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Lord Williams of Mostyn: My Lords, I hope that I did not imply to your Lordships that there was no link. I was careful to say that CAP reform was not on the agenda on this occasion, and that, indeed, the presidency had made that plain. Inevitably, as the noble Lord, Lord Biffen, said, there is a connection but it is wrong to confuse the two issues and think that they are the same. However, they are plainly linked.

All governments of whatever complexion—certainly in the 10 years that I have been here—have constantly struggled with that matter but the runaway, out of control CAP budget is now capable of being controlled. That is an important step. Of course, economies such as that of Poland are significantly dependent on agriculture in a way that ours is not, and a much greater proportion of its citizens are dependent on agriculture in a way that ours are not. I reaffirmed Her Majesty's Government's commitment to the third world, as the Prime Minster mentioned in the Statement, and which the Doha round will continue. We cannot simply continue with the CAP; I do not think that any serious political thinker proposes that we should. Equally, we cannot abandon it overnight.

Lord Williamson of Horton: My Lords, does the noble and learned Lord accept that it is welcome that the mid-term review of the substance of the agricultural policy, including a greater emphasis on rural development, remains to be negotiated because comment before the summit implied that that might not be the case? Of course, budget limits, which were discussed at the summit, have a role, but we have a lot of experience of substantial underspending below the budget limits. Does the noble and learned Lord agree that the right policy for us is to continue as we were before towards the substance of change on the basis of the mid-term review in, if I may say so, a bulldog style?

Lord Williams of Mostyn: My Lords, the noble Lord, Lord Williamson, is absolutely right. The Prime Minister tried to stress that point in his Statement and I have tried to ventilate it a little more in answering questions. We want to shift spending from the old-style CAP—which was far too rigid and inflexible—to rural development.

Lord Grenfell: My Lords, I thank my noble and learned friend for the Statement. Like the noble Lord, Lord Williamson, I am pleased that the limit on agriculture spending will be without prejudice to the Commission's mid- term review of agriculture or to the Doha trade round and that the fundamental CAP reform that is obviously vital is still on the agenda.

This is not a popular subject on any side of the House, but I should like to ask about President Chirac's attitude towards the British rebate. My noble and learned friend may be aware that President Chirac is not likely to give up on this one over the years to come. My noble and learned friend may recall that in

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March 1999, in a unanimous report, the European Union Select Committee recognised that, as a major net contributor, the United Kingdom had a problem, but we considered that the rebate would not necessarily be the best way of solving it for much longer. We proposed that a realistic negotiating result for the United Kingdom would be an agreement to forgo the rebate on condition that—and only when—the loss could be made up permanently through the savings of a reformed CAP and stabilised overall expenditure.

When the time comes in 2006, when I am sure that the rebate will be back on the table, does my noble and learned friend agree that we might be able to turn the tables on President Chirac, assuming he is still there, by calling his bluff and saying that if he is prepared to reform the CAP properly, we will be prepared to put our rebate on the table, provided we are assured that the CAP savings will compensate us for forgoing or cutting our rebate?

Lord Williams of Mostyn: My Lords, I am grateful to my noble friend Lord Grenfell for that contribution, which is worth bearing in mind. The Prime Minister's adamant stance was that the abatement was not up for discussion or negotiation. That stance has succeeded. Without the abatement, the United Kingdom would have been paying 12 times more than the French, on an absolute or a per capita basis. We are a very generous contributor—more generous than France. France has benefited in a way that we have not. The whole structure of the CAP needs reform in the long term. As I said earlier, all governments have said in the past that they wish for reform. Undoubtedly, the timetable to which the noble Lord referred will be an important stimulus to reform, which must come one way or another. The policy is wholly ruinous in two ways. First, it does not bring about desired consequences. Secondly, it is an unjustifiable economic drain.

Lord Renton: My Lords, unless the CAP is reformed, how will those of the 10 new applicants whose economy depends mainly on agriculture know before they join how their economy will fare? Will they not be entering into a state of uncertainty?

Lord Williams of Mostyn: My Lords, in the nature of things, all political advance involves some uncertainty. That is what political judgment is about, as I am sure the noble Lord agrees—particularly following the 1997 election. There are some key messages on the financing of enlargement. There will be a significant amount of new money. That will be within the ceilings already agreed at Berlin. We will seek to ensure that no candidate is worse off after enlargement, but they cannot continue to expect to be subsidised by others indefinitely without change.

Lord Dahrendorf: My Lords, like others who have spoken, I particularly appreciated the brief but clear reference in the Statement to Turkey and its future. The key fact for me is not just that there have been recent changes, to which my noble friend Lady

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Williams referred, but that Turkey is an Islamic country with a tradition of secular law. That is the key reason why we should decide that Turkey belongs in the community that we are forming in Europe. While I appreciate the Government's position, what reason is there to believe that they can prevail come December?

Lord Williams of Mostyn: My Lords, I am grateful, as always, to the noble Lord, Lord Dahrendorf. Her Majesty's Government's position has always been generally supportive of Turkish accession to the European Union. All such conclusions are partly altruistic and partly selfish. We firmly believe, not least because of the reason that the noble Lord, Lord Dahrendorf, gave, that Turkey becoming a full member would be of benefit to the European Union—and therefore to the United Kingdom. I accept that we are brought to that optimistic conclusion not simply because of the recent advances that Turkey has made, but those advances are very significant. The noble Lord referred to Turkey as an Islamic religious culture, but a secular state. That has been the position for a relatively short period—only since the end of the first quarter of the last century. These discussions have been beneficial to the European Union and to Turkey. There is plainly an advantage to Turkey in being a full member of the European Union. There is no doubt that the internal reforms have been assisted by the context of application for entry. It will undoubtedly be of benefit to the European Union if Turkey joins. The European Union is capable of being an oasis of stability in a world that is becoming increasingly fearful and uncertain.

Lord Stoddart of Swindon: My Lords, I shall also refer to Turkey. It is an important country that is already 60 million people strong and is projected to reach a population of 110 million in a few years. At the same time, Germany's population is projected to drop to 60 million. That means that Turkey will be a dominant country in the European Union. I hope that has been taken into account in discussions on Turkey's future in the European Union.

What are the Government's reactions to Mr Giscard d'Estaing's proposals? The noble and learned Lord touched on the issue. Are the Government really in favour of a written constitution? Are they in favour of abolishing the rotating presidency in favour of a semi-permanent presidency? Are they in favour of the virtual abolition of the national veto and of the imposition—or, rather, introduction—of a legal personality for the European Union? What, in his view, would be the implications of such a legal personality?

Lord Williams of Mostyn: My Lords, I would not say that Turkey would become dominant, but, as the noble Lord, Lord Dahrendorf, implied, it will be extremely important. There is a distinction. It is important to bear in mind that Mr Giscard d'Estaing has indicated his preliminary views. He is not able to impose his views, nor does he seek to. The convention

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will not make its final report to the European Council until June 2003. At the moment working groups are producing their reports and four new groups are to be established in the autumn. Questions of legal personality and so on are matters for discussion and elucidation. To my noble friend Lord Stoddart I say that it is a mistake to believe that the expression of a preliminary conclusion necessarily binds the outcome.

The Earl of Sandwich: My Lords, I do not believe that the noble and learned Lord has commented on the point raised by the noble Lord, Lord Strathclyde, that there was no mention of the coalition against terrorism. Rightly, the Prime Minister spent some time on the Chechnya crisis, but why is it that European leaders cannot produce regular statements on the coalition against terrorism as opposed to other major concerns like Iraq?

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