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Lord Pearson of Rannoch: My Lords, I thank the noble Lord for giving way. I do not believe he is quite right when he says that we did not have any answers.

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We have positive, forward-looking answers which do not happen to agree with the views of the noble Lord or the report.

Lord Wallace of Saltaire: My Lords, I take that back. Indeed, noble Lords have some idealistic and interesting answers which, I agree, I certainly do not share. So far as I am aware, they are not shared by Her Majesty's Government. I am not even sure that the Conservative leadership fully shares them either. However, I read in the Daily Telegraph, with great interest, the idea that we should join NAFTA.

How should Her Majesty's Government persuade the reluctant British public and reluctant governments and publics in the other European Union member states that enlargement is a political imperative and a strategic desirability? In the response of the Foreign and Commonwealth Office to the report, there is an interesting phrase which states:

    "but there is a lack of public engagement with the issue which the Government intends to address".

I hope that the Minister will be able to tell us a little about how the Government intend to address this. Sending Ministers around northern England in buses is not quite the answer.

Clearly we need to transform public attitudes in this country and particularly in countries such as France where there is deep resistance to overall enlargement. That will require the Prime Minister to commit time and effort. I regret that he has twice postponed his proposed visit to Warsaw. After all, Poland is the most important country due to come in. That is the sort of matter that we need to think about. We need to remind people in this country of our historic links with Poland; the contribution which Poles in the army and air force made to the defence of Britain during the Second World War. That is the way to make this real. We should perhaps have more in the way of two-way military visits, making the best of what the British Army is doing to help those countries as a way of symbolising that we share a sense of common history and perhaps a common fate.

I welcomed the Hungarian state visit as one small part of this earlier this year. Perhaps we should be thinking about a Romanian state visit or a succession of them to emphasise to the British public that this region is now part of our world.

The temptations to delay are very real. There are always pressures from lobbies within the EU not to accept Czech apples or Bulgarian raspberries. Scottish raspberry growers have their own interests. Governments have to impose political imperatives to overcome them. There is a real danger of letting these countries drift into what the noble Lord, Lord Cockfield, called an expectation gap, between what they have been led to expect by us over the past 10 years and what we may not perhaps be prepared to give them in the next five years. There are dangers in Poland of a nationalist reaction. My noble friend Lady Williams talked about the nationalist reaction within Russia. That is the sort of thing that we must avoid.

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Enlargement of both the European Union and NATO is an immensely complex exercise. But it should be one of the strategic objectives of British foreign policy and of European foreign policy.

Lord Monson: My Lords, before the noble Lord, Lord Wallace, sits down, perhaps I might ask him a question in the light of his perceptive comments about Greece, Turkey and Cyprus. Would he agree that there could realistically be no enlargement of any sort until the EU mends its fences with Turkey? The reason is to be found in paragraph 75 of the report on page 20 in which it is made clear that Greece intends to veto the accession of all other applicant countries if Cyprus is not admitted. Indeed, as the noble Lord stated, that was reconfirmed to him when he visited Brussels last week.

However, under the terms of the 1959 Zurich and London Accords ratified by a solemn and binding treaty in 1960, which is still in force, Cyprus cannot join the EU without Turkey's permission. That permission will not be granted unless Turkey is admitted.

Lord Wallace of Saltaire: My Lords, I share many of the views expressed by the noble Lord. There is a real danger of Greek blackmail, to put it bluntly. It is important that we avoid getting into a situation in which the Greeks are as successful in bouncing the European Union on Cypriot entry as they were in Corfu some years ago in bouncing other member states, including the then British Conservative Government, into putting Cyprus and Malta at the top of the list of candidates. I very much hope that the British Government are aware of such dangers.

8.16 p.m.

Baroness Rawlings: My Lords, I too, thank the noble Lord, Lord St. John of Bletso, for introducing the debate so admirably. I congratulate the noble Lord, Lord Grenfell and his committee on this excellent report. It is a great loss to the House that we no longer have the benefit of the wisdom of the noble Lord, Lord Grenfell. To my mind, that shows the folly of the Government in excluding the experience and good sense of so many hereditary Peers from this House, even if it is for only a short while.

The report makes most informative and interesting reading. It will no doubt be highly respected by all the people concerned, as reports from the House of Lords always are. This superb debate has been colourful, lively and in many ways very serious, with important contributions. I hope I shall be forgiven if at this late hour I do not go into many details or mention all the speakers.

Many say that enlargement is as important to the European Union as are the social security reforms to the home agenda. The committee's support for accession and negotiations with Bulgaria and Romania to be given high priority at Helsinki this weekend is to be welcomed. This is especially so in the case of Bulgaria after its unstinted support for NATO

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during the Kosovo war, as mentioned by the noble Lord, Lord St. John of Bletso. We owe support to these former Iron Curtain countries.

During my last session in the European Parliament in May 1994, our final task was to ratify the previous enlargement with Austria, Sweden and Finland. That was one of the few responsibilities or competencies, as it is known in the jargon, of the European Parliament. Alas, there is no record of the debate as there is no Hansard from the committees. We debated deep into the night, much the same debate as we are having here tonight in your Lordships' House. One group of members was determined to have the three countries join as soon as possible. Others felt that if we did not make the necessary institutional changes to cope with these three new members it would be a mistake and we would have failed in our duties. It was a narrow vote which was then mirrored later in the plenary. The world's press was waiting outside and it was headline news everywhere. The rest is history and we have now moved to another phase.

We are now looking at enlargement to a number of applicant countries with borders that will run to the old Soviet Union. The result will be a very different mixture of national traditions and of richer and poorer countries. Over 100 million people have asked to join the European Union, which will eventually have almost 500 million people, twice as many as the United States and three times as many as Russia, as we heard in the eloquent speech of my noble friend Lord Biffen.

As Mr Archie Norman said so forcefully in the other place last week,

    "The first challenge is creating a EU that can allow for flexibility to accommodate a much more diverse group of member states".

As is recommended in item 62 of the report,

    "the procedure for flexibility laid down in the treaty should be simplified".

I agree with the noble Baroness, Lady Sharp, that the regatta idea needs looking at.

Ten years ago Europe was agog with the fall of the Berlin Wall and, with it, the end of a decade of a Europe divided by dictatorship and despair. We British Conservatives were among the first to raise our arms in welcoming the former communist countries back to where they belong. I was privileged to have been able to campaign in several countries and to act as an official observer in others. It was a moving experience that I shall never forget. Both John Major and Margaret Thatcher realised the importance of not hesitating about enlargement. Banishing our lost allies once again into the political and economic wilderness would have been madness. They saw that that would be wrong morally, politically and economically. Based on the principle of democracy, fraternity and the need to heal the deep scars left by the communist era, enlargement would unite a continent that historically and culturally--as we heard this evening--should be one.

So where are we today, 10 years on? With all the celebrations that we had last month, the answer is: not as far as we should be. As item 31 spells out so clearly, the harsh reality is that not a single of the new democracies of eastern and central Europe is a member

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of the European Union. Was perhaps enlargement a misguided ambition and one we should abandon, as mentioned by my noble friend Lord Pearson? I am afraid he will not be surprised that I disagree with him once again.

I would argue that enlargement was definitely not a misguided ambition; an emphatic no. Much as we may say we want enlargement, it cannot happen without reforming the European Union and, in particular, its institutions. By and large, Amsterdam failed to prepare the institutions for enlargement. Unless the institutions are right, the policies will never be right. Moreover, would it not be fairer to settle the institutions first so that the applicant countries know what the club rules were before they join?

There are several challenges before enlargement can take place that are spelt out clearly in the report. First, there is the need to reform the common agricultural policy. Secondly, there is the need to reform the structural and regional funds; and, thirdly, there is the need to streamline the institutions of the European Union, including the re-weighting of votes in the Council. On the last matter, it is understood by the nation states that most tax and foreign policy will stay national responsibilities. That must be right. It is an interesting reflection on how nervously the 15 are proceeding towards the federal superstate featured in the Eurosceptic nightmare. In most federations, foreign and fiscal policies are the first to be centralised.

As my noble friend Lord Moynihan explained so clearly, and as Mr. Archie Norman too stressed in the other place, the importance of paying for enlargement has not been taken seriously enough. From my noble friend Lord Cockfield we heard of the importance of money in the European Union and the success of the Single European Act. That was an undoubted success upon which I as one Conservative salute him. A partnership is needed, with the European Union helping applicants to prepare.

Over recent years, the European Union has mobilised more support for the former eastern bloc countries than the United States put into Europe under the Marshall Plan. I fear that enlargement will require even more money than the Commission estimates. However, it is imperative that the European Union stays within its own resource ceiling of 1.27 per cent of the European Union GDP.

The proposals for the structural and cohesion fund also appear unsatisfactory. The criteria for distributing the overall allocations appear to be fundamentally flawed. The main purpose of the fund is to reduce the disparities within the Union. We should not fear Europe but, like the other members, make sure it works for us. We should not fear enlargement, but make it profitable for the whole Union. We must not fear reform. If the Union does not grow to encompass all the applicant states when they

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meet the necessary criteria, we shall have failed to provide for the future security and stability of the whole continent. It has been said that,

    "getting enlargement right is the single greatest challenge, and potentially the most rewarding one, that the European Union will ever encounter".

Those are not my words; they are the words of the Economist.

Extending peace and prosperity, free trade and rule of law elsewhere in Europe touches on the very foundations of Conservative beliefs and ambitions. But it cannot happen overnight. It takes time to change. Think how long it took for us to conform to the single market legislation; time, work and commitment. Now think how long it takes a former communist dictatorship to become a real democracy with a real, liberal economy. All the applicant countries will somehow have to conform to the acquis. The noble Baroness, Lady Williams, explained so well the difficulty of that.

It would be wrong to lay the blame for the lack of progress on enlargement on those aspirant countries sitting outside the European Union--Bulgaria, Estonia, Hungary, Latvia, Lithuania, Poland, the Czech Republic, Romania and Slovenia. After all, it is they who are knocking on our door. Is the real problem the lack of will inside that we heard of from my noble friend Lord Biffen and the noble Lord, Lord Shore? Has Europe really got cold feet? In a way it has, but it is a socialist-run Europe that has cold feet. It is clear that enlargement has been put on the back burner by socialist governments whose priorities are not our priorities. The fact is that enlargement simply frightens the left-wingers; after all, it emphasises all those values with which they are least comfortable.

For us, enlargement means an outward looking Europe that will encourage free trade across the continent; it is one which will deliver wider markets and more prosperity. Theirs is an inward-looking, defensive agenda, where safeguarding the rights of workers with a raft of expensive, social legislation is the priority, above the future of the rest of the people of Europe. Today we had another example of a damaging piece of legislation, the levy of droit de suite, which looks as though it is about to be agreed.

We do not see enlargement as a threat, but as an opportunity. Unfortunately, we are not running the summit agenda. Thirteen of the 15 governments in Europe are socialist. Enlargement was postponed at Amsterdam and key issues surrounding its future were never discussed.

Outlined in Agenda 2000 was the absolute need to reform the common agricultural policy and the structural fund. The European Union has been slow in developing these proposals. It is doubtful whether they amount to a coherent strategy. We all agree that the European Union must change if it is to accommodate such a massive expansion of membership. How can Spain and Poland fit into the common agricultural policy? The answer is that they cannot; that is, not into the CAP which we know today.

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If the mould cannot expand, why not look for a new one? This goes for policy, as well as institutional questions. It is clear that what works well for 12 and then 15 countries is unlikely to work for 25 countries. We all agree on this point. But how do we solve one of the many problems set out in the report?

Some in the present European Union say that we must unite still further; or, indeed, deepen, if you like to use the old jargon. Then, from this united, strengthened position, the Union will be able to cope with expansion. However, we believe that we must also look for more imaginative and flexible ways to accommodate more members. It remains a policy to which we have always been committed. Flexibility for us has always gone hand in hand with enlargement. We must remember that we have welcomed each enlargement in the European Union. Today, we cannot imagine a European Union without Portugal or Spain--countries which were under dictatorships this century, right-wing ones on that occasion.

If we give up on enlargement, we shall have turned our back on our principles and on support and encouragement for the applicant countries. This would be a disaster. Enlargement should be hugely beneficial for everyone and remains, I believe, our historic obligation.

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