Examination of Witnesses (Questions 420-439)
Rt Hon Caroline Flint, Ms Katherine Fox and Mr Adam
Bye
16 OCTOBER 2008
Q420 Baroness Symons of Vernham Dean:
Minister, you have been very full in your descriptions of how
we are trying to take forward policy on energy security, very
full in what is going on with trying to get some unity with other
European countries, but to come back basically to the point that
Lord Crickhowell was making which is that this is a dialogue and
we want Russia to play ball over this. Have you any indication
at all that they want to play? That seems to me to be the missing
part of this jigsaw. You have talked about the suspension of the
discussions that began in July; we all understand why that happened.
You have talked about the importance of Russia understanding that
it needs the market and needs the investments that Europe brings
to it, but has there been, at any point—if so, can you tell
us what it was—any give in the way that the Russians have
responded and any sign that they understand that this is a two
way street too? Or are we, singly and together with our European
colleagues, constantly in the position of demandeur.
Caroline Flint: As far as I understand
I think there is recognition of the mutually beneficial results
of engagement with this. They see the EU as a good customer for
them in terms of their market and in that sense I think that drives
some of the discussion in itself. The fact that the EU and Member
States within it are a major customer of Russia in terms of its
supply I think that helps in terms of these discussions, but I
think clearly there is a long way to go on it. Obviously the present
situation in terms of the way talks have suspended leaves us with
somewhat of a vacuum in terms of how we are moving forward, but
I think that is engagement that you have to continue on a very
practical level how we rely in many respects in the EU on Russia's
supply but also Russia in turn relies on what they get back from
that. I think that is part of the basis for discussion. I do not
know whether Katherine from the Russian desk has anything more
to add to that in terms of any discussions she has had in recent
times.
Ms Fox: I think it would be interesting
over the next few years, as your Committee's report pointed out
on energy, there is a forecast for a gas deficit. I think Russia's
behaviour over the next few years, if it faces up to that, will
realise the need for investment. The Secretary of State for Business
and Regulatory Reform will be going out to Russia in a few weeks
so I know he will be talking with Russian businesses about the
importance of energy efficiency among other things. I think that
is an important dialogue that we can have with Russia and the
forecast gas deficit helps us to start talking about issues like
energy efficiency, about gas flaring but also I think the EU's
approach has been quite realistic looking at the internal market,
recognising what Russia's behaviour is like and that if it is
likely to continue that we need to respond accordingly and not
just hope one day there is going to be some change in approach.
Q421 Baroness Symons of Vernham Dean:
Do you feel happy that there is a sort of Plan B, if they continue
to hold us off in the way that I think many of this Committee
are indicating that we are fearful will continue to be the case,
that there is a Plan B about how we secure our energies, but it
is largely one that is entirely EU focussed and based.
Caroline Flint: I think part of a Plan
B is the climate change package, how we diversify the sources
of energy that we have in terms of building a platform for alternative
supplies in terms of renewables and things like the Nabucco pipeline
as well. In terms of energy I think we all realise we cannot put
all our eggs in one basket; we have to think about these alternative
supplies. That is why the climate change package is important
and clearly it does mean we are less reliant on one source. However,
for the foreseeable future we still have a long way to go on that
and therefore the gas supply from Russia is important to that
end for some Member States more than others. We need to recognise
that and find ways to engage with our colleagues in Russia on
that issue.
Q422 Lord Anderson of Swansea: Minister,
until now the main response of our European partners and indeed
ourselves has been bilateral deals with Russia, the Germans on
the North Stream, Bulgaria and others on the South Stream. To
what extent in your view was the temporary closure of the Baku-Tbilisi
to Turkey pipeline an alarm bell which has been heard by our European
partners? What is our expectation on Nabucco? Are we totally in
favour? Will it be publicly or privately funded? Is it on track
for 2010/2013? What are the next steps in relation to this project
which may be justified, certainly politically and probably commercially?
Caroline Flint: I think in terms of EU
unity it is quite neutral on Nabucco. I would like to write on
the details about the responses to what you have just said because
I do not want to put my position in answering in detail on that
issue right now. However, part of the question about how we move
forward on climate change for the EU as a whole is to see where
we can have a much more common voice. That does not take away
from the fact that individual Member States have existing sources
of supply and therefore countries they deal with, but part of
the discussions that are happening at the moment and one of the
reasons why it has been identified that what was lacking in the
Security Strategy was recognising that you need to be less reliant
on fewer sources of supply which in themselves can be subject
to conflict which ultimately have an impact on that flow coming
through to the EU. I think there is unity on that, the question
is, are the details of how that will work in terms of existing
countries and their commitments and their relationships and their
contracts and also how positive are those individual countries
which will be part of the discussion about the 2020 climate change
package towards making changes within their own Member State in
terms of developing alternatives and addressing the issues of
reducing emissions. We do not all start at the starting line together
on this, but the fact that both the Strategy and the review on
energy are identifying these issues it means we are creating a
debate that nobody can really avoid.
Q423 Lord Hamilton of Epsom: Minister,
two other wild cards on this one. One is that there have been
rumours that the Russians may be intending to build new pipelines
to the East and supply China. The other one is the whole question
of internal consumption, that this may rise inexorably and they
may start using more and more of their own supplies of gas and
oil. I would be interested to know what our official position
is on that. One thing that was quite clear to us in our report
was that actually the production of Russian oil and gas is pretty
well static, it has not benefited from being nationalised and
on the whole their exploration programme is pretty limited. If
we are talking about a static supply of oil and gas with more
and more of it being used internally, what is our thinking on
those two elements?
Caroline Flint: I might ask Katherine
to come in and I might say something about increased consumption
because that is part of the issue we have to address about how
we reduce people's reliance and consumption because as countries
develop then the knock on effect is that they want to use more
energy and we need to find another alternative to that.
Ms Fox: In terms of the possibility of
Russia moving eastwards in its energy supplies I do not think
we have anything too concrete on that for the moment; there might
be something we could follow up with. Certainly China receives
a significant amount of LNG, I believe, so it is possible that
it may free up more supplies into the global market. I am aware
of a very complex picture that just because supplies are going
in different directions I think it would take someone with more
specific expertise into the global gas market than me to give
the Committee a fuller response on this.
Q424 Lord Hamilton of Epsom: In terms
of internal supply.
Ms Fox: In terms of internal supply,
as you are probably aware the Russian Government has been subsidising
for its local population and is on track to increase the prices
there. It is again something that we are very aware of and we
are watching its plans closely. Work is being undertaken by what
was BERR now moving over to the new Department for Energy and
Climate Change in terms of the modelling of the effects of that.
There is work going on there.
Q425 Lord Hamilton of Epsom: Do you
see a rising percentage of Russian production actually being consumed
internally?
Ms Fox: That is one possibility.
Q426 Lord Hamilton of Epsom: You
do not think it is a likelihood.
Ms Fox: Again it is an incredibly specialist
field; I think we will write to you on that.
Chairman: It is not one of the issues
which was suggested we were going to question witnesses on today.
Lord Hamilton of Epsom: No, but it does
have massive impacts on Europe.
Q427 Lord Hannay of Chiswick: Is
the reality not that we have not actually tried Plan A yet because
we have not had a common energy policy and a common approach and
we are now trying to construct that. The first priority surely
is to give a real try at Plan A and get the underpinning in Europe
for that. Secondly, surely Russian perceptions are going to be
affected more than anything else probably by the oil price which
is heading rapidly southwards and may possibly bring home to them
that a policy which they built up on the basis of 147 dollars
a barrel is not quite the right one for 75 and going south.
Caroline Flint: On the latter point,
I saw some of the headlines in the papers this morning about the
prices of a litre of petrol going down and again I think countries
do need to look at this and how they model their plans in terms
of their income has to be sound. On the wider energy issue obviously
we have colleagues in other departments—although they have
changed somewhat now—working on some of these issues, these
common energy strategies. I think it would be fair to say probably
in the last couple of years this has risen up the agenda for members
of the EU but also in relation to supplies from outside the EU
as well. The Russians, I understand, are invited to the Global
Energy Initiative in London and the President is due to attend
that, we hope.
Q428 Baroness Symons of Vernham Dean:
The December one?
Caroline Flint: Yes. Hopefully that will
be another opportunity to test out just where there are some common
areas of discussion on these issues.
Q429 Lord Anderson of Swansea: The
Western Balkans are our near abroad I suppose, and very manageable
in size. Would you agree, Minister, of Serbia that there can be
no long term stable relationship of the European Union with the
Western Balkans without the incorporation of Serbia and that Serbia
has made some very significant moves over the past year with Karadzic,
with the very welcome parliamentary elections and so on. How do
you see this progressing over the coming months? How significant,
looking at the parliamentary side in Serbia, will be the EU instrument
for pre-accession in terms of funding more relations with parliaments,
for example, which is part of our interest. Where do we start
in relation to Serbia and how can we help?
Caroline Flint: I think there has been
some progress made. Following the elections in May we saw the
formation of a pro-European government coalition in July and I
think that has added to some real progress in terms of Serbia's
ambitions in relation to the EU. Like the Committee we welcome
the Serbian Government's ratification of the Stabilisation and
Association Agreement and of course the arrest and transfer of
Karadzic to The Hague. I think that is an indication that Serbia
is taking seriously its commitments to become a member of the
EU. We do feel, however, further cooperation with the International
Criminal Tribunal for the former Yugoslavia is needed and that
the arrest and transfer of Karadzic was a significant step forward
but we think there is more that can be done to demonstrate their
full cooperation. There are, in particular, two remaining indictees,
Hadzic and Mladic, and that is something where we hope for as
much cooperation as possible. There are also some issues around
witness protection and intimidation as well in Serbia that we
feel needs to be addressed. Having said that, I think another
part of this is the constructive role that Serbia can play in
the region in line with the importance that the EU attaches to
good neighbourly relationships. I think in practice that is about
how Serbia demonstrates its constructive engagement with its neighbours.
That is why we were slightly concerned with Serbia's harsh reaction
to Macedonia and Montenegro's recognition of Kosovo the other
week because actually by demonstrating how Serbia can relate to
its nearest neighbours I think is an important part of the EU
being confident about their responsible role. We feel that Serbia
could demonstrate this by playing a helpful role in relation to
the deployment of EULEX in Kosovo and that would I think signal
very strongly their positive engagement.
Q430 Lord Anderson of Swansea: That
seems to put us, with respect, in the camp of the hardliners,
giving insufficient recognition of what Serbia has already done
and to the neuralgic points which it has dealt with over the past
months, certainly in a very constructive and diplomatic way. Where
do we stand? The Dutch obviously have the ghosts of Srebrenica.
Are we aligning ourselves with the hardliners within the European
Union and are we giving a sort of veto to the International Tribunal
before they give a total clean bill of health and we will say
with our colleagues no further progress in relation to Serbia?
Caroline Flint: I would make a couple
of points. First of all, the ICTY Prosecutor will be giving his
assessment to the UN Security Council in December on Serbia's
level of cooperation with the ICTY. I think that in itself will
be an important report for us to consider in terms of the way
forward. In terms of where we see ourselves, we do recognise the
progress that has been made but we still feel that it is important
that further cooperation could be given both in terms of the ICTY
but also in terms of relationships to near neighbours. We would
be ready in the interests of sending a clear signal of EU commitment
to Serbia's European aspirations and recognising the arrest of
Karadzic to consider implementing the Interim Agreement on the
basis of significantly improved cooperation. That is something
we have considered and feel we could go forward on. However, there
is not a consensus, as I am sure you are aware, within the EU
on this issue and therefore whatever we do there are other players
in this who need to be persuaded.
Q431 Lord Anderson of Swansea: It
may be very short-sighted and an unwillingness to recognise the
extent of the burden upon Serbia and the great progress they have
made thus far.
Caroline Flint: Yes, and I am hoping
over the course of the months ahead to spend some time in the
Western Balkans visiting. I do not know whether Adam, as Deputy
Head of the Western Balkans desk, would like to add more in terms
of his take on discussions over the summer.
Mr Bye: I think what you have said is
absolutely right. We are willing to acknowledge the progress that
Serbia has made and I think the EU has gone a long way to trying
to convince Serbia that there is a genuine EU perspective for
it. The signature of the SAA earlier in the year was an illustration
of that. You pointed to the significant funding under IPA which
is also an illustration of the EU's commitment to Serbia. However,
we have to balance that commitment against the need for Serbia
to play a part as a modern, respectable democracy and part of
that is cooperation with the International Tribunal in The Hague,
and that is why we are trying to ensure a balanced policy on that
which recognises their achievements but also ensures that they
deliver full cooperation.
Q432 Chairman: Is there any progress
on visa liberalisation with Serbia? I think it is very important
that young Serbians should have an opportunity to come and discover
what the rest of Europe is like.
Mr Bye: There is a new discussion on
visa liberalisation; that is being taken forward at the moment.
There is a roadmap to visa liberalisation; the countries have
to meet certain conditions and then the EU will consider visa
liberalisation. We also need to reflect domestically on what we
can do in this regard as we are not covered by the Schengen arrangements.
Q433 Lord Swinfen: Now that Serbia
is going to the International Court of Justice over the independence
of Kosovo, is there anything that the EU as a whole can do to
resolve the situation?
Caroline Flint: I think part of this
is about continual recognition in terms of Kosovo. Since the judgment
I think there are 51 countries that recognise Kosovo now. As I
mentioned I think the Montenegrins and the Macedonians are included
in that. Portugal, I think, came in at the final hour as well.
Certainly in terms of the EU countries recognising Kosovo it is
helpful in relation to that. We continue to work with Serbia and
one of the points I raised earlier where we feel we are collectively
working to encourage Serbia's cooperation is with EULEX and that
should be deployed throughout Kosovo. As I mentioned earlier I
think an indication of an acknowledgement of the role of that
deployment and support for it would be a very good sign. It is
something that the EU collectively is pressing Serbia to acknowledge
and work with. So there is unity on that part. I think with Serbia
behaving in that responsible way and again one voice of the EU
in terms of action to be taken is how we are working together
on this. We know that Kosovo is a very difficult issue for Serbia
but we believe that we are right to support the actions that are
taken in relation to that particular country and we would press
on Serbia, who we want to become a successful part of the EU,
to recognise that there are huge benefits for its population and
in some of these areas they can further their argument for progress
by taking a more practical and positive role.
Q434 Lord Swinfen: What members of
the EU have refused to accept the independence of Kosovo? Is there
any sign of them changing their minds? Are there any members that
have not made up their minds on the issue yet?
Mr Bye: Twenty-two European Member States
have recognised Kosovo, most recently including Portugal. The
countries that have not recognised it yet are Slovakia, Greece,
Romania, Cyprus and Spain.
Q435 Lord Swinfen: Of those that
have not recognised, which have refused to accept the situation?
Mr Bye: I think all the EU Member States
have been working together despite the differences over status
so, for example, on the deployment of the EULEX mission that has
had the support of the whole of EU.
Q436 Lord Swinfen: That is not quite
the question I asked. What I am trying to find out is if any EU
Member State rather than not having accepted the position—not
having made a decision—is actively opposed to the independence
of Kosovo. I had a feeling that Spain possibly was because of
the Basque region.
Mr Bye: That is a difficult question
to be honest with you. The situation as I would describe it at
the moment is that you have these countries that have not recognised
Kosovo but discussions have been relatively constructive. Occasionally
there are signs of active obstruction or of difficulty but as
a whole the EU has remained remarkably joined up despite the differences.
I am sorry I cannot be more specific.
Lord Swinfen: The impression I get is
the EU is not acting with one voice.
Chairman: As far as the EULEX mission
is concerned it is acting with one voice.
Q437 Lord Hannay of Chiswick: The
European Union does not recognise states. The European Union's
Member States recognise states but the European Union does not.
It cannot; it is not a state.
Mr Bye: That is absolutely right.
Lord Swinfen: That is fair enough but
they are still not acting with one voice.
Q438 Lord Anderson of Swansea: Minister
would you agree that the real significance of the referral to
the International Court of Justice, given what you have mentioned
as the very difficult internal problems of Serbia, is that they
have responded in a peaceful, diplomatic way and in accordance
with international law. We should seek to understand that.
Caroline Flint: The vote that took place
clearly shows a large number of people abstaining in terms of
referral and I think part of that was not necessarily acknowledgement
that it was right but that we are dealing with a very difficult
situation here. We believe that regardless of the judgment that
we should continue to work to secure stability in the region and
the fact that we now have 51 countries now recognising Kosovo,
I think we have to look to the future and not the past, difficult
though that is. That is why the other activities, EULEX deployment,
is very important and we would urge our Serbians colleagues, whilst
they sought this judgment, to recognise that in the meantime there
is a lot they can do to be a responsible and good neighbour. Given
their ambitions in terms of the EU I think that is very important
Q439 Lord Crickhowell: May I just
follow up what you have just been saying, that we should do our
best and get on with it, can you tell me what the consequence
is? Is it right that a judgment might not be there for a couple
of years and, if so, what are the practical consequences for day
to day events on the ground for a waiting for what is clearly
a very important judgment? I am not clear what happens in the
interval and what the consequences of delay may be.
Caroline Flint: My understanding is that
it could take some years—I have seen some commentaries where
it is three—for the court to decide. But, as I was saying
before, given that we have a situation that we are having to deal
with now and the fact is that we remain firmly convinced that
Kosovo's independence is consistent with international law and
we do believe it is the most stable outcome for Kosovo and the
region. That is why we want to continue working with Kosovo, Serbia
and other neighbours to try to focus on the future which is for
these countries in this part of world their ambition to be part
of the European Union and how they can make progress in that.
It is about promoting stability across the region and whether
through our EU relationships or bilateral relationships that is
what we try to do with the different countries that are most concerned.
I just think we have to keep focussing on that. I am not an expert
on how the court works when it does its business and what have
you, but it does not mean an end to discussions and trying to
improve relationships. I think we should be positive and forward
looking about that.
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