Maghreb Countries' Relations with European Union: ECC Report

HL Deb 23 October 1995 vol 566 cc921-58

Lord Hunt of Tanworth rose to move, That this House takes note of the Report of the European Communities Committee on Relations between the European Union and the Maghreb Countries (11th Report, HL Paper 58).

The noble Lord said: My Lords, I should perhaps begin by apologising to your Lordships for being taken unawares by the speed at which the previous debate concluded.

In moving the Motion standing in my name I should like to remind the House that next month the European Union is holding a major conference in Barcelona with its Mediterranean non-member neighbours. The purpose is to lay the foundation of a new Euro-Mediterranean partnership which will have political, economic and social dimensions, and for a number of reasons, the European Communities Committee of the House thought it right to look at that concept of partnership with particular reference to the Maghreb countries. It is their relationship with the EU which has largely set the pattern for articulating relations between Europe and the wider Mediterranean basin. They are leading recipients of financial assistance from the EU and from the European Investment Bank. They were the first among the countries on Europe's borders to press for a special relationship, and their interests have consistently coloured the Commission's policy towards the wider Mediterranean.

New association agreements were also under discussion with Morocco and Tunisia: and we had noted that at a time when Mediterranean issues were rising up the agenda of the EU, in this country there did not seem to be much interest in them, whereas the member states with borders on the southern Mediterranean had some very specific national interests to further, arising from geographical proximity, history and climate. We had noted also that the Commission seemed to be proposing greatly increased financial aid to the southern Mediterranean states at the expense of central and eastern Europe.

Having referred to what I call the special interests of the southern member states, I should, however, like to emphasise that Sub-Committee A, which prepared the report, needed little persuasion that it was in the interests of all the member countries of the EU for there to be stability on its southern as well as its eastern borders, and not just in the interest of those who might appear more directly threatened by illegal immigration or terrorism.

The importance of such stability is further underlined when it is remembered that the population on the southern shores of the Mediterranean is increasing so fast that by the early years of the next century two-thirds of the littoral population will be on the southern shore instead of, as at present, on the northern shore. We have however reservations about the best way to ensure that stability, and hope that the Government may bear those reservations in mind at the Barcelona conference.

Members of the committee visited Morocco and Tunisia, but we were not encouraged to go to Algeria, and our report does not deal with the internal situation there. We did, however, give a good deal of thought to the question of Islamic fundamentalism and to the likelihood of instability in Algeria spreading elsewhere in the region—the so-called domino effect. We took evidence from a wide spectrum of witnesses on that issue.

The first thing I should like to emphasise is the danger of applying the word "fundamentalism" as a kind of umbrella word of concern when talking about Islamic countries. In fact, they differ greatly, with, for example, most north Africans following the Sunni rite which does not have a hierarchical clergy, unlike the Shi'ite rite in Iran. More to the point, there is nothing wrong in people having a close attachment to their faith or in a close association between that faith and the state in which they live. For example, King Hassan is on record as saying: In Morocco we are fundamentalists and have been for 1200 years".

Nor is there anything in the Islamic religion which is a barrier to partnership with non-Islamic market economies. The danger arises when extremism takes over, and either the tenets of strict Islam are imposed by force or religion itself is used as a cloak for violence directed at political ends.

The consensus of our witnesses on that topic was that Algeria was a special case where political factors which have nothing to do with Islam have been the main cause of unrest and terrorism. That is not to minimise the seriousness of the Algerian situation or what appears to he the growing threat of Algerian inspired terrorism in France. It is however relevant to the likelihood of a domino effect elsewhere. Our witnesses thought that that was unlikely, and indeed instanced the comparative failure of the Arab Maghreb Union to show how different are the north African states.

We did not dissent from that somewhat reassuring view that the threat of widespread Islamic extremism in north Africa had been exaggerated, subject to one important caveat which meant we could not rule it out. That is that just as political factors unconnected with Islam have been at work in Algeria, so political factors could also drive instability and extremism elsewhere if there arose mass dissatisfaction with existing regimes because of internal economic conditions, democratic shortcomings, and, in particular, unemployment among the rapidly growing populations. That is why the purpose of the Barcelona conference is very relevant.

Our report was deliberately finalised in time for the Cannes Summit at the end of June, but reports of that meeting seemed to confirm our feeling that of the proposed three themes for Barcelona (the political security theme, the economic and financial theme, and the social and human theme) the economic and financial aspect deserves particular attention.

The other aspects are of course very important, but the most Barcelona seems likely to do on them is to adopt certain principles of neighbourly relations which, it is hoped, will be the start of a process of greater collaboration. In any case, we were clear that economic growth and prosperity are the key to stability in the region.

That does not however mean that a massive or indiscriminate increase in financial assistance to the Maghreb countries (or to the southern Mediterranean states generally) is the right answer. Clearly the Community's spending as a whole should not be increased beyond the agreed financial perspective and any proposal for a significant diversion of aid from central and eastern Europe to north Africa would need careful weighing. Moreover the north African states are not poor by world standards. They are middle income countries which have already achieved an impressive measure of economic development. In the past few years both Morocco and Tunisia have enjoyed substantial rates of growth. Morocco had 10 per cent. last year and Tunisia has averaged 5 per cent. per annum since 1987. Both have done much to reform their economies with particular reference to their capital markets and trade regimes, and to embark on programmes of privatisation. Both need help to continue the modernisation of their economies and to maintain their economic health despite their rapidly growing population, but it is idle to suppose that the EU can just give them money to stop their people from emigrating. In our visits to Morocco and Tunisia the emphasis of almost everyone to whom we talked was on trade rather than aid.

The agreed long-term objective is of course a full free-trade area with the EU and that assumes particular importance when it is recognised that the EU accounts for 60 per cent. of Moroccan and 75 per cent. of Tunisian trade. It will, however, take time to achieve and, for example, Morocco and Tunisia will need a lengthy transitional period as they set about removing the tariff barriers which protect some of their uncompetitive industrial products.

In the medium term, we want to emphasise two points in particular. The first is agriculture where there are very strong feelings that the EU imposes unfair restrictions over the access, for example, of Moroccan tomatoes and Tunisian olive oil to the European market. It is argued that the EU has been liberal, for example, over the access of industrial products where the Maghreb countries are less competitive, and restrictive in discussions about the products that really matter to them, such as agriculture and fishing.

That feeling is all the stronger when it is remembered that the countries of north Africa are estimated to have lost around 600 million dollars-worth of trade a year as a result of the Uruguay Round. Help over agricultural products is absolutely crucial to them. We felt strongly that movement on agricultural access is the key to a successful Euro-Mediterranean partnership rather than aid and still less educational, cultural and social links.

Having said that, we recognise of course that the question of agricultural access to the EU is not an easy one. It raises the paradox that the member countries of the EU which are most at risk from instability in north Africa are also those which find it hardest to make the concessions that the Maghreb countries want. It is also relevant that a more liberal attitude would have considerable CAP costs as the CAP currently stands. But this is just another argument for further reform of the CAP, which enlargement to the East will require anyhow.

Having stressed the importance of trade, and in particular access for agricultural products, we accepted that there is a case for some moderate increase in financial assistance to the Maghreb countries. We have noted with approval that some rather extravagant earlier Commission proposals seem to have been scaled down but we felt it important to stress that financial assistance should be more carefully targeted and more qualitatively evaluated than has often been the case under the current protocols. In particular, it should go to infrastructure investment to increase the attractiveness of the region for direct, private, foreign investment; and since these are middle income countries it should normally take the form of loans rather than grants.

The committee would like to thank the many witnesses, both in this country and in north Africa, who helped us with our inquiry. My personal thanks also go to the other members of Sub-Committee A and to our clerk, Mr. Tom Mohan. A special word of appreciation also goes to our specialist adviser, Mr. Jon Marks, whose detailed knowledge of the region was quite invaluable to us. Finally, I should like to thank the Government for their warm response to our report. I was particularly glad that the Government agree with the committee's view that: the Maghreb is a region where Britain could, and should do more".

I have referred already to the generally favourable impression which we formed of economic progress to date in Morocco and Tunisia. These achievements have laid the foundations for economic prosperity and we have no doubt that considerable opportunities for British business exist there. The United States and other European countries recognise these opportunities. Unfortunately, we were also struck by evidence of a widespread lack of knowledge and an incorrect feeling among British business not only that there are not the opportunities which exist but that these countries are still just a French preserve. That is untrue. Indeed, one of the things that struck us most in Morocco and Tunisia was the appetite for English language teaching, which the British Council is not always able to meet. More needs to be done to raise the awareness of British business not just to the economic opportunities there but also to the existing EU financial instruments which are under-used by our firms, and thus to increase the success rate of UK companies bidding for shares of EC-funded projects. We hope that in a small way our report on an area which has not hitherto been the subject of a Select Committee investigation in either House may help to stimulate such interest. I beg to move.

Moved, That this House takes note of the Report of the European Communities Committee on Relations between the European Union and the Maghreb Countries (11th Report, HL Paper 58).—(Lord Hunt of Tanworth.)

5.15 p.m.

Baroness O'Cathain

My Lords, as a member of Sub-Committee A, I welcome the opportunity to draw attention to the report of the Select Committee because I believe that it contributes a great deal to the knowledge of that area. The Maghreb is a most important area and is likely to become even more so. Today we are being given the opportunity to express our views on the issue as well as drawing the attention of Members of your Lordships' House to the opportunities and threats that we perceive exist in the relationship between the Maghreb and the EU.

At the outset, I would like to pay tribute to the noble Lord, Lord Hunt. Coincidentally, it is his birthday today and I offer my congratulations. He has guided us through a veritable quagmire of economic, statistical and political data and made sure that the members of his committee had every opportunity to obtain as much information as possible from the witnesses both here in London and in north Africa.

The Maghreb is not exactly top of everybody's mind when considering either the global international scene or the EU scene but perhaps we should recall that Yugoslavia and its constituent parts was not top of mind some very few years ago. I am not suggesting for one moment that the tragedy of the area which used to be called Yugoslavia is in any way likely to be repeated but rather, I think, reminding your Lordships that political, economic and social developments do not proceed at a uniform pace throughout the world. Today's tourist area can so easily become tomorrow's area of conflict or of great concern which impinges on us all.

Links between the United Kingdom and the Maghreb have never been as strong as, for example, links between the individual member states of the Maghreb and France, Spain, Portugal and Italy. But we need no reminding that we are fellow members of the EU along with France, Spain, Portugal and Italy and, as such, are not left unaffected if there is a movement within the EU towards increased involvement with the area.

The post-colonial development of the Maghreb countries has varied in pace but all of them have, and continue to have, raised expectations of a viable economic future. That is understandable because any examination of the structure of these countries shows that they have many and varied valuable resources which could and should be harnessed for the benefit of the indigenous population. And it is not only the raw material resources that are impressive; the emphasis on education has resulted in big advances in the level of education of the populations as a whole. The noble Lord, Lord Hunt, drew attention to the hunger for English language teaching.

But it is the very success of the education programme which causes me concern. As we have seen time and time again in various parts of the world, an emphasis on improved education, the goal of abolishing illiteracy and the aim to open higher education to an ever-increasing proportion of the population raises job expectations which cannot be met if there is insufficient investment in business activity. Time and time again we come up against the inability of 20th century man to grow investment in education and economic activity at a uniform pace.

There is another inability that occurs time and time again; namely, the inability of nations to overcome vested interests in the interests of their less advantaged friendly nation states. This is the case with the Maghreb. If in the course of taking evidence we heard once about tomatoes and olive oil we must have heard it dozens of times. The ever-recurring evils of the CAP were quoted time and time again. Yes, the southern EU states dearly wish for Morocco and Tunisia to thrive economically—but not at the cost of their agriculture. Of course, we can understand that. Of course it is a problem. Of course the livelihood of farmers within the EU must be a consideration of us all. But there seems not a little hypocrisy in the actions of southern EU states calling upon the EU to help the Maghreb, yet roundly maintaining import controls against the produce of these countries, refusing to accept that by the strict imposition of such controls they are, in effect, worsening the situation of the Maghreb.

And there is another problem. Because of the sensitivity of any issue concerning the restriction of movement of peoples—particularly of refugees from undemocratic regimes—we seem to be loath to mention the fundamental problem which is almost universal throughout the world. I refer to the reluctance of countries to countenance widespread immigration. I fear that that is at the root of the demands within the EU for greater economic aid to the Maghreb. The southern EU states do not want and fear they cannot cope with, large-scale migration of people from the Maghreb to their country.

Just a few short weeks ago I had a long and rather heated discussion with an inhabitant of Montpellier who, quite rightly, pointed out the huge changes that had had to be made to that beautiful city in the past few decades to cope with the migration of Algerians and other nationals. He was not too happy to think that similar adjustments, construction projects for housing and job creation schemes would have to be undertaken in the future to accommodate the probable inflow of young Moroccans and young Tunisians searching for means to fulfil their raised economic and social expectations. That really is the nub of it all.

And what can be done about it? The classic response of the economist is the correct one: encourage greater wealth creation by freeing the economy from barriers to trade. Of course, that involves investment in infrastructure projects; inward investment in manufacturing enterprises; investment in training to improve technical skills; and export of know-how to the area. All of this sounds like a litany for UK involvement, but that is not the only solution.

Yes, there are great opportunities for this country in the Maghreb—opportunities which too few businesses seem to wish to take. I fear that it is much more attractive for UK businesses, and much easier, to deal with countries where English is the lingua franca. Our national aptitude in foreign languages still appears to be below what we might have expected following so many years of exhortation by business, industry, government and the education sector. There are, of course, notable exceptions and recent efforts have been made in terms of trade missions but I hope that this debate this evening achieves the acknowledgment that in the Maghreb there is a very big opportunity for the UK, not only to benefit from a growing economic area, but also genuinely to help less economically advanced nations.

The subject of the Select Committee report is not, of course, relations between the Maghreb and the UK but the Maghreb and the EU. We must prevail, yet once more, upon the other EU member states to consider most carefully the damage which could be, and almost certainly will be, caused to the whole Mediterranean area if the CAP continues to militate so unfairly against the logical business of the Maghreb countries.

I was struck, only yesterday, by the number of geographical areas within just a few hours flying time from Heathrow where a peace process is being undertaken. We were asked in our church to pray for: the peace process in Northern Ireland; the peace process in Bosnia and other parts of the former Yugoslavia; and the peace process in the Middle East. I hope that we do not have to add a fourth area to that list; namely, the peace process in the North African states of the Maghreb. It is not, sadly, too far-fetched to suggest that if efforts are not made to meet the natural and understandable expectations of this region, there could be political instability leading to widespread conflict.

We are constantly being told by analytical journalists that we are no longer a great power, we no longer indeed have any power; this is not the time to refute that statement. What we still have—and in great measure—(certainly way above the proportionate size of our geographical area or the size of our population) is influence. We should seriously consider using our influence to assist the peoples of the Maghreb to reach their economic, social and political expectations in three positive ways. First, we should work even harder to gain universal acceptance within the EU that the CAP must be changed to allow greater access to EU markets for the producers of the non-EU Mediterranean and North African countries. Secondly, we should encourage even greater effort by UK business to invest in the Maghreb—particularly in the area of know-how. Thirdly, we should adopt a supportive stance to the aspirations of the Maghreb as it moves to more democratic structures.

As has already been said by the noble Lord, Lord Hunt of Tanworth, throwing money at the region—although the noble Lord expressed the matter more eloquently when he referred to massive or indiscriminate funding‹—which always seems to be the knee-jerk reaction to any problem, provided it is not our money, is not the answer. Debates such as this are not the answer either, but they draw attention to a situation which can be perceived as a threat. But in the well-worn phrase: there are no such things as problems, there are only opportunities. I believe that we have a great opportunity to influence the development of that area; to lessen the tension; and to encourage its economic progress.

Finally, I should like to thank the noble Lord, Lord Hunt, for giving us this opportunity to learn more about the area. I hope that this increase in knowledge can be used to good effect.

5.25 p.m.

Lord Bruce of Donington

My Lords, I too pay my tribute to the work done by Sub-Committee A on this particular subject under the distinguished chairmanship of the noble Lord, Lord Hunt. The arrangement of the agenda, the selection of witnesses, the hearing and in some cases cross-examination of witnesses finally elicited a good deal of factual information which has been reproduced in the earlier sections of the report which we are debating this afternoon.

I shall seek to deal with only a limited aspect of the report; namely, the financial aspects and possibly also the United Kingdom's contributions from taxpayers' money into the various projects which have been suggested.

Initially I wondered why the proposals that were made by the Commission for aid to the non-member Mediterranean states, of which the Maghreb countries are only three, were actually made and what lay behind them. Was it that the Commission had undertaken its own researches into the real needs of the countries concerned or was there some other reason?

The Commission has been extremely frank in stating the main reasons for bringing forward the proposals which involve the expenditure of some millions of ecus and therefore pounds. I invite your Lordships to turn to paragraph 87 of the report at page 31 where the Commission's role in this is discussed. It says: The Commission's Communication", that is in regard to the Maghreb, was drafted in response to a request from the Corfu European Council in June 1994. According to Mr. Wright of the Foreign and Commonwealth Office (FCO), the motivation behind the paper was that 'the EU and particularly the southern Member States have been keen to pay regard to their southern neighbours in the Mediterranean to balance the recent development of relations with central and east European countries"'. That seems to me to be the prime motive behind the Commission's original proposals. I suggest that the quotation that I have just given underlines that fact. There was no particular zeal by the Commission itself to proceed ahead with a number of stated and described projects—none at all. Indeed, our own report mentions the absence of any real detail on how the Commission proposes to spend the money.

The question is one of balance. That surprises me somewhat because I should have thought that if the proposals envisaged the expenditure of money the Commission might, quite properly, have some regard to the normal canons of cost-effectiveness and value-for-money which are so warmly supported alike by Her Majesty's Government and Her Majesty's Opposition. But, no, nothing of the kind. That is reflected in the final conclusions of the committee at page 38 of the report which says that, it is no good offering money to the Maghreb States as a substitute for making the concessions, particularly over agricultural access, which [is what] they really need". The committee goes on to say: Full free trade with the EU is a desirable goal for them but aside from the question of agricultural access it is clear that Morocco and Tunisia will need a lengthy transitional period in removing their tariff barriers on industrial goods". It could not be clearer than that. The odd thing about it is that the proposals come at a time when the Government have been seriously worried on the whole question of the environmental issues in central and eastern Europe—the PHARE programme. If noble Lords refer to CM 3011 published in October of this year they will find that those extra demands for aid (for largely unspecified purposes) have come at a time when the Government are seriously worried about the steps being taken in practical terms under the PHARE programme.

I should have thought that the reaction of the Government in such circumstances, rather than giving general support to what remains a fairly amorphous idea of the Commission for aid to the non-member states in the Mediterranean, would have been to concentrate their efforts in getting proper value for money and rendering real aid in the programmes to which they are already committed in the eastern states under the PHARE programme. It is far better to do something well first than to contribute or prejudice doing well in existing fields by going into other fields which are essentially of a dubious nature.

I could not agree more with the noble Baroness, Lady O'Cathain, on the question of the common agricultural policy. It was made quite clear in most of the evidence received by the committee that what was necessary in the Maghreb states—indeed, in Morocco and Tunisia in particular—was the ability to sell their produce in the European market. That is the principal, and most important, way of enhancing the structural and material fortunes of the peoples in those areas. Yet what has really happened is that the Commission itself is of course conscious of that defect and of the fact that the CAP is not playing fair by those Mediterranean countries and wants to offer some form of recompense by the provision of finance. That is really what it is all about.

I suggest that that is the wrong way to go about it. There should be a proper appraisal on what is really necessary to revive the economic fortunes and to increase the prosperity of those regions. As the noble Baroness said, that must include practical measures to eliminate some of the worst effects of the CAP on some of those countries as a principal way of contributing towards their future success. Then, after that, if money is to be spent—and there are quite large sums involved—it should be possible to assess the situation and give a closer idea of what the Commission thinks the money should be spent on. However, as the report says, that has not been done.

Since the report was published the European Community has issued another proposal on financial and technical measures to support the reform of economic and social structures in Mediterranean non-member states. Of course, they include states from the Maghreb countries, but go far wider than that; indeed, other countries include Egypt, Israel, Jordan, Lebanon, Malta, Syria, Turkey and the occupied territories in the West Bank. So a new, overall regulation has been brought forward on which the Government issued an explanatory memorandum—No. 9112/95 (COM.95) 204 final)—in which they say that the proposal is for a regulation in support of the "budget line (B7.410)" for financing the technical and financial co-operation requirements. The memorandum goes on to say that the Regulation proposes commitments of about £3.302 billion in order to be able to do so.

As we are discussing money and the budget line, I should like to refer to a relevant item in the European Community Budget for 1996. I refer the House to page 1061 of Volume 4 Section III of the Draft General Budget which deals with the Commission's budget for 1996. I should like to quote what is said in regard to the total appropriation which in 1996 will amount to £204 million. In 1997 it will be £186 million, in 1998 it will be £130 million and in subsequent years it will be £146 million. The following is what is actually proposed: This appropriation is intended in particular to cover the financing to:

• —support economic transition (by backing up the process of modernization and economic reconstruction of the Mediterranean non-member countries …
• —achieve a better socio-economic balance (inter alia by contributing to the improvement of the social services, balanced and integrated rural development, the commitment of civil society to development, support for education and cultural exchanges, the strengthening of democracy and human rights and protection of the environment)".

Moreover, it is also for, the promotion of regional cooperation". In essence: It also covers expenditure on studies, meetings of experts, conferences, congresses, information and publications directly linked with the achievement of the objective of the measure of which they form an integral part … Also charged to this article is expenditure on operations and other measures of a horizontal nature designed to enhance the profile or increase awareness of the European Union which are directly linked with the achievement of the objectives of the European Union's action in the Mediterranean non-member countries". Indeed, I could go on. However, what is not said is what assessment has been made as regards the projects upon which the money will be spent. I ask your Lordships—and the House is already acquainted with my somewhat sceptical views—where's the beef? What will the money be spent on? The answer is that it will be spent, to a large extent, on propaganda. I do not believe that is the right way of going about it. It is proposed to proceed under Article 235 of the treaty. In order that we may be better acquainted with that, I remind your Lordships that Article 235 of the treaty states: If action by the Community should prove necessary to attain, in the course of the operation of the common market, one of the objectives of the Community and this Treaty has not provided the necessary powers, the Council shall, acting unanimously on a proposal from the Commission and after consulting the European Parliament, take the appropriate measures". I put this matter quite succinctly to the Government. What on earth have these proposals to do with the enhancement of the Common Market? Have they not more, as their objective, the enhancement of the powers of the European Commission itself; its ability to publicise itself; and its ever growing desire to appear, ahead of all the member states individually, as being the real power that is moving Europe? Your Lordships may think that that is rather a jaundiced view.

The House has done me the honour of listening to a number of my remarks in the past and the House may think that view is somewhat confined to me, and may be a little idiosyncratic. I think not. I think that on the basis of the evidence available to us these proposals have nothing at all to do with the purpose of the Common Market prescribed in Article 235 and that this House should look at them critically. The Government should examine these proposals in budget committee and in the Council of Foreign Ministers to see whether the expenditure that is so far proposed, of which we bear a large percentage, cannot be quite drastically reduced.

5.42 p.m.

Lord Dahrendorf

My Lords, in one respect at least I wish to associate myself entirely with the remarks of the noble Lord, Lord Bruce of Donington, and with those of the noble Baroness, Lady O'Cathain, and that is in the warm appreciation of the chairman of Sub-Committee A, the noble Lord, Lord Hunt of Tanworth, who has guided us with his customary calm, good humour and wisdom through a difficult subject. He has presented the report today in ways which require but few additional comments.

My brief comments have to do with four aspects of the relationship between the European Union and the Maghreb and Britain's interest in it. The first aspect is that we are here dealing in an important respect with European Union foreign policy; in other words, not with the Treaty of Rome but with the Treaty of Maastricht, and with the question of what exactly the interests of the European Union in foreign policy may be. My own view is that if and when it becomes fully apparent that economic and monetary union will either not happen, or will be seen not to contribute to European co-operation, foreign policy will gain in importance in the framework of European Union action. My view is also that no good case can be made for a European Union foreign policy which deals with the whole world, as it were. However, a good case can be made for an interest of the Union and its members in what one might call the "near abroad" of the European Union. This near abroad is not east central Europe. East central Europe, in my understanding, is an area of future membership, and, one would hope, membership at an early date. The near abroad is essentially two regions: the former Soviet Union and the Mediterranean. It is in these two areas that we have a massive common European interest, and it is for that reason that paragraph 94 of the report is so welcome when it states that we view what is proposed in the context of this interest.

My second comment concerns the problem itself. It is a familiar one but one cannot repeat it too often. Either we contribute to improving the conditions under which people live and work in the precarious countries around this European space or we shall suffer significantly from the pressure which is exercised by these people. I say "pressure" because we are not just, perhaps nowadays not even primarily, talking about immigration. We are talking as much—and, as we see in France, even more than we thought we would—about terrorism, crime and the pressure which small groups can exercise in the name of larger communities (although their communities have usually not been asked) on the members of the European Union. In my view, for reasons of simple interest we have to do everything we can to enable people to live and to prosper in peace in their countries. That is the motive for Europe to take an interest in its near abroad in the Mediterranean and most particularly in the Maghreb countries.

My third point is by now familiar but it is right that we should repeat it as often as we can. Supporting people in these countries is not primarily a matter of giving them money. There may be infrastructure projects which are of legitimate interest, for instance, to the European Investment Bank or to other institutions, and for which a case can be made once they have been properly assessed—I entirely agree with that—but basically it is a question of enabling these countries to export what they can produce best. That means being prepared to import what they produce. As one who has never given up hope in the European Union and has therefore a much more positive view of that creature of post-war political effort than the noble Lord, Lord Bruce of Donington, I am nevertheless—I have to put it in strong language—fed up with having to apologise for what the European Union does when I talk to my friends and others. However, here is yet another example where those of us who are in favour of European co-operation based on interest have to apologise because what the Union and the Community have done so far is to insist that these countries open their markets to our industrial products while at the same time keeping our markets closed to their agricultural products. That simply will not do. I suspect that we will pay an enormous price if we go on acting in this way. That is another point which I see as the background to our report and the attempt to draw to your Lordships' attention an important area of European foreign policy.

I come to my fourth and final point. Let us make no mistake, the road to development is rocky. For all of these countries, as in the case of east central Europe and the former Soviet Union, development leads through a valley of tears and a very difficult phase. Let us not be simplistic about expectations of economic development. The initial phase of economic development is, for many people, one of uprooting, uncertainty and expectations which in many respects are not satisfied. It is in that period in particular that assistance and co-operation are needed.

In the committee we were pleased to see the progress made by Tunisia. We were left with the hope that Morocco, which is in a more difficult position, may find a way through that valley. We were not persuaded that there are yet convincing signs of a similar path forward for Algeria. One can hope that there will be a form of reverse positive domino effect and that successful countries will have a positively infectious effect on their less successful neighbours. However, there will be a considerable period in which intimate co-operation is one of the necessary conditions of progress. That is why Barcelona is important and why there is need for agreements which establish bodies for co-operation. We, in your Lordships' House, with the limited means at our disposal, should express support for progress in the Maghreb countries.

5.52 p.m.

Lord Chalfont

My Lords, I must begin by declaring an interest in the subject of the debate in that I am the only British member of the Academy of the Kingdom of Morocco, which was established by King Hassan in 1980 to study the issues and problems affecting the role of Morocco in the world. It is a body which consists in equal numbers of Moroccans—politicians, academics and scientists—and of foreigners. Some of the foreign members may be familiar to your Lordships' House. They include Dr. Kissinger from the United States, Anatoly Gromyko from Russia and Crown Prince Hassan of Jordan. The body also includes members from most Islamic countries, including Iraq, Tunisia, Turkey and Saudi Arabia. It meets in plenary session twice a year.

I mention the academy by way of introduction in some detail because at our last plenary meeting held in Lisbon in May this year the subject to which His Majesty the King invited us to address ourselves was the future of the European Union and the Mediterranean countries. With the valuable and indispensable help of our own Foreign and Commonwealth Office, I presented a paper at that plenary meeting. In the debate which followed the concerns of the people of the Maghreb countries were articulated in a way which impressed me enormously. As a result I have been placed in a position especially to recognise the quality and importance of the report which has been so impressively introduced in your Lordships' House today by my noble friend Lord Hunt of Tanworth.

I should like to join in the congratulations, which I am sure will be echoed throughout the House this evening, to my noble friend and his colleagues on Sub-Committee A on producing a most thorough and valuable report. It has contributed enormously to enlightenment and understanding of the problems of an area which is too frequently far from our minds in this country as we concentrate on more important aspects of what an earlier speaker called the near abroad, in other words the countries of eastern Europe.

Perhaps the most important contribution that the report has made is in the context of its observations and reflections on Islam, and especially in its emphasis upon the inaccurate and ill-informed use which is so prevalent in public debate and especially in the press of this country, of the word "fundamentalist", as though fundamentalism were in some way synonymous with terrorism, violence and extremism. To many Moslems and followers of the Islamic faith fundamentalism is nothing more sinister than a desire to establish the society in which they live and the government which governs them on the values and moral codes of Islam. It seems to me that there is nothing more sinister in that than there might be in a desire to establish a society based on Christian or Jewish values. That is what fundamentalism means to most Moslems and followers of Islam. As my noble friend Lord Hunt of Tanworth said, it has been pointed out by King Hassan of Morocco that Moroccans have been fundamentalists for 1,200 years. There is no connotation of political violence in the Islamic fundamentalism of the Moroccan monarch or his people.

I hope that what I have to say may go further than the confines of this noble House. The use of fundamentalism as a pejorative term synonymous with something undesirable causes great offence to many Moslems and many devoted and peaceful followers of the Islamic faith. There are, of course, terrorists and extremists from the world of Islam. However, as we all know, there are terrorists and extremists from the worlds of Christianity and Judaism also. We would do a service to the public debates on these issues if in future we were a little more accurate in our use of language and referred to people as terrorists and extremists if they are terrorists and extremists but did not refer to them as Islamic fundamentalists. That is patronising and offensive.

The fact that the term is used in a loose and ill-informed way is only a part of something much bigger. It is part of the dangerous gulf of suspicion and misunderstanding which is growing up between the whole world of Islam and the West. Recently an American historian and analyst called Samuel Huntingdon wrote a serious and well-researched article in an American magazine in which he referred to the new clash of cultures and expressed the theory that with communism defeated and the Soviet empire in a state of disintegration the new threat to the security of the West was Islamic fundamentalism. As recently as last Thursday there was an article in The Times in which a member of the American Administration referred to the dangers of the domino effect of Moslem and Islamic fundamentalism spreading across the countries of North Africa.

The report of the Select Committee has made it clear that in the view of the committee—and it is a view with which I fundamentally agree—there is no such danger as the danger of the domino effect, or, if there is such a possibility, it is not an immediate danger. The committee considers that the dangers of Islamic fundamentalism creating conditions of instability and violence in the Maghreb countries of north Africa are remote. I agree entirely with the conclusion which the sub-committee has reached in that respect.

However, there is an important antithesis. As the report says, there is the danger of economic problems in the Maghreb countries which might provide a fertile ground for extremism if it should spread beyond the boundaries of Algeria, where at present its nucleus exists. It is there, I believe, that the critical and crucial importance of the policy of the European Union towards the Maghreb countries lies. The most important thing that the European Union can do now is to attempt to promote stability in the Maghreb countries by helping them to continue on the path of economic development which, in the case of Morocco and Tunisia, they have so successfully followed up to now.

For the last few moments of my intervention I should like to focus on Morocco which is the country that I know best. It is a constitutional monarchy. It is true that, as the report said, the king is at the centre of power; no one denies that. However, it is a constitutional monarchy with an elected national assembly. The king is a thoughtful, constructive and subtle political leader. There is in Morocco a history of religious tolerance; it has a thriving, flourishing and fully tolerated Jewish community. As the report points out, Maimonides and Pope Silvester III were entertained and welcomed at the University of Fès, the oldest university in the world. The significance of that is not to be overlooked. As I need hardly point out, Pope Silvester III was Christian, but what might not be equally well known is that Maimonides—perhaps my noble friend will forgive me for saying that in the report Maimonides has suffered from a severe case of printer's revenge because his name has been badly mangled! Maimonides was the Rabbi Moses Ben Maimon, the great Jewish philosopher of the 12th century, who spent time at the university of Fès in Morocco. He was welcomed there, as was Pope Silvester.

Those are both manifestations of the religious and political tolerance which characterises the political culture of Morocco. I discovered recently at the conference in Lisbon that Morocco urgently seeks closer ties with the European Union. The King of Morocco—I think with some justification—regards his country as the junction point, the crossroads between Europe, Africa and the Arab world. As the report points out, there is a profound ignorance generally in the West about Morocco, and especially in this country where it is regarded as some kind of French chasse gardée because of the relatively brief time in which Morocco was a French colonial country.

There are great opportunities for British industry and business in Morocco. However, above all Morocco is a case history underlining the danger of regarding Islam as a great monolithic entity. Morocco is as different from Libya or Iran as Turkey is from Pakistan or Brunei; they are all Islamic countries. I suggest, therefore, that the United Kingdom should continue on its present twin-track, approaching a free trade area in the Maghreb as part of a European/Mediterranean partnership, but continuing to pursue its bilateral interests in the Maghreb, especially in Morocco. I know that the Government recognise that countries such as Morocco wish to diversify away from their traditional suppliers, especially from France. As the noble Lord, Lord Hunt of Tanworth, pointed out, there is an interest in acquiring the English language for business purposes. There have already been structural reforms and privatisation programmes in Morocco and there is great opportunity for our business and industry to prosper there.

Furthermore, the important final point I wish to make is that Britain shares with its European Union partners an interest in working to reduce the potential causes of instability in the Maghreb countries to the extent that any outsiders can, because it is largely a matter for the countries themselves—and the primary instruments of any influence that we can bring to bear in the area are economic because the root causes are economic. There is no direct security risk to Britain or to Europe in any military sense (although there are concerns about terrorism and the proliferation of weapons of mass destruction). But it is internal stability that counts and it is internal instability that would damage trading prospects, damage investment prospects and damage general political interests in the region. It is in that area that I believe that the European Union, with Britain at its heart, can play an important role.

I close by expressing the hope that later this evening we shall hear something about the line that Her Majesty's Government will be taking in the European Union as they prepare for the important conference in Barcelona next month.

6.5 p.m.

Lord Butterworth

My Lords, as a member of Sub-Committee A, I too would like to express my thanks to the noble Lord, Lord Hunt, for the skill and patience with which he guided us through evidence which was always useful and often most interesting. As he pointed out, the Union has been considering its relationship with the countries to the east and also those to the south—the whole Mediterranean region. As is emerging, different solutions are proposed. The eastern countries will eventually be offered full membership, but the Moslem countries of the Mediterranean will, it is hoped, join some permanent economic relationship short of full membership. That is to say, apart from Cyprus and Malta.

Following our report, the European Council met at Cannes on 26th and 27th June. The presidency conclusions accept, to some extent, how important it is for the European Union to help the Mediterranean area. Perhaps I may quote those conclusions which specifically refer to, a Euro-Mediterranean area to be established on the basis of free trade and partnership in a maximum number of areas". However, as often pointed out, we have to remember that the Maghreb countries have largely farming populations. Therefore, to be effective, the help that is given must be in the agricultural sector. As many people told us when we met them in Morocco and Tunisia, trade is more important than aid. It is therefore probably unfortunate that the presidency conclusions would seem to offer a quicker move to free trade in manufactured products while being hesitant about progress in the agricultural sector. I quote: Taking as a basis, traditional trade plans, and as far as the various agricultural policies allow"— I emphasise that last phrase— trade in agricultural products would be progressively liberalised through reciprocal preferential access". That does not suggest urgency. The Moroccans would say that they grow better tomatoes than anyone in Europe and the Tunisians maintain that their olive oil is the best in the world. But our report points out that it would be difficult for some member states of the Union to accept access of such agricultural products. Spain would resist the entry of an additional Moroccan tomato and Italy would not greet the entry of Tunisian olive oil with any pleasure at all unless, may be, it saw the opportunity of re-exporting it as Italian. In truth, as frequently pointed out this evening, the CAP is becoming more and more of an impediment to Europe's true economic progress.

Not only are the principles of the CAP at loggerheads with the free market assumptions on which the single market is based. Another of your Lordships' sub-committees has already pointed out to the House that the admission of the eastern European countries to full membership of the Union will require the most drastic amendment of the CAP. Now, a committee of this House finds that CAP considerations tend to impede the best help that the Union could give to the Maghreb countries and the kind of trade relationships those countries most desire.

The evidence of Mr. Nigel Varney of the Home Office is worth some attention. It gives further urgency to the need for imaginative assistance in the agricultural sector. He pointed out that Morocco is a large producer and exporter of cannabis. More than half of the cannabis seized in the United Kingdom originates in Morocco. In 1993, 63 per cent. of all cannabis resin seized in Europe came from Morocco. Moreover, a cannabis route having been opened, it is used for smuggling other drugs, m particular cocaine, brought into Morocco from South Africa and then smuggled into Europe.

In Morocco—a country of just over 26 million people—some 5 million, especially in the Rif region in the north of the country, are dependent in one way or another upon the cannabis trade. Clearly, it would be greatly to everyone's advantage to find alternative employment for those people. But converting to other crops will be a long and very expensive process: it takes time to grow other crops to the point where they become truly productive. In any case, growing drugs is much more profitable than growing more orthodox agricultural products. In short, it still has to be proved that the Union has the will to carry through the kind of agricultural development that is needed in Morocco and in the Maghreb more generally.

Finally, perhaps I may refer to a technical, though not unimportant, matter. Miss Marie-Christine Kerr, of Banque Paribas, explained to us how the successful financing of projects in Morocco and Tunisia requires regard to be paid to the policies of other governments. The viability of a contract often turns upon a government's willingness to make available mixed credits in a financing which that government are prepared to soften with aid.

Not all contracts with developing countries are eligible for mixed credits. Thus the so-called Helsinki accord, which came into force in 1992, laid down that OECD countries cannot apply mixed credits to projects that are in the themselves commercially viable, for instance, energy products, oil, gas, or indeed manufacturing projects. Mixed credits can, however, be supplied for projects that are not self-supporting. These are mostly in the important social sector, such as water and transport: roads, dams, and so on.

The problem arises because our Government have gone further than other developed countries. In pursuance of our policy of restricting aid to the poorest people in the poorest countries, we have taken a unilateral decision to withhold aid and mixed credits if the developing country concerned has a GDP per head of more than 700 dollars per annum. That rules out the possibility so far as this country is concerned of mixed credits in Morocco and Tunisia. Indeed, many other developing countries are caught in that trap. In the Mediterranean area alone, it applies to Turkey and Lebanon. And there are others throughout the world, such as Thailand and Colombia.

In Morocco and Tunisia, British contractors are often competing with those of France, Italy and Spain. Because those countries apply protocols or lines of mixed credits of considerable size, competition becomes very difficult. Sometimes the project may be supported from elsewhere, for example, the African development bank, or through EU or Arab money. But if no such multilateral aid is available, it is hard for British contractors to beat a 30 to 40 per cent. subsidy from a competitor country's government.

How much business does Britain lose because of its aid rule? Let us take the Mediterranean region alone. Morocco, Tunisia, Turkey and Lebanon are caught in the trap. Of course, it is always difficult to prove a negative. One responsible estimate that I have seen puts the figure for the loss at £100 million a year.

I hope that today the Minister may be able to help us with this problem. It seems to some of us that in Morocco and Tunisia the policy thrust of the DTI and that of the ODA do not fit well together. I suspect that many of us who have experience in developing countries are in favour of the general principle that, broadly, aid should go to the poorest people in the poorest countries. But do we need to apply the principle with such rigour that our contractors cannot compete with those of other OECD countries in respect of such projects as clean water, irrigation and health? That applies particularly in countries such as Tunisia and Morocco where broader European considerations make our participation desirable at a time when those countries wish to widen their economic and trade relationship beyond one of French predominance and forge a new Anglo-Saxon relationship.

6.19 p.m.

The Earl of Winchilsea and Nottingham

My Lords, in making a short contribution to this debate I do so at the risk of being accused of having a one-track mind. My subject, as some noble Lords will already have guessed, is the knotty question of the Western Sahara. It is indeed a knotty question. It is highly relevant to the future of the Maghreb region, since without a satisfactory solution it will simply be impossible for there to be a united Maghreb, however desirable that may be.

The report is flawed because it dismisses the problem of the Western Sahara in one small paragraph contained on page 16 and found in paragraph 40, sub-paragraph (c). Yet this problem of 20 years' standing is central to the establishment of the Maghreb region as a going concern. It appears to present one of the claimants to the territory—the Saharawis, represented by the Polisario Front—as illegitimate guerillas operating from camps in south-western Algeria. Saharawi people everywhere want the basic human right to live unmolested in their own country of the Western Sahara—not just the Polisario Front, which is another name for the Saharawi government in exile. The word "Polisario" itself can be misleading and is easy to exploit, conjuring up, as it does, images of a tottering old communist regime; whereas the truth is that the word derives from the geographical extremities of the old Spanish Sahara, whose boundaries were drawn up and agreed by the Berlin Treaty of 1884. That treaty set many of the boundaries of colonial Africa, most of which are still as we know them today. The word "Polisario" is derived from frente (Spanish for "Front")—Popular Liberation of the Saquit el Hamra and Rio de Oro, which are the two regions comprising the Western Sahara.

It is appropriate to go back a little in history, so that instead of a single paragraph in the report, barren of any explanation or background, your Lordships at least have a scanty understanding of why this problem exists and has done ever since 1975, when Spain began to withdraw from its colony. Spain began in earnest to colonise the area after exceedingly rich deposits of phosphates were discovered late in the 19th century.

Along with many other European colonial powers, Spain made little effort to benefit the local indigenous population. It must be said in fairness to Spain that that was often very difficult to do, even if the desire to do it had been present, because until the 1930s most Saharawi people led nomadic lives, following in their age-old traditions. It was not until towns and villages began to expand and acquired some status and reputation as growing commercial centres that those ancient habits started to change. Their eventual, near total demise was finally hastened by the drying up of wells and feeding grounds for the herds of camels and goats which used to follow set seasonal patterns throughout the nomadic year.

The indigenous population began settling in the expanding towns in ever-increasing numbers. They established all manner of businesses and commercial establishments. Many of them became entrepreneurs and the capital city, El Ayoun, became a free trade port, which greatly encouraged further commercial expansion.

Going along with that was a growing national movement which came to be known as the Polisario Front. It sought to achieve independence—as, indeed, every other colony in Africa seemed to be doing successfully at the time, although the Algerian struggle for independence from France turned out to be an exceptionally long and bloody one, with over 1 million dead on each side. By the mid-1970s, the struggle was beginning to take its toll on Spanish resolve to hold on to her colony. In 1975 she eventually withdrew, promising—this is a very important point to remember—the Saharawi people a UN-led referendum on their own future. That referendum has not taken place. At first it was blocked by Franco, who in 1975 was still causing havoc. Instead, a secret tripartite agreement was cooked up in Madrid. It divided up the former Spanish colony between Morocco and Mauritania, with Spain retaining a healthy interest in mineral extraction.

Morocco invaded from the north and Mauritania from the south. The Moroccans called it the "green march". It presented to the world a peaceful, civilian reoccupation of the territory taken from Morocco by the Treaty of Berlin, to which I have already referred. But also marching 10 miles away, hidden from the attention of the world's cameras, was the Moroccan army, armed to the teeth with equipment obtained from the West and occupying the region which was one of several claimed by Morocco. Those claims go back long before the Berlin Treaty. Indeed, Morocco still has outstanding territorial claims, which she has never withdrawn, against Algeria.

That invasion was particularly brutal. After the Western cameras and television crews had returned home, the Moroccan air force went into action, bombing the capital city, towns and villages, causing thousands of casualties and forcing the civilian inhabitants to flee into the open desert where they established makeshift refugee camps. Those, too, were bombed. So the only remaining solution was for the people to make for the sanctuary of neighbouring Algeria, over 700 miles away across a burning, empty, waterless desert. They did so and have been existing ever since in four large camps, each containing around 50,000 people. Many more Saharawis escaped to other countries: Mali; Mauritania (which gave up its military struggle for the southern half of the Western Sahara in 1978); the Canary Islands; other parts of Algeria; and as far as Niger. Of course, many decided to remain voluntarily in the Western Sahara, hoping that they would be well treated by the Moroccan authorities. Others were either too old or too sick to make the long trek across the open desert. Altogether, Saharawis account for about 1 million people.

Since then, the Polisario Front has operated from the four camps around Tindouf in Algeria; and, yes, the Algerian Government, very nobly and at great cost, have supported it. They continue to do so. They do it because they believe in the Saharawi cause; because they could not let die in the desert all those people who had struggled across it seeking help. They do not do it, as some cynics would claim, because all that they really want is access to the Atlantic coast. If they wanted that, they could have had it years ago for the taking.

The referendum was originally promised for 1992, then 1994 and then 1995. The report states that the referendum has consistently been postponed because of issues such as who is entitled to vote. That was agreed, but it was at Moroccan insistence that a further 100,000 or so names were added to the list of those eligible. That was a blatant attempt to undermine the outcome and the Saharawis rightly ask "What is the point of holding a referendum if it is not a free and fair one?" Would your Lordships feel able to vote freely with a gun in your back?

The efforts of the UN Secretary-General to hold the referendum can at best be described as half-hearted. It is well known that he favours the Moroccan position. In short, from a Saharawi point of view, he has been a total disaster. Meanwhile, the Moroccans used the four-year ceasefire period to their advantage by strengthening their defensive wall and consolidating their positions along it. They have also been guilty of violating the ceasefire on over 300 occasions. But nobody says anything; nobody does anything; and even the UN personnel out there, supposedly to oversee the setting up of the referendum process, have been corrupted.

I was last in the refugee camps in February this year and I shall shortly visit them again as I am organising our fifth humanitarian convoy to the camps in November with supporters from all over the United Kingdom. In February they were near a state of despair about the lack of progress with the referendum. In my view, unless some concrete progress is made now, the ceasefire regrettably will become a memory and the Arab Maghreb union will become only a remote possibility.

I believe we must take a much more robust stand on issues like the one in the Western Sahara, and the European Community and the European Parliament is the place to do it. As the UN celebrates is 50th anniversary we would do well to stand up there as one of the five permanent members of its Security Council and urge more resolve and determination in getting this long-standing problem sorted out in a fair and just manner instead of turning a blind eye and hoping that the problem will go away. If I know the Saharawis—and I do after 10 years of trying to help them with humanitarian supplies—they will never give up their rights; be they human rights, birthrights or civil rights.

It is surely in everyone's interests to work towards, find, and then implement, a fair solution; to expose and reject corrupt practices wherever they occur, especially when it involves UN personnel. That merely serves to further undermine the UN and causes people to lose faith in it as an organisation. We must achieve the opposite; we must restore people's faith and trust in the United Nations by making sure that it fulfils its world role without favour or bias. I hope that this is an issue that the European Union, along with the United Nations, will pursue and that an end to the dispute, satisfactory to both sides, will be found.

6.31 p.m.

Lord Thurlow

My Lords, I am sure your Lordships share my gratitude to the noble Earl, Lord Winchilsea & Nottingham, for bringing to our greater notice this so far obscure problem of the Western Sahara. It is a terrible story and a continuing tragedy. I am one of those who hoped that a referendum would provide the framework for a final solution that would be acceptable. I gather the prospects of the Polisario accepting the results of a referendum in favour of Morocco are not good. I doubt that an international initiative by the Security Council or otherwise is likely to be brought to bear at this stage, though possibly, if the referendum does not provide a solution to the problem, others will have to think again.

I am deeply grateful to Sub-Committee A for this remarkably clear and informative guidance on a problem about which many of us are far too ignorant. My interest in the Maghreb and the problems covered by the report stem to a great extent from my residence for periods of over 10 years in countries which have either a large Moslem majority or a large Moslem minority. I look therefore with keen interest and some apprehension at the spectre held out in front of us, especially by the media at present, of a possible upsurge of immigration from north African littorals into Europe. I am reassured by the well-balanced judgment of the committee that at least for the time being we need not be too alarmed by the prospects of infection of the north African littorals from Algeria.

Coming to the focus of the report, I naturally share the view that the direct concern of this country is economic, in two respects. As the noble Lord, Lord Bruce, again so eloquently reminded us, we need to do everything we can to ensure that we obtain value for money out of our substantial 16 per cent. contribution to whatever direct funds are channelled by the European Community into the Maghreb. As he again reminded us, we have grounds for great misgivings in relation to the way these enormous figures for recommended five-fold increases of the aid have been, if not plucked out of a hat, drawn in rather an arbitrary way in an effort to draw the balance with what we do or seek to do in Eastern Europe. That is no way to produce recommendations for expenditure. No finance minister would countenance such procedures.

As the noble Lord, Lord Bruce, told us, we have learnt from experience. I have been involved in this aspect to some extent in previous sub-committee work. We know that the Commission's processes of monitoring and evaluation simply do not stand up to critical examination. The Commission cannot reasonably expect member states to put their hands in their pockets to the enormous extent recommended when they have already shown elsewhere—for instance, in relation to the structural funds—that they do not have the means of monitoring or assessing how the various supposedly worthy projects supported have worked out.

Inevitably the Commission's recommendations have been cut down. Only yesterday the finance ministers of the European Union endorsed a previous decision that the ceiling must be maintained; that new funds for north Africa cannot be found simply by waving a wand; they can be found only at the expense of something else—probably eastern Europe. As has been said, that would require serious consideration.

The second British economic interest is in the area of trade. Exciting prospects are held out in front of us for possible rapid continued expansion in Morocco, and Tunis in particular. The population is increasing by leaps and bounds; the GDP is increasing by 10 per cent. a year in Morocco and by a very high rate in Tunisia also. We would all wish the British exporter to get in on the act. But as has been pointed out, all kinds of difficulties exist, in history and in the problem of mixed credits, upon which the noble Lord, Lord Butterworth, expounded. If we are to enter this particular market, there must be a reasonably level playing field, and conditions in which our contractors can fairly tender. But we are told—and I believe it—that if everything works out well and if the Algerian cancer does not spread along the littoral, Morocco in particular could be the first African tiger and that would present great trading opportunities for us all, so I hope that we shall get in on the act.

Noble Lords have referred to the third substantial interest of this country: the general foreign policy interest of stability in the region. None of us should underrate that. Although reassured by the Select Committee's judgment on the immediate prospects of an increase in immigration, no one can deny that if things get progressively worse in Algeria, the dangers of the pressures to get out will increase, and Italy and Spain are in no position to administer controls which would be likely to withstand a flood. That is a long-term danger that we all share, and it brings us back to the root of the risk, which is the Algerian political situation.

Inevitably and rightly, the sub-committee did not seek to get involved in the Algerian political problem, but we are all increasingly alarmed. The French Government, we understand, are now doing their best to move towards some kind of bridge-building initiative. However, even if those efforts gradually succeed in the face of all the difficulties, if the FIS should be brought to participate in representative institutions, enormous dangers and difficulties will still remain. It could all very easily go altogether wrong and eventually result in some kind of violent uprising which would bring the FIS into power in circumstances which would be likely to create great problems for European governments and for its own minority citizens. In those circumstances, there seems little doubt that there would be great pressure on the frontiers of the European Union. So we cannot too much discount the dangers.

There is little that we can do directly. The only role that is open to the United Kingdom is quiet diplomacy. We sympathise with the French and know of the appalling problems facing the French Government with regard to their own public opinion, with Le Pen aggravating everything as far as he can, bombs going off and the media making the most of it. So, we sympathise with the French Government and people, but profoundly hope that moderation will eventually come to the surface.

I should like most strongly to endorse the very clear comments of the noble Lord, Lord Chalfont, about the confusion of thought that dogs the whole issue of fundamentalism in Western perception. It is essential that a clear line should be drawn between Islamic extremism and terrorism and violence. They need have nothing to do with each other. The noble Lord, Lord Chalfont, quoted King Hassan. Morocco has been fundamentalist for 1,200 years, since the Koran. We know that throughout history Islam has provided a framework for a particular kind of rule of law within the Sharia, which is entirely different from our own concept of representative parliamentary democracy but which nevertheless has given, can give, and is likely to give North Africa a reasonable degree of accountable government in which governments have a high measure of responsibility to a rule of law of a different kind.

I should like to say a word about the problem of education in Morocco in particular because it has a relevance to, and a relationship with, the problem of how to educate an uneducated peasantry throughout the rest of Africa—and not only Africa. It is difficult to see how millions in uneducated communities can have their level of understanding raised, as is necessary for the labourforce of a potential tiger. I remind your Lordships that in addition to the conventional means of tackling education, agricultural education and social education, all of which are very commendable, there are new ways of accelerating education. There is an interesting example of that in South Africa where the problems in the townships have much in common with those facing North Africa.

Finally, as regards our perception of the nature of extremism and understanding of Islam, although the right reverend Prelate is no longer in his place, I should like to appeal to the churches to step up their own contribution. They make a considerable contribution and I know that they devote much research and study to this, but I think that in some ways the churches are better placed than any other body to help the general public, through their own communities, to develop a much greater understanding of the possibility of Christian countries and Islamic countries living happily together side by side as they have in the past and trading together to their mutual profit.

6.49 p.m.

Lord Lucas of Chilworth

My Lords, before I address my remarks specifically to the excellent report that we are considering, perhaps I may comment on the contribution of the noble Earl, Lord Winchilsea and Nottingham. I say that because I am fairly near the bottom of the list of speakers and I should not like the noble Earl to feel that no one in your Lordships' House is sympathetic to the cause which he so energetically pursues, and has done for the past five or six years.

Perhaps I may draw the noble Earl's attention to a report of the two standing committees of the North Atlantic Assembly. Your Lordships will know that that assembly is one of parliamentarians of NATO countries. It is a report on Morocco. It comments on the annexation in 1978 by Morocco of the total area of Western Sahara. The report comments further that there was pressure from the United Nations, the Organisation of African Unity and from regional neighbours, Tunisia and Algeria, that Morocco and Polisario agree to negotiations. That was in 1988. The United Nations mission for the organisation of a referendum in Western Sahara began to deploy in the region in late 1991.

I hope that I misheard the noble Earl if he said that he was sorry that this mission had become corrupted. I hope that he did not mean that. He will also know that there is great difficulty in trying to identify the people who may quite properly engage in the referendum. As a result, in April of this year only about 45 per cent. of the potential voters had been identified on the Polisario side and only about 28 per cent. on the Moroccan side. So there is some great difficulty about the referendum taking place. The tentative date is January 1996 and that looks a little bleak.

The noble Earl will also know that none of the alliance member countries has recognised Morocco's sovereignty over the area. Therefore, there is an association taking some considerable interest in the area. The Civilian Affairs Committee of the North Atlantic Assembly sent a delegation to Morocco in 1993. The report states that it, was able to witness the scale of the Moroccan development effort in the towns of La5youne and Dakhla".

So he is not totally on his own in that regard.

I turn more properly to the report before us. As other noble Lords have said, it is a comprehensive report. It is to the usual and comprehensive standard which we have come to expect of our Select Committees on the European Community. I hope that the noble Lord, Lord Hunt, will not think it presumptuous of me if I congratulate both him and his members for this report. He said in his opening remarks that he was pleased that the report was in fact published in time for consideration at the June conference. It is perhaps timely also that this debate should take place against the background of the discussions at the United Nations on the 50th anniversary of that organisation.

I say that because I want to speak from the background of the North Atlantic Assembly. As some of your Lordships will recall, I am a UK delegate to that assembly and serve on the Civilian Affairs Committee. I am a member of the Sub-Committee on the Mediterranean Basin and chairman of the committee on the OSCE. As I understand from Radio 4, President Clinton said in his opening remarks to the assembly in New York that there were threats to our stability by virtue of terrorism, trafficking in drugs, armaments, migration and so on.

It is perhaps to this general threat to what we call democracy in the West that I address my remarks and read from the report before us. Paragraph 34 of the report comments on Mrs. Rimington's 1994 speech when she discussed the general security of our own country and the threat that came from some of the North African countries. I believe that that threat is equally apparent today and perhaps a little more so, because of the ability to transmit information and the proceeds of crime through modern technology, from nation to nation. I do not believe that that should be disregarded.

We in this country and in Western Europe have always recognised the importance of the central and eastern European countries to Europe. But for the Mediterranean-bordering countries of the European Union, the Mahgreb countries are equally important. As the noble Lord, Lord Thurlow, said in his remarks, they are particularly important for the United Kingdom whose foreign policy has to be directed to some extent to the stability of the area, which can affect the stability of our own country.

I turn momentarily to comment on one or two of the points contained in the opinion of the committee. Paragraph 94 discusses the European Union's external policies being dominated by central and eastern Europe. The report states further: Any discussion of EU external relations must now take account of the future enlargement of the Union". There can be no disagreement with that remark if one accepts that full membership of the European Union is in fact and practice going to take place. The noble Lord, Lord Dahrendorf, hoped so, as did my noble friend Lord Butterworth. However, in the discussions in which I have taken part through the North Atlantic Assembly at least twice a year, there is some doubt as to whether that is going to be accomplished, certainly within the next 10 years or even within the next 20 years. One can observe a certain cooling of ardour for the wider enlargement of the Community expressed by some of the Eastern European countries.

I was rather taken by the remarks of Mr. George Joffe set out in paragraph 93 of the report. Your Lordships will recall that Mr. Joffe is deputy director of the School of Oriental & African Studies. He argued for a different approach to priorities. He said that he recognised the attractiveness of eastern Europe as a destination for investment and said that there were good arguments for "an equality of treatment" between Eastern Europe and the Mediterranean. That is one of the problems we will have to face. The countries of the Mediterranean basin do not see equality as between themselves and our approach to central and eastern Europe.

Paragraph 98 of the report deals fairly extensively with the question of the rise of Islamic fundamentalism. I should like to underline the opening remarks of the noble Lord, Lord Hunt, and those of my noble friend Baroness O'Cathain, the noble Lord, Lord Bruce of Donington, and, in particular, the noble Lord, Lord Chalfont. They explained the difference in perception of Islamic fundamentalism. I agree with them and with the report that the threat is much exaggerated. If we could better understand that, we would be more able to give the kind of assistance outlined in the report to those countries which would be to our benefit as well. I refer in particular to the stability of the area.

Perhaps I may be a little pedantic. I just wonder why the committee said, in paragraph 112 on page 37: The Maghreb countries are worth helping".

That may be a rather infelicitous turn of phrase. I would have much preferred to see the word "necessary". It appears to me that we denigrate our responsibility and the worthwhileness of giving assistance, however it may be.

I doubt whether anybody can quarrel with the summary of conclusions in paragraph 115. The points made in (a) and (b) about stability and in the first part of (c) about the financial perspective of the Community seem to me to be of the greatest significance.

Others have spoken about the financial aspects. I do not wish to go further than to say that, against the background of I do not know how many billions shortfall in United Nations contributions—and contributions which will be asked for from western Europe and other nations—we cannot accept a bottomless pit. As the noble Lord, Lord Bruce of Donington, made abundantly clear (as he so frequently does), we have to ensure that the money is not wasted and that it is prioritised.

I turn finally to the North Atlantic Assembly, which is, so to speak, the parliamentary arm of NATO. It is disappointing that NATO did not have a Mediterranean policy until the 1994 summit. We would be a little naive to believe that our relations with the European Union, and its relations with the Maghreb countries, are settled in one neat little envelope. They are not. We have to consider our alliance partners through the NATO organisation, which is the only one that takes into account the influence of the North American countries. I hope that the Government take greater notice of the assembly's wish to look again at finding an OSCE equivalent for the Maghreb countries. If we can do that I think that jointly, with all the other interested organisations, we may take some small steps forward. Meanwhile, like the noble Lord, Lord Hunt, and other Members of your Lordships' House, I look forward to some positive results from the conference in Barcelona to be held at the end of next month. I believe that we deserve from that conference some sensible and practical solutions that can be embarked upon.

7.5 p.m.

Viscount Waverley

My Lords, the committee has deal with many issues and is to be congratulated. This is a most useful report that will be often cited. The regional opportunities available to British exports were emphasised. Figures show how meagre are the inroads that we in this country have made into the Maghreb region. I accept that our many friends there would like to see a strengthening of trading links with the United Kingdom. Her Majesty's Government have generally spared no effort in the area of export promotion. In response, the noble Lord, Lord Chesham, may be tempted to inform the House of the strategy towards the Maghreb.

When I consider misunderstandings that lead to conflict in our volatile world, I regret that Islam is high on the list. This is perturbing. The committee was unable to visit Algeria. That was understandable but regrettable. Since the affairs of that nation state could impact the region, I hope that I shall be excused a few remarks. The Algerian crisis is now well into its third year and real tension exists. The round of talks in Rome last November seemed to address many of the issues necessary for a meaningful dialogue to commence, not least the Front Islamique du Salut's acceptance of political pluralism. The then French Defence Minister, M. Leotard, even expressed the view that Rome constituted a, veritable charter for a democratic and reconciled Algeria [and] there is no military solution to the crisis.

To what extent is this the current French Administration's mediation approach towards Algeria? What is the current position of the Algerian Army? Are there signs of a more flexible and sympathetic stance? President Zeroual must be-encouraged to come to terms with the opposition parties in the spirit of the Rome platform. As with all disputes, it is the participants themselves who must want to resolve differences by seeking sustainable solutions through dialogue. However, I envisage a key facilitation role for the European Union. Perhaps the noble Lord would undertake to encourage the Commission to this end.

I return to the report. I note with interest and concern the remarks in paragraph 65 relating to access for agricultural products and the effect of the GATT Uruguay Round in regard to export losses. Certain Ministers—I do not include any of the Maghreb states in this observation—told me that, although their countries signed up for GATT, they had not, nor have, any firm understanding of the ramifications. Time does not allow more comment on this point, but I anticipate that this will be a major factor when negotiating a successor Lome agreement, for example. I accept that the Maghreb region is not a beneficiary under that convention.

The noble Lord, Lord Bruce of Donington, raised the question of agricultural access to the European Union. Broadly I agree with that, with one proviso. For example, the effect on the economies of ACP countries must be carefully considered so that access is balanced.

As has already been mentioned, I endorse fully paragraph 101 on page 35, that, the most useful thing the European Union can do to promote stability in the Maghreb countries is to facilitate their economic development".

Time must be devoted to carrying this philosophy into the hearts and minds of sceptic members of the Union and even beyond to countries such as the United States.

Perhaps I might return briefly in my concluding remarks to general issues relating to Islamism. Many in your Lordships' House will be familiar with the speech of His Royal Highness the Prince of Wales to the Oxford Centre for Islamic Studies. If not, I commend it. It is still discussed often in the Middle East. He reminded his audience that Moslems, Christians and Jews are all "peoples of the book". Yet distrust, even fear, persists. On the subject of Islam and the West he, believed wholeheartedly that the links between these two worlds matter more today than ever before, because the degree of misunderstanding between the Islamic and Western worlds remains dangerously high, and because the need for the two to live and work together in our increasingly interdependent world has never been greater". His Royal Highness was and remains correct.

It is essential for all our sakes to refrain from demonising one another and to build friendship upon common heritage and interest. We must engage in dialogue in which Islam and the West listen to each other with sympathy and respect, otherwise I fear a drift towards conflict.

A key question is: what do we mean by Islam? We must differentiate between what is referred to as being fundamentalist as opposed to being extremist. My noble friends Lord Chalfont and Lord Thurlow touched upon that topic. I ask for understanding of firm believers of the Koran, but repudiate the violence, breaches of human rights and persecution associated with extremism in the name of Islam.

The Islamic faith is an ancient belief system embodying a code of conduct followed by many millions the world over. It deserves to be regarded by us with sympathetic and respectful understanding. One cannot overemphasise that this increasingly more accessible global village in which we live is all about pluralism.

7.12 p.m.

Lord Clinton-Davis

My Lords, it is always a pleasure to follow the noble Viscount. Like so many of your Lordships, he has touched upon the important distinction to be made between the fundamentalism and terrorism. I have recently returned from Saudi Arabia where that point was made to me most emphatically. One of the most significant features of the report is the stress it places on that extremely important matter.

I applaud also what the noble Viscount said when he reminded us that in the order of priorities that need to be addressed we should not forget the importance of the African, Caribbean and Pacific countries. That is a timely reminder because I did not see—I may be mistaken—a recognition of that in the report itself. That is a significant omission when one is dealing with the priority to be accorded to expenditure within the European Union.

Last Tuesday evening I had the pleasurable opportunity of having a long discussion with my former colleague President Jacques Delors, not, I know, a favourite of my noble friend Lord Bruce of Donington, but interestingly enough in the course of that discussion he commented upon the quality of reports produced in this House on a variety of matters affecting the European Union. He recognised that they were often critical. He made no complaint about that, rather the reverse. He told me that as president he read those reports with interest, and, what is more, still does. So I believe that this report—we all pay tribute to the noble Lord, Lord Hunt, on chairing these important discussions—would not have disappointed the former president with its thorough appraisal of the issues in this critical area and the importance of determining the European Union's priorities in trying to ensure stability and prosperity around its borders.

There are very real problems affecting political, social, and economic instability in the Maghreb countries. There is more in some than in others, evidenced of course by the wave of terrorist attacks in France which have been taking place in recent weeks and months, and the huge dilemma that confronts us in relation to Algeria, in particular, where human rights are, unhappily, not respected properly over a very wide field.

No one can claim that the Government of Algeria are a democratic constitutional government. They are presenting the European Union with many problems, not least of course the French. It is right to say that the Maghreb countries are not the preserve of the French above all, but while in a broader context it is right to say that the interest of the Maghreb countries are tied up with those of the European Union as a whole—I shall come to that point later—the fact is that there are grave problems affecting the relationship of France and Algeria at the present time, as is evidenced by the decision of the French president to cancel his planned meetings with the Algerian leader.

In the light of what is happening in Algeria, should we think in terms of suspending aid to that country? Should we engage in a programme of economic boycott? Should we subtract Algeria from the dialogue that is to be embarked upon in Barcelona? I think not, but, having said that, we have to go on stressing the importance the European Union places on the recognition of human rights, because that goes to the heart of what the European Union has to stand for. We have to go on stressing the case for reform; for increased opportunities for pluralism; for a detailed scrutiny of human rights; and if we were to deflect ourselves from that purpose we should be doing ourselves an immense disservice.

One of the most important themes underlined in the report and in today's speeches has been the fact—this was emphasised by the noble Lord, Lord Hunt, and the noble Baroness, Lady O'Cathain—that the European Union is a dominant trading partner in all three of the Maghreb countries. So it is not just a French preserve. Opportunities exist for others, including ourselves, to promote trade. It is those three countries which have been the main beneficiaries of European Union aid, but they are just three of 11 countries (the Mediterranean non-Community countries) which are comprised of seven Arab countries—Algeria, Egypt, Jordan, Lebanon, Morocco, Syria and Tunisia—and four others—Cyprus, Malta, Israel and Turkey. It follows that the European Union has immense interests in the area and itself should be able to exercise a corresponding influence.

My noble friend Lord Bruce of Donington made one of those thoughtful, controversial contributions to which we are used. I always like to listen to him, even though I do not always agree with him, as he well knows. Unquestionably, he studies his case with great care; it is his conclusions with which I do not always agree. He asked what possible interest, other than to make propaganda, can the European Commission have in this particular area. He went on to complain that the Commission wanted to acquire enhanced powers in this regard. I do not agree with that, although I found many of his other points most forceful.

The answer to that point was given by the noble Lord, Lord Dahrendorf, who held the important external affairs portfolio in the European Commission for some three years and long before I went there. The noble Lord is no apologist at the present time for activities involving the European Commission. He said that we either help or we shall be subjected to pressures from these areas. I am sure that the noble Lord is right in that reflection.

These countries border on the European Union. Stability is of primordial importance to the European Union. Terrorism, legal and illegal immigration are threats posed to a number of member states, most particularly those in the south of the European Union. The noble Baroness, Lady O'Cathain, complained that some of these countries were engaging in hypocritical attitudes because they were not prepared to make concessions, in particular in relation to agriculture, which were being demanded by the Maghreb countries. It is easy to make that charge but I am not sure that it is easy to sustain it. The charge of hypocrisy is serious, but I do not believe that it is right to overlook the fact that these countries have not been the main beneficiaries of access to manufactured products which the European Union has gained in the Maghreb countries. In the main, the industrialised areas have enjoyed that access. We must remember—and, indeed, we were recently reminded of it at the Conservative Party Conference and sometimes in not very beguiling terms—that all member states of the EU are democracies and must carry their electorates with them. If they perceive themselves to be at risk there is a penalty to be paid.

We must ask how the balance is to be achieved. How can they persuade their electorates to recognise that there is a paradox between failing to give access to the products which are so important to the Maghreb countries and their farming people and the difficulty which confronts them as regards their own electorates. I believe that we need to be a little more helpful. I very much admire the noble Baroness, Lady O'Cathain, as she knows, but I ask her with the greatest respect to reflect on the difficulty of that matter a little more.

Indeed, in many ways it is encapsulated by the problems in relation to fishing. Fishing always poses a huge problem for virtually every member state engaged in it. Morocco is demanding that Spanish and Portuguese boats which fish off its coasts should make drastic cuts in their catches. It claims, I am sure with justification, that hundreds of thousands of jobs depend upon that. On the other hand, Spain has some 40,000 jobs at risk and it is facing a general election in the near future. There is always a general election taking place somewhere in the European Union and that does not altogether promote a careful reflection and an objective assessment of the policies that must be undertaken. Are we immune from that consideration?

The European Union's priorities in terms of loans and gifts have been demonstrated by providing twice as much to central and eastern Europe as to the countries on the southern and eastern shores of the Mediterranean, despite the fact that those countries have almost twice the population of the central and eastern European countries and that their populations are growing rapidly. Moreover, our trade surplus with the Mediterranean countries is twice that with the central and eastern European countries. Those fundamental problems must be confronted too. It is hoped that we will do so in a challenging way at the forthcoming Barcelona Conference.

In the wider perspective, deals which have been agreed or are in the pipeline are of great importance to the whole area. The European Union has agreed to increase aid for the period 1995–99 by 4.6 billion ecu. An association agreement has been signed with Tunisia and soon another will be signed; all that remains is to dot the "i's" and cross the "t's" with Israel. There has been an intention to undertake similar deals with Egypt, Morocco, Jordan and the Lebanon as rapidly as possible.

I am aware of the fact and I agree with the assertion that the report stresses the quality of financial aid that should be provided to help sustain the burgeoning economic development of the Maghreb countries. I am sure that my noble friend Lord Bruce of Donington was right in his comment. The noble Lord, Lord Thurlow, also referred to the inadequacy of some of the analysis in the application of that aid. It is not always the fault of the Commission because it does not always have the necessary resources to undertake the tasks imposed upon it.

We need to ensure that that aid is properly targeted, in particular in the provision of infrastructural support. I applaud what has been said about that. That matter goes to the heart of the economic advance of these countries and it goes to the heart of what we ought to be seeking to achieve in the European Union where infrastructural development has hardly reached the pitch that we need. How much more is required in these countries if they are to be areas of great attraction for investment from overseas? I concede that a formidable criticism has been mounted of the Commission as regards development of these ideas.

The report emphasises that mutuality of access to markets is the key to further economic progress and that a long transitional period in terms of removing trade barriers in industrial areas is required. I am sure that that too is a powerful recommendation. Unquestionably, the Maghreb countries face different challenges. Morocco has made substantial progress and recorded substantial growth in 1994. However, it would not be right to overlook the salient points made by the noble Earl, Lord Winchilsea and Nottingham. In this complex tapestry of different interests and approaches in the Maghreb area there is the failure to respect human rights in the Western Sahara, which is a problem. It contrasts with an enlarging respect for human rights in other areas affected by Moroccan policy. There can be no doubt that King Hassan, a constitutional monarch of increasing influence, has played a significant part in helping to ease tensions in the Middle East, not just in the past two years but over many years, and in helping to promote dialogue between Israel and her Arab neighbours and, indeed, the Palestinians.

In Tunisia, extremism does not have the same deep roots as in Algeria. A powerful president is exercising strong political control but again there is a hope for an enlargement there of human rights.

As has been said over and over again, Algeria poses the most acute problem, not simply for the European Union but also in wider terms. The noble Lords, Lord Hunt and Lord Chalfont, referred to the fact that the domino effect may not be as significant as some commentators have suggested. I am not quite as willing as they are to put aside major threats of terrorism because I believe that they have enormous potential consequences for us all.

But of course, economic instability and unemployment must undermine political stability. Algeria cannot solve its problems—as its Government seem to think and to some extent they were supported by Mr. Pasqua in France—by eliminating its extreme Islamists. Cancellation of the elections three years ago tends to—I use the word in inverted commas—"legitimate" the use of violence against the government in the view of many Algerians. It is a very sad fact, but I think it is a fact nonetheless.

The fear of terrorism is mirrored by the fear of a government who have been responsible in many respects for a huge toll in terms of death and other casualties—1,000 casualties per month in that country. We cannot overlook that.

But there can be no doubt that solutions are very elusive. Can we place trust in the sincerity of the FIS in seeking to establish pluralism in Algeria? It is very easy to make the promise. Are its assertions realistic that it can influence the most radical armed Islamic group while it claims responsibility for so many barbaric terrorist acts? Can the Algerian Government be right to reject dialogue, and is terrorism sponsored on a substantial scale from outside, and from Iran in particular?

Those are some of the major problems to which I, frankly, do not know the answer. But they have been posed rightly in the report in an eloquent and elegant way. We are all involved in the interests of that area because they are our interests. To my mind, that is the most potent argument that has been used in this formidable report. Again, I compliment the noble Lord, Lord Hunt, and his colleagues on producing it.

7.33 p.m.

Lord Chesham

My Lords, I very much welcome the opportunity for this debate, provided by the committee's report on the EU's relations with the Maghreb. This is an important and timely document on a subject which is of increasing interest, given the EU's current sharper focus on the Mediterranean region. The Government have taken careful note of the committee's conclusions, which are very much in line with our own thinking. Therefore, I shall repeat a number of points already made this evening because the Government agree with them and I shall try to keep my comments directed towards the committee's report.

The Maghreb is an area in which the UK has not traditionally had strong direct interests. But its potential for instability and the impact that this could have on the whole EU make it of substantial importance. The Maghreb is a region where Britain could, and should, do more, as the noble Lord, Lord Hunt, said. We believe the best approach is to work through the EU. In turn, EU assistance and the wider prosperity it generates can offer considerable opportunities for British business.

My noble friend Lord Butterworth drew attention to the limit of 700 dollars GNP per capita which UK policy imposes on support under the ACP provisions. I should point out that that policy aims to focus limited resources on the poorest countries. Therefore, UK firms have particularly good opportunities in those countries which somewhat offset the opportunities in the richer countries. However, we believe that UK firms have excellent opportunities to win business resulting from the EU financing for the Maghreb countries agreed at Cannes in June.

Since the committee published its report in May, we have seen a number of further developments in EU-Maghreb relations. In June the Cannes Council settled the difficult issue of EU grants to the Mediterranean over the period 1995 to 1999. In July a new agreement was signed with Tunisia. I look forward to a draft agreement with Morocco being initialled soon.

The Maghreb countries are an important part of the EU's wider Mediterranean initiative. Next month in Barcelona the Foreign Secretary will join his counterparts from the 15 EU countries and 12 Mediterranean neighbours, including Morocco, Tunisia and Algeria, for the Euro-Med conference. The conference should be the foundation for a new long-term relationship between the EU and the Mediterranean states, setting out future principles for political, economic and social co-operation.

I fully agree with the committee's view that stability in the region should be a priority for the EU. Indeed, stability and prosperity are in the interests of both the EU and the Mediterranean states. As regards north Africa, the threat should not be exaggerated. There is no direct security risk to Britain or to the EU in any military sense. But there are concerns about the proliferation of weapons of mass destruction, the real possibility of increased migration, and terrorism. That is illustrated by the despicable bomb attacks carried out recently by Algerian extremists in France. We are ever-vigilant to potential terrorist threats to Britain, and we are co-operating closely with the French authorities on these terrorist incidents.

As has been mentioned frequently, one aspect of political and economic instability is Islamic extremism. Much has been written and said recently in the popular and academic press about it. It is important to differentiate between Islam, which the British Government hold in the greatest respect, and Islamic extremism. We deplore any form of extremism which advocates the use of violence to achieve political ends.

The causes of extremism in the region vary from country to country. Economic problems have been a key factor. In the populous states of the northern and western Arab world, including in the Maghreb, economic distress is widespread. The combination of sluggish economic growth and rapid population growth has led to increasing pressure. An obvious sign is unemployment. Extremist groups benefit from this.

There are also social and political factors. With the spread of global information, expectations have risen and people are less tolerant of poverty and injustice. Where under-developed democratic systems exist, channels for dissent such as the role of opposition parties may be considered inadequate. Extremist groups are only too willing to fill the vacuum.

These are serious underlying problems which need to be addressed. However, circumstances vary between individual countries, and extremist groups tend to have national rather than supra-national identities. The rise of extremism in one country has implications for the stability of its neighbours. But the committee is right to conclude that talk of a "domino effect" from Algeria to its neighbours is unduly alarmist. The conflict in Algeria involving government forces and militant groups has not undermined the internal security of Tunisia or Morocco in any significant way. Both have embarked on economic restructuring programmes, which should enhance stability and pave the way for the further development of existing democratic political systems.

We share the committee's assessment that the most significant causes of instability in the region are economic problems and unemployment. That is why financial assistance and improved trade flows are a major plank of the EU's strategy.

In the medium term, improved trade will have a much greater impact than aid. That is why we welcome the new agreements with Tunisia and shortly, I hope, with Morocco. The agreements are a major step forward. They encompass not just removal of tariffs but also stronger commitments to prevent non-tariff barriers, align economic policies and improve intellectual property rights. These are gains for both sides. Companies will be able to do business in a more certain environment. That will help encourage investment in the region and transform those economies in the interests of both producers and consumers.

As the committee pointed out, it will take time for the Maghreb economies to introduce greater openness. That is why a long timetable of 10 years or so has been set out for dismantling specific tariffs. The long-term aim is a Euro-Mediterranean free trade area by the year 2010.

Of course, the Maghreb countries already enjoy a substantial degree of concessionary access to the EU's industrial markets. It is in the area of agricultural products, as has been mentioned, where they have most potential for increased trade. The committee correctly identified the paradox that the southern EU member states with most to gain from improved stability also have most to lose from increased agricultural imports.

Mediterranean crops like fruit and vegetables from the Maghreb are in direct competition with the EU's southern producers. Those products currently receive less support under the CAP than products like milk, beef and cereals. So there is only limited Community assistance available to help EU growers affected by increased competition. Nevertheless, increasing Maghreb access would necessitate increased support under the common agricultural policy with obvious budgetary implications.

The UK has been at the forefront of those calling for improved market access for all goods. We share the ambitious long-term goal of a Euro-Med free trade area. We recognise that WTO rules require free trade areas to cover "substantially all trade" in order to avoid distortions. That means agriculture too. In the short term the Government will continue to argue for better agricultural market access. In the long term, we will seek to establish a free trade area which is WTO compatible.

In addition to improved trade flows, the EU is committed to a significant increase in financial support to the Mediterranean region. But the Government share the committee's view on the importance of keeping expenditure within the current financial perspective. The Cannes European Council agreed to a figure of 4.7 billion ecu for the Mediterranean region over five years, including the Maghreb. That was a substantial reduction on the Commission's unrealistic original proposal of 5.5 billion ecu.

We also share the committee's view that loans should be an important element of EU support. Under the current fourth financial protocol, around two-thirds of assistance is in loans. The amount of lending by the European Investment Bank to the Mediterranean region will depend on the EIB's future external lending capacity, which my right honourable friend the Chancellor of the Exchequer is discussing with other EU finance ministers in Brussels today. We will continue to try to improve the effectiveness of EC aid in the region by careful monitoring and, if necessary, by raising issues in the Council. It may have some conciliatory effect on the noble Lord, Lord Bruce of Donington, when he knows of the careful scrutiny that will be undertaken by the Government.

The committee is right to recommend that EU aid be sensibly targeted on infrastructure and economic co-operation to prepare the Maghreb for greater integration with the EU's economy. The integration of the Maghreb countries into the world economy is a long-standing objective of Britain's approach to the EU aid programme. British companies can and, I hope, will play a full part in that process. The DTI, through its range of export services and with other organisations such as the Committee for Middle East Trade, the Middle East Association, and the Arab-British Chamber of Commerce, is working actively. It aims to promote the commercial opportunities under EU aid including use of the EC investment partners scheme to support joint ventures. The Euro-Mediterranean conference in Barcelona will provide a focus for a greater publicity effort towards UK firms.

The committee drew attention to a lack of awareness in British business of the opportunities in the Maghreb and a tendency among some companies to view the region as the natural preserve of other trading partners, notably France. These were issues that the committee explored particularly with the DTI's export promoter for the region. The DTI is working hard to identify and address some of those misconceptions. That work will continue and will be intensified in some areas, including the opportunities under aid. It is worth noting some encouraging signs. British firms have expanded their efforts considerably in the past few years. Visible exports to Tunisia were up 22 per cent. in 1994. We have seen strong growth in exports to Morocco this year which may well reach £200 million for the first time by the end of 1995.

The Government support moves towards the gradual establishment of a Euro-Med free trade area. That will enhance economic growth and prosperity and promote stability. But the two are inter-related as economic growth thrives best in a liberal political environment. The EU's Euro-Med partnership aims to promote good government and respect for human rights as well as good neighbourliness through an ongoing political dialogue. We look to the Barcelona conference to give a strong political steer to that initiative.

I express my support for the remarks made by my noble friend Lord Lucas of Chilworth to the noble Earl, Lord Winchilsea and Nottingham. The UK does support the current exercise under the auspices of the United Nations which has voted through a referendum on the future of the Western Sahara territory. The identification process is complicated and has been much delayed, but it is continuing.

The EU will play a key role in promoting economic and political stability in the Maghreb. The Government will work hard to ensure that the UK both contributes to and benefits from the challenges and opportunities in this increasingly dynamic region.

7.47 p.m.

Lord Hunt of Tanworth

My Lords, I should like to thank the Minister for his reply to the debate. I should also like to thank all those who have taken part in it and contributed to what I believe was an interesting discussion. I was struck by three strands that seemed to come through almost all the speeches. First, there is the general agreement that one should not equate fundamentalism with extremism: there is a very clear distinction between the two. Secondly, there is the need for a radical reform of the common agricultural policy. Thirdly, there is the need for financial assistance to the region to be justified and properly targeted. In concentrating on limiting Community expenditure, with which I believe we all agree—and there is general agreement that the financial perspective must be maintained, and so on—I hope that, where there are EU instruments and where EU aid is available, British firms will get their fair crack of the whip. Indeed, we heard much evidence of uninterest or lack of knowledge. I was very glad to hear what the Minister said about the further steps which will now be taken.

I should like briefly to comment on two points upon which the report was criticised. I shall start first with the Western Sahara. We were not seeking to minimise the importance of this question in any way. What we were seeking to do in that paragraph was to say, "We are not dealing with it" because, having taken some evidence, particularly from Mr. George Joffe, we were convinced that we could not deal with it in two or three more paragraphs. It was rather like the matter of Algeria, where we agreed that it was an important matter but we were not dealing with it. That was the course we chose. However, we were not seeking to minimise the position.

If I understood the noble Lord, Lord Clinton-Davis, aright, I believe he was criticising us for not dealing with the priorities vis-à-vis the ACP countries. I accept that we did not mention that, but it was very much in our thinking and I believe it was implicit in what we said about aid to the Maghreb countries being to middle income countries and therefore taking the form of loans rather than grants. However, his point was certainly very much in our minds. I again thank noble Lords for the debate.

On Question, Motion agreed to.