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Baroness Rawlings: My Lords, I am grateful to the Minister for his explanation of the orders. This is a very timely debate as it takes place shortly before the European conference--the prelude to the launch of the accession process and the start of negotiations with six countries, including Slovenia, at the end of the month.

This group of orders ranges over a huge portion of the world, from the Italian eastern border to some of the remotest parts of Asia, embracing very diverse historic countries with great future potential. The underlying treaties represent elements of those strategies devised by the Union in response to the Drang nach Westen-pace Yilmaz of the newly independent states and central and eastern European countries.

As an MEP I witnessed the previous British government championing with determination the eastern enlargement. At the time I was also closely involved in the Europe Agreement with Bulgaria. There was a real sense of excitement at the prospect of a fledgeling democracy coming back into the European fold. Bulgaria initially made speedy progress overcoming the first hurdles along the road to the heart of Europe. I was

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concerned, however, that disillusionment and bitterness would set in: a combination of vested interest in the Union and structural weaknesses both in the body politic and the economy of Bulgaria were endangering a speedy accession and driving a wedge between candidate countries.

Specific strategies for relations with the NIS and the CEEC were formulated in 1994. This policy-making process culminated with Agenda 2000 in 1997 and has now led to the introduction of accession partnerships. These instruments should safeguard against the dangers of disillusionment and bitterness. I hope this Government will strengthen the determination of the Commission to pursue this approach and will ensure that it is truly inclusive. The Opposition, therefore, broadly welcome the orders. In particular, it would be odd if we did not, as the Conservative government signed up to the treaties in 1996.

The partnership and co-operation agreements with Georgia, Armenia and Azerbaijan are basically the same. They emphasise the promotion of trade, investment and harmonious economic relations, coupled with political objectives focusing on the consolidation of democracy and the complete transition to a market economy of those nations. The agreements will provide also a basis for greater co-operation in economic, social and political spheres between the Union and those countries. To what extent does the Minister believe that the precarious security situation in these countries will undermine the implementation of the agreements?

The agreement with Uzbekistan includes many of the same elements as the agreements with Georgia, Armenia and Azerbaijan in terms of economic and political objectives. Unlike the latter group of agreements, it also includes the objective of supporting the independence and sovereignty of Uzbekistan and the construction of a civil society based on the rule of law. Will the Minister, however, confirm that the differences reflect the different circumstances of these countries; their different ability to satisfy the Community's conditionality; and their different ability fully to implement the obligations undertaken in the agreement?

The treaty with Slovenia is very different. It is a paving provision within the framework of the accession strategy, while not entailing a strict commitment to include Slovenia in the Union. As such it refers in particular to the development of a free trade area between the two partners. It builds on the economic and political objectives common to the other partnership and co-operation agreements. Slovenia is one of the better placed candidates for accession. The Slovenian government have declared that they expect to be ready for accession on 1st January 2002. Although I understand that the precise timetable is a matter for negotiation, I wonder whether the Union will be ready at that date.

Is the Minister concerned at the rate at which Slovenia is developing the structures necessary to apply and enforce the acquis effectively? What progress is Slovenia making in bringing down its rate of inflation?

All the orders and underlying treaties promote the expansion of free trade and democracy within these nations, the hallmarks of the previous government which

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had such a profound effect on the NIS and CEEC in the post-communist era. The orders also help to provide a foundation for a future solid relationship between those countries and the European Union. We therefore welcome all the instruments.

Baroness Williams of Crosby: My Lords, like the noble Baroness, I very much welcome these orders. I am delighted that they will be ratified with the approval of the two Houses. However, I take the opportunity to ask the Minister a few questions about some of the countries concerned. There are some issues on which I should be grateful for his illumination.

First, I share the strong welcome of the noble Baroness for the treaty regarding Slovenia, which in a brief period has changed from being a co-operation and partnership treaty to becoming effectively an accession treaty. That is as it should be because Slovenia already has a remarkable record of achievement both as regards moving towards democracy and also moving towards a market-based economy. In many ways Slovenia is an excellent candidate for enlargement, perhaps one of the best. It is delightful to see the steady progress that has been made in that country, all the more so because Slovenia--one tends to forget--was a part of the former Yugoslavia. It is the one part of the former Yugoslavia which has made the leap into being part of Europe in a true sense while, alas, the rest of the former Yugoslavia still has to achieve that change in attitude and change in attitude towards institutions which Slovenia has so successfully managed.

Having said that, and having said how much many of us--I believe--appreciate what has been done by the Slovenian Government and by the Slovenian president, I wish to mention the four other countries we are discussing. First, I refer to Uzbekistan. One of the purposes of the partnership and co-operation agreements, of which one involves Uzbekistan--three others involve trans-Caucasian nations, as the Minister has said--is, to quote the words of the agreements, "to consolidate their democracies". I find it a little difficult to accept that "consolidation of democracy" is the appropriate phrase with regard to Uzbekistan.

It is certainly the case that Uzbekistan has achieved a substantial enlargement of trade--something like a sixfold increase since 1992--and it has affirmed its independence of Russia, and indeed has established itself as a clearly independent state. But having said that, Uzbekistan is a long way from establishing anything resembling a democracy that is sensitive to human rights. The regime still cracks down on those members of the media who are critical. It is difficult for the opposition to be able to develop in a truly independent and free manner.

There has been little movement towards private ownership or privatisation. There is no private ownership of land. The cotton crop is still largely expropriated and there is little attempt to try to establish competition between cotton farmers. Uzbekistan is, perhaps tragically, virtually a mono-culture dedicated almost wholly to the growing of cotton. The best possible thing that could happen in Uzbekistan would

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be a diversification of its economic base. Can the Minister kindly tell us whether there is any intention on the part of the European Union through TACIS to encourage such a diversification? Have any attempts been made to deal with the desperate environmental situation in Uzbekistan which has led, among other things, to the draining of the lakes in that country, and with the possibility that large parts of Uzbekistan may be rendered infertile by the attempt to grow cotton intensively on inappropriate land?

I turn for a few moments to the three trans-Caucasian countries and to what is becoming perhaps one of the most phenomenal races after oil that we have seen for a long time, certainly at any time since the development of the Middle East. The Caspian Sea is seen throughout a large part of the oil world as the new great bonanza. Newspapers and informed journals such as the Economist and others refer increasingly to the second round of the Great Game that was once played between the Russian and British empires. That great game is now to try to acquire oil rights in the Caspian Sea.

There has been a long debate--it is beginning to be resolved--about whether the Caspian Sea should be split into territorial blocks with each country effectively dominating some part of that lake, or whether it should be organised in a co-operative manner. Perhaps I may ask the Minister whether the impression I have is correct. Is there an increasing acceptance of the idea of territorial division rather than co-operative management of the Caspian Sea? Have Her Majesty's Government and, more generally, the Council of Foreign Ministers of the European Union, given any thought to the continuing very strained relations between Armenia and Azerbaijan?

We have before us two agreements. One deals with Azerbaijan; the other with Armenia. But those two countries are not far removed from being in a state of war. There is a ceasefire. It is very weak and fragile. It was established in 1994. As the House will know, since that time the President of Armenia, Mr. Ter-Petrosyan has been overthrown by those who do not accept any attempt to establish a peaceful long term agreement. He supported--it turns out unwisely, although with a longer term view perhaps it was wisely--the attempt by the OSCE to bring about a settlement of that longstanding dispute. He was regarded as having abandoned the nationalists who are strongly opposed to any agreement. He therefore lost his office and the Armenian leaders now in charge, in particular the Prime Minister, have strong interests in upholding the Armenian claim on Nagorno-Karabakh to the very end without concession of any kind. Can the Minister give us a few reflections on the Nagorno-Karabakh dispute? Will the European Union take any role in easing an extremely difficult situation?

Perhaps I may ask the Minister briefly about the disturbing situation with regard to arms in that area. Between 6,000 to 8,000 landmines are said to be dug into the border between Armenia and Azerbaijan. Those landmines effectively blight a substantial piece of territory. It would be useful to know whether any steps are being taken to remove them as a first step towards establishing better relations between the two countries.

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In that context, it would be very much in the interests of Armenia to consider trying to reach a peaceful settlement. In the next few years Azerbaijan is likely to be the recipient of huge oil revenues. The estimates are 5 billion dollars to 6 billion dollars a year by the early 21st century. With those kinds of moneys coming in, the great danger is that if the strained relationship is not settled one might see arms pouring into an extremely sensitive part of the world exacerbating ancient conflicts into ethnic conflicts, and others which would destabilise an already very sensitive area.

Finally, will the Minister be so kind as to add a few more words on the subject of Georgia? Georgia has fought against the odds to establish a remarkable degree of democracy. It has done so under the leadership of Mr. Shevardnadze for whom many in this House and in another place have reason to be grateful. Mr. Shevardnadze has pursued the Government of Georgia, continually keeping in mind democracy and human rights. He has a genuinely free and talkative Parliament. It has been possible for Opposition groups to survive and campaign in Georgia. He has suffered very high risks for pursuing the battle against organised crime. I should not like to speculate about who tried to assassinate Mr. Shevardnadze on 6th February. But there is very strong evidence that it was an extremely professional attempt with some 15 gunmen attempting to surround the president and kill him. And this is the second miraculous escape that Mr. Shevardnadze has had from his opponents and enemies. On behalf of these Benches, I should like to say that we are very grateful that Mr. Shevardnadze survived that attack in order to steer Georgia towards a peaceful outcome.

I have two further questions. First, the Minister spoke about the work of TACIS, with which I associate the work of the EBRD. TACIS has played some part in modernising the transport system of Georgia, in particular the port of Poti which has great potential for developing trade between Asia and Europe with the build up of the Caspian Sea oil fields. Clearly, if Georgia is able to be an effective entrepot as that development takes place, it will need to have modern facilities. There is a considerable bottleneck already in Poti and other ports on the Black Sea coastline. It will be helpful to know whether any plans are in place to help Georgia in building up those facilities. In that context, there is considerable British interest. The Caucasian Transco is a British company and, together with Chevron, is committed to repairing the pipeline which in turn will bring in yet more trade, both exports and imports.

My final question on Georgia concerns its one quite desperate area. The economy has moved rather well. Amazingly, inflation has fallen from 8,000 per cent. four years ago--it is a figure which makes the Weimar Republic look positively sound--to only 8 per cent. in the past year. That is an astonishing achievement in itself. But, as the Minister will know, Georgia faces a very difficult problem with regard to power. Sometimes as little as two or three hours electricity per day is provided to its capital, Tbilisi and other major towns. That makes it difficult to attract tourists and foreign investment. Can the Minister give the House any

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information on the EBRD loan to provide modern power stations? Some 600 million dollars of credit has been held up by the problems surrounding Georgia's creditworthiness.

I hope that I have not kept the House too long. I conclude by sharing with the noble Baroness on the Opposition Front Bench the welcome that she offered to the new treaties. Many in this House are conscious that this is one of the most exciting but also one of the most frightening regions of the world. I hope that these treaties will help to stabilise the region and enable it to benefit from the dark gold of oil rather than to sink beneath the waves, as has happened to other countries to which such immense riches have come without proper preparation.

7 p.m.

Lord Bethell: My Lords I join with other noble Lords who have indicated their approval of the orders. I hope that they will be approved today. However, I detected a certain bland note about the Minister's introduction. I am glad that the two noble Baronesses gave some sense of perspective by pointing out the problems in particular in Uzbekistan, but also in the Caucasian nations.

I may be the only Member of this House who has visited all five countries. Even now, after the fall of the Soviet Union, one has to confess that democracy is a long way from being consolidated. Indeed, in Uzbekistan one can hardly say that it has begun. Did the Government take advice from diplomatic representatives, Amnesty International and other NGOs on the question of human rights in Uzbekistan, as regards the total lack of pluralism and other points raised by the noble Baroness, Lady Williams? The situation in Uzbekistan is thoroughly deplorable and worrying. Compared with Uzbekistan the situation in the Russian Federation is superb. It is an entirely different kettle of fish.

The Slovenian Republic is a beautiful little country. I have nothing but good to say about it. I hope that the Slovenians have settled with Italy the problems that arose during the 1940s, and that the rights of Italian citizens in relation to property in particular have been protected. That apart, I very much look forward to Slovenia becoming one of the members of the European Union. There is nothing bad to say about it.

Various points were made by the two noble Baronesses about the three Caucasian countries. Armenia is in occupation of a large part of Azerbaijan, and that is worrying. One wonders whether, particularly since Britain holds the EU presidency, this would be a good time to make representations to the Caucasian countries and to the government of Uzbekistan to see whether something can be achieved before these matters go through the parliaments of the member states. Now would surely be a good time to use what leverage we have.

That said, we have very great interests, particularly in Azerbaijan, in the oil business. On the other hand, it is rumoured that weapons are passing through the Caucasus on their way to Iran, and that missiles made

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in Russia are being allowed transit through the Caucasus to Iran and are being deployed in the Gulf. Those are worrying developments. We cannot reject these orders on that account, but these matters need to be considered. I would wish to have heard them mentioned rather more seriously in the Minister's earlier remarks. I do not know whether it is too late now, but I hope that in replying he will be able to comment on the points raised by the noble Baronesses, Lady Rawlings and Lady Williams, and myself.

7.12 p.m.

Lord Whitty: My Lords, I welcome the general support for these agreements and the objectives behind them. I regret the fact that the noble Lord, Lord Bethell, thought the opening of my remarks too bland. It was my intention factually to point out the content of the agreements rather than go into great detail as to what lay behind them in terms of the extraordinarily difficult situation in some of these countries. The whole point of European Union intervention is to provide a new and positive framework for trying to address many of these problems, deep-seated though they are.

I welcome in particular the general--and I think I can say unqualified--support for the agreement with Slovenia and for the inclusion of Slovenia among the front-runners for full accession to the EU. Whether or not the timetable referred to by the noble Baroness, Lady Rawlings, is achieved will depend very much on whether the European Union itself can make the adjustments in order to provide for enlargement. We have debated the matter in this House on a number of occasions. In general, the Slovenian agreement has been widely welcomed.

In relation to the broader issue of enlargement raised by the noble Baroness, Lady Rawlings, clearly the process that is starting this very week and will continue through the British presidency and beyond is intended to be inclusive. Therefore, countries not mentioned in this debate, such as Bulgaria, are part of that whole process, even though they are not in the first wave of formal negotiations. We are now engaged in an historic transformation of the nature of Europe. So far as concerns the slightly more distant areas of, for example, Transcaucasus and central Asia, their problems are greater than those of even the least favoured country in central and eastern Europe.

The noble Baroness, Lady Williams, asked a number of questions. She referred to Uzbekistan, as did the noble Lord, Lord Bethell, and the noble Baroness, Lady Rawlings. It is true that the position in Uzbekistan is particularly worrying in terms of the development of democracy. The commitments by the Uzbek government to improve the position on human rights are very much part of the background to this agreement. There is deep concern as to both the inadequacy of independent opposition and the question of religious freedom within Uzbekistan.

However, it is the view of the European Union as a whole and of Her Majesty's Government that a positive and constructive relationship with Uzbekistan is one of

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the ways forward to exert leverage on the Uzbek government to try to improve that situation. There were references to economic and environmental problems within Uzbekistan which, again, the agreement does not in any sense resolve; however, it does provide a framework for addressing those problems.

In regard to the three Caucasian republics, there are a number of serious problems. To address the issues raised by the noble Baroness, Lady Williams, first, the oil riches of the Caspian Sea are one of the great development areas for the whole region. There is still uncertainty as to how that sea is to be managed. Azerbaijan and Kazakhstan believe that it should be partitioned, and Iran and Russia believe that it should be collectively administered--the smaller countries believing that that may mean domination by the larger. That difficulty has yet to be resolved. The position of the UK Government is that this is very much a matter for the states themselves to sort out, but nevertheless there is a serious need for it to be addressed.

The Armenian/Azerbaijani conflict, debated in this House relatively recently, is a serious dispute. Problems such as landmines and arms traffic will not be resolved until a more permanent peace is established. As the noble Lord, Lord Bethell, said, the situation is that Armenia, in some sense the weaker power, is occupying 20 per cent. of Azeri territory.

The position of the British Government and the European Union is to support the efforts of the OSCE in this area. The Minsk Group, of which Britain is not a member but is very supportive, is attempting to bring the two parties to a more constructive relationship. In terms of internal politics, it may well be that the presidential elections, of which one is to be held this week and one later in the year, may lead to a more constructive ability to tackle the problems. Undoubtedly, however, there are serious nationalistic pressures in both countries on the existing government. It is to be hoped that the fact that both countries are in a constructive relationship with the EU will make the problems easier to resolve.

I echo the endorsement by the noble Baroness, Lady Williams, of the progress made by Georgia. Nevertheless, it has severe criminal and secessionist problems. Again, I believe that its relationship with the European Union within this framework will help. As regards specific issues, the TACIS programme has already provided significant assistance to Georgia. The whole question of oil distribution via Georgia and the British Transco interests in that are important. The European Union will continue to provide support for the development of infrastructure. I am not in a position to give a reply regarding the EBRD loan in relation to power generation. I shall write to the noble Baroness if that is acceptable.

I have answered the main questions. There are very difficult political and economic situations in all of these countries. I did not intend to under-estimate them in my opening remarks. We are establishing a framework whereby the EU can be a constructive influence on those areas. For Slovenia, it is a dramatic and significant contribution to its eventual and, it is to be hoped, early accession to the European Union as a whole.

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I hope that with those remarks I have addressed most of your Lordships' concerns. If noble Lords wish to raise any further questions before I sit down, I will be happy to answer them. I see that nobody rises to ask a question. I commend the orders to the House.

On Question, Motion agreed to.

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