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One further remedy seems to receive too little attention; and I was delighted to hear the noble Lord, Lord Crickhowell, who knows much more about these matters than I do, giving it a good deal of emphasis: the establishment of much more extensive gas storage facilities throughout Europe. After all, there are EU obligations on member states to hold a minimum supply of oil for facing the event of a supply interruption. Why do we not have similar obligations for gas, which is even more vulnerable to interruptions? I was glad to see in the Government’s reply to the report that this issue is to be looked at during the course of the year. Will the Minister say what line the Government will take during that review? Will he assure us that they want to see an increase in gas storage capacity, including in this country?

It is also important not to present the case for an EU policy on energy and energy security as simply an anti-Russian gambit. That would be quite foolish. No conceivable amount of diversification of supplies, development of renewables and nuclear or increases in energy efficiency will rid us of a considerable long-term need for supplies of Russian oil and gas, just as no amount of Russian development and diversification of its overseas markets will rid it of a considerable dependence on the EU market for its oil and gas exports. So we need to learn to get on better together and to co-operate in this area, which is of obvious mutual advantage. It is entirely legitimate and indeed highly desirable for the European Union to reduce its present vulnerability to a single supplier, but not in doing so to ignore our interest in a better long-term relationship with that supplier. Perhaps the Minister could say something about progress in the negotiations for a new agreement between the EU and Russia and whether it will cover these vital energy issues.

No recent development in Russian foreign policy arouses more concern than President Medvedev’s so far fairly vague references to Russia having a “sphere of influence” or “privileged relations” with the countries

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of the former Soviet Union. Russian actions in Georgia and the handing out of Russian passports to many citizens of these countries have only added to that concern. Are we to interpret this as a mere passing manifestation of post-imperial nostalgia, an affliction with which we have had some familiarity ourselves, or is it something more sinister and dangerous? Whichever it is, surely we must neither collude with it nor condone it. The 21st century has no place for such pre-First World War concepts, which in any case ended in disaster for all concerned. The European Union is surely right to pursue its Eastern Partnership with those countries, but must ensure at the same time that nothing is done behind Russia’s back and that the fullest consultation takes place at every stage in the development of those relations.

The picture of EU-Russia relations is one that presents opportunities but which also has plenty of clouds hanging over it. President Obama’s decision to try to reset relations between the US and Russia, and the recent reopening of bilateral negotiations on strategic nuclear arms, is such an opportunity since the interconnections between EU and US relations with Russia can hardly be in doubt. However, we need a clear European strategy and a will to implement it if we are to put the opportunities on offer to good use, and that strategy so far is lacking.

6.22 pm

Lord Selkirk of Douglas: I am grateful for the opportunity to say a few words in the gap, especially as I did not give notice beforehand that I would speak. On the day that Georgia was invaded, I wondered whether the developments would have the effect of invalidating the original report on the European Union and Russia. If I may say so, the noble Lords, Lord Roper and Lord Hannay, made tremendous contributions to the excellence of that report. All parliamentary colleagues worked hard on it, but those noble Lords in particular went the extra mile right up until the end of December. We are most grateful to the noble Lord, Lord Teverson, for taking the helm thereafter.

The follow-up report seems to have a different emphasis in urging that we should be more hard-headed. However, the policy of constructive engagement, which has been called for by the Foreign Secretary, remains every bit as valid today as it was at the time of the original report. Paragraph 325 starts by stating:

“Despite the difficulties, Russia cannot avoid dealing with the European Union on trade, on competition, on customs and frontier controls, and on a variety of other issues involving the EU’s common standards and regulatory procedures”.

The report goes to say that,

Perhaps even more important, paragraph 326 stresses that,

All this is as true today as when it was written. But I should like to make three brief points arising from the follow-up report. The first is in relation to Ukraine’s application to join NATO. It is in the public interest that the EU and NATO speak with great clarity.

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We are all aware that Russia has a dread of potential military encirclement which it would regard as a provocation. I note that on 23 June 2008 in RIA Novosti, a news agency in Moscow, Ilya Kramnik wrote,

I have to say on the other hand that the Government of the Ukraine have taken an entirely different view and have applied to join NATO, with the support of our present Government. It is entirely possible—indeed, likely—that a future Government would adopt a similar policy. The Foreign Minister, Caroline Flint referred to legitimate aspirations.

Incidentally, I thought that the wording of the follow-up report was absolutely appropriate. In Paragraph 58 it states:

“It is clear from the NATO ministerial meeting in December that there is no prospect of early NATO membership for either Georgia or the Ukraine. Without drawing back from the commitment by NATO to the two countries’ eventual membership, the focus should remain in the immediate future on practical cooperation”.

I draw to the Minister's attention the need for clarity and realism in decision-making and timescales, because Russia needs to know what we mean by legitimate aspirations, and we need to be aware of Russia’s concerns about what it believes to be military encirclement likely to increase tension. History shows that where clarity is absent, there is a risk of miscalculation, misinterpretation or misunderstanding, which can lead to trouble that we want to avoid; so I call for clarity and realism.

Secondly, we should take the trouble in the EU in maintaining a dialogue. Paragraph 313 states:

“We believe the EU should consult in depth with the Russians over all aspects of the European Neighbourhood Policy with regard to countries which were formerly part of the territory of the USSR, but should not give them a right of veto over EU policy”.

Paragraph 314 states that,

As a matter of principle, we are obviously anxious to seek good relations with Russia, but it is every bit as important that we have good relations with her neighbouring countries, referred to as her near abroad.

My third point is that the attacks on the British Council, which have not been mentioned so far today, were extremely high-handed. They are seen in Britain as being totally unnecessary and a serious setback for British-Russian relationships. Perhaps the Minister could say a word about the up-to-date position of the British Council. Surely finding a solution should not be beyond the wit of humankind. Our report was emphatic in stating at paragraph 299 that the attacks on the British Council were seen as,

That is very unsatisfactory.

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I also have to report that there have been some encouraging signs. I note that Mr Rogozin, who is Russia's envoy to NATO, has said that Moscow is ready to go ahead with restoring ties to the NATO alliance, which had been frozen. General Mattis, the Supreme Allied Commander—

Lord Patel of Bradford: The noble Lord is speaking within the gap; his speech should be limited to four minutes.

Lord Selkirk of Douglas: I will conclude; I am most grateful to my parliamentary colleague for saying that.

In conclusion, there are a number of positive signs, which we have welcomed. For example, when Soviet sailors were saved from their stricken submarine, Mr Putin honoured them with medals and signed an agreement with Prime Minister Tony Blair against terrorism. We encourage such constructive engagement, but we must do so on the basis of realism that is hard-headed and thoroughly pragmatic.

6.29 pm

Lord Dykes: Although the noble Lord, Lord Selkirk, uncharacteristically forgot the rule of the gap, I am sure that the Grand Committee was grateful for his remarks. He put a very interesting emphasis on the delicate and subtle balances that are needed in this relationship between the EU and Russia. The complexities are enormous and it is very difficult to reach tangible conclusions in a very fluid situation. Therefore, we await with interest the Minister’s response because of his great experience of these matters, the UN relationship with the then Soviet Union and, later, the new Russia and all that that meant for international peace in the future.

I am also glad that my noble friend Lord Teverson was able to take over as chairman of this report. I thank him and his colleagues on the sub-committee for an excellent job and a nuanced but balanced set of conclusions. The noble Lord, Lord Selkirk, and my noble friend Lord Teverson reminded me of that very important aphorism—I suppose that is the right word—from Voltaire who said that superstition could put the world into flames, but only wisdom could put out the fire. We have heard some very wise suggestions from both of them and other contributors to this debate.

I, too, share the concern that has been expressed today about how the West reacted in the early days of the new Russia emerging. The naturally free and energetic press in the West denounced many things in Russia—from bandit capitalism to the oligarchal fiddling of the privatisation programme, terrible attacks on journalists, the murder of journalists and so on. It rightly referred to those matters and presented President Putin in a somewhat bad light, often referring to his KGB background. While understandable, these things can be viewed differently in Russia. It is never a weakness for us to consider what those in another country feel. Even members of the Russian population who were not slavish adherents of the majority Nationalist Party or particularly keen on President Putin and his

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successor—although his successor has a somewhat more popular rating—were put off at the initial stages of that change in the collapse of the Soviet Union in 1990 by the condescension of the West towards Russia. The country was viewed as sort of a problem child which needed severe attention of the wrong kind rather than a friendly, helpful and positive relationship.

I hope and believe that, bad moment has passed and is long since gone. Now there is a much more realistic appraisal of the matters that we need to keep in purview, but there is particular anxiety, which I understand fully, in this report, in the West and elsewhere in the world, about the near abroad area of Russia, which several speakers have mentioned. I was very struck, for example, with the suggestion made by Roderic Lyne in giving evidence. In paragraph 60, page 20, he mercifully says that:

“Russia did not represent a direct threat to the West, nor did he think that Russia would now annex a Member State of the EU”.

That is a fairly dramatic assertion, but I was glad to read that in the report. He continued:

“The greatest threat was Russia’s potential self-isolation but he insisted that Russia and the West were no longer on opposite sides”.

Page 21, paragraph 64 states:

“Roderic Lyne also thought that the EU needed an agreement with Russia but ‘a different sort of agreement and maybe several agreements rather than one’ ... He warned that Russia had started to make clear four or five years previously that it did not want a partnership; the EU had not adjusted its course in response”.

That therefore aided and abetted the process of vociferous differences in the member states of the EU in their individual approaches to Russia and the scramble for energy supplies, particularly led by Germany after it had already asked the European Commission to formulate a common European energy policy, which was a glaring example of that.

In the conclusions, paragraph 96 on page 26 states:

“The ongoing disputes between Russia and the West over missile defence and NATO enlargement risk further complicating EU-Russia relations”.

That must be handled with great care by the Americans. There is every sign now that Obama is just the right person for this role as the new president in making sure that the Americans do not overstate their own case and their objectives.

Paragraph 97 states:

“It is clear from the NATO ministerial meeting in December that there is no prospect of early NATO membership for either Georgia or the Ukraine”.

Once again, the noble Lord, Lord Selkirk, rightly emphasised the difficulty that Russia would face if the Ukraine became a member of NATO. While we would welcome it, the future role of NATO itself needs to be clearly enunciated and constructed because it seems to me and to many people in the West that NATO’s role has been one of “keeping going, jobs for the boys and let’s find an artificial role in Afghanistan”. I am saddened that I have to say that. I hope that the role in Afghanistan works out now, but it clearly was something that the Russians were very worried about and thought was extremely provocative at the time.

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I emphasise, as does the report—I think that we are all of one mind on these matters in today’s debate—that the EU has to act with one combined foreign policy stance on Russia-EU links. I assume that the Minister will confirm yet again that Lisbon would help that process. It is not essential but it would make it much easier. I think that Lisbon is more important for other, non-foreign policy matters, but that, too, would be a positive step. I echo what my noble friend Lord Chidgey said about the huge anxiety about the situation in Georgia. The UN stance is tellingly pro-West in this sense and therefore we have to accept that Russia must heed those words of warning. Yesterday, Putin referred to the future and perhaps switching again. Members of Parliament in the other place talk about switching house ownership in terms of primary residence, but in Russia they talk about switching the president and the prime minister. His references were fairly disturbing as he sounded determined to resume his role as the president. In that case, I do not know whether President Medvedev would become prime minister.

I warmly endorse the report’s sensible conclusions. I feel that there is a positive future if we can only keep the balance. There are still serious problems, including others that have not been mentioned today. The Middle East peace process is not addressed in the report but Russia should surely be playing a much bigger part in that with other quartet segments. It does not seem inclined to do so, but is now hosting meetings more often; that may be a good sign. It really needs to get involved in that. Moldova is a tiny country with huge problems and is situated next to Romania, with the anxiety that Moldovans feel about that. They are desperately keen to get into the EU but that will take a long time in view of their severe poverty and all the problems associated with that. Russia is its near neighbour and is watching the situation very closely.

I believe that there is a positive future if this country follows a common EU line on these matters. The sooner we achieve that, the better. I hope that the Minister will endorse that concept when he winds up.

6.37 pm

Lord Howell of Guildford: I join in congratulating the noble Lord, Lord Teverson, his team, and his predecessor, the noble Lord, Lord Roper, on tackling this vast issue with such gusto and so comprehensively. You hear people say that Russia has problems, is flawed, has a declining population and is over reliant on oil and gas. However, it remains a huge factor in the global equation. Despite its declining population, it is a nation of colossal innovation and ingenuity and should never be underestimated. It stretches from Europe at one end right into the areas of growing power—the areas where the global pattern will be decided in this century and the next: the rising areas of Asian dynamism.

The relations between ourselves and this huge area—this fantastic nation—are enormously complex and have not been going very well. Indeed, in the follow-up report, Sir Roderic Lyne speaks of a deteriorating spiral in relations between the US and Russia. After the publication of the original report in May last year, that would apply to the whole situation, including the UK-Russian relationship in particular, which has been

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especially fraught and marked by almost incomprehensible and very frustrating things such as the attacks on the British Council, which my noble friend Lord Selkirk rightly mentioned. Those are a very bad stain on the Russian behaviour pattern which we should not brush aside but should keep returning to.

Since the original report last May, we now have plenty of material for a follow-up report. We have had the Georgian saga, which, as my noble friend Lord Crickhowell said, was unpredictable, except in the sense that we all know that Russia has been raging around in the Caucasus for the past 250 years since the days of Shamil and long before, so perhaps there is no long-term surprise at Russian involvement. I could not help saying to some Russian friends after the Georgian affair, when they said that they would like to restore a commonwealth out of their near neighbourhood, that if they wanted a commonwealth, perhaps they should learn from the British approach, which is, on the whole, to embrace and support our Commonwealth members rather than to invade them, which might not be quite such a good way of making friends. The noble Lord, Lord Anderson, and others have spoken with great knowledge on the Georgian situation. It is deeply unsatisfactory, but there we are.

Then there was the Ukrainian gas saga, which was very predictable. That comes around from time to time, and we are going to hear a lot more about that. I shall say more about it in a moment. Then there was the reputed offer from the new President, Barack Obama—I am not sure that we have got to the bottom of this—suggesting that if Russia co-operated more on the Iran question, it would be possible to wind down the anti-missile systems that are placed, from the Russian point of view, bizarrely and provocatively at the eastern end of Europe. It may be that the deal was the other way around—if the Russians co-operated, the missiles would be reduced—but either way the Russians saw it as a quite unacceptable proposition and turned it down. If it was true, and it was never confirmed officially, it opened up the interesting possibility of areas of very detailed co-operation with a different sort of Russia in the new world which we are now in.

Meanwhile, in the year since the original report, the rule of law has become even more distorted in Russia. There is more and more evidence of criminality and corruption—in very high places, I am afraid—and a general feeling that dealing with the Russian bear is getting more difficult, not easier. I agree with the guiding theme of both the original report and its follow-up, which is hard-headed and practical engagement rather than isolation, despite all the difficulties and provocations. I am sure that that is the right approach.

I confess that, rather like my noble friend Lord Selkirk, I found the follow-up report rather more attractive than the original, which, frankly, I found quite disappointing. The original report seemed to be based much more on hope and “wishing it was so” with regard to EU co-ordination—longing for Europe to speak with one voice, to co-ordinate its policies and to be united—than on reality, which is probably a better basis on which to build our policy. The reality is that different EU members have very different interests depending on their history, their position, their proximity

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to Russia, their energy needs and a whole variety of other considerations, and that will continue. Professor Cooper reminded the committee of that back in the original report in clear and brutal terms. I wish it were not so. Indeed, we can all wish that, but we have to be realistic and hard-headed about where to start building our policy initiatives. The follow-up report struck a much more practical and hands-on note than the original.

On energy aspects, I am not so happy. My noble friend Lord Crickhowell very kindly referred to me and made some very perceptive and well founded remarks. We may have the seeds of a debate here of the sort which, ideally in your Lordships’ House and in committees, can tease out how we should position ourselves in the United Kingdom on energy needs and energy security in the next 10 or 20 years. We agree on one thing; the Russian supply system is not 100 per cent reliable, to put it mildly. I had occasion, a few years back, rather naively to ask Mr Lavrov, the Russian Foreign Minister, whether Russia would use its energy resources as a diplomatic weapon. He looked at me pityingly and said, “Of course”. We have no doubt that that will continue.

What worries me about the original report and the follow-up report is that there are one or two rather serious omissions from the whole picture. First, there is no mention in either report of the fact that part of the Russian strategy is to find new customers in the East and to build new pipelines, one of which is now under rapid construction to China from south-central Asia, to supply both China and Japan and to meet the colossal demands of the very fast growing economies, whenever they recover from the present recession, which will manifest themselves in Asia. That is a bigger issue.

Secondly, I am not sure that the central question about the Nabucco pipeline has been grasped. The central question, which the noble Lord, Lord Anderson, and other noble Lords have touched on this afternoon, is whether there will be enough gas to make the thing even remotely commercial. This is not just a question of collecting gas in Baku but whether the pipeline under the Caspian from Turkmenistan can be built, whether the Turkmenis and their President are prepared to send the gas that way rather than eastwards to Asia, and whether the Russians will allow that pipeline to be built under the Caspian. They are raising every difficulty. The latest I heard was that they are worried that the pipeline will vibrate so much that it will disturb the sturgeon and reduce the output of caviar. They appear to be prepared to use any argument about the Caspian part of the pipeline, although they have different arguments for building their own pipeline under the Baltic, as we have heard.

As the noble Lord, Lord Crickhowell, rightly says, all this really does matter to us. It is true that we are not very reliant on Russian gas at the moment compared with the seven EU countries that are 100 per cent reliant on it. Many others, such as Germany, are 57 per cent reliant on it, so it sounds as though we need not worry too much, but that is very wrong. Dieter Helm said as a witness in the original report that we are “terribly exposed”, because we have not

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built replacement nuclear stations. In the 10 years ahead, we will have to go for carbon capture and storage if we can work it out, which we have not done yet. We will certainly have to go for many more gas turbines and will drink a whole lot of gas to produce our daily electricity and to keep the nation warm. We will also rely substantially on Norway and on liquid natural gas imports from Algeria, Qatar and various other points including Norway and even Russia. It is in our interests as a nation, rather than as the broader EU, and in the interests of our energy security to see that these sources are not diverted to a gas-hungry central Europe. It therefore follows that we have an interest in seeing alternative sources of gas come through to central Europe from places other than unreliable Russia. That is the central point that we need to keep in mind when we consider our energy security as a nation within the broader context of the EU.

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