HC Deb 24 October 1990 vol 178 cc456-75

12.4 am

The Minister of State, Foreign and CommonwealIth Office (Mr. Tristan Garel-Jones)

I beg to move, That this House takes note of European Community Document No. 7720/90, relating to the extension of the provisions of Council regulation No. 3906/89 to Czechoslovakia, GDR, Bulgaria, Yugoslavia and Romania; and supports the Government's view that the provision of co-ordinated economic aid to those countries by the European Community will promote economic and political reform in those countries and foster a closer relationship with the Community. Last Friday the House debated the EC consequences of German unity. Although that debate was not without its complexity—no less than 26 pieces of draft EC legislation lay on the Table for the House's consideration—it was lubricated by the fact that the former German Democratic Republic is acceding immediately to the Community as a part of the Federal Republic. The considerable costs of bringing the GDR up to the standards of the Community will be largely met by the Federal Republic of Germany. Even though substantial social and economic strains will result, they will undoubtedly be eased by the wealth of western Germany and its commitment to the cause of German unity. No such sponsor exists for the other newly emerged democracies of eastern Europe, and they will need our support both bilaterally and through the Community.

For Conservative Members and the majority of Opposition Members, the return of Poland, Czechoslovakia, Hungary, Bulgaria and, we hope eventually, Romania to democracy and free enterprise is a matter for unalloyed rejoicing. For some Opposition Members the matter is not so clear cut.

Last Friday the hon. Member for Newham, North-West (Mr. Banks) leapt to the defence of the Trabant motor car—an heroic act that 18 million former East Germans are no longer prepared to perform. The hon. Member for Derbyshire, North-East (Mr. Barnes) even praised the full employment policies of the GDR. At one stage I was surprised that none of the Members who sit below the Gangway rose to praise the policies of law and order that used to pertain under Herr Honecker.

The regulation which we are debating this evening gives effect to the extension of the Community's aid to the other countries of central and eastern Europe in addition to the original recipients, Poland and Hungary. I was grateful for the Scrutiny Committee's agreement that our acceptance of the Commission's proposal did not need to await its deliberations. By agreeing to this regulation in July the Government were able to send a positive signal about their commitment to supporting political and economic reform in eastern Europe.

I should like to outline first the criteria used by the Community in deciding to which countries to give aid. Secondly, I shall touch on the range of measures that have so far been taken. Thirdly, I shall consider some of the projects that have been financed by EC funds. Finally, I shall comment on the future of EC relations with eastern and central Europe.

I shall begin with the criteria. The Community's aid policy is based on an assessment of each country's progress in implementing political and economic reform. We measure that commitment according to five criteria: the establishment of a market economy; a pluralist democracy; free and fair elections; the recognition of human rights; and the rule of law. The freedom of the media is a further barometer of the extent of political liberty in any country.

We retain, alas, some doubts about Romania's commitment to democracy following the unhappy events of June this year. Romania, although covered by the regulation, will receive EC economic aid only when Ministers are satisfied that the above criteria have been met. We look forward to its early inclusion.

The programme of aid available to Poland and Hungary developed at the end of last year comprised four basic elements—measures to boost trade with the Community, lending facilities, project aid for spending in the priority areas of environment, agriculture, training and industry, and food aid where that was required.

A further important role will be performed by the European Bank for Reconstruction and Development which we hope will begin operations in the spring from its London headquarters.

Mr. Tam Dalyell (Linlithgow)

What will happen after 1 January when non-transferable roubles become difficult and have to give way to hard dollars? That will hit countries such as Poland and Bulgaria extremely hard. Will the bank do something about that?

Mr. Garel-Jones

The hon. Gentleman will be aware that eastern Europe faces problems in financial management, accountancy and so on. Through our know-how fund and the TEMPUS programmes of the Community we shall be attempting, through conferences, seminars and direct advice, to give assistance to eastern Europe on the many problems that will arise from moving rather abruptly from a command economy to a market economy.

The EC's aid measures are being extended on a case-by-case basis to Czechoslovakia, Bulgaria, Yugoslavia and Romania, although I stress again that no disbursements will be made to Romania until she has met the requirements that I outlined to the House in my earlier remarks.

Mr. John Bowis (Battersea)

Does my hon. Friend intend to refer to Yugoslavia and the abuses of human rights there? It is hardly moving towards a free and fair democratic system, particularly in the Kosovo region. Will he also define Yugoslavia should Slovenia and others begin to break away and form their own nations?

Mr. Garel-Jones

I am sure that my hon. Friend will forgive me if I do not attempt this evening to define Yugoslavia—a matter which is causing some difficulty even for Yugoslays. I agree that Yugoslavia has some way to go before it attains the criteria that I have just outlined.

In particular the PHARE—Poland Hungary aid for reconstruction of the economy—regulation now covers all the above countries for project aid, although, as I have just explained, there are no disbursements yet for Romania.

The original budget for 1990 of 300 million ecu, which is about £210 million, was extended to 500 million ecu, or £350 million, for all six countries, and 850 million ecu, or £595 million, has been earmarked for 1991. It might be helpful if I highlighted some of the projects implemented using that money. Some 25 million ecu, or about £18 million, has gone to the TEMPUS student mobility scheme for the current academic year. That programme will bring about 600 students from Poland, Hungary and Czechoslovakia to EC universities.

The United Kingdom has proved to be a particularly attractive destination for TEMPUS students, and we expect approximately 200 to arrive in this country this autumn. We have made a significant contribution to the improvement of Polish agriculture, to help Poland feed itself this winter. Environmental aid has accounted for some 20 per cent. of the overall budget, with further amounts going to small businesses and the improvement of statistics.

Finally, I come to the perspectives for the future. The priority areas for 1991 will remain the same as for the first year of the PHARE programme. We asked the Commission to provide a detailed indicative breakdown by country and sector of the likely expenditure pattern, but that is not yet available. In the meantime, the Commission is making rapid progress on the relationship that we hope will develop between the Community and eastern European countries in the coming years.

Mr. Dalyell

When does the Foreign Office expect the report of the OECD combined with the World bank and the European bank on which some British academics, such as Professor Sir Paul Hare of Heriot-Watt university, are presently working?

Mr. Garel-Jones

I cannot answer that question immediately, but the report will have a significant bearing on the subsequent action taken by the Community and others. I may return to that point when I wind up, if I am fortunate enough to catch your eye, Mr. Deputy Speaker.

Association agreements with Poland, Hungary and Czechoslovakia which the British Government proposed at the Strasbourg European Council in December 1989 could be in operation as early as 1 January 1992. They are likely to contain provisions for economic assistance, which will need to be closely co-ordinated with the priorities of the PHARE programme.

All the countries that we are discussing this evening have shown moral and on occasions even physical courage in opting for democracy and the market. However, we know—and they know, too—that they will need another kind of courage to meet the challenges of the market place. There will certainly be redundancies, and shortages, too. There will be failures, which will be reflected in a free press.

The Community programmes of which the House is taking note tonight will help to meet those challenges, but the bottom line in the market economy is, and will remain, the individual and collective effort of the people themselves. We have no doubt that the peoples of eastern Europe will show the same courage in rising to those challenges as they have shown in gaining their freedom.

12.15 am
Mr. George Robertson (Hamilton)

I go along with much of the Minister's peroration, because we all have expectations of the bravery and initiative already shown by the peoples of eastern and central Europe, which have allowed them to triumph over the corrupt dictatorships that they overwhelmed and will be directed now at the enormous economic problems which confront them.

Nevertheless, brave words and rhetoric from the Minister at the Dispatch Box will not open the doors that those peoples need to open now. The debate is the starting point for a much wider one on how the West—the European Community, Britain and other countries—can unite in creating the climate of optimism that will allow eastern and central Europe to overcome the short-term problems that are a consequence of rising oil prices caused by the Gulf crisis and the unique difficulties inherent in moving from command to mixed economies.

The documents before the House concern the technical nature of expanding Community help through various programmes that the Minister outlined, and we endorse the position that the Government and the Community have adopted in that respect. Later, my hon. Friends will, if they catch your eye, Mr. Deputy Speaker, comment on particular aspects of those programmes.

I want to comment generally on the problems facing the countries of eastern and central Europe and to relate them to our own efforts, so that we may view them alongside those being made on a multilateral basis by the Community as a whole.

We wholeheartedly agree with the Government's public statements and actions in the Community, in emphasising that there is no sense in throwing money at the immensely complex problems of economic restructuring. There can certainly be no question of adding to the debt problems of eastern Europe in the way that has happened in Africa and south and central America, which has exacerbated those countries' difficulties. A debt mountain is no way for a country to get out of its problems.

If the assistance that we provide is to be of long-term benefit, it must be targeted on areas in which this country and the Community as a whole are best placed to provide the know-how which is absent from command economies, but vital to the development of mixed and market-based models. That is a feature of the programmes that we are endorsing in this debate, but it is also an important point about the way in which the British Government have approached this problem and this challenge.

The know-how funds that the Government set up were in principle an excellent idea, and I was pleased to serve on the unique—for the British Government—advisory board set up to oversee the funds for eastern Europe. This is an area in which Britain has much to offer the people of central and eastern Europe, and potentially much to gain from the partnership that it represents with them. In spite of 11 years of this Government, this country still has a significant contribution to make in banking, insurance and financial services. In these areas we have an experience and expertise that can be of real value to the emerging market economies of eastern Europe. We also possess expertise in the scientific, agricultural and cultural fields. If these economies are up and running as quickly and as strongly as possible, it is bound to be of real value to Britain and the rest of the European Community that we do what we are doing today.

We also have a special asset which can be to our advantage as well as to that of the central and eastern European countries—the parenthood of the English language. English is clearly the pre-eminent language in the worlds of business and industry, and eastern and central Europeans have not been slow to recognise that. Furthermore, there is a real desire in eastern Europe—more so than has become the case in many other countries—to learn the British rather than the American or any other form of the language. And for once we already have the institutions in place to capitalise on this remarkable pro-British attitude, which is rare enough these days but heart-warmingly strong in countries such as Czechoslovakia. That warmth of feeling towards this country was amply illustrated by the approach to the Prime Minister as she regally wandered through the streets of Prague and Budapest not so long ago, but it has not, I fear, been reciprocated since then by a similar generosity of approach on her part.

I was interested to read in last Sunday's The Independent on Sunday a description of the problems facing those who seek to promote the English language. It pointed out that a certain Czech playwright has made an offer soon to restore the Prague palace, from which the British Council was ejected in 1949, to the British Council. That Czech playwright was, of course, Vaclav Havel, now President of Czechoslovakia but for so long a dissident for whom many hon. Members on both sides of the House campaigned and waged aggressive battles with the ambassador of the then Czechoslovak Peoples Republic. Havel has said that he has a major sentimental attachment to the English language and to the British Council, but as the article perceptively points out, Havel's presidential fleet is made up of BMWs. The unquestionable economic power of the region is Germany". If we have that attachment, that link, that valuable connection, it is a shame that other countries are in there and have made so much progress before us.

The BBC World Service has long been cherished as a precious resource in eastern and central Europe. In the days of totalitarianism, it was a source of reliable information when there were precious few others. Now, it is a central access point to the English language and British culture, which is still in demand there. In the British Council, praised by Vaclav Havel, we have in place the ideal instrument with which to extend the crucial process of promoting the British culture in these vital markets.

In order to continue the excellent work done over many years by the BBC, the British Council and many other British organisations overseas, we must ensure that we make the necessary funds available. The half-hearted efforts of the Government are not good enough, especially when compared with the priority given to this by our partners and competitors. For example, the French have just allocated 200 million French francs—over £20 million—to training people to teach French in eastern Europe. They are setting up imaginative and useful scholarship, broadcasting and exchange schemes across the new Europe.

The French are going to all this effort partly because they know that we have a head start through the English language but also because they know, given the attitude of the present British Government, that it will not take them very long to catch up with us. I plead with the Minister—I am sure that he is sympathetic because he is a long-standing friend of the British Council and of its teaching operations in Spain—to ensure that in central and eastern Europe the money required to carry out our commitments to English language teaching will be guaranteed for the future. That will be the most important leverage that we shall have in those countries.

Mr. Donald Thompson (Calder Valley)

Bismarck said that the most significant happening of his lifetime was that America turned out to be an English-speaking country. Had it been a German-speaking country, the history of this century might have been very different. I reinforce what the hon. Gentleman has said.

Mr. Robertson

I am grateful for the hon. Gentleman's support. I know that a lot of what I say about English language teaching and the World Service is not a partisan point of view because it is shared by many hon. Members. The difficulty is that, although the Minister and his Department are sympathetic and know what the advantages are, and what can be done with them, they are being outflanked by the Treasury, where the ears listening are not sympathetic to the pleas of the advantage that can come to Britain. I hope that the hon. Gentleman will add his voice to the strong voices saying that this is the time for Britain to take hold of its advantage and to pay out the money so that future generations will reap the benefit of the minimal expenditure involved.

Even in culture, the German equivalent of the British Council, the Goethe Institute, has recently opened new offices in Moscow, Warsaw, Prague, Cracow, Budapest, Bratislava and Sofia. About 10 million people in the region are learning German. I see these figures as rather more than coincidentally linked to the fact that German foreign cultural spending now stands at more than £1 billion. If we compare that and the growth in its cultural expenditure with the United Kingdom commitment, we begin to get a picture of where we are heading.

While the Germans are spending nearly £1 billion on restructuring, the Government, I regret to say, initially offered £50 million of know-how funds for Poland and £25 million for Hungary. Both offers were spread over five years. They also offered an unspecified amount, and it remains unspecified, to the other countries of eastern and central Europe when the offer was extended to them. The fact is that for the financial year to April 1991 there is a strict limit of £15 million on know-how expenditure for all the countries of eastern and central Europe.

I ask hon. Members to contrast that with one other statistic. The Government will be spending this year £20 million on the television advertising of electricity privatisation alone. That has to be contrasted with the total of £15 million that Britain is to spend on know-how for all the countries of eastern and central Europe. All the money for the six months to April 1991 is committed. Demand has increased but no more money is available until April 1991. There is no guarantee that after April 1991 additional money will be forthcoming. I am sure that I am not the only hon. Member who is less than 100 per cent. confident that the Foreign and Commonwealth Office will get all the money that it needs during the autumn public spending round. We can only hope beyond hope that the Secretary of State for Foreign and Commonwealth Affairs is not tinged with the same generosity in offering money as his right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke), the Secretary of State for Health.

The problem that the know-how funds face is compounded by the fact that while the Government are not very good at planning policy, or at government, they lead the field in disingenuous hype and self-promotion. By hyping the know-how funds, the Government were too successful. I made a speech last month to the Royal Institute of International Affairs in which I made that point. I said that penetration was good, that interest had been aroused, that commitments had been made and the Ministers went to all these countries publicising them. But we shall be judged by what we do, not by what we say. If the plug is pulled now, as appears to be the case, in order to satisfy obsessional Treasury small print, disappointment will turn to anger. Disappointments and delays are lost opportunities for mutual benefit.

To parade brave central and eastern European leaders at the Conservative party conference and across our television screens during party political broadcasts is no substitute for giving them the help and the know-how that their economies need. To take the place of those broadcasts there will be a catalogue of broken promises and unfulfilled expectations.

As a result of my contacts and the work that I do here, I know many of the people in the countries concerned. I have listened to their pleas and to their worries and concerns. I place on record their demoralisation.

Both I and the Minister know precisely what is at stake. This should not be a party political matter. I did not believe that it was when I joined the know-how fund's advisory board. We are talking about a unique opportunity for Britain—either alone or, with more value, through the European Community—to grasp the enormous opportunities offered by the democratisation of central and eastern Europe.

I draw the attention of the House to an article in The European Business Journal written by Mr. Ralph Land, a member of the Government's advisory board on the know-how fund and general manager of Rank Xerox's eastern Europe export operations. In his fine article he said: There is some evidence that those companies that have persisted in the East European market have succeeded in developing profitable business and most of them are looking at the future with some degree of encouragement even while the short-term outlook may be less encouraging. What is now happening in East Europe and the USSR is unprecedented. While the outlook is uncertain there must be a real possibility that these changes will provide the West with unprecedented business opportunities in one of the world's last underdeveloped markets. If we squander the chances when the breaks are available to us, it will not be our doomed Government who suffer but future generations of Britons who deserve far better than that.

12.35 am
Mr. Tim Rathbone (Lewes)

I welcome unequivocally the subject of the debate, which is the proposed regulation that extends the Community's economic aid to all of Germany, Yugoslavia, Bulgaria, Czechoslovakia and, with some reservations, Romania, in addition to Poland and Hungary who have received it hitherto. I welcome also the removal of the limit on the level of finance available under the previous regulations. It enables the Community to give humanitarian assistance and much more to the beneficiary countries.

The document cannot be considered in a vacuum. It is linked within the foundation and location of the European Bank for Reconstruction and Development with a capital of 10 billion ecu, working alongside the European investment bank. Other financial institutions will continue to play their part.

This is the first opportunity I have had to welcome my hon. Friend the Minister to his new position. However, I must tell him that we are not doing enough. By "we", I mean not just this country but all the countries of the developed western world. I have mentioned before and should like to reiterate the suggestion of the establishment of an all-embracing Strasbourg plan. Such a plan would add focus and direction to what the European Community can do and would embrace the actions of other institutions and nations. I believe that it is only under such an umbrella and with such identifiable motivation that whatever help is given in whatever form will be planned and carried out to best effect.

That is all the more important because such help will take many forms, including grants, soft loans, interest rate subsidies and preferential access to western markets, mostly free of customs duties and other taxes, as it is for other countries receiving help from the European Community under the Lomé convention. It will take the form of direct investment and know-how funds such as the £15 million contributed by the United Kingdom this year. I share the concern expressed by the hon. Member for Hamilton (Mr. Robertson) about the amounts we are providing, but we should not lack pride in what the know-how funds are already achieving.

Such a Strasbourg plan should be designed on the principles which underlie the recommendations we are considering now—encouraging self-help and creating stable conditions in which free institutions can survive. After the exhilaration of liberation in eastern and central Europe, those countries face the challenge of living free. They face it after development at a most extraordinary speed. It has been said that the revolution in Poland, where Solidarity first confronted Communist rule a decade ago, took 10 years. In Hungary, the changes initiated by liberals in the party itself took 10 months. In East Germany, demonstrators were on the streets for 10 weeks before Honecker's bogus state collapsed. Czechoslovakia's hardliners held out for only about 10 days, and in Romania it was virtually all over in the first 10 hours after the crowds booed Ceausescu. However, the bloody counter-revolution lasted longer and things still have not settled down there.

The Strasbourg plan should help those countries to tackle the problems they face. It should be a political effort, couched in economic terms, and a foreign policy initiative, the main objective of which should be to help to create viable and stable national economies in central and eastern Europe. Those economies must be strong enough to resist political or economic subversion, and therefore able to contribute to the harmonious development of economic activities in Europe, to which the European Community is so correctly committed.

To achieve that, like the Marshall plan 40 years ago, the Strasbourg plan must be of massive dimensions. The Marshall plan cost ․12,000 million over four years. That represented 1.2 per cent. of the United States's gross national product in that period. As a guideline, applying the same percentage to the gross domestic product of Organisation for Economic Co-operation and Development countries would demand funding of about £400,000 million for the next four years. That is quite a challenge, but it is also an enormous opportunity.

I remind the House of the success of the imaginative levels of funding under the Marshall plan. It increased the national gross domestic product of recipient nations by 15 to 20 per cent., rates of investment by 30 per cent., industrial production by more than 30 per cent. and agricultural production by almost 15 per cent., although I believe that the Strasbourg plan should far exceed that proportion. It increased export trade by 66 per cent.; imports increased by 20 per cent.; and trade between the recipient countries almost doubled.

Those were the successes of the Marshall plan, despite continued exchange controls and continued quantitative national import restrictions. The Strasbourg plan, properly executed, should far exceed those, to the benefit of recipient and donor countries alike. Such a plan should not be measured or judged only by short-term economic results. It should provide a cornerstone for achievement in central and eastern Europe in the next decade, and though designed to address specific and immediate economic problems it should help to lay the foundations for free, peaceful democratic practice in those countries. That is a good wish for them and a self-serving wish for ourselves.

A Strasbourg plan would vividly illustrate our shared western heritage. It would illuminate and motivate, at last, a shared common purpose of spreading freedom and of the use of that freedom to benefit all European peoples. In so doing, it would mark the start of a new epoch in history.

I hope that my hon. Friend the Minister will not only carry the support of the House in the recommendations that we are considering but use this moment to start planning such a co-ordinated effort, which could make a difference not only to this decade but to the century ahead.

12.43 am
Mr. Bruce George (Walsall, South)

We are debating the extent to which we in the west should help to underpin the emerging democracies in eastern and central Europe, enhance their political systems and rebuild and build their economies, which hardly function. Those countries' economies are now seen to have been bereft of any competence or initiative, and we know that their output was low. Now we are reappraising the bogus statistics that were produced and discovering just how economically, morally and politically bankrupt those regimes were. I would class them as a series of gigantic Whips Offices. When the Minister takes a cheap shot at the Opposition, I shall be tempted to reciprocate by saying that, having spent so long in the Whips Office, he ought to know a thing or two about authoritarian structures. Like the Romanians and the eastern Europeans, he has emerged from a nightmare of discipline—in this case into the relative freedom of the Foreign Office.

No one is asking whether we should help central and eastern Europe. We are merely discussing the extent to which we should help them. Despite the rhetoric and euphoria that greeted the collapse of communism—the collapse of the decks of cards in eastern Europe—I wonder whether the collective efforts of multinational organisations, Governments, the private sector and individuals will be sufficient. It is clear that the survival of the new democracies in eastern and central Europe will largely depend on their own endeavours. But that should not provide us with an easy let-out, because both their progress and our interests will be served by a massive collective effort by the public and private sectors and by Governments—not simply through economic assistance, loans and the wiping out of debts but through the provision of political expertise. Matters are fairly easy now: things are going well. But things might suddenly get worse, and if that happens, the support of western countries will be even more important.

Sir Alan Glyn (Windsor and Maidenhead)

Does the hon. Gentleman agree that this is a unique opportunity in the history of Europe and of the world, and that we should take advantage of what has happened in the countries of eastern Europe, which we have all visited at various times? If we do not take this opportunity now, we shall lose many opportunities in future.

Mr. George

I am grateful to the hon. Gentleman for his intervention. I suppose that it is slowly dawning on people that the success that has been achieved was not inevitable. We realise now that things can go wrong—that they are going wrong in some respects. We must realise that a year from now, or five years from now, the whole thing could turn sour. Suppose that there is a counter-revolution or that the dark forces suppressed by totalitarianism for more than 40 years re-emerge. We in the west will have to assume some of the responsibility for the failure that may result in eastern and central Europe.

One of the pleasurable tasks that I have had to perform in my capacity as chairman of the political committee of the North Atlantic Assembly is to produce for publication a chronology of the events of the past 12 months. The first entry, dated October 1989, describes how thousands of East Germans were allowed to enter West Germany through embassies in Prague and Warsaw. That happened just 12 months ago. It is almost impossible to believe how much has happened in such a short time. I am sure that historians will regard the past 12 months as epoch-making ones. They will regard this year in the same way as they have regarded 1789, 1815, 1848, 1918 and 1945. But all those great years were years in which Europe was transformed by revolution, by a civil war or by a major conflict. In 1989 and 1990, however, there was a virtually bloodless revolution—a series of velvet revolutions—and we must be eternally grateful for that.

Few could have predicted what happened. Certainly those who were least prepared for it were Jaruzelski, Honecker, Jakes, Kadar and Zhivkov. Why did it happen? It happened because the legitimacy of regimes was exposed. Gorbachev had said that no longer would Soviet armed forces be available to sustain the unsustainable. Bereft of legitimacy and of Soviet military support, those regimes have proved completely bankrupt and the democratic forces have emerged.

I had intended to quote Timothy Garton Ash, but was pre-empted by the hon. Member for Lewes (Mr. Rathbone). Let me now quote from Havel's address to the assembly of the Council of Europe a few months ago: Time suddenly accelerated and what otherwise took a year suddenly happened in an hour … the impossible and the dream became reality. The stoker's dream became the daily routine of the Minister of Foreign Affairs. That is a cause for euphoria, but our euphoria must be translated into something that might be a burden for our constituents and our Government.

The jettisoning of Stalinism was almost simple in comparison with the nation-building that must now take place. The first stage was represented by the events that led up to the revolutions in eastern Europe, the second stage by the revolutions themselves; the third stage was that of transitional government before elections provided legitimacy. It is the present stage that will be the difficult one.

I do not feel that what our Government have done is remotely sufficient. If goods and assistance could be equated with rhetoric, eastern Europe would be as happy as the East Germans will be with the West Germans sustaining them. Our efforts so far would bring about the regeneration of Transylvania, if we were disposed to provide the resources. Much more must be done.

We face a monumental task. Politicians in eastern and central Europe are learning by experience: people who were denied access to the political system are now holding key offices, and must deal with obsolescent industry, limited capital, an unmotivated and, in many instances, unskilled work force, entrenched opposition from forces that have not yet been eliminated politically and peacefully and the lack of any entrepreneurial skill or spirit.

The Minister talks of movement to a market economy. I suspect that the market economy in those countries will be tempered by a significant dose of social market economy. Some may argue that a halfway house is impossible, but this is not a halfway house. I have visited eastern Europe many times, and I know that people there are enthusiastic about their perception of Scandinavia. I suspect that what will eventually emerge could be more accurately described as a social market economy.

We now have support from the EC, and the American seed support, for eastern democracy; there is support from the banks. But we must not look only towards economic assistance and know-how; we must also consider the political framework within which these countries are to emerge. The magnet of the European Community and 1992 was, I believe, one of the significant factors that led to the collapse of communism in eastern Europe: those people could see that, while their societies were disintegrating and old rivalries were beginning to emerge, we in the west were going in the opposite direction. It was the realisation that there was a distance between them, with their COMECON, and us. Someone said to me when I attended a COMECON meeting, "The Phoenicians invented currency 3,000 years ago; we are still operating a system of primitive barter in COMECON." It was the realisation that the gap was widening by the hour that led them to realise that their system had been exhausted.

We must do much more. The know-how fund is wonderful in principle, but it is not sufficiently great in its scope. Although the Minister has excluded Romania for the moment, I wish to advance an argument that may not be especially popular. I was in Romania 10 days after the revolution and I can speak with some knowledge, but not with any certainty. I think that President Iliescu's use of the miners was shameful and wrong and that his country has paid a heavy price for it. The Balkans, however, are not the central or northern tiers of eastern Europe. They are quite different from those areas, and considerable progress has been made so far. The Romanian Government, even though we may not like them, were elected in a relatively free election and have a legitimacy.

Perhaps I am introducing extraneous factors into the argument, but we must remember that it was a Romanian ambassador to the United Nations who chaired the Security Council in August and who was crucial in enabling extremely important resolutions on the Gulf to pass through the council. It was Romania that imposed sanctions, at enormous cost to itself. Romania has offered United States armed forces the opportunity of rest, rehabilitation and recuperation on the Black sea. If the offer is accepted, it will be the first time that NATO forces have been in Warsaw pact territory. For those reasons alone, we should look a little more sympathetically at Romania. We should not use the stick or the promise of a carrot. Unless we are prepared to assist more enthusiastically than the Government have so far, Romania will be almost frozen on the other side of an imaginary divide.

Why should we be so tolerant of Bulgaria? The reigning Government Ministers—again, a freely elected administration—are members of what was the Bulgarian Communist party, which has been reformed and called the Bulgarian Socialist party. If we are tolerant of one set of reformed communists, we should have rather more tolerance of another more reformist and augmented branch of the regime, which is perhaps different in form, in Romania.

These countries are passing through an horrendous period in their history. Will they seek the road of gradualism or that of shock therapy? If they make wrong decisions, much will turn sour. As the Minister and my hon. Friend the Member for Hamilton (Mr. Robertson) said, we have much expertise. We have much to give through the BBC World Service—or the BBC external services, which are not exactly the same as the World Service—and it is vital that we do more than cheer. We must help. We must do infinitely more, and it is only right that we should give more. We must provide trade, access to our markets and know-how. Only then shall we see pluralistic, functioning and prosperous democracies in eastern and central Europe.

12.59 am
Mr. Hugo Summerson (Walthamstow)

At a ridiculously late hour, once again, we are discussing extremely important matters. Earlier, we spent two and a quarter hours discussing the Redbridge London Borough Council Bill. We spent another two hours or so on the London Underground Bill. I am not saying that they are not important matters, but to discuss matters such as those that are before us at this hour of the night, with the debate restricted to one and a half hours, cannot be right.

The motion mentions the provision of co-ordinated economic aid to Czechoslovakia, the German Democratic Republic, Bulgaria, Yugoslavia, Poland and Hungary. I am all in favour of that. Also relevant to the motion is the establishment of a European bank for reconstruction and development. It is being established as an international development bank, the broad purpose of which is described as being to foster the transition to open market economies and to promote private enterprise in those east and central European countries which are committed to the principles of democracy. So far, so good.

Eight recipient countries will have access to loans from the hank. Furthermore, as the 27th report of the Select Committee on European Legislation states: The Department reports that the Bank will lend on broadly commercial terms. Again, I am all in favour of that, but as has already been said—by hon. Members of all parties—we must be extremely careful about the possibility of those countries building up huge borrowings. We have been through all this before in the past 20 or so years. The developed countries have lent huge amounts of money to third-world countries, doubtless with the best of intentions—and, as a result, many third-world countries are today struggling under a mountain of debts which they have no possibility of ever paying off. We need to be extremely generous not only in the years but in the decades ahead.

From the enormous pile of papers that I picked up earlier from the Vote Office, I gather that, in the present year, aid to the countries of central and eastern Europe from the European Community totals some 300 million ecu. Incidentally, what a horrible expression "ecu" is—almost as bad as the phrase "European currency units". However, that sum is not very much in terms of the problems of those countries, especially when we consider how much money West Germany is proposing to spend on the GDR. It is not just 300 million ecu this year and possibly a few hundred million more ecu next year—it is talking of so many billions upon billions of deutschmarks that I have lost count of the number of noughts on the end. As has been said, we have a great opportunity here. We must take that opportunity, and we must be generous.

An Adjournment debate is the Commons equivalent of putting out the milk bottles. We are not yet on the Adjournment, and it is now 1.2 am. I bet those bottles were put out hours ago. We need to get our priorities right here—and in our dealings with our friends in central and eastern Europe.

1.2 am

Dr. Kim Howells (Pontypridd)

The immense changes in central and eastern Europe pose great challenges to the member states of the European Community and to the community as a whole. Great potential markets are beginning to be identified and developed in central and eastern Europe. We are also beginning to understand the monumental scale of the social and environmental rehabilitation that will be necessary to bring the quality of the lives of those living in central and eastern Europe up to the minimum standards existing in most western European countries.

The expanding markets of eastern Europe offer an obvious challenge to our manufacturing and service industries and the potential rewards are not difficult to imagine, but the area that I have termed "social and environmental rehabilitation" also has its potential rewards, and it is on that area and those rewards that I wish to concentrate.

The environment of central and eastern Europe, for example, is as badly polluted as any part of the planet. The West Germans have revealed from their surveys that some 55 per cent. of East German forests are damaged, while more than 40 per cent. of its waste water is untreated. East Germany reported 15,000 uncontrolled toxic waste tips. It imports 700,000 metric tonnes a year of waste from West Germany alone. In central and eastern Europe as a whole it is calculated that 1,200 million tonnes of carbon dioxide and almost 23 million tonnes of sulphur dioxide are pumped into the environment each year.

The European Community is at present the main multilateral agency supplying aid for environmental purposes to eastern Europe. Aid for specific environmental purposes has already been given under the EC-administered scheme PHARE—Poland Hungary Aid for Reconstruction of the Economy. It has given £18 million to Hungary and £16 million to Poland. I understand that that will be extended to East Germany, Czechoslovakia, Bulgaria, Yugoslavia and Romania, conditional, of course, on those countries carrying out the necessary political reforms which were mentioned by several hon. Members tonight.

Anxiety about the environment in eastern Europe is widening. In particular, the World bank is concerning itself with environmental issues in middle-income as well as developing countries. In May it established an environment fund of US․1 billion to US․1.2 billion for use over the next three years to help to deal with cross-border issues such as deforestation and climate change.

The World bank has relaxed the income restrictions for its soft loans which would have excluded eastern Europe. It is expected to commit US․2.5 billion to Poland over the next three years and a further US․2.5 billion to the rest of eastern Europe. However, with applications from both Czechoslovakia and Bulgaria under consideration, it is likely that commitments to the region over the next three years will be US․2 billion or so higher, at a total of about US․7 billion. Those funds are for general development, rather than environmental improvements only. They are substantial sums of money and represent a serious attempt at tackling the problem. But in terms of the estimated cost of arresting the worst effects of existing pollution. I am afraid that they are extremely modest. For example, West Germany estimates the cost of clean-up in eastern Germany alone at some US․200 billion over 20 years. Poland requires US․25 billion this decade to arrest air, Iand and water pollution.

Poland's need is desperate. Half its lakes are contaminated. Half its forests are damaged from acid rain. Poland has five times the incidence of cancer of the west. It has been reported that water from the Vistula river corrodes heavy machinery. In Krakow one in six babies is born prematurely. In some areas 44 out of every 1,000 babies born die before they reach their first birthday. Poland's factories use three times the energy and produce 10 to 20 times the pollution of western ones. Pollution there is greater by a factor of 10 than in the west.

Those are horrendous statistics but they are not the litany of some distant disaster. Poland is a European neighbour of ours, like Czechoslovakia, Hungary, Bulgaria and Romania. We know that when radioactivity was pumped out of the Ukraine from Chernobyl it fell across Europe, recognising no borders or frontiers. The

The appalling problems do not merely represent an enormous challenge to the European Community. They represent a chance for economies such as our own, which is in the middle of great changes, to accept those challenges and use them to promote and develop existing technologies designed to achieve a cleaner, more efficient use of energy. We have expertise in clean-up technologies which we should exploit.

My area of south Wales has had tremendous experience in the engineering and energy industries. I have long cherished the idea of that region becoming the manufacturing centre of new energy industries—the clean technologies. We must use those technologies in eastern and western Europe to substitute for our huge levels of fossil-fuel burning and our dirty production systems.

We must be astute about the way in which we approach the problems in eastern Europe. I do not want to sound unfashionably competitive about this, but I am worried that Germany, France, Sweden and Denmark will steal a march on us in terms of the promotion and development of new technologies. The eastern Europeans will look for such technology and I have already read about the joint proposals between the Poles and the Swedes, and possibly the Soviets, to clean up the Baltic. They share that sea and recognise that they face a common problem.

Europe is a small, shared continent. It takes about two hours to go from Heathrow to Warsaw. It takes me longer than that to drive from Heathrow to my constituency, especially if the wonderful Severn bridge is having one of its off days. We must recognise the inherent constrictions on the continent and our shared future.

We must ensure that we develop and expand new technologies so that we can take them to eastern Europe and that we are part of the technological revolution. That is the only answer to the appalling pollution in eastern Europe.

Reports have already been made on the dreadful state of some nuclear plants in eastern Europe. Teams of German nuclear scientists have gone to East Germany and advised that all its nuclear power stations should be closed down immediately because they are unsafe. That is not a general comment on nuclear energy installations in eastern Europe, but a specific observation made by German scientists. We have a great centre of nuclear excellence at Seilafield and we should vigorously employ that excellence by helping to decommission the dreadful plants in East Germany. That work would be a good earner for Sellafield and could do something to promote the image of the scientists and engineers of the industry who have frequently been under attack. Such work would benefit Europe a great deal.

I know that there are industries trying their hardest to push their products and technologies in eastern Europe. I am not sure that that determination is shared by the Government, but perhaps the Minister could enlighten me on that. People in British Gas are doing excellent work in East Germany by helping to improve the transportation systems of natural gas. By entering into such partnerships, British Gas and other industries will ensure their futures in an important market.

I know some of the details of the excellent know-how programme, but I am rather disturbed, having added it up in a naive way I am sure, at the cost of some schemes. I have calculated that the British Government are intending to spend, or have spent, £475,000 on training and retraining eastern European journalists, and have spent £30,000 on schemes for improving the environment in eastern Europe. I can understand their anxiety not to produce large numbers of Brian Redheads in eastern Europe, but I do not understand the logic that informs such decision making. Why is there such a discrepancy? I should be glad if the Minister would enlighten me about that because it seems an extraordinary decision.

I hope that this momentous phase in European history will not be subject to the mistakes that we have made with other under-developed areas of the world, and that we will not simply treat eastern and central Europe to the sorts of unfulfilled promises that we have given so often in the past to the under-developed nations of the third world. I hope that we will realise that we have a shared destiny with Europe, whether eastern, central or western Europe. and that we will put our money, efforts and know-how where our promises have so often been in the past.

1.16 am
Mr. Roger Knapman (Stroud)

I shall be brief and I hope that treason is forgivable at this time of the night. I am sorry to cast a little doubt over the great visions and grand designs that have been expressed so far, particularly about saving eastern Europe, which seems to be what most people hope.

We have bilateral aid measures, largely through the know-how fund, and multilateral aid measures, largely through help to Poland and Hungary, and the European Bank for Reconstruction and Development. I was taken by a speech made by my right hon. Friend the Minister for Overseas Development as recently as 26 June, when she set out how aid programmes should be judged. She said: we know that one cannot solve the highly complex problems of development by throwing money at them. Aid quality and effectiveness are equally vital … Unless we ensure that our aid is used effectively, we are wasting precious resources for the developing countries and squandering British taxpayers' money in the process. Such action is neither sensible nor defensible. That is why we concentrate on using our aid where it is most needed and why we have rigorous systems in place to ensure project effectiveness and value for money."—[Official Report, 26 June 1990; Vol. 175, c. 253.] I am sure that my hon. Friend the Minister of State would readily agree with that.

With those thoughts in mind, how can we measure which is more effective—bilateral or multilateral aid? I also wonder whether multilateral aid will be in any way subject to parliamentary control. I have considerable doubts about that since earlier today we had an hour and a quarter to discuss procedures for considering European Community legislation and voted that any proposal which required adoption by unanimity abstention should be treated as agreement. I do not remember my hon. Friend the Minister of State, when he was in the Whips Office, suggesting that that would be acceptable. My right hon. Friend the Minister for Overseas Development also spoke of rigorous systems to ensure project effectiveness and value for money. How do we know that that will be achieved with multilateral aid? Which is most likely to benefit United Kingdom trade—bilateral aid or multilateral aid?

Aid for trade is a good principle—£1 of aid can easily lead to £2, £3 or £5 of trade. With what I understand to be a £630 million investment in the bank, how much trade could have been generated under bilateral aid measures? Well-directed bilateral aid, particularly by liaising with the British Consultants Bureau, can be of direct benefit to British industry and therefore of direct benefit to our balance of payments.

That is to be compared with what has happened so far in East Germany. The Germans are not only our partners—they are also our business competitors—but so far the West Germans have taken over East Germany's airline, banks and insurance industry. The rest is just so much dross. I do not think that any British companies had the opportunity to invest in East Germany in any meaningful way. There should be some lessons there for us in dealing with other eastern European countries. If subsidiarity means anything, we should put greater stress on bilateral aid measures.

1.20 am
Mr. Tam Dalyell (Linlithgow)

The hon. Member for Thanet, South (Mr. Aitken) has been in the Chamber for as long as I have, so I shall confine myself to four questions.

First, what assessment has the Foreign Office made of the situation in the middle east and escalating oil prices which may be responsible for no less than the collapse of economic reform as we understand it in areas such as Bulgaria, and perhaps Poland and other parts of eastern Europe? In particular, what is the outcome of the discussions between Mr. Delors, Mr. Sitaryan and separately with Mr. Andriessen on that subject? There must be some Foreign Office assessment.

Secondly, may I have a long written answer to points made by my hon. Friend the Member for Pontypridd (Dr. Howells), encapsulated in the fact that apparently one mark spent in eastern Europe is worth six spent in western Europe on anti-pollution measures?

In terms of this debate my third question is not a theoretical one. Given that funds are limited, what is the Foreign Office's thinking on the relative priorities of aid to eastern Europe and aid to Brazil, Zaire and other rain forest countries? A great deal has been said by me and by others in the House about the need to help those countries with rain forests so as to make it possible for them not to destroy their rain forests to the detriment of the global climate, the world in general and the planet itself. There may have to be choices and I would be interested to know the Foreign Office's relative priorities.

I have given the Minister a little notice of my fourth question which comes from discussion with my friend Paul Hare, professor of business studies at Heriot-Watt university, who is on one of the working parties, and with others. What are we doing to provide for eastern Europe what any well-run western firm would simply take for granted in the way of accounting expertise? I applaud the fact that my hon. Friend the Member for Hamilton (Mr. Robertson) is on the know-how fund's advisory board and I know that he knows a lot about it, but there is a problem about providing for aspects such as accounting which we take for granted.

My final point is to repeat the question about non-transferable roubles that I put to the Minister during his opening speech.

1.23 am
Mr. Jonathan Aitken (Thanet, South)

It is extremely good of the hon. Member for Linlithgow (Mr. Dalyell) to split the last five minutes of the debate with me. It is almost impossible to make a 120-second speech, so I shall not attempt to describe my fascinating experiences in Roman:ia in the past few days, regretful though that is, and just concentrate on one small point, which is to do with the scrutiny of the documents.

I warmly welcome the motion. It is rare for us to have such a united and harmonious debate on European directives at this late hour. But I want to make a critical and perhaps irritating point, but nevertheless an important one in view of the fact that we are changing our scrutiny arrangements.

The basic document that we are discussing tonight is EC document 7720. That publication is true to the Brussel's tradition of supplying the national Parliaments with the least possible information. The Foreign Office's three-page explanatory memorandum is as thin as dishwater too, and I want to impress on my hon. Friend the Minister that we shall expect a much higher standard in future.

If one wants answers to questions that any sensible person may have about Community aid to eastern Europe—such as the size of the budget, how it is being allocated, which countries are receiving which sums of money, which development projects are to be financed by ECA, and what proportion is being devoted to humanitarian assistance and what form it takes—they cannot be found in the document. That is a regrettable error, but typical of the attitude shown by both the Commission and, sadly, sometimes by our Government towards scrutiny.

In the two minutes available to me, it has not been possible to make a sensible speech, but the documents are seriously defective, and I add that complaint in the hope that it will be remedied.

1.25 am
Mr. Garel-Jones

I thank the hon. Member for Hamilton (Mr. Robertson) and all the other hon. Members who have contributed to the debate for the generally constructive tone of their remarks. The hon. Member for Hamilton could not resist taking a few swipes at the Government, and I do not chide him for that. I will respond with some of my own, but I hope without spoiling the amicable nature of the debate overall. If I am unable to cover all the points made in the short time available to me, I will of course write to the hon. Members concerned.

The hon. Member for Hamilton said that brave words from a Minister are not enough, which I accept, and that we must create a culture of optimism. I wish that he had spoken instead of a culture of enterprise, because that is what we are trying to achieve. I agree that we cannot approach the problems of eastern Europe by simply throwing money at it. though I noticed that the hon. Member for Hackney, North and Stoke Newington (Ms Abbott) seemed shocked that a member of her party's Front Bench appeared to be coming round to the view that we have expressed in the House for a long time.

Mr. Robertson

The John Smith school.

Mr. Garel-Jones


The hon. Member for Hamilton made specific mention of the British Council, and I am sure that all right hon. and hon. Members agree that it has a specific role to play not only in teaching the English language in the countries of eastern Europe but as the organisation that we will frequently use in implementing know-how fund projects. The council has been given an extra £2.25 million for the year 1990–91 to cover its additional activities in eastern Europe and the Soviet Union.

The hon. Member for Hamilton referred also—although perhaps not strictly in order, in relation to the document being debated—to the United Kingdom's bilateral aid in what I thought were unnecessarily disparaging terms. The United Kingdom was the first country to initiate a know-how fund, and it is now worth in excess of £75 million to Poland, Hungary and Czechoslovakia. We expect to make disbursements by the end of the 1991 financial year of £17.4 million. In addition, we have pledged £15 million for an agricultural project in Poland, made a grant of ․100 million, or £61.7 million, to the Polish stabilisation fund, and given £900,000 in humanitarian aid to Romania. As part of the Paris Club rescheduling agreement for 1990, the United Kingdom rescheduled £550 million of official Polish debt.

Obviously we all want to do more, but the Government deserved a slightly better response from the hon. Member for Hamilton than they received.

The know-how fund has been a huge success. There is great demand for it and the money has, I admit, been spent rather more quickly than we had expected this year; but I assure the House that future activities will be generously funded and in relation to demand.

My hon. Friend the Member for Lewes (Mr. Rathbone) told us—we would all agree with him—that an enormous political effort now needs to be made to create viable and sustainable economies, and he referred to the Marshall plan. I cannot entirely agree with his linking of the Marshall and the Strasbourg plans, but I share his view of the enormity of the task that faces us.

The hon. Member for Walsall, South (Mr. George) referred to the European communist regimes as gigantic whips offices. The hon. Gentleman knows that I have some experience in these matters. Indeed, this is one of the few areas in which I would claim to have more experience than the hon. Gentleman, who we know to have been, in difficult times, a staunch supporter of NATO and to have held a whole range of other positions that were not always easy to adhere to in the Opposition.

The former employment that I held—one should refrain from referring to it overtly on the Floor of the House—is indeed a kind of Securitate, but I assure the hon. Member for Walsall, South that it is a democratic version of the Securitate. As I no longer belong to it, perhaps I can take this opportunity of paying tribute on behalf of both sides of the House to the people who work in that underground world and who provide a service and a continuity for the House which should be placed on record.

The hon. Member for Walsall, South told the House that he was euphoric about the events in eastern Europe. But his hon. Friend the Member for Derbyshire, North-East (Mr. Barnes) is less euphoric about them. The hon. Gentleman also said that he would like a social market economy to emerge. That is not a phrase from which Conservative Members would dissent. It was given wide currency by Lord Joseph. We have always accepted that the market economy and Conservatism are also about living in a community and accepting the duties and responsibilities that that entails.

My hon. Friend the Member for Walthamstow (Mr. Summerson) mentioned the EBRD. He is right that we should not build up huge debts for the countries in the east. I remind him that the main purpose of the EBRD is to promote the private sector, to make investments in that sector and to help to build it up.

The hon. Member for Pontypridd (Dr. Howells) made a thoughtful speech about the environment in eastern Europe. He painted an horrendous picture of what he called "these terrible statistics". That was the moment when the hon. Member for Derbyshire, North-East chose to leave the Chamber. No doubt he found it difficult to bear the gruesome picture of a command economy in failure. I should tell the hon. Gentleman that I referred to him in my opening remarks, when I said that last Friday he had praised the full employment policies of the former German Democratic Republic. I was only surprised that he had not risen to praise its law and order policies, too——

Mr. Harry Barnes

What was said in that debate has no connection with the points about pollution, and was in no way a defence of the bureaucratic and organisational abuses in eastern Europe. But there is a balance to be struck in all debates, and that is what I was trying to do last Friday.

It being one and a half hours after the commencement of proceedings on the motion, MR. DEPUTY SPEAKER put the Question, pursuant to Standing Order No. 14 ( Exempted business).

Question agreed to.

Resolved, That this House takes note of European Community Document No. 7720/90, relating to the extension of the provisions of Council regulation No. 3906/89 to Czechoslovakia, GDR, Bulgaria, Yugoslavia and Romania; and supports the Government's view that the provision of co-ordinated economic aid to those countries by the European Community will promote economic and political reform in those countries and foster a closer relationship with the Community.