. Germany has to insist that Poland comes into the European Union as soon as possible. The Czech Republic and Hungary come along with that in economic and political terms. Slovenia, by far the most prosperous of those states at present, has the strongest economic case for membership. The Nordic states will wish to insist that at least one of the Baltic states is in the first group of membership. I gather that that was part of the argument in Madrid. Therefore it is likely that Estonia will be one of those that comes in within five or six years. Romania and Bulgaria are likely to take a longer period, and perhaps they may not succeed, but the French and the Greeks will necessarily have something to say about stabilising the Balkans. Some of your Lordships will believe that Malta and Cyprus are in many ways British responsibilities and that we ought to have a particular care that those countries carry through their applications to successful membership.

There are some major and complex issues at stake. I do not intend to rehearse them in detail now; I wish only to underline that they need to be examined and understood together, not torn apart one by one. If we are moving towards a Community of some 25 to 30 nations within the next 10 years or so, then the foreign and defence policy responsibilities which that brings to the European Union will be considerable. As many of your Lordships know, there is a parallel argument under way about the enlargement of NATO and about the implications for the Western European Union.

The European Union itself carries implicit responsibilities for ensuring the security of its members. These states wish to join the European Union partly in order to strengthen their political and military security, so the whole dossier on European defence co-operation is one which will have to be looked at in the context of a much wider European order. There are, of course, major financial implications of increased membership of the Community, which will probably result in a larger Community budget. It is indeed on the Community's agenda to reconsider its financial framework before 1999. There will be a major shift in the balance of the European economy as these countries prosper as their

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economies grow, which necessarily again will make Germany even more the centre of the European economy, and therefore even more the central power of our new European order.

There are, of course, major agricultural implications of this increased membership. The amount of arable land in the European Union will increase by one third, and the number of people working on the land in the European Union will double. There are also major institutional implications--which I gather other speakers may wish to address--as regards the future of the Commission and the European Parliament, majority voting, and the problem of making sure the Community rules are implemented throughout the European Union. There is also the important question of how far in such a wide European order we can maintain the structure of the European Union which we have so far established; whether or not there are core policies which must be implemented throughout the Union, and whether or not the levels of diversity which these new countries will bring into the Union must allow for a greater degree of flexibility of the sort suggested by the Government in the White Paper published yesterday.

The debate has not yet been fully joined on which core policies we need to maintain and which policies are less important that we might allow to be opted in and out of as the Community expands. The passage of time over the next 10 years will resolve some of these problems. The agricultural markets are already shifting. The transition under way is already solving some of the legal and political problems. The faster the economies of these countries grow, the less the cost to us in financial transfer terms when they join. But there is also a need for an active approach on behalf of the European Union as a whole and, I suggest, on behalf of our Government. The British Government are doing well with the know-how fund, but I doubt whether we are yet doing enough to encourage their governments to play an active role in bilateral as well as multilateral relations, and I suggest that we might perhaps give some of these countries a greater level of ministerial attention.

I hope I have said enough in opening this debate to suggest that there is a huge number of questions here which we have not yet entirely understood. We are, after all, talking not just about a transformed European Union but about a transformed Europe and about the objective of establishing a stable European order after the Cold War which can give our children the peace and prosperity which our grandparents failed to establish after the end of World War One. That is a major objective. I hope that our government--and whichever governments we may have over the next 10 years--will contribute actively and positively to that objective. I beg to move for Papers.

3.35 p.m.

Lord Kingsland: My Lords, I am greatly flattered and somewhat bewildered to find myself speaking second in this debate. I can only attribute it to the frequent confusion between the names Kingsland and Kingsdown. I wish to touch on just two matters. The first is security; the second is the rule of law.

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Our country assumed in the 1930s that security developments in central and eastern Europe did not matter to us. That was a near fatal mistake. The central issue therefore raised by the membership of the emerging democracies of central and eastern Europe is one of security. It is absolutely crucial that they are bound in to the western security system. Here, I believe the fundamental relationship is not a European relationship but a trans-Atlantic relationship. The commitment of the United States to the security of the Continent of Europe is absolutely crucial to our security and Europe's security. It was, I suppose--second to the character of the German leader in the 1930s--the failure of the Senate to ratify the League of Nations treaty in 1920 and the removal of the United States from the balance of power system of Europe for 20 years that was so fatal in Europe's failed attempts at creating peace after the First World War.

I believe we would also be under an illusion were we to think that institutions will solve security problems. They will not. Institutions do not solve security problems unless the political will is behind them to make security stick. We have the tragic example of Yugoslavia over the past five years to demonstrate that--I hope, to your Lordships, obvious--truth. I am afraid that the western democracies' approach to Yugoslavia has been abject. I might almost say that the word "appeasement" has sadly reappeared in our political calendar; not because the institutions failed us but because we lacked the political will to confront an aggressor far less formidable than the aggressor we faced in the 1930s. We have to make sure that the commitment of the United States, and the political determination of the western democracies to resist aggression, are two fundamental preconditions to any successful security system we might negotiate with our partners in Europe over the next decade.

The second point I wish to make is about the rule of law. In a Community of six nations it is possible to have institutions which can develop a common political will. It will be exceedingly difficult to do that in a Community of 27 nations. No national electorate will have anything like a majority of Commissioners or a majority of Members in the European Parliament, let alone a majority in the Council of Ministers where they will have just one representative among 27. The crucial element in binding the Community together-- a Community of perhaps as many as 27--will be the rule of law. Without the rule of law the whole idea of the European Community will crumble. It ought not to be a difficult notion for us in the United Kingdom to understand in the sense that we invented it.

However, the rule of law means respect for the decisions of courts. You cannot have a market system which is continent-wide without a single source of interpretation of the rules. That can only be the European Court of Justice. Therefore, far from weakening the European Court of Justice, as some have suggested in the recent great debate in our nation about Europe, I believe that we ought to be strengthening it. It has to be strong enough to withstand not a Community of 15 but a Community of 27 nations.

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At present some countries virtually ignore the rule of Community law and do enormous damage to our business interests in the process. Therefore, we have to make sure not only that we have a strong Court but that in each member state of the Community there are judicial remedies available to individual citizens which are effective. Sometimes we may not like what the Court says. Mostly, in this country, what it says is music to our ears. Often, when what it says is not music to our ears that is not the fault of the Court but the fault of the legislation that it has to interpret.

Let us be under no illusions. We cannot have a Community without a strong Court. We cannot have a rule of law in the Community without independent judges. That is the great challenge in integrating central and eastern Europe. Fundamental to a market system operated by a rule of law is a law of contract and a respect for the rule of law. Neither of those exists as yet in any of the new democracies. These are economies which have been run by fiat from central government. Volumes of production, prices and the incidence of profit and loss are entirely arbitrary. They have nothing to do with individual initiative. The idea that you make a bargain and stand by it whether it is a good or bad bargain is totally alien to the culture of those countries. How can you have a market economy without a law of contract? We have a very long way to go before the notion of the single market can have any reality in those areas.

For those who have lived in a country like Poland, Hungary or Czechoslovakia for the past 40 or 50 years the rule of law does not equal the friend of the citizen. It equals the instrument of the foreign oppressor. So there again is a terrific cultural challenge which we must face.

I believe that we should concentrate on the crucial issues of security and the rule of law. After all, everything in our own political life in this country is a pygmy compared to those two factors. It is the same for the European Community. If we concentrate on those fundamental issues I am sure that the detail will fall into place.

3.42 p.m.

Baroness Blackstone: My Lords, this is a most timely debate. Europe is the subject of considerable interest and topicality this week with the publication of the IGC White Paper. I only wish, however, that the White Paper and yesterday's Statement had been characterised by a little more vision and a little less carping. At least they endorsed enlargement and the institutional changes designed to facilitate enlargement. However, in their insistence on the retention of unanimity in many areas, as well as supporting enlargement, I am not sure that the Government were being entirely consistent. However, the IGC is not the subject of today's debate, and I hope there will be other opportunities to debate it more fully.

The Labour Party is strongly in favour of further enlargement of the European Union for those countries willing and able to join. In particular, we believe that

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we have a duty to help the countries of central and eastern Europe, countries which since the collapse of the Soviet Union have worked hard to reform their political systems and develop their economies. We endorse the view of their governments that both democracy and a successful market economy are best supported inside the European Union rather than outside it. However, we recognise that before that can happen significant change is needed, both in the countries concerned and, as the noble Lord, Lord Wallace of Saltaire, has already said, in the European Union itself.

We welcome the agreements that have already been made with some of those countries as a preliminary to European Union membership, and hope that it will be possible to extend them to others. We also believe that we have the obligation to support all those countries in making the necessary changes for full membership at a later date. That means finding new forms of co-operation. It also means avoiding policies which make economic and political progress among the applicants for membership more difficult.

I want to say something about those agreements, but before doing so I want to make one general point. We are considering 12 different countries in a two-and-a-half hour debate with 14 speakers. In the short time available it is not possible to consider each country individually, though I recognise that each is unique and generalisation has its risks. I know that the extent and scale of their economic problems vary enormously. Nevertheless, generalise I shall and must. Moreover, as I shall argue later, there is a strong case for treating the countries of Central and Eastern Europe as a group. With all respect to Cyprus and Malta, it is on the Visegrad countries, Bulgaria, Romania, the three Baltic states and Slovenia, that this debate should be mainly focused.

Returning to the European agreements, perhaps I may begin by asking the Minister what is the latest position with respect to Slovenia. For how much longer does he think that implementation will be held up by the dispute with Italy?

Central to all the agreements is the principle of asymmetry. What is entailed here is the acceptance that the European Union should make greater trade concessions to those countries while they are in transition than are received in return. In other words, it needs to be recognised that their economies could not cope with a complete liberalisation of trade immediately. That is reflected in a phasing in of free trade in industrial goods. That is fine. However, the agreements also lower trade barriers in agriculture. It is rather unfortunate that they do so in a far more restricted way.

So on the one hand we are telling these countries that they must move as fast as possible towards a market economy, but at the same time we are imposing substantial restrictions on the entry of their goods, and in particular their agricultural goods, into European Union markets. Nor is there any clear end date to the restrictions on the free flow of agricultural goods.

No one doubts the importance of agriculture in the domestic economies of many of these countries, although the extent to which that is true varies. It is

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much less true of the Czech Republic than it is of Romania, for example. But what is worrying is that as a result of the way in which the agreements have been drawn up distortions are now occurring in which agriculture, which vitally needs reform and modernisation, is being neglected while greater focus is placed on goods whose exports are less restricted. The Minister may well tell us that the European Union is offering extensive assistance programmes for agriculture. That is true, but it is a pity that that does not seem to be properly reflected in the agreements.

The other problem with the agreements is that they are all on a bilateral basis between the European Union and individual states. That has led to differential preferences being offered to individual countries and, in turn, to their competing with each other to meet the conditions of membership. Moreover, the agreements have done little to encourage trade among the countries of central and eastern Europe, nor, in particular, helped the recovery of the central European market in agricultural goods.

I should very much welcome a view from the Minister on all this. Can he indicate whether the Government agree that what is now needed is a new approach aimed at creating common economic arrangements which encourage those applying for membership to forge closer relationships with each other in the transition period?

Without some change in direction the chances of successful enlargement in the near future seem rather remote. While quite unequivocal about the desirability of enlargement, as I hope I made clear, we must also be realistic about the likely timescale over which it will happen. To be frank, the wording of the Motion in the name of the noble Lord, Lord Wallace, takes us a little beyond the point that we have actually reached, as he made clear in his speech. The only absolute commitment to negotiations six months after the IGC has been concluded is with Cyprus and Malta. What the Madrid Council did was to express the hope that initial negotiations could begin with some of the other applicants.

If we are honest with ourselves and with them, we have to ask how meaningful such discussions would be without further changes to the CAP and the structural fund. I know that the Government are in agreement with us on the urgent need for its reform, but I am afraid that they have utterly failed to bring about required further changes. I suspect that this is partly because they do not carry the weight they should in Europe because of their negative attitudes towards the European project which were made manifest yet again in yesterday's White Paper.

It is painfully obvious that no positive step can be taken forward on any European matter now without a row in the Conservative Party. Last week we saw a row between the Foreign Secretary and Mr. Redwood about the appointment of an official to co-ordinate a common foreign and security policy. This week we are seeing a split emerging between the Prime Minister and the Chancellor on whether we should have a referendum on a single currency.

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If the Government are as serious about enlargement as they claim, they should be at the centre of the debate persuading Chancellor Kohl to agree to a radical reform of the CAP. This might allow some of the proceeds of the resulting savings to be used in a special structural fund for those countries which have applied for membership, helping them to prepare for it. Again, perhaps the Minister will comment on this proposal.

Having concentrated on economic issues I should like to conclude by suggesting that much more thought needs to be given to the promotion of a European political area which would allow prospective members the opportunity to participate in the political deliberations of the European Union.

The wish for membership is based on a desire for political stability and security as well as economic prosperity. It is in all our interests that stability in the eastern part of the European continent should be sustained. There is some danger that insufficient tangible progress will be made towards enlargement because of the difficult economic conditions that have to be met. Nor can we ignore those economic hurdles. Precipitate economic integration will only damage the long haul towards economic transformation on which all those countries are embarking with such bravery and commitment.

3.53 p.m.

Lord Tordoff: My Lords, when I first heard that my noble friend Lord Wallace of Saltaire would be joining your Lordships' House I knew that we could look forward to some interesting contributions, in particular on the subject of Europe. His luck in the ballot gives him an opportunity today to demonstrate to your Lordships his breadth of knowledge on the subject, and we are grateful to him.

It was Professor Helen Wallace, as she then was, now Lady Wallace of Saltaire, who, appearing before your Lordships' Select Committee last year, said that enlargement,

    "is probably the most important challenge for the I.G.C. but also the hardest to address".
I thought that I might take the opportunity of reminding your Lordships of one or two matters which have been dealt with by your Lordships' Select Committee and sub-committees over the past two years. The noble Lord, Lord Wallace, mentioned the first report of the sub-committee in 1992-93, chaired by the noble Lord, Lord Aldington, which looked at enlargement as a subject, and the 21st report last year produced by the IGC ad hoc sub-committee which I had the good fortune and privilege to chair.

The report of the committee chaired by the noble Lord, Lord Aldington, stated in its conclusions:

    "The advantages to the Community and to Europe as a whole of enlargement are undeniable and this enlargement must not and need not threaten the effectiveness of the Community. Enlargement has been the destiny of the Community ... Enlargement will be in the United Kingdom's interests."

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Having talked about EFTA countries which were not at that stage in the Community, the report added:

    "A broader Community stretching eastwards as well as northwards will better face the challenges of the third millennium from the world beyond Europe. The problem is not whether there should be enlargement, but how and how quickly, and what adjustments should be made in the Community's institutions and procedures".
It continued:

    "There will be strains, but they will be procedural rather than institutional...arrangements have to be tailored for the circumstances and needs of each European State".
That was a point made by the noble Baroness, Lady Blackstone, when she referred to the states all being quite different and to arrangements starting with the trade and co-operation agreements. I endorse the report's statement:

    "No country should be encouraged to believe that Community membership is possible before it is able to play a full part in the Community's economic and political structure. Otherwise it could subject itself as well as the Community to unacceptable burdens".
The report added:

    "Every Community institution will be affected by such numbers, and considerable political issues will be raised. Such decisions cannot wisely be rushed".
It is not for me to become involved in the debate which is developing this afternoon on how far and how quickly we should go. That is a matter best left to the proponents on the various Front Benches. I can only offer a few ideas from your Lordships' Select Committee.

The ad hoc committee which I had the privilege of chairing states at paragraph 230:

    "The enlargement of the Union since 1991 and the prospect of further enlargement throw into relief a number of purely institutional aspects which require attention at this I.G.C.".
As my noble friend Lord Wallace of Saltaire stated, yesterday's White Paper underlines the same point in its introductory paragraph 3. He quoted a large portion. However, the paragraph concludes:

    "Enlargement is at once an historic responsibility for Europe and a long-term British interest".
Indeed, the Corfu conclusions themselves instruct the IGC to facilitate the work of the institutions and guarantee their effective operation in the perspective of enlargement. Perhaps we may spend a few minutes reminding ourselves of the consequences that your Select Committee saw as a result of enlargement.

It is clear that failure to address institutional questions will delay accession negotiations and send "profoundly negative signals" to the associated states. On the other hand, I wonder whether we are not already sending signals which are perhaps too optimistic in regard to time. We occasionally meet people from central and eastern European countries passing through. I must say that their expectations often seem somewhat ahead of the game.

However there is much to do if we are to put the existing Communities' house in order. I do not intend to deal here with the CAP although we urged in our report that Her Majesty's Government should make it a political condition that the IGC should not close without some agreement being reached on its reform. I know

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that the noble Lord, Lord Middleton, intends to say a few words on that issue from the perspective of Sub-Committee D.

Perhaps I may take one or two instances. As regards the size of the Commission, at present there are not enough portfolios to go round. As long ago as 1990 the Select Committee of your Lordships' House expressed the view that this matter must be addressed. But with the prospect, however distant, of a Union of 27 members the Commission would become utterly unwieldy. The White Paper seems to agree. At paragraph 32 it states:

    "The Government understands the importance which Member States attach to having their own Commissioner. With further enlargements, however, it may not be appropriate to retain the present system. The IGC will consider how to achieve an acceptable balance".
The White Paper discusses a two-tier Commission. We felt that that was dangerous. It may well be that a team of commissioners should to be put together. But we ducked the question of what it should be called. We state in our report that,

    "the delicate question of title, rank and status within the teams would be a matter for further consideration in the Commission itself".

Similarly, the presidency is thrown open to question. Both in our report and in the White Paper there is the question of what is to be done when countries the size of Latvia or Malta take on the presidency. Again, team presidencies were suggested. But there were cautionary voices. On the whole the committee came down in favour of team presidencies, but the voice of the noble Lord, Lord Hunt of Tanworth, was loud in our considerations and was heard in the House when we debated the report. He felt that there were grave administrative difficulties in team presidencies. It is also difficult to believe that we can live with a situation where the presidency comes round only every 12 or 13 years.

Qualified majority voting is another item which must be addressed. I mention not the scope but the arrangements. The possibility of some form of weighting to take account of population is obviously high on the agenda. We recommended a dual key approach with Council votes weighted by population size as the most likely way round the problem.

The size of the Parliament must be addressed again if there are 27 or 30 member states. However, it seems that the European Parliament itself has recognised the problem and is now considering limiting itself to 700 members. I was interested to hear the noble Lord, Lord Kingsland, talk about the European Court of Justice in a memorable contribution in which he discussed the rule of law. But even there the question of how many judges can be produced from how many major and minor states is a problem we must tackle.

Noble Lords will see from those few remarks that the Wallace family is right to draw our attention to the whole matter of enlargement. In the long run we must solve the conflicting pressures of the benefits of the political stability which will come from expansion of the Community towards the east and the countervailing difficulties in modifying a Community which was designed for fewer than a dozen so that in future it can

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suit a Community approaching 30 members. Time is not on our side. I only hope that we have not already given too many hostages to fortune.

4.2 p.m.

Lord Mackie of Benshie: My Lords, I too wish to congratulate my noble friend Lord Wallace of Saltaire on introducing the subject. We knew that he would and it is right and proper that he should do so. I also wish to congratulate the noble Lord, Lord Kingsland, on a speech which shook me to the core. I did not know that that kind of vision still existed in the Conservative Party. I am glad that it does.

The noble Lord, Lord Kingsland, raised the point of education and the transformation of thinking of those nations to the east which had been under communist domination. I have been a member of the Parliamentary Assembly of the Council of Europe for 10 years and that organisation has played, and can play, a great part in preparing the nations which have been under communist domination for proper membership of a democratic community. The Council of Europe has taken distinct risks. I know that my noble friend Lord Lester disagrees with me. We have been criticised, but, when it came to the point, the decision on the admission of Russia to the Council of Europe--which had already been delayed once--was correct. They are a proud people (witness the success of Zhirinovsky) and rejection would have been a terrific blow to their pride. That admission of Russia, with all its imperfections on human rights, was enormously helpful to democrats inside Russia who are striving to help to build a proper democracy. The Council of Europe has been valuable in that way.

It may not surprise noble Lords that I shall talk about agriculture. I am also a member of the Agricultural and Rural Development Committee in the Council of Europe. I have been shocked and dismayed at the way we have proceeded agriculturally in regard to eastern countries. We talked a lot of rubbish about how quickly the free market would transform the situation. We were right--it was transformed. It ruined many people, caused immense misery and lowered production by 30 per cent. to 40 per cent. in some countries. For example, in 1993, for the first time in its history, Poland had to import food. That was exacerbated, no doubt, by the drought, but the main reason was the enormous fall in efficiency of production; not efficiency in terms of labour. I went through the great plain of Hungary in the early communist days. There were good crops and the cows gave a lot of milk. Admittedly, there was one cowman to every cow, but the people lived reasonably happily, although poorly, in their communities. Now we see them deeply regretting that the system has departed as there are now rural communities without work.

Poland is the most interesting country. Without doubt, the whole nation was held together by the fact that 80 per cent. of the land was held in small units. At the moment, those small units contribute greatly to stability, but gradually and even quite fast, they will be amalgamated. Young people on the small farms will not

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put up with the standard of living they have there, in exactly the same way as young people will not put up with the standard of living in crofts in the Highlands. They want work.

We have a big task, not only in agriculture but in rural development. We must help to set up small, medium and large industries in the countryside so that there will be work for the people who live there and they will not proceed to the towns, adding to the amount of crime. If they can live in the country and their own homes there is a good chance of genuine progress. That depends largely on our being able to have a common agricultural policy which we can share. I am talking mainly about the first four: Poland, Hungary, and the Czech and Slovak Republics. At present they receive a good deal less for their produce. On top of that, we have generously opened our borders for their production and poured our subsidised production into their countries, to the great detriment of the farmers who get poorer prices.

We have much to sort out before we can start bringing the whole body into a common agricultural policy for the enlarged Community. All main parties are agreed, and I am sure we are right, that we must work towards world prices through which we can protect the agricultural community by an outside tariff, which is allowed up to a point under GATT, and with direct decoupled payments to farmers and areas which are in need. That must go a good deal further, because there is little doubt that production in those countries will recover quite fast. For example, I know a couple of young Scots who are farming good land in Poland. Their neighbours are catching on fast to their practices and production is already rising. When it reaches its former level of communist times, we may well be in a situation where our surpluses and the intervention stocks will rise to an unacceptable height. So before then we must move towards world prices.

I know that the Minister for Agriculture, and the Government believe that to be necessary, but I have listened to agriculture Ministers in Germany and France who do not agree. They say firmly that they will continue to support the CAP in its so-called reformed state and that for electoral reasons they will not shift from that point of view. We have to offer a reasonable scheme. I ask the Government to look at a number of excellent schemes to produce bonds that were before us some time ago in Sub-committee D. The idea was very simple. For 10 years, or five years, a payment is made to farmers to compensate them for the fall in prices and keep up their income. The bond can be marketed. The scheme lets you off the hook eventually because it does not commit you for ever more to supporting those farmers who are incompetent.

This process will be helped greatly by the fact that the Chinese are multiplying by leaps and bounds. All over the Far East prosperity is growing and those countries can buy the food that they need. If, for example, China were to consume the same amount of cereals as we consume in the European Union it would need 500 million tonnes of cereals, of which nearly 200 million tonnes might have to be imported. That will keep up cereal prices in the world. It is certainly doing so already. It is not all the result of a drought here and

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there. I believe, as do many good judges, that it results from the fact that we are progressing towards a rise in cereal prices that will get us off the hook.

The goal is worthwhile. Agriculture plays a big part in it. This country can take a lead if it shows that it is sincere and people in Europe believe that we really do want to be at the heart of Europe, instead of taking our present attitude.

4.12 p.m.

Lord Middleton: My Lords, we should be grateful to the noble Lord, Lord Wallace, for reminding us that a successful integration of the CEE and other countries into the European Union will go a long way to ensuring the peace and stability of the European continent in the future. The noble Lord also referred to agriculture, as did the noble Lord, Lord Mackie, with most of whose remarks, as usual, I agree. I also agreed with the noble Baroness, Lady Blackstone, when she referred to the nature of the trade agreements on which my committee reported and to which it will refer again.

It is worth quoting an introductory paragraph to a paper written for a conference on enlargement in Brussels three weeks ago:

    "Agriculture will be the main stumbling block in talks about expanding the European Union to include the Central and Eastern European countries (CEECs). This we already know for sure. In fact, it is the only real certainty in this massive bargaining process, for which neither the exact date nor the form of the changes that it will take are yet known".
This was endorsed by the Select Committee of the noble Lord, Lord Tordoff, in its report on the IGC and again by many speakers in the subsequent debate last December.

The matter was taken on board just over a year ago by the Essen European Council which told the Commission to get on and produce a paper with alternative strategies for CAP reform with a view to future accession by the CEE countries. The resulting paper, under the signature of the agricultural Commissioner, Mr. Fischler, was published just before Christmas. This is not the occasion to debate that strategy document. The noble Lord, Lord Wallace, suggested that the Select Committee on the European Communities should address the subject of enlargement. Sub-committee D is at this time conducting an inquiry into the question of enlargement and CAP reform based on the Fischler paper and we hope to report to the House in the early summer.

Whatever the merits, or otherwise, of the Commission proposals, the important thing is that there is movement within the EU towards CAP reform and the ultimate removal of the great obstacle in the way of enlargement.

At this stage of our inquiry I think I can say that what worries my committee is that the proposed CAP reforms do not go far enough and may not proceed fast enough. On the one hand there are a number of separate pressures for reform. First, the CAP itself, despite the 1992 reforms, remains expensive and inefficient. Secondly, it barely complies with the obligations imposed by the recent GATT round and it will surely be challenged again when the new WTO negotiations

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start in 1999. Thirdly, as the noble Lord, Lord Mackie, mentioned, there are those who see great opportunities in an increasing world demand for food coupled with an increasing ability to pay for it on the part of the developing countries, not least, as the noble Lord reminded us, China. A CAP which continues to restrict output will hardly be an ideal instrument for enabling European farmers to capture these expanding markets in competition with the United States.

Lastly, there is the accession pressure to which I referred. No one who has visited, as I have, some of the CEE countries or who heard, as my committee did last week, the representatives of the Parliament of the Czech Republic can be unaware of the strength of their drive towards accession. But how can they reorganise their agriculture if they do not know what form the CAP will take? As one of the Czech MPs said to us last week: "It is very difficult to aim at a moving target". Those countries are justified in saying that if you are about to join a club you do need first to know the rules.

As a result of all these pressures, there is great urgency to get CAP reform moving. On the other hand, there are political difficulties. The noble Lord, Lord Mackie, referred to these. Within the EU there is reluctance to change the system. There is preference in some member states for inertia and the status quo. I was reminded of that when I attended a conference in Brussels on enlargement earlier this month. That is all the more reason for making an early start, after the IGC, in working out a CAP reform plan that can be adopted by the EU following a period for debate. But that period for debate must not be allowed to drag on. If the EU fails to press forward with CAP reform, then the movement towards a settled, safe, stable and integrated Europe will be put in danger.

4.19 p.m.

Lord Desai: My Lords, I am grateful to my noble colleague, Lord Wallace of Saltaire, for introducing the Motion this afternoon. I am very sceptical as to the desirability of enlargement and its benefits. While everybody has accepted that enlargement will take place--like my noble friend Lady Blackstone I speak merely of the Visegrad countries--even at the slow pace it is proceeding it is perhaps premature. The single market is not yet fully absorbed by the existing members. We notice across the European Union a number of practices which are gross distortions and violations of the single market. Nevertheless we are already embarked on a single currency which is proving a considerable problem. I believe the single currency to be a premature project launched by President Delors for a political purpose. The political purpose was to bind Germany firmly with France into the Union. What he thought Germany would do if it was not so bound I fail to see. However, such are the pressures of the history of 50 years ago that we still panic about imaginary dangers.

As the noble Lord, Lord Kingsland, said, perhaps the only argument for enlargement that one can make is based on the argument that we have to avoid the 1930s somehow happening again. For those political and defence reasons perhaps we ought to have enlargement into eastern Europe. We need not enlarge the Union for

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that. The enlargement of NATO may be sufficient. I do not really see the argument for enlargement. I strongly believe that it is not in the interests of the Visegrad countries, keen though they are to join the European Union. As my noble friend Lady Blackstone emphasised, they are being subjected to very severe conditions which the European Union members are not willing to obey in their own backyard. A considerably greater liberal economic policy than is being followed within the European Union is being imposed upon them as a condition of entry. Indeed, it is very similar to the conditions that in NAFTA Mexico had to satisfy vis-a-vis Canada and the United States. It is always the weak who suffer these conditions and the strong get away with it.

As a number of noble Lords have pointed out, given the structure of the CAP as it is today (it has taken the European Union several years before even starting to tinker with it) it is clear that reform will take much longer than was originally thought. With the Visegrad countries in an unreformed CAP, again as noble Lords have emphasised, the costs are going to be enormous and the whole system could not stand the strain. I think enlargement of the Union was first proposed in the hope, at least of the British Government, that it would dilute the federalist programme. The one hope one had in a sense was that enlargement was an expansion of the single market programme rather than of a federal programme.

My expectation is that if we are going to have 20, 25, 27 countries in the Union, qualified majority voting will have to play a much bigger role. As the noble Lord, Lord Tordoff, pointed out, the arrangements which were set up for the six or the 12, or even the 15, that is, the Commissioners, the Council, the presidency, will not be feasible for the 27. When you get to the 27 you have to think really seriously in terms of a federation. There is no other way to run a union of 27 countries. You will have much more harmonising, much more uniformity, much more fiscal federalism for the sheer reason that there will be 15 poor countries out of 27 compared to four or five right now.

A very serious examination of the subject has to be made now, given the difficulties the European Union is having already surrounding the IGC. Even to maintain the 15 in a proper union which has any depth is proving difficult. My fear is that we are embarking on an enlargement programme without sufficient thought as to what sort of Europe at the end is actually envisaged. There have always been two very different sorts of ideals clashing within the European Union. One is the ideal of a single market area which arose from the customs union of Belgium, the Netherlands and Luxembourg. It is all part of the German idea where you have free trade within a large area, free movement of practice and goods, but tariffs against foreigners. That single market idea could be extended. However, another idea, which grew out of the Coal and Steel Community, is a Europe of harmonisation, a Europe of cartelisation, a dirigiste Europe.

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On the Continent people are perfectly happy with these two conflicting Europes. Indeed, some of the reservations that Britain has had about the European Union arise from the fact that the Government like the single-market Europe but are not quite happy with the other Europe. I do believe that the tension will continue, exacerbated by the entry of another 12 countries which are economically uneven relative to the existing members.

All the institutions of the Union--the Parliament, the Commission, the presidency and the Council--will not stand the strain of enlargement. Unless radical thought is given to that question, we are embarking on a foolish adventure. My fear is that, given the way we make decisions in Europe, we do not have the machinery for any radical overhaul, especially on the common agricultural policy. I do not see how French politics could stand a radical overhaul of the common agricultural policy, given all the other difficulties France has. I do not want to labour the point but I want to add a sceptical note to the desirability of what is proposed. I believe that the Visegrad countries would do better to adopt a much more liberal regime in their own back yard rather than get into a protective European Union.

4.28 p.m.

Lord Weidenfeld: My Lords, I should like to deal with the four Visegrad states: Poland, Hungary, the Czech Republic and Slovakia, and--unbundling her from the wider list--the Republic of Slovenia. I should also like to focus on the first of the three main criteria, that which encompasses the stability of institutions, democracy, the rule of law, human rights and the protection of minorities.

Before appraising the current state of affairs in those countries we owe ourselves a reminder of our debt that has to be settled--a moral and historical debt. Czechoslovakia was the first victim of undisputed Hitlerite aggression, abandoned to Germany and later allowed to be repressed by the Soviet Union. Poland was an ally that afterwards also fell prey to the same power. Hungary, although ensnared into the Axis camp by geography and lingering resentments stemming from the Paris peace treaties after the First World War, redeemed herself by the heroic revolution in 1956. Indeed the Hungarian Government's lifting of the frontier barriers with Austria, enabling East German refugees to flee to the West, started the stampede which culminated in the crumbling of the Berlin Wall.

The Czech Republic has gone a long way towards building a civil society. Far-reaching privatisation and deregulation have boosted the Czech economy to the point where it can confidently look to meeting all criteria. A humanist President, a fiercely free-marketeering Prime Minister and an independent press have shown how this great people, with its thousand year-old history, punctuated and accented by not one but three golden ages, can shape its destiny if given a measure of freedom. There is no serious minority problem in the Czech Republic except a current chill between Prague and Bonn regarding the delicate question of compensations and moral reparations centring on the former Sudetenland.

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While nobody denies the grave injustice done to the Czechs during the war, it must also be recognised that the expulsion of Sudeten Germans after the war was accompanied by violations of human rights. The Czechs are wary about mounting claims for restitution. But it is a psychological more than a material problem. The surviving Sudeten Germans, the descendants of the Sudeten Germans, do not have restitution claims in terms of wanting to have back their land. More than anything else, they want the moral recognition that they also have suffered injustice.

We know that there have been very decent, Christian Conservatives, Liberals and Socialists who were among the expellees. Manfully, President Havel tendered a public apology, which, as it turned out, was ahead of the mood of public opinion. The German Government are now well aware of that impasse, but there is an iron determination in Bonn to reach a compromise ahead of formal negotiations.

In contrast, relations between Germany and Poland, involving the status of nearly 1 million Germans in Poland, are very healthy and most satisfactory. It is one of Chancellor Kohl's achievements to have made that relationship a pivotal part of German foreign policy. The German political class, media and think tanks are now musing about the "Republic of Berlin" which will replace the era of Bonn. What will be its future meaning, its ethos and its philosophical leitmotif? Bonn is on the Rhine and anchored in the West; Berlin is a 50-minute taxi ride away from the Polish frontier. Should the capital of Europe's largest state become the eastern bordertown of western Europe? The 39 million Poles, who are western in outlook, Catholic and European to the last degree, must not be allowed to remain isolated. Polish democracy is robust, litigious and rough but functioning.

When people talk of a communist revival in Poland and other lands between the Baltic and the Black Sea, they are only partly right. In the fluid East European scene today, there is much terminological confusion. Labels do not necessarily mean what they say. All those countries, having chosen the path of "velvet revolution"--that is to say, having eschewed bloodshed and massive top-to-bottom bureaucratic change--have retained many apparatchiks who know how to manipulate power. Some, in fact, are indispensable and difficult to replace; they know where the problems lie. But, at the same time, we must be quite confident. New leaderships are emerging. Some purists may be less than satisfied with the pace of reform, but the process of transition is inevitably marred by compromise and abuse. Yet somehow the system functions.

I was very pleased to hear from the noble Lord, Lord Kingsland, about the primacy of the rule of law. In those countries we must achieve a threshold of human rights observance and a modicum of civil society rather than the minutiae of institutional change or parliamentary government which would clone the parliaments of Britain and France.

Hungary seemed destined to be the front runner in the transition to democracy, having benefited from the mildest form of communist dictatorship in the 1980s. But

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after the initial upswing, both democratic politics and economics seemed to stagnate and some of the demons of chauvinism have resurfaced. Many Hungarians gaze anxiously at the still far from happy fate of the Hungarian minorities in Romania and Slovakia.

It is just that spectre of ethnic feuds and disgruntled minorities which makes the inclusion of the central European states into Europe so vitally urgent and important. Only through the European Union can those demons be exorcised. Exclusion from Europe would exacerbate conflicts, which could reach a scale approximating what we have seen in former Yugoslavia. Such tensions could explode into war. That, indeed, was the deeper meaning in Helmut Kohl's remarks in his recent speech at Louvain, which, incidentally, has been misinterpreted and quoted out of context by some of our tabloids and broadsheets and turned into a kind of apocalyptic and menacing prophecy of doom.

If Poland, Hungary and the Czech Republic deserve our unambiguous support, Slovakia's political scene must give us pause to reflect. The Slovaks' decision to separate from the Czechs has brought them face to face with massive economic problems and thrown into relief the issue of the Hungarian minority. An authoritarian party is in government. It rides roughshod over human rights and the freedom of press and television. There is a courageous democratic opposition which needs our support. The strategic importance of Slovakia, which borders on the former Soviet Union and is liable to KGB penetration, must be of concern. However, I believe that the Slovaks' firm desire for integration into Europe will mitigate the current political danger, but not without a very firm line from the European Union, including Her Majesty's Government.

There remains Slovenia. I am very glad that the noble Baroness, Lady Blackstone, singled out Slovenia. It is that part of former Yugoslavia which is ethnically homogeneous--an educated, civilised people decidedly prepared to meet the European criteria in the near future. Whereas there are still disputes with Austria, which has a tiny Slovene minority, there is a lingering and serious feud with Italy--shades of Marshal Tito's territorial expansion in and around the Adriatic littoral.

On the one hand, we must remember Slovenia's suffering in the last war; but, on the other hand, we must not dismiss Italian claims as flamboyant reassertions of Gabriele d'Annunzio's posturing claims on the eve of the fascist march on Rome. A compromise is necessary and we should help to broker it. There are grounds for optimism. There is much commonality of interest and shared culture between Slovenes, Austrians and Italians. Some time at the height of the cold war I had occasion to attend several meetings of writers, teachers and young politicians in a forum called Alpe-Adria, where Austrians, Slovenes and Italians shared constructively hopes for a peaceful trilateral future.

President Havel once said:

    "There can be no real peace in Europe if there is turmoil and turbulence in any one of its parts".
Those five countries are not in a far corner of the continent. Their problems have a way of besetting us on our very doorstep and far-sighted governments must

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purposefully enlighten and carry public opinion, however sluggish, with them. That is the real test of leadership. That is the greater part of a European vision.

4.36 p.m.

Lord Lester of Herne Hill: My Lords, I congratulate my noble friend Lord Wallace of Saltaire on having chosen a topical and crucially important subject for debate. For reasons just expressed by the noble Lord, Lord Weidenfeld, it would be churlish for anyone to speak in opposition to greater enlargement, especially enlargement which involves the Czech Republic, Hungary and any country which can satisfy the crucial criteria referred to. But in my remarks, without in any way withdrawing what I have just said, I shall emphasise some of the dangers. In a sense, everything that I am about to say builds on the remarkably effective speech made by the noble Lord, Lord Kingsland, with whom I entirely agree, and his emphasis on the importance of the European rule of law and the need for effective European judicial remedies.

The White Paper published yesterday rightly states:

    "Enlargement poses formidable challenges not only for the applicants, who must be ready and able to take on the obligations of membership, but for the existing European Union which must adapt its structures and its policies".
That is a masterly example of English understatement, even by White Paper standards.

But the White Paper wholly fails to tell us exactly what changes in the Union's structures and policies are necessary if further extensive enlargement is not to result in a serious undermining of the Union and its institutions and the rule of law. The White Paper avoids facing the fundamental questions affecting the very future of the Union. I have read the document twice and can find no enlightenment on those questions.

I do not find encouraging the reference in paragraph 8 of the White Paper to what are called "a degree of flexibility" and "variable geometry", if that means that enlargement involves a variable geometry in the practice of parliamentary principles or in the demonstration of respect for human rights among the applicant states. I mention those because they are the key criteria to which the Select Committee on the European Communities attached great importance in its impressive report in 1992 on the enlargement of the Community. I hope that the Minister in his reply will make clear that that Delphic remark in the White Paper is not meant to signal some retreat from those parliamentary principles or that demonstration of respect for human rights in the applicant states as conditions required for membership of the Union. I do not believe that that represents the kind of excessive respect for purity--or purism--about which the noble Lord, Lord Weidenfeld, spoke.

A key indicator of the demonstration of this respect for human rights is the capacity and readiness of the applicant states to secure the effective implementation in their national systems of the duties imposed on the states by membership of the European Convention on Human Rights. Indeed, as the White Paper says, the European Union is now bound to respect the European Convention on Human Rights.

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I wholly agree with the noble Lord, Lord Kingsland, regarding the fundamental importance of the European rule of law. It is a measure of the remarkable success of the jewel in the crown of the Council of Europe-- the European human rights convention system--that 31 member states are now bound by that convention. They accepted the right of everyone in their countries to go to the European Commission and Court of Human Rights. But rapid enlargement of the Council of Europe and the convention system is now threatening the viability of that system in a dramatic and grim way. I am sorry if I sound like Cassandra; I hope that, unlike Cassandra, I shall be proved wrong.

The first step for a member state of the European Union is to become a member of the Council of Europe. It is therefore instructive to see what is happening within the Council of Europe. The European Commission and Court of Human Rights are now choking on a completely hopeless backlog and caseload, working in two languages but in truth with 18 different languages with complaints that will be coming from already 31 states to what is already 31 European judges from very different backgrounds. It already takes six years for the European Court to cope with the backlog; many cases will have taken six years even to reach the court in the first place from the national system. That makes 12 years altogether. That is a denial of justice in itself, without any further enlargement.

The convention was conceived when there were only 10 member states, just as the European Community was conceived when there were only six. A conservative forecast, based on present experience, suggests that the number of cases coming before the European Court of Human Rights will soon double. We will have a full-time, permanent Court of Human Rights with 35 to 40 judges sitting full-time in five chambers of seven judges apiece. Imagine that; imagine the kind of overload and stress that that will place on the system.

Enlargement within the Council of Europe will be quite terrible when the Russian Federation is admitted to the system. It will be the last straw that will break the camel's back. I disagree with my noble friend Lord Mackie of Benshie regarding the consequences of the decision that was taken by the parliamentary assembly to recommend admission. Frankly, I am not at all encouraged by the answers given by the Government to questions I raised about the consequences of that rapid enlargement. Essentially, to sum up the position, I was told that the Government do not accept the view of the parliamentary assembly that objective criteria are to be maintained and enforced. There are to be no new resources for the consequences of accepting Russia's admission to the federation. I do not believe that Russia now respects the rule of law, or is likely to in the foreseeable future, in a way which makes it probable that it will comply with the convention.

I mention that example because, although Herr Kohl may believe--I think he does--that it was sensible to let Russia in under President Yeltsin's ultimatum (for that is what it was), I do not believe that we in this country should be pleased about it. In short, enlargement and further enlargement are a noble aspiration. But it threatens the European Union in its

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present form and, as we said in the report of the IGC sub-committee of my noble friend Lord Tordoff, to which I was privileged to belong:

    "A major objective of the IGC must be to make such changes as are necessary to allow the Union to function more effectively and efficiently. This will be even more important in the perspective of an enlargement, which is now the driving force in the European Union's forward planning".

Without those changes--and they are profound-- I fear that the European institutions, including the two European Courts, will become Towers of Babel, in danger of collapsing under the weight of top-heavy, uncoordinated judicial and administrative bureaucracies. I believe that the European institution as a whole, without the necessary reforms, will be paralysed by outmoded, rigid and inefficient procedures designed for a much smaller and more cohesive European Community. I do not believe that the Government have yet responded to the challenge of those problems. It is better that they do so now, rather than when it is too late--after we get closer to real greater enlargement.

4.45 p.m.

Lord Grenfell: My Lords, I am grateful to the noble Lord, Lord Wallace of Saltaire, for giving us the opportunity to air some views on this important subject. I look forward to the eventual accession of Cyprus and Malta to the European Union and declare my absolute conviction that the eventual incorporation of the 10 countries of east and central Europe is a geopolitical imperative. I should like to talk about the applications of those countries.

I take as my starting point an interesting first leader in The Times of Monday, 11th March, which commented on the remarkable speech made by the noble Baroness, Lady Thatcher, in Fulton, Missouri. I have not seen the verbatim text, and I must rely on The Times to reflect accurately the thrust of the noble Baroness's remarks. One passage which very much caught my eye stated:

    "She is right to turn on the European Union for neglecting 'an almost explicit duty laid down by history': the speedy incorporation of the new democracies of Central Europe. She asks why, instead, 'every obstacle' has been put in their way and absurd quotas imposed against their exports. She is right to point to the resulting political costs in these fragile democracies as post-Communists profit from the perceived rebuff by Western Europe".

It is extremely important that we try to understand why our future European partners, as I hope they will be, in the European Community in east and central Europe are turning to the successor parties to the old communist parties. With respect to the noble Baroness, Lady Thatcher, in my view it has precious little to do with any perceived rebuffs by any European Union members. If we misunderstand or ignore what is really happening in that region, we will be ill placed to help them prepare for entry into the European Union.

I want first to try to dispose of the myth about the European Union driving east and central European countries back into the arms of the old communists under new names; that from Riga to Sofia the clocks are being turned back to the bad old days. We must not

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confuse what is happening in some parts of the former Soviet Union successor states with what is happening in east and central Europe and the Baltic States.

Only two weeks ago the Economist based an article on the "New Democracies Barometer No. IV"--an opinion poll carried out by the much respected Paul Lazarsfeld Society of Vienna. That poll showed that in six former Warsaw Pact countries plus Slovenia, only 16 per cent. of the population are nostalgic for the old days. In Poland, which has just elected an ex-communist president, only 8 per cent. of the population want to return to the communist economic and political system. Five years ago only one-third of East and Central Europeans were positive about the transition. Today nearly two-thirds are happy with the progress already made and do not want to turn back. In the Czech Republic and Poland the numbers holding positive views have shot up in five years from a quarter to over three-quarters of the population. And what bodes particularly well for the future is that, right across the region, it is the under-30s who are the most positive of all.

How then do we explain the fact that in recent times Bulgaria, Estonia, Hungary, Poland, Slovakia and Slovenia have all elected the descendants of the old communist parties? It certainly has nothing to do with perceived rebuffs by the European Union. The most common conclusion jumped to by outside observers is that the reforms were just too painful and that people therefore wanted to take refuge in the old certainties--jobs for life, universal pensions, generous disability systems, guaranteed healthcare, vacations, housing and in fact all the lavish entitlements that eventually bankrupted the communist system.

There has to be some other reason why the old Left is being voted back despite the fact that people do not want a return to totalitarian rule. For a start, the people obviously do not believe that the post-communist Left want to turn the clock back and reverse the drive to a market economy. I am sure that the noble Lord, Lord Weidenfeld, will agree with that.

Everyone knows that the reforms have been extraordinarily painful. Post-communist governments were sailing in wholly uncharted waters. Hundreds of books had been written about how to turn a capitalist society into a totalitarian society and a centrally planned economy, but there had been no books written about how to do it the other way around. I remember a Polish politician telling me that the process was rather like trying to turn a bouillabaisse back into an aquarium. The initial shock was tremendous.

In December 1989, Warsaw's main unemployment office handed out benefits to just five people. A year later 1 million Poles were unemployed and three years later 3 million Poles were unemployed. Across the region everyone was discovering the cost of transition paid in more poverty, higher child mortality and crime rates and precipitous declines in output. But they went ahead. Now, across the region, as some noble Lords have already pointed out, positive rates of growth are being achieved, and the process is being helped by the end of recession in the industrialised countries and

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the subsequent recovery of western European import demand. And that, taken together with the implementation of the Association Agreements, is adding 8 to 10 per cent. to eastern and central Europe's export growth. A look at household consumption patterns shows that living standards for the majority have not dropped, and consumer durables not available under the old regimes are now being snapped up.

Most significantly of all, social spending has not only remained an unusually high proportion of GDP, it has actually been rising. Social spending budgets are somewhere between 15 and 30 per cent. of GDP. In East Asia, countries at similar income levels average between 5 and 10 per cent.

Herein lies a key part of the answer to the question: why are the ex-communists coming back? Well, they have learnt something important about democracy: that if you promise enough you improve your chances of getting elected--something that they did not have to worry about before. And these ex-communist parties are seen as the parties most likely to retain or increase social welfare entitlements while at the same time embracing the market economy.

The lesson of this is clear. Many of these countries are building up dangerous deficits and will have to halt the growing fiscal crisis in its tracks by reducing the volume of social spending to a more realistic share of GDP. Because of low population growth rates, the region's population is relatively old, which means high state pension costs. Moreover, older workers are having more trouble adjusting to transition, so early retirement is now widespread. With such a large proportion of the adult population on pensions, the cost has to be met out of a huge payroll tax, among the highest in the world, which is hardly helpful to the development of the market economy.

Countries in permanent fiscal crises of this magnitude would be hard put to make themselves ready very quickly for entry into the European Union. Social welfare reform is essential, just as it is essential in many countries that are already members of the Union. It is not easy and, as Jeffrey Sachs of Harvard has said and warned,

    "almost no country in the world has been able to roll back long-established entitlements".
But it has to be done. Only six weeks ago, Hungary lost its brilliant young Finance Minister, Lajos Bokros, who resigned because he was fed up with the bickering over his planned welfare overhaul.

European Union members have an interest and a duty to help these countries prepare for eventual membership, as my noble friend Lady Blackstone has said. They are not, and will not be, starved of advice. There are limits to their capacity to absorb large capital transfers. But what they do need is even better access to EU markets than they have at present. I cannot quarrel with the argument in the Fulton speech of the noble Baroness, Lady Thatcher, on that one.

The problems that have to be solved are not insuperable, and we can help to resolve them. But at the same time there must be moves towards some further liberalisation by the European Union in trade and export sectors vital to the interests of these countries.

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I conclude with a plea for particular understanding and patience on all sides in this enlargement argument. The Union must first get its own house in order, and quickly. Applicant countries have little to gain from joining a watered down Community that is little more than a free trade area, vital though trade in them is. The enlargement must proceed, but at a pace that permits time to create the best possible conditions both in the European Union and in the applicant countries. The ultimate goal is set. Its achievement must not be jeopardised by unreasonably rushing the process and its worth must not be devalued by a failure to reform the Union itself in anticipation of enlargement. On that, time is not on our side.

4.55 p.m.

Baroness Rawlings: My Lords, I, too, would like to thank the noble Lord, Lord Wallace of Saltaire, for initiating this debate, especially prior to the one that we shall no doubt be having on the White Paper.

A few years before the Berlin Wall came down in 1989, before eastern and central Europe had refound its freedom and democracy, that part of Europe was often referred to as the "forgotten Europe". Happily, in the light of those events, that has been swiftly remedied.

Now we are in a fragile period when these fledgling democracies have passed through the first excitement of freedom. The dream has come true, as have also the hard facts of reality, as we have heard so well described by the noble Lord, Lord Grenfell. We have witnessed the difficulties and strains on the FDR with the unification of Germany and the immense burden of costs and social strains on the government and the people.

Enlargement of the European Union, as we have heard, is not only eastwards but also southwards, including the Mediterranean applicants. This will involve much larger and even more complex problems.

Article 237 of the Treaty of Rome and Article O of the Maastricht Treaty states:

    "any European State may apply to become a member".
The term "European" has not been officially defined. It combines geographical, historical and cultural elements which all contribute to the European identity. The shared experience of proximity, ideas, values and historical interaction cannot be condensed into a simple formula and is subject to review by each succeeding generation.

Other essential characteristics of the Union, referred to in Article F of the Maastricht Treaty, are the principles of democracy and the respect of fundamental human rights. A state which applies for membership must therefore satisfy the three basic conditions of European identity, democratic status and respect of human rights. That is only the start.

At this late stage in the debate I would like to touch on just two points. Enlargement of the European Union is vitally important if the Union is to continue to act as a force for peace and prosperity in Europe and the world. Enlarging the European Union to the east will enhance the security and prosperity of all the peoples of Europe.

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It will help to bring about the changes that we have witnessed in the past five years and will bring benefits to Europe as a whole and to Britain in particular.

I turn now to security. The European Union will not be secure if there is uncertainty beyond its borders in central and eastern Europe. Stability in central Europe is necessary if there is to be stability in the whole continent. The prosperity of the applicant countries will not only benefit them but the whole of the European Union. As regards our shared values, the central and eastern European nations and the Mediterranean ones that have applied are not just our geographic and economic neighbours; they also share thousands of years of history and culture. The European Union cannot ignore this common cultural heritage.

The timescale for enlargement of the European Union, which is the essence of this debate, cannot be glossed over just for romantic reasons. We might like to double the single market tomorrow, but it would be totally useless if it did not work--hence the two important points made so eloquently by my noble friend Lord Kingsland about security and the rule of law.

Since the Maastricht Summit of 11th December 1991, it has been clear that the European Community is going to be enlarged. The Heads of State have taken that decision of general principle. There are three open questions to be answered. First, which European countries is the Community willing to accept and when should future enlargements take place? Secondly, what are the adequate terms and conditions for future enlargements for both the Community and for possible new member states? Thirdly, and more specifically, what are the necessary institutional reforms? We have heard some suggestions from the noble Lord, Lord Tordoff. All three questions are interlinked with each other. Obviously, the more countries the European Union is willing to accept and the shorter the time for preparation, the more urgent is the need for reform.

When I was in the European Parliament, I took the Europe Agreements with Bulgaria through the Parliament. The Europe Agreements are important stepping stones, but they are not totally satisfactory, as we heard from the noble Lord, Lord Mackie of Benshie. For most of the countries that suffered all those years under the communist yoke and a command economy, the European Union, despite all its problems and faults, is a light at the end of the tunnel.

I hope that over the next few years the governments of the European Union countries will come to positive decisions to assist what now, thank goodness, is no longer the "forgotten Europe".

5.1 p.m.

Lord Kennet: My Lords, we are having a very good debate and, like other noble Lords, I should like to start by thanking the noble Lord, Lord Wallace of Saltaire, for introducing it so admirably. We heard an outstanding speech from the noble Lord, Lord Kingsland, with whom I differ on only one point in his splendid exegesis of security and the rule of law. I remind him that the aggression of Hitler was against sovereign states, his

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neighbours, whereas the aggression in Bosnia has been of the nature of a civil war within one country, which perhaps we should never have created or rather permitted Germany to create. That speech was followed by a most judicious round-up of considerations by my noble friend Lady Blackstone.

Alongside the widening of the European Union, which we are debating, we have to remember two other aspects. I refer to its deepening, and to relationships with surrounding organisations. Europe is now planted thick with organisations. Deepening was the subject of yesterday's interesting White Paper, and is not a matter for today. So much has been said about widening that there is very little more to say.

The widening of the European Union must be considered alongside the widening, if any, of other organisations such as the Council of Europe, NATO, the Western European Union and the OSCE. When considering the position of Russia in all this, it is obvious that the one thing that must not be done is to widen NATO up to its borders against its will. That would simply be flying in the face of history, and of all chances of peace and harmony in Europe for as far as the eye can see. The existence of Russia provides a natural frontier to the east for the European Community. Russia would not fit into the European Community, not because it is very large and was until recently communist, but because of its continuing nature as an empire. Its wars--its imperial wars; its internal wars--would become European Union wars if Russia were within the Union. I do not think that the European Union is equipped to have any opinion, let alone to take any action, on such a phenomenon in the future, as we have seen in Chechnya. It is true that Britain and France are still empires--that is, we still have overseas possessions, but they are so tiny that the parallel is not of any interest.

How far could the expansion of the European Union go? In the long run, supposing we agree that to the east it should not go as far as to include Russia, there are plenty of countries to the south--I refer to Tunisia, Algeria and Morocco--in which, although I do not say that they are thinking about it, people's voices are raised to say that the only way out of their present difficulties is a kind of Gleichshaltung with Christian Europe, but that is difficult to imagine. Indeed, I imagine that most European countries would instinctively reject that-- at any rate, for the moment. So, there is a reasonably, historically, ethnically and even religiously defined frontier all around the Europe that we plan to build in the European Union.

What about future relations between the European Union and the Western European Union? At the moment when we are deepening the European Union and intensifying its functions, and when we are enlarging it, can we sensibly go forward without taking a rather more reasoned and formal decision on the general security functions of the European Union and the military security functions of the Western European Union? I believe that that requires more thought. I do not know the answer, but at present there is a general tendency to say, "They are quite different, aren't they? Never must the military touch the civilian fabric of the European Union, and never

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must the unifying function of the European Union touch the Western European Union". I doubt whether that distinction can be maintained for ever.

I should like to say a final word about the other enlargement--that is, the enlargement of NATO. I had the pleasure about a year ago of meeting the Member of Parliament for Kaliningrad in Russia. Kaliningrad is completely separate from the main body of Russia. That democratically elected parliamentarian had to cross Polish territory each Monday to get back to Moscow to do his work in the Parliament. His views on the possibility of having to cross the territory of an historically hostile military alliance, if we were to include Poland in NATO, naturally enough scarcely bear repetition. We should make a firm resolution that NATO stops short of Poland, and that Poland and the other countries that we are talking about come into the European Union as quickly as possible. "Get 'em in and sort it out afterwards", is the reasonable position.

5.8 p.m.

Lord Taverne: My Lords, one of the pleasures in being a Member of this institution is to discover the expertise and breadth of knowledge that are brought to bear in your Lordships' debates. That has struck me particularly during this debate. We are all grateful to the noble Lord, Lord Wallace of Saltaire, for raising the subject. He pointed out the historic importance of the step of enlargement and what fundamental and profound changes it will have to bring about in the European Union itself.

Several noble Lords have said that enlargement is inevitable. I am not sure that I necessarily share that view or that I feel that enlargement is inevitable within a reasonable timescale because of the fundamental changes that will be required. It is clear that some states are not yet necessarily prepared to face up to those changes.

As was pointed out by several speakers, notably the noble Lords, Lord Middleton and Lord Mackie of Benshie, there have to be profound changes in the common agricultural policy; otherwise enlargement will not be feasible. Yet Germany and France have not yet faced up to that.

There will have to be a move towards making the Union's institutions more and not less effective. In his speech, to which I listened with particular respect, the noble Lord, Lord Kingsland, pointed out that the ECJ would desperately need strengthening. My noble friend Lord Lester also pointed out that as enlarged, the EU must be founded on the rule of law. There are other institutions which need to be strengthened, not weakened. My noble friend Lord Tordoff referred to the need to look again at the whole composition and functioning of the Commission. The Commission's role will become more, not less, important in an enlarged Community. It needs to be strengthened, not weakened.

One of my regrets about the Government's White Paper is that, far from recognising the need to strengthen the Union's institutions if they are to achieve their aim of enlargement, they take a rather opposite view. The point I wish to stress especially is

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the role of qualified majority voting. The Government must realise that they cannot have enlargement without some extension of QMV.

First, the Union cannot function efficiently if it is to be a union of 27 states and every state has a veto. Malta is one of the states which may soon become a member of the Union. Malta, with its population of 400,000, will have 0.1 per cent. of the population of the Union. It is neither efficient nor democratic for Malta to have a veto on so many of the issues where the veto still applies. The Union will be unable to function if every state has a veto. That is a fact that must be recognised. It is not necessarily likely that each country will exercise its veto, but we cannot rule out that vetoes will be exercised capriciously by some states. We have seen that in the past when Greece, for reasons of Balkan politics, vetoed a complaint to the Soviet Union over the shooting down of the Korean airliner. Greece prevented a more constructive relationship being developed with the former Yugoslavian state of Macedonia, again by the use of its veto.

Secondly, not only will it not work, it must be recognised that we will not have enlargement if there is not some extension of QMV, because our partners will not persist in pushing for enlargement if it would mean the seizing up of the machinery of the Union.

A third aspect which is disturbing about the Government's total opposition, as it seems from the White Paper, to any extension of QMV is that it is, in fact, a self-inflicted injury, because we have benefited greatly from QMV. Enormous progress has been made in the near realisation of the single market, and that has been possible only because of QMV. The reason why Europe is such a magnet to the states which wish to become members of the EU is the success of the single market programme.

Without QMV we would not have had the abolition of exchange controls and the extension of free trade in the Uruguay Round. We have benefited in all sorts of ways from the extension of the single market to various financial services such as life insurance. That would not have happened without QMV. As has been stressed by a number of noble Lords, for enlargement it is essential for there to be a major reform of the CAP. That cannot happen without QMV.

I should like to say some words in praise of the noble Baroness, Lady Thatcher. By signing the Single European Act, her government enabled the largest extension of QMV to take place in the Union's history. Before the Single European Act took effect many of the provisions of the Treaty of Rome were frustrated. At one stage the noble Baroness was the leader of a government who enabled QMV to be greatly extended. It is true that she later modified her views somewhat, but then one must allow people to change their views and one must understand that the lady was prepared to go in for some turning.

Unfortunately that turning was to a stance which was contrary to British interests. If the total opposition to QMV is persisted in, enlargement will not take place. If we are to achieve what we wish to achieve--if many of the points made during the debate are to be taken into

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account--the Government's attitude must be flexible and pragmatic. They must recognise that the enlargement, which is desirable for the reasons so many noble Lords have advanced, will not be possible if the machinery and institutions of the EU are not made more rather than less efficient. It is wholly inconsistent to support enlargement but not to support the fundamental changes in the Community which can be achieved only by an extension of QMV.

5.16 p.m.

The Parliamentary Under-Secretary of State, Department of National Heritage (Lord Inglewood): My Lords, we have had a useful debate. The whole House owes a debt of gratitude and thanks to the noble Lord, Lord Wallace of Saltaire, for giving us the opportunity to debate this subject. Of course we have had differences of view, but I am heartened that the majority of your Lordships agrees with the Government on the importance of enlarging the EU and recognises that it is the essential element running through the forthcoming IGC debate.

Enlargement of the EU is an opportunity to heal the wounds of a continent artificially severed for far too long. It will extend to our eastern European neighbours the lasting peace and prosperity which we in western Europe have enjoyed to our collective benefit for 50 years. It therefore follows that the construction of a wider EU, encompassing the whole of Europe, is more than a mere technical enlargement of a unique political organisation. It is a development full of historic resonance. It is a step, not just in the interests of our neighbours but in the interests of the existing EU, the interests of Britain, and, we believe, in the interests of the wider world.

Enlargement will bring a range of benefits, some obvious, some less so. It has increased trade with and investment in the countries of central and eastern Europe and will do more. We are already seeing the results of that. British exports to the Visegrad Four countries trebled between 1989 and 1994. Enlargement will increase the weight of the EU's political voice in the world, and add to it the special insights of countries formerly within the command economy system and the Warsaw Pact. It will help achieve better co-operation in the fight against the growing menace of drugs and international crime. It will bring higher environmental standards in the countries of central and eastern Europe, helping to combat trans-border and global pollution. It will make nationalist wars as unthinkable in eastern Europe as they are in the West. As the noble Lord, Lord Weidenfeld, put it, we must exorcise those demons. My noble friend Lord Kingsland made, as a number of noble Lords have pointed out, a memorable speech. To those of us who were fortunate enough to serve in the European Parliament it will have come as no surprise. He was right to focus on the importance of a common foreign and security policy in that area.

As has already been mentioned, the White Paper on the IGC will be debated by your Lordships on another occasion. I hope that I may be forgiven for quoting the final paragraph of Annex D to that White Paper, which

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is the memorandum on the UK Government's approach to the treatment of European defence issues at the 1996 IGC. Paragraph 34 of the summary reads:

    "The United Kingdom's objective will be to promote the concept of an outward looking Europe, able to promote stability within Europe and wider afield, and shouldering its fair share of the burden with the United States and others for promoting the conditions of international peace and stability within which European nations can best pursue their interests and well-being. That burden should also be shared equitably amongst European Member States. This Memorandum has set out our proposals for the adoption of a task-based approach to the development of a European defence policy to achieve that objective, and the implications for institutional structures and the development of the WEU's capabilities. We shall now take these proposals forward with our partners".
On this occasion, I hope that I am permitted to leave that part of our debate at that point.

We have already moved down the road towards a continent at one with itself. In response to the questions asked by the noble Lord, Lord Lester, about the reference to flexibility in paragraph 8 of the White Paper, I emphasise that the use of the word "flexibility" does not refer to what I might describe as the Copenhagen or Madrid criteria. I hope that that is absolutely clear.

As has been mentioned, nine countries have Europe Agreements, designed to lead towards European Union membership. The noble Baroness, Lady Blackstone, and others, referred specifically to Slovenia. We hope that Slovenia will soon be able to resolve its bilateral property dispute with Italy and sign its association agreement, which has already been initialled. We are encouraging both sides to resolve their differences and as strong supporters of enlargement we do not want to see Slovenia fall behind when the Commission begins serious work on its opinions of the central European applicants.

Those countries which have Europe Agreements find that almost all their exports to the Union enter duty free. The last restrictions on their textile exports will be removed next year. We are heading towards full cumulation of rules of origin across the Continent which will reduce the constraints on goods being processed in more than one country, encouraging regional co-operation and helping the central European countries to export more to our markets.

Of course, there is much more to do, as was said by a number of noble Lords not least my noble friend Lord Middleton and the noble Lord, Lord Mackie of Benshie. Agricultural trade remains an outstanding problem. All but Hungary have a food trade deficit with the European Union. Even in the case of Hungary, the balance of trade has shifted significantly in the Union's favour. Yet these countries have a comparative advantage in agriculture. That situation is impossible to justify either to consumers here or to producers in central Europe. We will continue strongly to support moves to improve market access for agricultural goods from central Europe. That is the way to help the applicant countries to restructure and rebuild their economies. Not only is that a problem but, as was pointed out by the noble Lord, Lord Grenfell, social welfare reform must be tackled head-on. Protectionism is not the answer. History shows us that all too clearly.

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The central European countries are working hard to prepare for membership. They are adapting their laws or adopting new ones, in particular for joining the single market. They have a shared goal of long-term economic and monetary stability. They are continuing along the democratic path. We do not under-estimate the task of consolidating lasting change. Reform will not proceed at the same pace in every one of the applicant countries and some countries are likely to be ready before others. That is natural and we must take account of it as negotiations begin.

In this context, it is important to be clear that the European Union has been taking steps to assist those potential member countries with their economic development. The Essen European Council of December 1994 adopted a strategy to prepare associates for membership. The Commission's White Paper on integrating the central European countries into the internal market is a vital part of that strategy. It supports their practical preparations for membership by helping them to align national law to European Union law and to create the conditions for the internal market to function properly after enlargement.

It is a comprehensive and detailed presentation of the internal market, identifying key measures for the freedom of movement of goods, services, capital and people. It suggests a sequence for implementing them and describes the structures necessary to enforce legislation. It does not suggest priorities--that is for each associate to decide--nor does it form part of accession negotiations or anticipate any transitional arrangements.

Most of the central European countries now have plans for approximating their internal market laws to those of the European Union. They are establishing national co-ordinating machinery and planning how to use assistance from the Commission and member states to make their legislation work effectively. It will be a complex task for the associates and requires considerable technical assistance. We shall pay attention to progress with the implementation and enforcement of single-market rules.

As your Lordships know, we are assisting both as a member of the European Union through the PHARE programme, and also bilaterally through the know-how fund, to assist these countries in implementing these very necessary steps. As yet, the Union has not taken a decision on which central European countries will negotiate for accession and when exactly that might be. That decision will depend crucially on the readiness of the candidates for membership. It would create real difficulties both for the candidates and the countries in the European Union if they entered the Union before they had developed the full range of effective institutions essential to economic life in the European Union. That reflects the thinking of the Copenhagen and Madrid criteria.

The decision to begin negotiations will also depend on the opinions which the Commission is set to deliver as soon as possible after the IGC. It would be wrong to prejudge that decision, especially now as the candidates' preparations are in full flow. But at Madrid the

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European Union leaders expressed their hope that the initial phase for the first negotiations should begin alongside the opening of negotiations with Cyprus and Malta, to which reference has been made in the debate. We expect that at least some central European countries will be ready to negotiate then. We are keen that they should do so and very much look forward to it.

I have mentioned the need for thorough preparation. One of our tasks is to help the central European countries with that process and to do so as speedily as we can. We will continue to support their progress through the European Union's PHARE programme and through our own bilateral know-how fund.

The other vital task is one for the European Union itself; to put in place institutions and policies fit for an enlarged European Union. That point was made by the noble Lords, Lord Wallace and Lord Tordoff, in respect of the House of Lords IGC ad hoc committee. It was also touched on by a number of other noble Lords. We must have proper institutions and policies which will be right for the Union in the 21st century. The European Union's institutions will come under the spotlight in the IGC. Our position on the IGC and the issues which touch on enlargement have been spelt out in some detail in the White Paper. I do not wish to go over that ground but we believe that issues which need addressing for enlargement include the weighting of votes in Council, the level of blocking minority, the number of commissioners, the presidency system and the size of the European Parliament. We will certainly consider constructive proposals from others as regards those areas.

There is also the question of unanimity, which was touched upon by the noble Lords, Lord Taverne and Lord Desai. Unanimity in areas where it still applies has not prevented effective decision-making in the European Union so far, even on highly contentious issues such as the Maastricht Treaty and the 1992 financing package. Unanimity ensures that decisions on the most sensitive issues take proper account of vital national interests and will continue to do so after enlargement. New members hoping to join the European Union emerged only recently from membership of organisations which denied them an effective say. They will certainly not want to give up their recently won right to safeguard important interests.

The noble Lord, Lord Kingsland, quite properly emphasised the importance of the rule of law in the proper development of the European Union. That point was echoed by the noble Lord, Lord Lester. It is important to be clear that the proposals in the Government's White Paper which relate to the European Court of Justice do not imply any kind of erosion of the principle of the rule of law. Rather, the Government are looking at the consequences of the court's decisions and the manner in which the court operates.

The noble Lord, Lord Lester, referred to the European Commission on Human Rights and the European Court of Human Rights. Protocol 11 of the European Convention on Human Rights is designed explicitly to allow us to cope with the pressures of enlargement. It provides a way to streamline the procedures involved;

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for example, by replacing the part-time commission and court with a single full-time court. In addition, we are discussing with other member states and the Strasbourg institutions what other new arrangements might help.

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