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Lord Wallace of Saltaire: My Lords, we on these Benches welcome the Bill. Looking at the Bill in its full length and complexity reminds me of the benefits of being mainly concerned with foreign affairs in this House. I took part in a Second Reading debate of one of the Home Office Bills the other week and I did my best, as I looked through it—through Article 60 and Article 80 and further—to appreciate how much harder, in legislative terms, my colleagues on other policy teams have to work. When I picked up the Company Law Reform Bill the other day, that was an entirely different matter.

The careful balance of the European Union's approach to enlargement, particularly with reference to Bulgaria and Romania, seems to me entirely the right approach: that we should welcome the European states which move successfully through the painful transition from authoritarian regimes and state-run economies to open economies and democratic government into membership. However, we should, at the same time, insist that they meet the necessary political, economic and administrative conditions required for membership.

Enlargement has been the most successful foreign policy that the European Union has conducted over the past 25 to 30 years. I can remember visiting Portugal, Greece and Spain in the mid-1970s as they began to move away from authoritarianism and it is astonishing how far—Portugal in particular—they have moved. The quality of Greek administration today and so on and so forth all owe a lot to their membership of the European Union, which helped a great deal. We have seen the same with the eight east European countries that have already joined and we are following the same path with Romania and Turkey. We need to do the same with the rest of south-eastern Europe: with Croatia and with the other countries of the western Balkans. We are attempting to do the same with Turkey.

This is not a distant part of Europe. I was happy to hear the noble Lord, Lord Tomlinson, reminding us of the Bruges speech made by the noble Baroness, Lady Thatcher, in which she spoke of eastern Europe being very much part of our Europe and which we had to look forward to coming into our Europe. That is what we are now very much working on. As he went through his historical dimensions, I was thinking about how much the history and population of eastern Europe is
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tied in to our own country. Every time I visit my father-in-law's grave in Bradford with my wife, I see the Polish section and the Ukrainian section of the same graveyard, carefully tended.

I used to have many enjoyable conversations with Lord Roll, long-since departed, about Ruthenia and his time growing up there. This is not a distant area about which we know so little, although I am not entirely sure about Dacian regiments and whether or not those of us whose ancestors come from southern Scotland should count Dacia as part of our blood. Furthermore, one does have to remember, as we play around with where we think Europe stops, that the Emperor Charles IV settled all those Saxons in those towns in Transylvania to defend the boundaries of Europe, as he saw them, against the barbarians coming in from the east again.

We have to be very careful about further enlargement beyond this. I disagree with some noble Lords who have spoken. We have some difficulty with populations in other western European countries—I spent some time in the Netherlands during and after their referendum—where there is some resistance to enlargement. If we are to hold to the line on the western Balkans and on Turkey we must discuss how much enlargement carries on thereafter. There are those who talk not only about the Ukraine but the southern Caucasus. The Government and their partners in Europe need to talk about how we make the ineffective neighbourhood policy that the European Union is now pursuing more valuable—about how a broader European economic area and political consultation is put into effect.

Various noble Lords have mentioned costs. The costs are relatively modest. They, and certainly the noble Lord, Lord Howell, did not talk much about the benefits and the investment in stability and security which assisting these countries to move towards open market economies and effective and non-corrupt administrations provide for us. We now spend half as much on defence as we did 20 years ago. This is investment in our security in a different sense.

The budget deal that we have just achieved was not too bad. I have two criticisms of it; first, that the British Government should have avoided offending our natural allies in eastern Europe—the Poles, the Czechs and the Slovaks—with our proposals before the final stages to cut what was transferred to those countries; and, secondly, that the Government should have used the occasion to argue not only for sharper changes in structural funds towards the new members, but that more money needs to be spent from the common budget on foreign policy regarding countries outside and around Europe with which we share common interests.

I was sorry to hear the noble Lord, Lord Howell, following what seemed to be the Daily Mail's "misery agenda", as it is now called. The noble Lord, Lord Turner, said the other day that the difference between the free market in Europe and the free market in the United States was that in Europe we regulate,
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but in the United States they litigate. The costs of litigation in the US are absurdly high, so there is something to be said for our level of regulation.

Clause 2 refers to the free movement of labour, which is a delicate issue that we must all be concerned with. It is difficult to extrapolate long-term migration flows from short-term migration flows. In the past year there has been a significant surge of people into the United Kingdom, but the net figures for the previous year were negative and it is not clear whether last year's surge will be maintained for the next 10 to 20 years. I note that in Spain, Greece and Portugal, the flows of migration that accompanied their moves towards the European Union were reversed as they became more prosperous. All three are now countries of net immigration, rather than net emigration. Most of those who came to the European Union in the process of accession have since gone home. I anticipate that the same will happen in Poland, the Czech Republic and others. Yet again, that is a reason for us to invest in helping them towards greater prosperity.

The noble Lord, Lord Howell, should be careful about following the MigrationWatch agenda in this respect, which provides us with the worst possible extrapolations of current trends. After all, the principles of the free market rest on the four fundamental freedoms of trade, services, capital and labour. I hope that liberals—and I understand that the Conservative Party is moving in their direction—interfere with those freedoms as little as possible. The conditions are important. I note that in the other place the Minister for Europe said that accession was not yet a fait accompli. I now understand that to mean that it is not simply a question of whether there will be a delay of one year, but that accession itself is not yet absolutely guaranteed.

The European Union rests on the quality of national regulation, national courts, national policing and national and local administration. That is what holds together the single market and our shared political and social space in Europe. It is important to maintain that, which is what the Copenhagen conditions do. The Commission's comprehensive monitoring report in October 2005 expressed serious concerns about corruption and organised crime in both Bulgaria and Romania. From visits to both countries I am aware that there is a degree of overlap between organised crime and corrupt administration. People talk about the "deep state" with reference to Turkey; certainly, people in Sofia have talked to me about the deep state in terms of the links between some aspects of the administration and organised crime. I read the report on the problems of Bulgarian court procedures and the case of Michael Shields, which Louise Ellman has raised in the other place.

The noble Lord, Lord Howell, asked what would happen next and how would we know what was to happen next. Here it is in the Commission's comprehensive monitoring report: the Commission will present to the Council and Parliament in April/ May 2006 and may recommend that the Council postpone the accession if there is a serious risk of any of those states being manifestly unprepared to meet the
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requirements of membership by January 2007. The Commission will make a proposal and the Council will reach a decision; this is the normal way things operate. The two states will be treated separately. I should like to say in passing that I note that the British Government have given high compliment to the quality of the Commission's work on enlargement. This is and remains one of the best areas of Commission work. I think we may all have particular confidence in Olli Rehn, who has a British PhD and I can recommend to the noble Lord, Lord Howell, his thesis on the political economy of small states in a globalised open market. It is the sort of thing I am sure he would enjoy reading; I speak as a former supervisor.

Conditionality standards and the current member states are something that we might wish to touch upon. Some of us have some concerns about whether Italy fully meets current standards in terms of the quality and diversity of its free media, the problems of its financial corruption and even, perhaps, the independence of the judiciary from the government. I touch on that only in passing. We on these Benches welcome this Bill. British interests are clearly served by further enlargement to the eastern and western Balkans. This is about our stability and our security. For that the Government have strong support from these Benches.

4.38 pm

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