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Kosovo and the Cologne Summit

4.27 p.m.

Baroness Jay of Paddington: My Lords, with the leave of the House, I will repeat a Statement being made in another place by my right honourable friend the Prime Minister. The Statement is on Kosovo and the European Council and is as follows:

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    transferred to the prison at Mittrovica. The prisoners were forced into cells and made to stand, shoulder to shoulder, for 24 hours without food, water or access to a lavatory. They were beaten again systematically in the prison. Yet still he said that he was among the lucky ones. He had witnessed summary executions when he was detained at the village of Vushtria and had heard reports of a mass execution of 103 men at a nearby village of Studime. So when the refugees say they want to be sure that the Serb troops will go out and our troops will go in to guarantee their safety, it is not hard to understand why.

    "The next step will be further military talks to put in place the necessary technical agreement and they are taking place today at Blace. Given the progress on a Security Council resolution, there is no excuse for the FRY authorities to drag their feet again. Provided the Serbs now, at long last, honour their undertakings and begin a verifiable withdrawal of their forces, NATO bombing can be suspended, the Security Council resolution passed and the international force can start to deploy into Kosovo before the end of this week.

    "It is time Milosevic realised that the longer he tries to draw this out, the longer and harder his forces will be hit. We have only achieved this agreement by showing total resolve and determination. We shall need to be as resolved and determined now in implementing it. We are close to having all the elements in place. But until we are certain President Milosevic has embarked on the withdrawal of all his forces, NATO's military action will continue.

    "We can also now start planning in earnest for the reconstruction of the Balkans to give the peoples of the region the security and prosperity needed to avoid future wars. The future of these front-line states, many of which I have visited in the past few weeks, should be one of peace and prosperity, not ethnic conflict. The people of a democratic Serbia can also benefit from reconstruction and integration into the mainstream of Europe. But let me be clear: that cannot happen while there is a nationalist dictator in power in Belgrade. Until Milosevic goes, Serbia cannot take its true place in the family of world nations.

    "Events in Kosovo overshadowed other issues at the European Council. But other important work was done too. The European Council appointed Javier Solana to the new post of Secretary-General of the Council and High Representative for Common Foreign and Security Policy. Mr. Solana is a friend of Britain and a highly capable operator, as we have seen during the Kosovo crisis. His new appointment will boost the effectiveness and the credibility of the Common Foreign and Security Policy and I warmly welcome it.

    "There was a full discussion of economic policy. The European Council unanimously reaffirmed that sustainable, non-inflationary growth and increased employment required comprehensive structural reforms at EU and national levels. The message is

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    clear in the broad economic guidelines which the European Council approved and in the new European Employment Pact.

    "So far as the future development of the Union is concerned, the European Council took a number of important steps. It heard a strong statement from the president elect of the Commission about his plans for reform of that institution. The European Council pledged its full support for Mr. Prodi's approach to reform.

    "The European Council welcomed the new European Anti-Fraud Office agreed upon at the ECOFIN Council on 25th May which will permit the Union to step up the fight against fraud, corruption and mismanagement. Agreement was reached on the further development of a common European security and defence policy, building on the ideas which I outlined last year and which were warmly endorsed by NATO at its Washington Summit in April.

    "The European Council confirmed that an intergovernmental conference will be called early next year to resolve the issues which were left open at the Amsterdam European Council and which need to be settled before enlargement. The European Council also endorsed an initiative by Prime Minister Guterres of Portugal to convene next March, under the Portuguese presidency, a special meeting of the European Council. This will be entirely devoted to economic reform and employment. The initiative is very welcome and follows the call for such an event at the Anglo-Spanish Summit on 10th April.

    "We are making real headway in promoting economic reform in Europe which, as I have repeatedly said in this House, is essential to ensure sustained growth and the unqualified success of the single currency.

    "The Council rejected the notion of ending tax competition or of the harmonisation of business and income taxes. Instead, sensibly, it decided merely that harmful tax competition should be avoided and it actually advocated lower business and labour costs. Unfortunately, though we had the support of 13 out of the 14 other member states, we could not reverse the duty-free decision taken by the previous government in 1991 since they had agreed to it being reversible only if there was unanimity.

    "So at the Council as a whole substantial progress was made on economic reform, but it was, rightly and understandably, dominated by Kosovo. Let us hope that the process begun at this Council and taken forward today at the G8 will come swiftly to a secure and just conclusion, ending the obscenity of ethnic cleansing and obtaining justice at last for the people of Kosovo."

My Lords, that concludes the Statement.

4.38 p.m.

Lord Strathclyde: My Lords, I am grateful to the noble Baroness for repeating the Statement made by the Prime Minister in another place. Likewise, I shall keep my answers to the two issues in the same order: first on Kosovo and then on the European Council in Cologne.

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Does the noble Baroness agree with me that there is a great deal of confusion on the whole situation surrounding Kosovo as to whether there is yet peace or whether there is yet going to be peace? Will the noble Baroness, as Leader of the House, ensure that we maintain a system of regular reporting back to this House, either through Statements or debates, so that these issues can be discussed in this Chamber?

We entirely endorse the view that there should be a continuation of the bombing campaign. However, is there any truth that the kinds of target aimed at previously have been changed? Also, has the overall level of sorties by the combined air forces been reduced over the course of the past few days?

I now turn to the question of President Milosevic himself. The Statement draws attention to the fact that the Prime Minister will not deal with President Milosevic, but what is unclear is whether that is a pre-condition for the peace agreement itself or a pre-condition that there will be no money for reconstruction until Milosevic has been removed. I should be very glad to hear what the Government's policy is on that.

Next, on the question of the unified command, is there going to be a role for Russian troops and, if so, how will they fit into a NATO/UN command structure? Has that already been agreed with them? As to the United Nations Security Council, what messages have been received from the Chinese Government as to how they see this developing over the course of the next few weeks?

One of the tests that should be set as to the success of this policy is whether or not the refugees are returned home and whether or not the humanitarian disaster already existing can be brought to a speedy halt so that the refugees will leave not only other countries of the European Union but also other countries in the Balkans, so that they can return home. Has the noble Baroness any estimate she can offer as to how long it will take from an agreement being reached to returning the refugees to their homes?

Turning now to the Cologne Summit, the Statement said that,

    "The European Council unanimously reaffirmed that sustainable non-inflationary growth and increased employment required comprehensive structural reforms at EU and national levels".

I am glad that the Government at last are accepting what the Conservative Party has been saying for a very long time indeed. However, what have the Government done over the course of the past two years to further those aims? Practically everything that has been done has been designed to create more difficulties and more regulations for our businesses, rather than fewer. We have seen the Government give in over the Social Charter. We have seen the valuable veto being weakened and we have seen a further surrender on tax harmonisation. In this regard the Statement says that, sensibly, the Council decided merely that harmful tax competition should be avoided. I would be very grateful

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if the noble Baroness could produce some examples of the difference between harmful tax competition and normal tax competition.

Finally, on the detailed points raised in the Statement, why is it that the European anti-fraud office--which we welcome--is not independent of the Commission?

The Statement did not mention the single currency, but perhaps I may ask the noble Baroness, in conclusion, about the euro. Since the euro is increasingly becoming an issue of public concern, as a matter of policy are the Government pleased with the progress of the euro over the course of the past five or six months? Do the Government think that the level at which the euro finds itself against the pound is about right, or are they happy to see it fall further?

4.45 p.m.

Lord Rodgers of Quarry Bank: My Lords, I join the noble Lord, Lord Strathclyde, in thanking the Leader of the House for repeating the Statement made elsewhere by the Prime Minister. As the Statement says, the Cologne discussions were dominated by Kosovo. I hope it will not confuse everybody if I reverse the order of my comments by saying very briefly that the other steps beyond Kosovo taken at Cologne seem to be sensible as far as they went--which was not very far, but the Kosovo business was pressing. I include in that the outcome of the discussion on tax competition. The Government were bound to lose on the question of duty-free; there was never much point in pursuing this further, whatever their somewhat doubtful merits.

I also welcome the appointment of Mr. Solana to his new post. I am sure that he will serve all of us very well. As the Statement makes clear, and as the House will know since the discussion of Kosovo at Cologne, there has been, first, the failure of the border talks on Saturday and Sunday, which justified the caution which was very widely expressed following the Belgrade agreement. Then there has been the G8 meeting to which the Statement refers, yesterday and this morning. I do not know whether the noble Baroness has seen a statement which appeared this afternoon. When asked who would lead the international presence in Kosovo, Madeleine Albright said that NATO was both the core of the force and its military leader. However, Russia's Foreign Minister, Igor Ivanov, said that was still the subject of negotiation. I hope it is not still the subject of negotiation, because if we have learned anything from the events of the last week it is that we should settle the detail as well as the main principles; otherwise it will most certainly go wrong. If the noble Baroness would care to comment on the situation I shall be very glad to hear what she has to say.

Even if the plan that was accepted by Belgrade last week is indeed fully incorporated in a Security Council resolution with the necessary detail and is then implemented, we must nevertheless recognise, if we are not to be desperately disappointed, that there will be misunderstandings and a total absence of good will on everybody's part. Lives will be lost and from time to time the whole agreement will be threatened with collapse. I say that only because it is best to be wise

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before the possible event and to be resolute and determined in the meanwhile, whatever problems then arise. The essential key to the success of the plan is the remarkable unity of NATO, which has been demonstrated through very difficult times, together with its continued leadership. That will be essential to any successful plan.

The noble Lord, Lord Strathclyde, asked how China's attitude might develop over the next few weeks. The most important and immediate question is this: do we have any reason to believe that China will exercise a veto, or do we believe that it is on board? That is the crux of the matter, because unless China is on board, there will be no resolution.

I have two questions about what may happen thereafter. It is not clear from the Statement or from any published document who will be ultimately responsible day to day for ensuring the success of the total operation. I mean by that the re-occupation of Kosovo by its people. Where will the buck stop? If that is unclear, then again I think we shall find far more difficulties ahead than we would like.

Secondly--this is a related question--who will provide the administrative structure and who will be responsible for making sure that there will be machinery to keep the peace, to make judicial decisions and to prepare for fiscal reconstruction? There must also be a structure to make sure that schools and hospitals re-open. These routine tasks are part of reconstruction, and I would have thought that all the evidence is that the Kosovars, of themselves, will not be capable of dealing with that.

Beyond that there are a further two questions I would like to ask concerning the future of Kosovo. The Statement says that military talks are taking place again today under General Sir Mike Jackson. I appreciate that it may be too soon to say anything, but as they have been taking place today I wonder whether there is any evidence yet as to whether they will be any more fruitful than last week.

I have a further two points, rather than questions regarding the future. I believe that it is right for us in due course to be told what the total cost of the operations has been to this country. I say that as somebody who, on behalf of these Benches, has supported the action from the beginning. I believed that we would all have been deeply shamed had not NATO, with our support, taken the action that it did. I think it is necessary to know what the operation has cost and also to know what the continuing costs are likely to be on the assumptions that we are currently making about the implementation of the agreement.

Despite the optimistic conclusion of the Prime Minister's Statement and the hopes that we all, without qualification, share, I am sure that it will be necessary to be cautious and for NATO not to de-escalate its operations and its readiness too fast or too far.

4.49 p.m.

Baroness Jay of Paddington: My Lords, I am grateful to both noble Lords who have responded to the Statement for the support that they have expressed for

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the conclusions, especially the part relating to Kosovo. Perhaps I may echo what the noble Lord, Lord Rodgers, said about the need for caution. I know that the Government, and especially my noble friends, who were both congratulated during Question Time today--namely, my noble friends Lady Symons and Lord Gilbert--have been grateful for the consistent support that they have received from all parts of the House during the military operation in Kosovo. That has been very valuable. Indeed, as has been said on several previous occasions in this House, it is important that these messages have gone to British troops so that they know that there is general and genuine support for their valiant efforts. Those British troops will be continuing to play a substantial role in the next stage of these events. I am sure that the whole House will join with me and the Government in wishing them well. In some ways, it may be the most dangerous and perilous part of their duty that they will be undertaking in the future.

The noble Lord, Lord Strathclyde, suggested that there might be confusion about the next stages of these events. Clearly, at a time when the proposed UN resolution was only agreed a few hours ago and has yet to be put to the Security Council, that is at least de facto true. On the other hand, the intent of the Security Council resolution embraces the points which have been made consistently about the G8 position and indeed about NATO's position, which can be summarised simply by the fact that we must have Mr Milosevic's troops out of Kosovo. We have to have NATO troops in there and we have to ensure that the refugees can return safely and securely. Given that those points are now embraced in the UN resolution which has been agreed and, as I said in repeating the Statement, will be sponsored by all the members of the G8, including Russia, that is an important step forward.

As I said when reaffirming what the noble Lord, Lord Rodgers, said, we need to be extremely cautious and wary in dealing with someone with the track record of Mr Milosevic in moving away at every opportunity from any commitment which has been given. I believe that the path towards a new and more hopeful position on the military, technical side is now more optimistic than it was when the talks broke down yesterday. The fact that this is now moving to New York and the UN Security Council is a hopeful sign.

The noble Lords, Lord Rodgers and Lord Strathclyde, raised the question of the attitude of the Chinese Government, which is clearly extremely important when considering the matter. Despite what the Chinese Government said in their immediate response to the unfortunate bombing of their embassy in Belgrade, we have no reason to suppose, given what they said later--namely, that they supported the general approval of a new peaceful situation in Kosovo--that they will necessarily take anything other than a positive stand about this proposed resolution. It may be of use to the House to know that President Ahtisaari is today in Beijing involved in talks with the Chinese Government. One has to hope that those talks will produce a positive outcome in terms of their support for the resolution when it reaches the Security Council in New York.

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The difficult situation about the Russian troops was mentioned; namely, what their presence will be and under whose command they will serve. Noble Lords will be aware that this is one of the continuing questions which has arisen in the discussions with the Russian Government. Because they have agreed to co-sponsor the UN resolution, which mentions the very central point that suggests that NATO will be at the core of the force that will be in Kosovo--of KFOR--and that it will be led by NATO, it is now recognised that there has been a change in their position. As far as concerns the practicalities, people are drawing on the positive experience of what has happened in Bosnia, where the Russian troops have served in a NATO force though not directly under a NATO commander. Those points of difficulty may well be ironed out in much the same way when the practical problems are addressed.

The question about the continuing presence of an authority which is not a civil authority was also raised. Indeed, this was a point which the noble Lord, Lord Rodgers, was most concerned about in relation to the organisation and administration of life within Kosovo outside the purely defence and military situation. The draft resolution, as agreed by G8, makes provision for the appointment from the UN of someone who will, as it were, take responsibility for the civil authority in relationship to the secretary general and, through him, to the Security Council of the UN. That task will be extremely difficult and there will need to be close collaboration and co-operation with the military forces. However, that issue has been specifically addressed within the draft resolution and is something which will need to be worked out--again perhaps drawing on the experience of Bosnia and other arrangements where a civil administration of that kind has been established.

I move on to the broader questions of the Council's discussions and debates on the future of employment in Europe; and, indeed, the questions which the noble Lord, Lord Strathclyde, raised about the euro and activity on the general economic and administrative front. The noble Lord mentioned the implementation of some of the policies which the Government have undertaken during the past two years--for example, he mentioned the social chapter. However, I would also mention matters relating to the minimum wage resolutions, the parental leave regulations, and so on, which have been welcomed by many people. This Government are proud to have implemented those measures and we do not feel that there is anything there that we should retreat from at this stage.

The noble Lord mentioned the employment pact, which has three pillars. First, it involves macro- economic dialogue between the member states aimed at preserving non-inflationary growth. Secondly, it intends to promote employability and entrepreneurship through a co-ordinated employment strategy which we hope will improve the efficiency of the labour markets; and, thirdly, it includes, as the Statement said, comprehensive structural reform and modernisation to improve the innovative capacity and efficiency of the labour markets and markets in goods, services and

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capital. The details of these are to be found in the conclusions of the Council which, as I said when repeating the Statement, have been placed in the Library of the House.

On the question of the anti-fraud measures and whether the Government believe that this is appropriately placed within the Commission, the Government are happy that they are within the Commission because this is being run on an independent basis. Clearly, anyone who is going to tackle fraud within the Community, the Commission or wherever it may lie needs to have the detailed information about the organisation of that body and an understanding of the detail of the official arrangements which may or may not have been called into question. It seems to the Government and, indeed, to the Council to be appropriate that it should be placed within the organisation rather than attempting to investigate from without.

The noble Lord, Lord Strathclyde, raised a further point about the euro. As the House will know, the Government's position on this is basically unchanged. We have always said that if the economic conditions on the euro were right and stability maintained, it would clearly be in this country's interest at some stage to hold a referendum to see whether moving into the euro in the long term would be something which the country supported. I can only suggest to the noble Lord that I believe there is a difference between some of these matters. As he will know, I entirely respect his position; but there is a difference in many of these matters between taking what could be perceived as a short-term political practical position and a long-term strategic view which we hope will benefit the country in much the same way as we hope the benefits to the people of Kosovo will be achieved in the long-term peaceful resolution of the discord and terrible tragedy that we have seen there recently.

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