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Berlin European Council and Kosovo

4.27 p.m.

Baroness Jay of Paddington: My Lords, with the leave of the House, I should like to repeat a Statement being made in another place by my right honourable friend the Prime Minister. The Statement is as follows:

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    beef. It also set limits on agricultural spending, bringing the CAP under tighter control than before. Agricultural spending by 2006 is planned to be less than 2 per cent. in real terms above its level next year, and falling. Of course, some of us wanted more but it is worth contrasting this outcome with the increase of 9 per cent. agreed at the Edinburgh European Council in 1992. And United Kingdom consumers will, when these reforms have been fully implemented, benefit by about £1 billion a year--£65 for every family of four.

    "On the structural and cohesion funds, the European Council agreed that spending in the existing Union should total 213 billion euros in the period 2000 to 2006, an 11 per cent. reduction in the Commission's original proposal. Within that total full and proper account will be taken of the interests of the United Kingdom. Cornwall, West Wales and the Valleys and South Yorkshire will qualify for assistance under Objective 1 of the structural funds for the first time. Merseyside will retain its Objective 1 status. A safety net will safeguard the position of regions of the UK qualifying for assistance under Objective 2 of the structural funds. This will cover 14 million British people. There will be a special package for Northern Ireland assuring assistance at a level equivalent to Objective 1 status. A special transitional programme of assistance totalling 300 million euros for the Highlands and Islands of Scotland, which no longer qualifies for Objective 1 status, has been agreed. This sum is double the amount available for other areas losing Objective 1 status and is comparable to the amount the Highlands and Islands would have received as an Objective 1 area. This is a tremendous deal for Scotland.

    "The negotiation also covered the revenue side of the Union's finances. It was agreed that more revenue would be raised from contributions linked to GNP and less from VAT receipts and customs payments. There is also to be a change in the way in which payment for the UK abatement is divided among the other member states. But no change was made to the own resources ceiling, the limit on revenue available for the Community budget. This is significant and welcome. In the last two major negotiations on European finance, in 1988 and 1992, the European Union, when it made changes, agreed an increase in the revenue ceiling; that is, an increase in the share of the European Union's wealth which taxpayers can be required to contribute towards EU spending. For the first time there has been a major Community financial settlement without an increase in the potential burden on taxpayers. In 1988 the settlement envisaged spending rising by 17 per cent. and in 1992 it foresaw spending rising by 22 per cent. This time spending within the EU 15 will fall in real terms over the period covered by the agreement.

    "On the abatement, I am delighted to report that the Presidency conclusions say in terms that the UK abatement will remain. In line with the 1988 and 1992 European Council conclusions, the United Kingdom accepted that we should not make a windfall gain out

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    of changes to the method of EU financing; that is, the gains from a switch from VAT to GNP contributions and from an increase in the collection costs for traditional own resources. On the same principle, I agreed that the abatement will not apply, after enlargement, on an amount of expenditure in the new member states equal to the pre-accession aid in those member states which is itself now unabated. So any expenditure unabated now will remain unabated after enlargement. But the vast bulk of expenditure in the new members after enlargement will qualify for the abatement because it is abated now.

    "The result is that there will be no reduction in the United Kingdom's rebate. Our objective was secured. I said that the Government would maintain the abatement. We have done so.

    "Heads of State and Government also agreed to invite Mr. Romano Prodi, former Prime Minister of Italy, to be the next President of the European Commission. I warmly welcome this appointment. Mr. Prodi has a strong record of economic and political reform.

    "The European Council's intention is that the new Commission should be appointed and start work as soon as possible after the European parliamentary elections and remain in office for the remainder of this year and the five years starting from January 2000.

    "There was unanimous agreement among Heads of State and Government that the new Commission will need to give urgent priority to a programme of far-reaching modernisation and reform in which Community funds, programmes and projects are properly managed, the Commission's services are correctly organised and the highest standards of management, integrity and efficiency are ensured.

    "The Middle East peace process was also discussed at the European Council and we urged that the transitional period established under the Oslo Agreement be extended beyond 4th May 1999 with the aim of reaching agreement on final status issues within one year.

    "I am pleased to say that agreement was also reached on the Trade and Development Agreement with South Africa, a historic step in consolidating prosperity and democracy in South Africa and developing the European Union's relationship with that country.

    "To sum up, the outcome of Agenda 2000 is an agreement which makes significant reforms to the CAP; puts the Union's financial house in order in preparation for enlargement; brings spending under control and reduces Community spending as a proportion of Community GNP even after allowing for the costs of enlargement; gives a fair deal to UK regions which receive support from the structural funds; and maintains the abatement.

    "It is a good result for Britain and has been achieved by a government who have rejected the sterile confrontations and isolationism of the recent

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    past and who engage constructively with Europe to get a deal which is good for Britain. I commend it to the House."

My Lords, that concludes the Statement.

4.38 p.m.

Lord Strathclyde: My Lords, I begin by thanking the noble Baroness for repeating the Statement made by the Prime Minster in another place. I know that the noble Baroness had no part in the decision about arrangements, but will she take it from me that the duty of reporting to Parliament should run much further than combining an important Statement on the future development of the European Union with another on the prosecution of a war by NATO? Does she accept that each of these great matters merited a separate Statement and that this House should not be denied the opportunity to question the Government on each of the matters in depth? Perhaps I can ask the noble Baroness to take that message back to the Prime Minister when he next visits Parliament.

Turning to the war in Kosovo, the House will have noted warnings from the Defence Secretary today that it could be a long campaign. Will she pass on the sense of gratitude of all Members of the House, whatever their views on the war, for the courage and commitment of our pilots and air crews over what will be a dangerous time ahead?

There are two specific points I wish to raise. I note what the noble Baroness said about the assistance to be given to refugees. As far as it goes, I welcome the initiative. However, the scale of the humanitarian crisis growing day by day is so great that surely it merits more than just the establishment today of an interdepartmental committee. The suffering being caused in Kosovo requires a major, highly co-ordinated international relief programme embracing governments, aid agencies and charities. When the noble Baroness replies, will she say something about her view on the future of such a programme and what the interdepartmental group aims to do? Will she tell the House also what is the latest estimate of the number of refugees on the move from Kosovo since the NATO offensive and what are their destinations? What are the latest reports on the alleged sealing of Yugoslavian borders and what are the British and other NATO governments doing to help countries affected by the influx of refugees?

Secondly, will the noble Baroness tell the House what contact there has been with Prime Minister Primakov prior to his announced visit to Belgrade. In view of his recent refusal to visit Washington, do we know in what capacity Mr. Primakov and the Russian defence minister are now going to Belgrade? Will the Government confirm the importance of the role that Prime Minister Primakov and the Russian Government can now play in resolving the dispute, a critical role which should not be underestimated? I am sure that the noble Lord, Lord Gilbert, may well wish to report again to the House before the Recess on events in Kosovo.

I turn now to the summit in Berlin. What was the Prime Minister's objective in going to Berlin? Was it, as he said, the root and branch reform of the European

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Commission? If so, where is the root and where is the branch? Was it, as the Prime Minister promised, to set up an independent fraud investigation office? If so, how independent will that office be in view of the fact that it reports to the Commission? Was the Prime Minister's objective to safeguard the British rebate? If so, how is it that the Prime Minister managed to accept a climb-down which will cost British taxpayers some £154 million extra per year? Will the noble Baroness confirm that if the concession had not been made, the British rebate would have risen and our taxpayers would have had to pay less money? What will be the effects of enlargement on the contributions made by the British taxpayer?

I move briefly to the loss of Objective 1 status in the Highlands and Islands. I notice that the Statement refers to the fact that there will be a doubling of the transitional programme of aid assistance. But will the noble Baroness say--and if she does not have the details, I am happy to receive a letter--how much the north of Scotland will have lost as a result of losing Objective 1 status.

Finally, what was achieved on the fourth objective which the Prime Minister set himself; namely, to reform significantly the common agricultural policy? Is it not the case that what has been achieved is something of a disappointment, to put it mildly? Can the noble Baroness explain why, in the light of the Statement's claim of substantial reform, President Chirac has claimed that the changes agreed are relatively minor? It is said that the agricultural package has been redesigned completely. Does the noble Baroness agree with the assessment of one independent analyst that President Chirac emerged as the main victor, having neutered and delayed modernisation proposals? The Statement makes it sound as though everyone is a winner. But everyone cannot be a winner, so someone has lost out. Who? Will the noble Baroness tell us whether the Prime Minister succeeded in avoiding any discrimination against British farmers and whether he was successful in opposing modulation?

There is precious little evidence here that the huge concessions which the Prime Minister has made in Europe since 1997 have achieved any benefits at all for Britain. That is something we should all regret.

4.44 p.m.

Lord Rodgers of Quarry Bank: My Lords, the noble Lord, Lord Strathclyde, has a point, as a general principle, about two Statements being rolled into one. But on this occasion we cannot object in view of the extent to which the Berlin summit was naturally overshadowed by the events in Kosovo. One hopes--and one cannot ask for more--that the developments since the bombing began were broadly anticipated by the Government. It is difficult to see where those events lead but the action which we supported and still support was bound to have consequences for the movement of refugees. It would be reassuring to believe that the Government had anticipated the situation before its acuteness became apparent in the past few days.

Perhaps I may ask the noble Baroness a different question about the supply of arms to the Serbs. We do not know and now we cannot go back to the origins of

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the arms which are now available to them. But what steps are being taken to ensure that those arms are not replenished? In particular, what discussions are taking place with the Russian Government and other governments of the federation to make sure that that does not happen?

We are going into Recess on Wednesday. The Government have kept us very well posted about the awful events in Kosovo. I hope that we shall have a Statement before the House rises on Wednesday and that we shall be brought up to date on the assumption that the House is unlikely to be recalled. We hope that it will not be necessary to do so during the Recess as now planned.

On Kosovo, I have one particular question. A report was received this afternoon that a leading player in the Paris-Kosovo peace talks at Rambouillet, Mr. Fehmi Agami, has been executed. Will the noble Baroness confirm whether that report is correct? It would simply add one further infamy to others. But that report has been made and has been attributed to NATO. It would be helpful to know whether that is so.

Because the Berlin summit was overshadowed in that way, it was easy to believe at first that it had been remarkably successful. On reflection, I do not believe it was so successful. However, in that respect, I do not refer to what the Prime Minister may have achieved. After all, it was a summit which was meant to push forward the major reform of the CAP and the finances of the Union. It achieved very little in that direction although, I am glad to say, it settled a number of matters; for example, the government rebate.

The noble Baroness referred to the new Commission being in place as soon as possible. Will she give an indication of what that means? A new Commission would have taken its place at the end of this calendar year. One assumes that it always takes a little time to get the right people in position. How soon is it likely that we shall have a new Commission? Do we assume that the present Commission should continue to act as previously understood in the interim?

As regards Agenda 2000, as I say, the reform of the CAP has continued, as always, to be very slow indeed. Will the noble Baroness say whether there was any provision for the environmental consequences of change in the settlement which was reached?

We welcome the provisions in the structural cohesion funds for Cornwall, West Wales and the Valleys and South Yorkshire, although that is one of the many matters at which we must look in greater detail at a later stage.

Often it is not appreciated--or the truth is hidden--that every summit is a negotiation. There is a starting point and if a compromise is to be reached there will be some satisfaction on both sides. By those standards, the agreements reached in Berlin were satisfactory, as I said, but as regards the longer term perspective of major reform within the Union there is still a very long way to go.

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4.50 p.m.

Baroness Jay of Paddington: My Lords, I am grateful to both noble Lords for their responses to the Statement. On the point of a single Statement on the subject of the Berlin summit, as opposed to a joint Statement incorporating the Berlin summit and the Kosovo situation, noble Lords will recognise, as the two Front Benches have recognised--it was specifically mentioned in the Statement--that both subjects were topics of discussion at Berlin. Therefore, my right honourable friend was correct to include the situation in Kosovo as well as matters specifically related to Agenda 2000 and the Commission, which both noble Lords, quite rightly, raised.

I shall respond first to the points specifically raised about the Kosovo situation. The House will be aware that it continues to be an extremely serious situation and something that we have to keep under clear and constant observation. As both noble Lords have suggested, I am sure that if it becomes appropriate either I or one of my noble friends will bring further news to the House as it develops.

On the specific and urgent point raised by the noble Lord, Lord Rodgers, about the individual who has reportedly been executed in the past few hours, we do not have immediate confirmation, but I shall report personally and directly to the noble Lord and place such confirmation in the Library if it becomes apparent shortly. That would be an extraordinarily serious development.

On the refugees, the Statement points out that the organisation of the joint committee dealing with that appalling problem was, in a sense, co-ordinating efforts which were already under way but giving them a new initiative and a new impetus with the extra £10 million agreed today. All noble Lords will recognise that those kinds of sums and that kind of effort are a drop in the ocean in terms of the terrible tide of human suffering seen on our television screens. I am sure that no-one would expect us to do nothing in the face of the rising figures of people on the move which, in response to a specific question, we now believe to be about 250,000 as a result of the events of the past few days.

Both noble Lords raised the question of relations with Russia and Russia's attitude. The Prime Minister and my right honourable friend the Foreign Secretary have been in constant contact with the Prime Minister, Mr. Primakov, and the Foreign Minister, Mr. Ivanov. We await the outcome of their contacts with Milosevic with interest. Of course, noble Lords will be aware that although there has been disagreement--to put it at its lowest--with the Russians over the military action in the past few days, they have played an active and important role in the contact group and it is to be hoped that their visit to Belgrade will be in that spirit rather than any other. We know that they share with the NATO allies a sense of outrage at Mr. Milosevic's callous acts in Kosovo. I should add that there is no immediate and precise evidence about new supplies of arms.

Perhaps I may turn to Agenda 2000. The noble Lord, Lord Strathclyde, asked what was the purpose of the summit. It can be summarised quite briefly. It was to

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achieve the revision of the economic and financial arrangements, which was achieved; to maintain the British rebate, which was achieved; and to try to take forward some of the complicated and difficult issues arising from the report about mis-management within the Commission, of which noble Lords are aware and which we had the opportunity to debate last week.

Perhaps I can emphasise that the abatement has been safeguarded. We have forfeited only the windfall gains, which is something that previous administrations have done before us, and the value of the abatement will go up. With enlargement, of course, there will be the additional costs to which the Statement referred, and the UK taxpayer will in some way have to pay more for that enlargement. However, spending in the new member states will be abated and will be small relative to the economical and political gains of achieving that degree of enlargement.

The noble Lord, Lord Strathclyde, raised the question of the Highlands and Islands and whether the equivalent funding under Objective 1 would have been much higher than that under the special arrangements now agreed. My understanding is that the special financial arrangements will be approximately £200 million and that that is roughly equivalent to what would have been achieved under Objective 1 funding.

On the overall position, I simply quote from what my right honourable friend the Prime Minister said at the news conference at the end of the Berlin summit. He said that we have achieved a position that I think can be described as,

    "not a euro more, not a euro less".
That position was acknowledged by other members of the European Council. For example, President Chirac talked of the United Kingdom having obtained "virtually all she wanted". As I said in repeating the Statement, that is a demonstration of the advantage of a government engaging constructively with Europe to obtain a better deal for Britain.

4.56 p.m.

Lord Shore of Stepney: My Lords, inevitably the summit was overshadowed by the tragic events in Kosovo. I think we all understand that. Nevertheless, the conference was addressed to Agenda 2000 and to enlargement. Does my noble friend agree that although--thank heavens--we retained the rebate and some assistance for our own regions, the outcome of the agricultural negotiations, the long-awaited major reform on which it looked as though we might win, has been frustrated once again? Is it not equally disappointing, and perhaps even more surprising, that in spite of the damning report of the committee of experts on the Commission and all its works it will be at least three months before any change takes place at all? The Commissioners remain in office and President Santer will be replaced by yet another committed and active federalist in the person of Mr. Prodi.

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