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European Council, Helsinki, 10th-11th December

3.33 p.m.

The Lord Privy Seal (Baroness Jay of Paddington): My Lords, with the leave of the House I shall 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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    "There have been suggestions that this agreement to increase the options open to us in future crises has adverse implications for NATO, or that the European Union is creating a European army. This is the opposite of the case. The European Council made clear that the EU will launch and conduct military operations only where NATO as a whole is not engaged. The process will involve full consultation and transparency with NATO. The six non-EU allies will be involved and consulted before decisions are taken, and will be able to take a full part in resulting operations. The EU will avoid unnecessary duplication with NATO.

    "Final decisions on whether to involve troops will remain firmly with national governments. These arrangements do not imply a European army, as the Helsinki Council made explicitly clear.

    "But it would be a tragic mistake, repeating mistakes of British European policy over the past few decades, if Britain opted out of the debate on European defence and left the field to others. This is a debate we must shape and influence from the start, because our vital strategic interests are affected by it. As a result of our participation, it is moving in a clear direction reinforcing NATO, not in opposition to it. I completely reject the view of those who would have us opt out of this issue.

    "The conflict in Chechnya was much on our minds at Helsinki. Our relationship with Russia is a vital one, above all for the security and stability of our continent. We want Russia to continue on the path of democracy, market economy and the rule of law and will continue to support the transition process. But business as usual is not possible while human rights are being comprehensively abused in a corner of the Russian Federation. The EU called for a political solution to this issue and adopted a series of actions designed to back up the words of strong condemnation.

    "On the withholding tax, the Council agreed a sensible way forward. We will continue to work for a solution to the issue of tax evasion that rightly concerns some of our EU partners, Germany in particular. But this cannot be done at the expense of a major European financial market based here in London. I have made it clear that we will not permit that. We also have genuine concern about the efficacy of the measures proposed. So we have also insisted that, in debating the way forward, the Chancellor of the Exchequer's proposal for an exchange of information on a basis that involves more than just EU countries should be examined. There is increasing recognition that it is no good adopting measures in the EU if the only impact is that the market in savings moves outside the EU. The rest of the tax package we can support, although of course other countries have difficulties with parts of it.

    "The Helsinki Summit dealt with pressing issues of the day, but also had a vision for the future. We made the historic decision that the Europe of the future would be one that embraced countries in

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    eastern Europe that 10 short years ago were only just emerging from totalitarian communist rule. This enlarged Europe is one that would have been unimaginable until the very recent past and it is one that we should embrace. We also made the decision that our continent of Europe, which twice this century has lost millions of its citizens in the two most bloody wars in human history, should now co-operate in defence where the object is to help to keep the peace. A bigger European Union, a union committed to embracing countries committed to democracy, a Europe of nations determined to use their collective strength to advance our values--that is our vision and I commend it to the House."

My Lords, that concludes the Statement.

3.42 p.m.

Lord Strathclyde: My Lords, perhaps I may say at the outset how grateful I am to the Leader of the House for repeating the Prime Minister's Statement. But will she agree with me that it was strong on generalisation but weak on any details?

On a more helpful note, I concur with her on the gravity of the situation in Chechnya. Is she aware that we support the measures agreed at Helsinki, including the diversion of TACIS funding, but that we also need to ensure that we do not undermine democratic forces in Russia? Is she concerned that, strongly as we condemn the unacceptable and brutal Russian action, the bombing of Belgrade and other cities by NATO may have provided a pretext--but certainly no excuse--for the Russian action? Does she agree that we need to think very carefully about the application of the Blair doctrine on armed military interventions in other countries' internal affairs?

I turn to the substance of the summit. Is the noble Baroness aware that we on this side strongly support the expansion of the European Union to the states to the east? In particular, does she recall that we have on repeated occasions deplored the offensive attitude taken by some EU members towards Turkey? Will she accept our support for inclusion of Turkey in the process of enlargement? But is she aware that we do not believe that admission to the Union must invariably be on the basis of the acquis communautaire? Is it not important to campaign for greater flexibility within the Union? Was it not regrettable that at the recent WTO conference the EU was adopting protectionist positions, when it is clear that free trade has been the greatest creator of prosperity in the world in the past two centuries? Do the Government remain unequivocally committed to the principles of free trade? Did the Prime Minister urge that position on our EU partners? In particular, did he oppose any requirement on aspirant members of the EU that they should regulate their labour markets and industries in order to qualify for EU admission? Would it not be bizarre for states like Estonia, which have just escaped central regulation and freed their economies, to have to re-regulate to join the EU? I hope that the noble Baroness will be able to assure the House that that will not be the case.

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This brings me to the reality of the Helsinki conference. Do the Government regret that after their unilateral abandonment of the previous government's hard-won positions on the Social and Employment Chapters they have received precisely nothing? Are the Government ashamed that up and down this country as we speak there are millions of businesses--some of them small traders--wrestling with form after form, and regulation after regulation, that have been imposed on British business under the Social Chapter and various employment directives? Are they not concerned that our competitiveness is being sapped and the enthusiasm of entrepreneurs destroyed by such regulation? What was it all for? What has the Prime Minister achieved for small businesses in Britain?

In 1997 the Prime Minister preened himself, cycling around Amsterdam as a great European. No more bicycles now, my Lords. Instead, he has found himself being railroaded towards imposing a disastrous tax on the City of London. He was greeted with contempt and ridicule when he tried, far too belatedly, to speak up for our farmers. Does not this summit represent the complete failure of the Prime Minister's strategy on Europe? Will the Leader of the House tell us one thing that he has achieved by his willingness to sign away the interests of British business in Amsterdam? Has not his whole policy on Europe been exposed as utterly naive? We were told by the Prime Minister on 14th July that,

    "the decision to lift the beef ban has come about because the government have a constructive attitude to Europe. That is why we got the beef ban lifted and it is another example of new Labour working".

Was that not utterly naive? Should not the Prime Minister, and in his absence the noble Baroness, apologise to our beef farmers who were misled in this way? Will she tell us precisely when Germany will lift the ban on our beef and when she expects the law case against France to be concluded? Does she regret not pressing on her colleagues the need to respond earlier to the unequivocal call from this House to end the beef on the bone ban? Was the vote on that not an example of this House working--and of New Labour failing to listen? Would the position of Ministers arguing for our beef abroad have been much stronger had they spoken up for it at home? Is it therefore not an insult to our farmers to be told that the Prime Minister did not raise this issue at the summit and that--I quote from the briefing--he,

    "was so angry he didn't even mention the crisis when he met with Lionel Jospin last night"?

Why did he not mention it? Was he just weak? Was he temporarily embarrassed? Had he forgotten his French? My French is not on a par with the much-vaunted French of the Prime Minister, but is not the phrase he was looking for, "C'est inacceptable"?

Is not the handling of the withholding tax another example of the foolishness of the Prime Minister? Time and again at the Dispatch Box the noble Lord, Lord McIntosh of Haringey, no less, has been asked by the House to make clear to our partners that this country would veto a withholding tax. Would it not have been better if the Government had taken the advice of this House and made that clear from the

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outset? Will the Leader of the House make it clear that the Government will veto any withholding tax and that if any effort is made to impose it on Britain under any legal basis from without, we will not pass it into law? Will she declare unequivocally that a vital national interest is involved here and that the Luxembourg compromise will be invoked? Will she make it clear that Britain will reject the view, implicit in the Helsinki communique, that all savings in the EU should be taxed? When the Prime Minister says that he can,

    "accept the rest of the tax package",

does that mean that he accepts the principle of tax harmonisation in Europe?

Turning to some other issues, was there any discussion at Helsinki of the proposed new takeover directive? If so, did the Prime Minister make it clear that we would not accept any dilution of the freedom and flexibility of the Takeover Panel rules?

On the question of a European army, what will be the common language of such an army? Will commands be given in English? Does the Minister agree with the warning of the US Deputy Secretary of State that,

    "America would not want to see an ESDI that comes into being first within NATO and finally grows away from NATO"?

Is it the view of the UK Government that our prime strategic interest remains first, last and always the preservation of the NATO alliance? When the Prime Minister says that he will avoid unnecessary duplication with NATO, should he not mean "no duplication" with NATO?

Was there any discussion of transport matters at the Helsinki Summit? If so, did the Prime Minister inform his colleagues of the new division of responsibilities within the DETR? Will the Minister join these Benches in congratulating the noble Lord, Lord Macdonald of Tradeston, on his promotion? Can she confirm that in all future EU Councils on transport it will be the noble Lord who will speak up for Britain?

In conclusion, is it not clear that, far from moulding a new Europe, the Prime Minister has limped along behind an old integrationist agenda? Is that not why he agreed at Helsinki to open-ended discussion on abolishing our veto, to taxing savings and to the creation of a new Euro-army? Has he not carried off an unbelievable double--to sign up to the Euro-federalist agenda while simultaneously being isolated in Europe?

Does the Minister recall that, when my noble friend Lady Thatcher was isolated, she won the British rebate; and that when my right honourable friend Mr Major was isolated, he won the UK opt-outs from the Social Chapter and the single currency? Is it not the truth that the Prime Minister is the first to return from a European summit both isolated and empty-handed? Over the past two and a half years he has given away vital British national interests and achieved precisely nothing. That is a humiliation for the Prime Minister, but it is also a tragedy for Europe and a tragedy for Britain.

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3.52 p.m.

Baroness Williams of Crosby: My Lords, I, too, want to add my congratulations to the noble Baroness the Leader of the House on the Statement that she has repeated. First, with regard to the French attempt to ban British beef, will she confirm that under the European Union there is a clear resort to legal action? Will also she confirm that in the case of other countries, such as the United States which has maintained a ban on British beef for many years, there is no such resort and no way in which that country can be legally obliged to take British beef, whereas that is not the case with France?

Secondly, will the Minister confirm that, in rejecting a proposal for a withholding tax, the United Kingdom agrees that there are serious problems of evasion and money-laundering which must be dealt with and proposes to set up a working party under the European Union to investigate the problem and see how it might best be met?

Thirdly, will the Minister confirm that in discussions with the United States on the issue of the European strategic and defence initiative, it was made clear by Mr Strobe Talbott and others that the United States welcomed such a development providing that there was proper consultation with the American administration; and that, in addition, the United States has made it plain that in some cases it would be willing to support, logistically and with intelligence information, those particular foreign policy initiatives that it supports but was never selfish enough to be directly engaged in? Given that, is it not the case that, at the summit, Europe has taken another step forward to a genuine and balanced partnership between the western nations?

Does the noble Baroness agree that the ambitious and historic programme for a major enlargement, now to include a further six countries and Turkey, places heavy responsibilities on the existing member states to achieve a reasonable timetable? Is it the view of the noble Baroness and her right honourable friend the Prime Minister that we can be sure that the IGC will take place, and that it will deal with the major outstanding institutional issues, including a simplification of a European Union constitution?

We commend the Prime Minister and the Government on their wider vision of where Europe should be and the efforts that they are making towards that. Does the Minister appreciate that there is an unbelievable double in respect of the Opposition, with half the party wanting to get out of Europe and half the party wanting to stand on the fence--an uncomfortable and physically impossible position to sustain?

3.56 p.m.

Baroness Jay of Paddington: My Lords, I am grateful to the noble Baroness, particularly for the vivid metaphor at the end of her remarks.

On the general points raised by the noble Baroness and the noble Lord, Lord Strathclyde, about enlargement of the European Union and the terms of

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the acquis, I am sure that the noble Lord had read the extremely well-informed and authoritative debate that took place in this House last week, to which my noble friend Lady Scotland of Asthal replied, and the Private Notice Question relating to Chechnya, to which she also responded at the end of last week. I can add nothing helpful to what was said on that occasion, particularly as regards the flexibility that the UK Government seek to adopt on the acquis and the transition measures being taken with the other candidate states. However, we shall want to return to those points. The same applies in relation to Chechnya. I have taken advice as to whether anything further can be added regarding the preservation of the safe corridor that we all hope will be achieved to maintain the flow of refugees. The situation remains similar to that reported to the House by my noble friend at the end of last week.

Both the noble Lord and the noble Baroness raised questions relating to the European defence situation and whether it might lead inevitably to Europe being in conflict with NATO and in particular with our American allies. The noble Baroness rightly quoted one American expert in this area. Perhaps I may quote the US Defense Secretary. At the NATO ministerial meeting on the 2nd and 3rd of December, he said that for many years the United States Congress had been asking the Europeans to assume a greater burden. To precis his remarks, he said that the United States welcomed the arrangements that would be discussed at Helsinki and understood that it would be done in the context of having a European capability that would strengthen NATO. He added that there was no ground for speculation that somehow it would lead to a division between Europe and the United States. Noble Lords who have had a chance to examine the conclusions of the Helsinki Summit will have seen that at paragraph 27 there is an explicit undertaking spelling out clearly that this is in no way leading to the formation of a European army. Therefore, the noble Lord's question as to the language in which commands would be given is, frankly, irrelevant.

In passing, perhaps I may say to the noble Baroness that the IGC is scheduled to take place, and will end, by this time next year. Its primary concerns will, we hope, be focused on the reform of the structures that we have discussed several times in this House, particularly with a view to the arrangements that will be necessary when we come to examine the wider application of the candidate state.

On the question of beef, I agree entirely with the noble Baroness. There is little more to be said given that the Prime Minister did not speak to the French Prime Minister on the subject. The noble Lord's understanding of the Prime Minister's private conversations with the French Prime Minister is slightly better informed than is mine, but I know that this subject was not included on the formal agenda--for the simple reason that, as was said in the colloquial language of last week's press statements, the time for diplomacy has ended and the only thing left now is to see the French in court. That is certainly the intention.

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There is no question but that the Government have been anything but precise in their decisions all along the line on making the best possible progress. As to the remarks of the noble Baroness, Lady Williams, about the effectiveness of the situation in Europe, rather than dealing with the United States or British Commonwealth, the latter are in exactly the same position in refusing British beef imports, but there would be no legal redress because there would be no legal framework within which to work.

I relate this anecdote in contrast with the assumptions of the noble Lord, Lord Strathclyde, that nothing changes in Europe and everything is the worst of all possible worlds. I speak rarely in this House about my role as Minister for Women but it is appropriate to recall something that entirely demonstrates the step change in the relationship between this country and our European partners since the present Government came to power.

During exactly the same period as the Helsinki conference was in progress under the full spotlight of the international media, I was chairing in this country a meeting of European Union Ministers on women's and equality issues, at which there was practical discussion of arrangements between our different countries on some of the issues that most affect the everyday lives of our population. Although those discussions did not lead to any concrete or universal decisions, they produced a useful and important exchange of views, which can be taken forward. I shall take them forward tomorrow at a meeting with my right honourable friend David Blunkett and his counterpart the Portuguese Minister for Employment on issues relating to women's employment in this country and the wider European Union.

Such practical exchanges and detailed discussions by Ministers at a policy level contribute to the thickening and organisation of European issues. They are not in the glare of the media spotlight during a ministerial summit, but illustrate precisely what we are achieving in terms of our different relationships with Europe.

The noble Lord, Lord Strathclyde, was determined to display the Prime Minister as being isolated in a way that led to this country being undermined and mocked. A columnist writing in the Daily Telegraph this morning stated that,

    "flying solo on certain questions at any given time being inherent in the process of continual negotiation that is the hallmark of intergovernmentalism".

I accept that, and I agree with the noble Baroness's concluding remark that this is about a different vision of Europe and a practical working arrangement, which I hope that I have illustrated with the anecdote about my own responsibilities.

4.30 p.m.

Lord Tordoff: My Lords, I ask for clarification on the presidential conclusions. The noble Baroness spoke about the intergovernmental conference's rather focused agenda. Two phrases seem to open the

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floodgates of possible extra activity that might not be in the interest of concluding matters by December next year. The conclusions refer to,

    "other necessary amendments to the Treaty arising as regards the European institutions in connection with the above issues...The incoming presidency will report to the European Council and may propose additional issues to be taken on the agenda of the conference".

Does that not suggest that the floodgates could easily be opened by the new presidency, in putting on the agenda all sorts of exciting and interesting but delaying matters?

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