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I should add that in the medium term—unfortunately, I do not think that the report gets around to this—we may all rely much less on Russian gas altogether, whether or not it can fulfil its contracts in the short term, not least because of the enormous boom in US natural gas production. So far this has hardly been noticed, or even recorded, by the IEA or indeed by energy officials in this country, but the US probably now has 2.2 trillion cubic feet of gas available to it and is considering mounting a major programme of LNG exports back to Europe on a colossal scale. That is enough gas to supply America’s entire needs for gas for 100 years ahead. This will change the whole scene with regard to Russia, and will probably necessitate another report by our tireless colleagues. It will begin to alter the pattern of relationships with Russia; it will remain important, but the situation will be different.

It is excellent to have this superb debate and to hear the views of so many experts. Generally in all this, I see the danger of relying too exclusively on the hope, the wish and the fingers crossed that something will come up in the nature of a closer, more co-ordinated EU energy policy. If we are concerned about clarifying and advancing our own interests, the EU dimension is vastly important, but we must be careful about relying on it exclusively and about interpreting our interests solely by looking through the EU lens. We will find that lens extremely blurred and not the ideal optical instrument to look clearly, coldly and precisely at our own interests and concerns in the years ahead.

I hope that future reports will adopt a slightly different perspective from the one in the original report, and I hope that they will build on the practicality and excellent focus of the follow-up report on the immediate issues. In the longer term, Russia needs us, we need Russia, and some kind of modus vivendi—peace, democracy, any other broad concept that one likes to use—must be developed. Russia will remain a highly powerful element in the global future, and we in Europe need to work out exactly how to get on with it. It will be difficult but we must keep trying.

6.52 pm

The Minister of State, Foreign and Commonwealth Office (Lord Malloch-Brown): I join all who have congratulated the committee and the sub-committee, particularly the noble Lord, Lord Teverson, and, before

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him, the noble Lord, Lord Roper, for leading the effort and once again producing an insightful report. The Government welcome it and believe that it makes an important contribution to our understanding of EU-Russia relations following the crisis in Georgia.

We considered the immediate aftermath of that crisis during the debate on the committee’s previous report on EU-Russia relations on 10 October last year. The Europe Minister has already written to the committee on the key conclusions and recommendations made in the report. None the less, I welcome the opportunity to take stock almost a year after the crisis and, like other speakers today, revisit some of the key issues. I very much agree with the committee and the noble Lord, Lord Teverson. Although I suspect that the noble Lord, Lord Howell, would perhaps take exception to this, many of us feel that the EU’s response to the crisis in Georgia and the successful negotiation of the ceasefire agreement showed that the EU can play a crucial and successful role in international affairs. It highlights the EU’s ability to use a wide range of tools, including military and civilian, to ensure stability and security internationally.

As the Europe Minister highlighted in her response to the report, the Government welcome the committee’s support for our and the EU’s overall policy of residence towards, and pragmatic engagement with, Russia. Obviously, Russian actions in the South Caucasus ran counter to Moscow’s international commitments and raised serious questions about its approach to European security, and indeed to the international community as a whole.

However, we all quickly concluded that isolation was not an option and that it is only through engagement and hard-headed, frank discussion, including through rules-based organisations—the OSCE and others—that we can build a constructive relationship with Russia, and that that is in both the UK and the EU's interests.

Let me say a word about the report’s emphasis on the importance of continuing negotiations to the EU-Russia partnership and co-operation agreement, the tone and pace of which are being informed by Russia's actions elsewhere. Those who caution that we must ensure that it reflects a new agenda, one which takes cautionary lessons from the security issues as well as bringing in new issues such as climate change, speak wisely. The report's emphasis on engaging Russia in multilateral fora such as the G8, but also the G20, and in important issues such as the Middle East peace process and Iran, is key. Those issues will be discussed at the next EU-Russia summit next week.

I reassure the noble Lord, Lord Dykes, that just yesterday in New York Foreign Minister Lavrov chaired a Security Council session on the map, which my right honourable friend David Miliband also attended. The Russians are trying to co-operate on Middle East peace. Predictably, they want to give it a bit of a colouring of their own—they feel that they need to find a place again in the process—but I think that we would all agree that that is a constructive engagement.

More broadly on the question of US-Russia relations and the famous reset button, what is striking about the Obama Administration in these early months is not so much idealism about these issues as the opportunity to

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be rather pragmatic and realistic and escape the ideological tone of so much of the previous Administration's dealings on issues such as Russia. Although there is a lot of hard work ahead, and American diplomats caution that this will be a long, hard process trying to get agreement on everything from missile issues to Iran, and so on, talks are progressing. We have noticed the early commitments that both sides have made to try to do something about nuclear weapons arsenals.

To the noble Lord, Lord Teverson, I say that we very much support Russia's accession to the WTO, which we think will help its economy as well as supporting global trade and reducing protectionism. I know that it has a very oddly shaped economy, with such a huge dependency on energy exports and very little else, so it is an odd country to squeeze into the WTO arrangements, but that can only help to diversify its economy and open up areas that are, frankly, highly uncompetitive and untransparent.

An area of really constructive engagement with Russia lately has, curiously, been the global economic crisis. I visited Moscow in March ahead of the London summit on my salesman’s tour to get support for it. It became very clear during discussions with Foreign Minister Lavrov, who, it is true, is a very old friend of mine from UN days, that there was a high degree of convergence on international co-operation to tackle the crisis. It is a little invidious to say who were the helpers and who were the problems when it came to the G20 meeting itself, but I think that President Medvedev could be described as having had a pretty good visit to Docklands. He was helpful on a number of international economic issues.

As the noble Lord, Lord Selkirk, said, that should not disguise the persistence of some very pernicious issues, of which the British Council is very much one. I should reassure him, as I think he knows, that the British Council continues to operate an excellent and widely valued programme of activities in Moscow and from that base to other parts of Russia.

In terms of the forced closure of the council office in St Petersburg and Yekaterinburg in January of last year, there is at least some progress in the court action against the British Council for reassessment of their tax bills. It is proceeding well, with the council assessing that the final decisions of the appeal court gave a fair assessment of what it should pay. While the political level remains blocked, on the alleged casus belli, the tax arrears of the British Council, a court process is under way. As I have said, we all welcome the resumption of the EU PCA negotiations. We believe that they remain the appropriate vehicle for that wider constructive engagement.

Let me now turn to some of the specific issues raised. As regards Georgia, the Government agree with the committee’s conclusions that whatever the origins of this conflict, Russia’s use of disproportionate force, which extended the geographical range of the conflict and the scale of the fighting, had no justification. There was also no justification for Russia’s violation of Georgian sovereignty and territorial integrity, which continues, I am afraid to say, to this day. We remain concerned that Russia has not complied fully with the Sarkozy-Medvedev agreements. Russia maintains troops

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inside the separatist regions of Abkhazia and South Ossetia and has not withdrawn to pre-conflict positions. It also maintains a presence at Perevi, beyond the South Ossetian administrative boundary line.

The noble Lord, Lord Teverson, asked about the monitoring mission. While the EU’s intervention prompted Russia’s withdrawal from most of the Georgian territory outside the separatist regions, the EU monitoring mission has conducted more than 3,000 patrols and is a key player in diffusing tensions in the areas adjacent to the administrative boundary lines. The UK continues to provide an input to that EU monitoring mission. It contributes 11 equipped monitors. Nevertheless, it is clear that these monitors do not have access to all parts of Georgian territory. The UK continues to lobby Russia to influence the separatist authorities to allow this as called for in its mandate.

As the noble Lord, Lord Chidgey, said, the humanitarian situation is a major concern. The noble Lord characterised accurately the human consequences of the conflict, which is why we are pressing for a political solution which allows these individuals return or resettlement. We hope that the work of this EU monitoring mission creates a space for humanitarian organisations to operate.

Several times, the comparison of Kosovo to South Ossetia and Abkhazia came up. Of course, we benefit from the erudition of the noble Lord, Lord Hannay, on all matters diplomatic. He is absolutely right that north Cyprus in some ways offers a much better parallel and analogy. We are not surprised that from his encyclopaedic diplomatic memory he pulls this out, although this is an issue with which he is closely associated. However, I found less plausible his feigned surprise at such a double standard in diplomacy. He of all people would expect nothing less from this art form to which he has devoted his career.

As to the Kosovo precedent, we are all aware that that is an extremely partial comparison, as it ignores 10 years of UN administration, the efforts of international mediation to resolve the crisis, the UN-sanctioned international administration and an international security force operating there under UN authorisation and mandate. By contrast, in South Ossetia and Abkhazia, it was a land grab following several weeks of fighting and there was no such international legitimacy.

In order not to run over my time, your Lordships will forgive me if I turn immediately to energy issues, a subject raised by many noble Lords. I have not been able to give proper attention to some of the other issues such as passports, which I am happy to come to in writing because there is an update. We are all aware that we have to get the EU-Russia and, for that matter, the UK-Russia energy relationship right. It is critical to our security and critical to Russia’s security in the sense that it is her main source of income. We recognise on our side that any overreliance on a single supplier poses a risk to all of us in the EU and that we have to have a strategy which pursues diversification of both sources and routes of supply. The EU Spring Council conclusions build on the Commission’s second strategic energy review and, I hope, recognise the key challenges that we face. We look to the review as a means of

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finding ways to move forward. It has already been observed that the Ukraine-Russia dispute remains as predictable as night follows day. Over time, a solution must be found. I want to assure the noble Lord, Lord Hannay, that in terms of our own plans, we are seeking an increase in gas storage facilities, including here in the UK.

Several noble Lords referred to the Nabucco pipeline/southern corridor issue. Let me just say that the UK is a strong supporter of the Nabucco pipeline as part of the southern corridor to bring Caspian gas to the EU market. At last Friday’s Prague southern corridor summit, participants agreed concrete actions on Nabucco that include a commitment to sign the key intergovernmental agreement by June. This is a concrete development that we welcome. The noble Lord, Lord Howell, asked whether there will be enough gas. It is important to say first that we are not looking to replace Russian and other sources of gas; the goal is to create additional supplies and diversification. He is right to say, however, that the quantity of gas in the Caspian region is unknown, although significant reserves have already been discovered and identified off Azerbaijan. Several noble Lords commented on the potential of sourcing gas from central Asia—Turkmenistan, Uzbekistan and Kazakhstan—which may offer greater supplies. I have rather rushed my response to this important set of issues, but I hope that I have touched on the main concerns raised by the noble Lord, Lord Crickhowell, and others.

Let me close by thanking the committee for its hard work. Like others, I suspect that the members will have to put pen to paper again before long because this is not an issue that will go away. However, I align myself with those who believe that they have taken a hard-headed look at the position. I am not one of those who think that looking at so much of it through the lens of EU co-operation necessarily means that they have taken their feet off the ground; quite the opposite, I hope that it means that they have them placed firmly on the rock of Europe.

7.09 pm

Lord Teverson: I thank all noble Lords who have contributed to this debate. It has been longer than I expected, so I shall be shorter than I hope many expect. I thank the Front Benches, including my noble friend Lord Dykes for giving in many ways a different view on the Russian relationship, and the noble Lord, Lord Howell, for effectively writing our next call for evidence in a future study. I also thank the noble Lord, Lord Hannay, for all the drafting changes he made to the report, even after he left the committee, which found them very useful indeed. I also thank our staff and our Clerks, Kathryn Colvin and Oliver Fox, for bringing this report together.

The thing that struck me throughout this debate was the importance of Russia and its presence to our east in Europe. It is impossible to ignore and we have to get on with Russia. Perhaps there is a chance that the United States will have an even better relationship with Russia than Europe does. One thing that has been clear during the committee’s studies of the EU and China is that whereas China may often show disappointment at the lack of coherence and power in

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Europe, it is a badge of honour to Russia, in a way, to prove that Europe does not work and is not at one. That particularly suits it in terms of its major export, energy. Perhaps the lesson that we need to learn from the crisis between Russia and the EU is that it is up to Europe to respond both as individual member states and in unity, so that we do not have the sort of

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situation that we had, not so much in the Georgia crisis as in the energy crisis.

Once again, I thank all Members for their contributions to this debate.

Motion agreed.

Committee adjourned at 7.12 pm.

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