HC Deb 13 December 1999 vol 341 cc21-40 3.30 pm
The Prime Minister (Mr. Tony Blair)

With permission, Madam Speaker, I should like to make a statement.

Accompanied by my right hon. Friends the Foreign Secretary and the Chancellor of the Exchequer, I attended a meeting of the European Council in Helsinki on 10 and 11 December.

The key decisions of the Helsinki summit were far reaching. It increased to 12 the number of countries involved in accession negotiations with the European Union and gave candidate status to Turkey for the first time. That presages a hugely enlarged European Union and, over time, with the membership of Turkey now formally on the agenda, one with its borders stretching as far as the middle east. In addition, it has significantly pushed forward European defence co-operation, allowing the European Union for the first time to build the capability of acting where NATO is not engaged. Those are truly historic decisions for the European Union.

Before the start of the summit, we learned of the decision of the French Government to refuse to abide by the decision of the European Union and lift the ban on British beef. As I said in this House on 10 November, it was always preferable to settle this through discussion and clarification, but, failing that, we would have to go to law. We worked hard to reach an understanding with France. In the end, the Commission tabled a summary of our response to French questions, which we and the Commission believed should have satisfied reasonable concerns. Unfortunately, the French Government were unable to agree. The Commission is now taking France to court and will issue its formal legal opinion tomorrow.

There were some who said that we should have tabled the issue at the Helsinki summit. I can think of nothing more counter-productive or misjudged. At present, British beef can be sold in 13 of the 15 European Union countries. The Commission is completely on side with us. The beef ban is in law lifted. To have reopened the entire issue—and given all 15 countries an obligation to debate an issue that the vast majority regard as closed—would have been tactical ineptitude on a grand scale. Neither do I think that it is sensible to threaten a trade war with France. We have trade with France worth billions of pounds and thousands of jobs. To break the law ourselves, while seeking to have it upheld against France, would be folly and we will not do it.

To return to the summit, the main issue was the enlargement of the European Union, which the Government strongly support. Democracy and the market economy are now firmly established in the majority of central and eastern European countries, which are increasingly ready to join the European Union. We also owe an obligation to those countries that stood by us in the Kosovo conflict earlier this year.

Six countries—Poland, Hungary, the Czech Republic, Estonia, Slovenia and Cyprus—began negotiations last year. The European Council decided to open negotiations early next year with six more—Latvia, Lithuania, Slovakia, Malta, Bulgaria and Romania. The process is lengthy and detailed, but it is now firmly under way.

On Cyprus, the European Council welcomed the negotiations under way in New York between the Cypriot leaders. Successful conclusion of those talks would not only bring a welcome end to a long-running dispute, but facilitate Cyprus's accession to the EU, and we urge all those involved to make every effort to reach agreement. But at Helsinki, Heads of Government endorsed our view that Cyprus's accession was a matter for decision by the member states of the European Union and there should be no preconditions.

The European Council also opened a new and much more positive chapter in its relations with Turkey. This has long been a preoccupation for Britain. Turkey is of great strategic importance and an ally in NATO. A more constructive relationship between Turkey and the EU is long overdue, but we now have secured that. Turkey is now a candidate country, destined to join the European Union on the same basis as the other candidates. It will enjoy all the benefits of other candidates, including financial assistance, even though accession negotiations are unlikely to begin for some time. However, it is an excellent outcome.

The intergovernmental conference next year is aimed at preparing the Union for the impending enlargement. The Helsinki Council confirmed that the conference should focus on the size and composition of the European Commission, the weighting of votes in the Council and the possible extension of qualified majority voting, in certain limited areas. The conference will begin in February and complete its work by the end of next year.

On security and defence, the European Council endorsed our view that the top priority is for European nations to strengthen their military capabilities. At Helsinki, we agreed that member states should, by 2003, be able to deploy and sustain for at least one year military forces of up to 50,000 to 60,000 troops, capable of a range of tasks essentially defined as humanitarian and rescue missions, peacekeeping or peace enforcement.

There have been suggestions that this agreement to increase the options open to us in future crises has adverse implications for NATO, or that the European Union is creating a European army. That is the opposite of the case. The European Council made it clear that the EU will launch and conduct military operations only where NATO as a whole is not engaged. The process will involve full consultation and transparency with NATO. The six non-EU allies will be involved and consulted before decisions are taken, and will be able to take a full part in resulting operations. The EU will avoid unnecessary duplication with NATO. Final decisions on whether to involve troops will remain firmly with national Governments. These arrangements, as the Helsinki Council made clear explicitly, do not imply a European army.

However, it would be a tragic mistake—repeating mistakes of British European policy over the past few decades—if Britain opted out of the debate on European defence and left the field to others. This is a debate that we must shape and influence from the start, because our vital strategic interests are affected by it. As a result of our participation, it is moving in a clear direction—reinforcing NATO, not in opposition to it. I completely reject the view of those who would have us opt out of this issue altogether.

The conflict in Chechnya was much on our minds at Helsinki. Our relationship with Russia is a vital one, above all for the security and stability of our continent. We want Russia to continue on the path of democracy,

the market economy and the rule of law, and will continue to support the transition process. But business as usual is not possible while human rights are being comprehensively abused in a corner of the Russian Federation. The EU called for a political solution to this issue and adopted a series of actions designed to back up the words of strong condemnation.

On the withholding tax, the Council agreed a sensible way forward. We will continue to work for a solution to the issue of tax evasion that rightly concerns some of our EU partners, Germany in particular. But this cannot be done at the expense of a major European financial market based here in London. I have made it clear that we will not permit that. We also have genuine concern about the efficacy of the measures proposed.

We have also insisted that, in debates on the way forward, the Chancellor of the Exchequer's proposals for an exchange of information on the basis that involves more than just EU member countries should be examined. There is increasing recognition that it is no good adopting measures in the EU if the only impact is that the market in savings moves outside the EU. The rest of the tax package we can support, although of course other countries have difficulties with parts of it.

The Helsinki summit dealt with pressing issues of the day, but also had a vision for the future. We made the historic decision that the Europe of the future would be one that embraced countries in eastern Europe that 10 short years ago were only just emerging from totalitarian communist rule. This enlarged Europe is one that would have been unimaginable until the very recent past, and it is one that we should embrace.

We also all made the decision that our continent of Europe, which twice this century has lost millions of its citizens in the two most bloody wars in human history, should now co-operate in defence where the object is to help keep the peace. A bigger European Union; a union committed to embracing countries committed to democracy; a Europe of nations determined to use their collective strength to advance our values—that is our vision, and I commend it to the House.

Mr. William Hague (Richmond, Yorks)

First, I welcome and support what the Prime Minister said about Cyprus and Turkey. I concur with him about the gravity of the situation in Chechnya. The Opposition support the measures agreed at Helsinki, including the diversion of some of the TACIS funding. Russia's actions have been brutal, but it is in everyone's interests that we do not unwittingly destabilise the Russian economy or the progress of democracy in that country.

Overall, however, did not the Helsinki summit represent the complete failure of the Prime Minister's strategy on Europe? Before he came to office, the Prime Minister said: I will never allow this country to be isolated…in Europe. Is not it true that he thought that all he had to do was concede and cave in to gain the good will of our European partners? Two and a half years after taking office, is not it apparent that he has got nothing in return for his caving in or his concessions? There is nothing left of his European policy, which has been exposed as one of astonishing naivety.

Is not the greatest example of that the fiasco of the beef ban? When he thought that the ban had been lifted earlier this year, the Minister of Agriculture, Fisheries and Food said: Labour leadership in Europe and our constructive approach…has clearly been shown to succeed. In July, the Prime Minister told the House that the decision to lift the beef ban had come about

"because the Government have a constructive…attitude to Europe. That is why we got the beef ban lifted and it is another example of new Labour working."—[Official Report, 14 July 1999; Vol. 335, c. 402-5.]

Today he is reduced to stating, rather pathetically: The beef ban is in law lifted. Five months and several summits since the Prime Minister's statement to the House in July, is not the fact that British beef is still banned in Europe's two largest countries proof that Labour in Europe is not working? Is not it time that the Prime Minister admitted that he should have lifted our own ban on beef on the bone months ago, as the Opposition demanded, and that he should have begun legal proceedings months ago, as we argued? Should he not have been actively negotiating with the French, which is what we have called for throughout? [Laughter.] The Prime Minister thinks that he has been actively negotiating.

The Government veer between complacently announcing that the ban has been lifted and petulantly refusing to talk to the French when it is not lifted. The Prime Minister may think that he has been actively negotiating, but the Minister of Agriculture, Fisheries and Food went through a period when he would not pick up the telephone to speak to his French counterpart. The Anglo-French summit a fortnight ago passed happily by with beef neither on the menu nor on the agenda: where was the Prime Minister's active negotiation then?

The Prime Minister's complacency was finally shattered—and his petulance reached new heights—at Helsinki. A report in The Sun of 10 December stated: Mr. Blair was so angry he didn't even mention the crisis when he met with Lionel Jospin last night. The Government are experts in the tactical ineptitude of which the Prime Minister accuses others. We know that he always says that, in fighting the beef ban, we have the law and science on our side. We do—but, unfortunately, we also have the Prime Minister and the Minister of Agriculture, Fisheries and Food on our side, which is why the beef ban has not been lifted.

Beef provides one example of how Labour in Europe is not working, but the fiasco over the withholding tax provides another. Instead of vetoing the tax at the beginning, the Prime Minister has allowed the threat of it to hang over the City for more than a year, with all the damage that such uncertainty causes. The Chancellor's own Treasury report states that

"continuing uncertainty…will increase the likelihood that borrowers will look for alternative sources of finance outside the EU".

If the Prime Minister has been so tough about the tax, how is it that he has allowed that uncertainty to continue? How is it that, at Helsinki, he agreed to yet more talks? How is it that the German Finance Minister should have said on Friday that he had had

"differing signals from the British"?

How was it that the EU Tax Commissioner should have said that he is "hopeful and positive" about introducing a withholding tax in the next six months? Was not Helsinki the chance to end the uncertainty? Instead of simply vetoing the tax, should not the right hon. Gentleman have insisted that it would never be introduced by the back door through qualified majority voting?

European defence was also on the Helsinki agenda. We are in favour of an enhanced European defence capability within NATO. However, we are concerned about the current development of what is euphemistically called readily deployable EU military capabilities outside NATO—in other words, a European army.

Has the Prime Minister seen the comments of the Supreme Allied Commander of NATO in Europe in The New York Times today? General Wesley Clark says: "the main American concern…is decoupling or duplication or discrimination against non-EU, European members of NATO".

General Clark also says: "the new European plan has the potential to cause long-term irritation for the United States."

It is no good saying that the Americans are not worried about it—the Secretary of State for Defence admitted that they are only moments ago at Question Time.

Does the Prime Minister remember saying at the Amsterdam summit two years ago: Europe's defence should remain a matter for NATO and not the EU", and calling the very plan to which he has now signed up "an ill-judged transplant operation"?

The decision to establish a defence identity outside NATO is momentous—it is one of the biggest changes in foreign and defence policies on which the Government have embarked. We believe that it has profound dangers. Is not it time that the rationale for and considerable risks of the change were fully explained to the House?

Does not the challenge of European Union enlargement most starkly expose the fact that Labour in Europe is not working? We think that enlargement is the single most pressing issue facing Europe today. We believe that an enlarged Europe cannot work unless it is more flexible, unless countries can be in the European Union but not run by the European Union. The Prime Minister believes the opposite—that Europe needs to be more integrated, that more powers and rights of member states need to be transferred to Brussels. Sometimes the right hon. Gentleman leads the way on integration and sometimes he gets dragged along in that direction, but that is always the path that he takes. That is why at the Helsinki summit he agreed to an open-ended discussion on abolishing the veto, the development of a European army and more tax harmonisation.

The Prime Minister has managed to pull off the unbelievable double of signing up to the integrationist agenda while simultaneously being isolated in Europe. Baroness Thatcher was isolated when she won Britain the rebate, and my right hon. Friend the Member for Huntingdon (Mr. Major) was isolated when he won the opt-out from the single currency. Those British Prime Ministers may have sometimes been isolated, but they came back with something that we needed. Is not the right hon. Gentleman the first British Prime Minister in history to return from a summit both isolated and empty handed?

The Prime Minister

I think that when we got to Baroness Thatcher, we pretty well worked out the true author of that remark.

Let me deal with some of the issues raised by the right hon. Gentleman. He accuses us of not doing enough for enlargement. His policy, let me remind him, is to block enlargement. He is committed to blocking enlargement unless the European Union agrees to a treaty change. All 15 member states have to agree to such a treaty change, but not one does. Is there one? The idea of lectures from the right hon. Gentleman on doing more for enlargement illustrates how completely fatuous his policy on Europe has become.

As for beef, I thought that the right hon. Gentleman's criticism today was a trifle different from before—he is now accusing me of not negotiating enough. For weeks Mr. Yo-yo has been round the television studios, saying that I was a puppet dancing to Mr. Jospin's tune and asking why I was talking to him instead of fighting. It is another fatuous position. [Interruption.] The Tories shout, but let me remind them of one big difference between us and them. When we came to power, how many countries could British beef be sold in? It was a round figure, approximating to zero—and that was after the Tory beef war.

On the withholding tax, having accused me of being a puppet, of caving in and dancing to someone else's tune on beef, the right hon. Gentleman accuses me of being isolated—the very thing he asks me to be on beef, but for which he criticises me when I am. The right hon. Gentleman's biggest cheek came when he stated that we should have vetoed the withholding tax from the beginning because that is what the Tories did. Well, we have done some research on what they did: the tax arose from a decision taken in April 1996, and, on the previous occasion on which it was on the agenda, in 1989, Britain voted for it under a Conservative Government. The country that vetoed it then was Luxembourg. The Tories cannot tell us that we should have gone straight in with a veto.

The right hon. Gentleman also made some points on defence, a subject on which he is perhaps more ridiculous than on any other. If I understand his position, he is in favour of defence co-operation in Europe, but in a way consistent with NATO.

Mr. Iain Duncan Smith (Chingford and Woodford Green)

Inside NATO.

The Prime Minister

Inside NATO. In other words, he supports the European strategic defence initiative agreed by the Tories in 1996 at Berlin. Let me read out what the NATO summit of April 1999 said: We confirm that a stronger European role will help contribute to the vitality of our alliance for the 21st century. The Deputy Secretary of State for the United States said: The US is for this. It is in our interests for Europe to be able to deal effectively". The United States favours the European strategic defence initiative. Finally, let us hear what the hon. Member for Stratford-on-Avon (Mr. Maples)—the shadow Foreign Secretary—said in June: The relationship between British and French forces at an operational level is fantastic. It should be developed. We are the two most serious countries about defence in Europe…We need to do things together."—[Official Report, 10 June 1999; Vol. 332, c. 812.] What has changed between then and now? Baroness Thatcher has brought the Tories to heel. All that the right hon. Member for Richmond, Yorks is doing in the name

of strength is actually weakness. By choosing not to stand up to the ultra-Thatcherites who run his party, he has taken a party that used—no matter what one's politics—to be a serious party of government and turned it into the equivalent of a religious sect. It is that error of judgment from which all his errors stem—on the renegotiation of the treaty of Rome that would give us an exit route from the EU; on blocking enlargement; or on the absurd positions that he has taken on every policy that relates to Europe.[Interruption.]

Madam Speaker

Order. Those on the Opposition Front Bench should know better.

The Prime Minister

We shall carry on with our sensible, positive and constructive relationship with Europe. That does not mean, and never has meant, that we shall fail to defend the national interest, but it means that we shall be unyielding when we need to be—as with the withholding tax—shall look for agreement where we can find it, and shall always be persuasive and sensible in our attitudes.

There will be times when we are in dispute with Europe—that happens with all countries—but not every dispute has to be a crisis. The British rebate, negotiated at Berlin in March—and kept—is an example of that. The Leader of the Opposition told us that we would get rolled over at Berlin and that the rebate would go, but we came back with the rebate intact and with the best deal on structural and cohesion funds that this country has ever had—we did it without handbagging anybody. We did it by taking a sensible attitude.

There may be—indeed there are—parts of our media and of the Conservative party who have such a violent dislike of Europe that they will abuse it and exaggerate its weaknesses to an absurd degree, but we will not let them dictate the policy on Europe. The Tory party can give in to them, but we will not, because in the name of defending Britain's national interest, they betray Britain's national interest.

We heard what we expected from the Leader of the Opposition. When we analyse the details of the policies that he proposes, we find that they are far removed from support for this country; they are a mixture of extremism and opportunism. This country prefers grown-up, sensible government.

Mr. Charles Kennedy (Ross, Skye and Inverness, West)

I begin with the closing theme of the comments of the Leader of the Conservative party—isolationism. The majority of Members would readily concur—whatever the gradation or the spectrum of their views on matters European—that the one matter that should remain profoundly isolated from engagement with Europe is the current stance of the British Conservative party, which is deeply against our national interest.

I welcome what was said and the steps that will be followed, as a result of the Helsinki summit, in respect of the Russian position. The Government deserve support, as do the efforts of the European Union. Does the Prime Minister concur that that matter is an important test of the EU' s ability to manifest a more constructive and coherent foreign policy approach to such a significant neighbour as Russia, which currently is behaving in such an outrageous fashion over humanitarian issues?

On defence, will the Prime Minister acknowledge that—despite all the hokum and nonsense about a European army—among those who take a more sensible and constructive interest in the matter, there will be a welcome for the modest but significant step towards the establishment of a European rapid reaction force? That is not least because it bolts us further into NATO and bolts a European component into NATO, which is essential for our long-term interest.

On the all-important issue of enlargement—especially in respect of Turkey—does the Prime Minister agree that a seminal decision was reached in principle in Helsinki? However, Europe must be emphatic that, while wanting to welcome Turkey into the European community of nations in due course, Turkey must respond by a significant improvement in its domestic human rights agenda. We should not lose sight of that simply because of the bigger and welcome aim of enlarging the union in that geographic direction.

As for our friends in France, the old alliance is under some strain at present—never mind relations between Mr. Jospin and the Prime Minister. The benefit of hindsight is a great thing. However, does the Prime Minister acknowledge, with hindsight, that, while dealing with the matter in the sane and sensible way that the Government have adopted during recent weeks, it might have been better to realise that the French could have reneged on the agreement that they appeared to have signed up to? In acknowledging that, we should not lose sight of the bigger truth: British beef exports are locked out of Commonwealth countries throughout the world. We are locked out of the United States. We have no legal recourse in any of these areas of the world.

The only reason that we have a legal recourse—it is not Britain versus France but the rest of Europe versus France in this matter—is that we are members of, and active participants in, the European Union. When the sceptics and the critics say that this is an argument for disengagement, there are those of us who will strongly make the case that it is an argument for more proactive engagement in Europe, and for using the mechanisms that Europe makes available to us to ensure that the undoubted unlawful activity of the French is brought to a speedy conclusion in due course and in our national interest.

Finally—[HON. MEMBERS: "Come on."] I acknowledge that Conservative Members find this boring, because they are not interested in rational dialogue about Europe across the Floor of the House. Long may they remain bored and impotent on matters European.

On the issue of the withholding tax, the Prime Minister said, tellingly but not altogether revealingly: I have made it clear that we will not permit that". What does that mean? Does that mean, as far as the eurobond market is concerned, that he will be willing to exercise a British veto, come Oporto in June? It would be helpful if he would clarify that issue.


Mr. Eric Forth (Bromley and Chislehurst)

That is the second "finally."

Mr. Kennedy

I am pleased that the right hon. Gentleman is subjecting my words to such minute textual analysis. It is better than can be said of what the right hon. Gentleman has to say in matters European where the rest of the House is involved.

Will the Prime Minister none the less acknowledge that the mood music in terms of the summit was that Britain is clearly not playing the central leading role in Europe that it should? It cannot and it will not until Britain and the British Government are more unambiguous about our commitment to the single currency, and about being fully plugged into the European project as a whole.

The Prime Minister

On the right hon. Gentleman's final point, Britain was clearly playing a very central and leading role in the defence debate.

In relation to the euro, we have set out our position. In order for Britain to join the euro sensibly, the economic conditions must be met. Those conditions remain, and they are right and in this country's interests.

In respect of the right hon. Gentleman's comments on defence, we agree entirely that it is important to see the developments as an addition to our ability to affect issues in the right way. I know that some Conservatives have been saying, "Of course we want this, but only when it is within NATO." I do not think that they yet understand that this is actually building on the European security and defence initiative, so it is entirely consistent with NATO. Indeed, the force can be used by NATO, but it is then available to us to use it where the alliance

"as a whole is not engaged".

In other words, the alliance can decide that it will be engaged in a particular situation; but should, for example, America decide not to be engaged, we can have our own force in the limited tasks that are called Petersberg tasks—humanitarian, peacekeeping and peace intervention missions. Only a Conservative party utterly in thrall to the anti-Europeans could see that in a way that NATO does not see it, as was made clear by NATO's comments at the summit in April. [Interruption.] There was a shout about Strobe Talbott. In fact, he has given some very clear statements on it. He has said: It is in our interests for Europe to be able to deal effectively with challenges to European security well before they reach the threshold of triggering US combat involvement"— not that it will make any difference to the Conservatives.

The right hon. Gentleman is right in what he says about enlargement. We have said that we very much welcome the fact that Turkey is a candidate country, but we have made it clear—and it is clear in the conclusions—that the Copenhagen criteria on human rights and democracy must be met before the accession negotiations get under way.

In respect of France, the right hon. Gentleman is also right. We are extremely disappointed at the French decision. That decision is wrong. It is wrong in law, and it is politically misguided and misjudged. However, it is important that we recognise that it is only because we are members of the European Union that we can sell beef in 13 of the 15 member states, that we are actually selling it now in five countries outside the European Union and that we are free to sell it outside the European Union. When we came to office, not merely was the beef ban in place in Europe, but we were banned from selling it in third countries as well—[HON. MEMBERS: "By Europe."] I do not want to get into that internal row in the Conservative party about which side of the fence it is on. It is important—[Interruption.] We have done enough of that.

It is important that we continue to persuade countries. I wish to make one point again: British beef is the safest in the world because we sell only animals that are under 30 months old and that were born after August 1996 when the new rules were implemented. They are the strictest rules on animal feeding anywhere in the world, and there has not been a single case of BSE in such an animal in this country. When other countries consider the incidence of BSE as a whole in this country, they fail to recognise that it occurs within older animals—the animals that we are not selling to other countries. I am afraid that we must recognise that we have a big job of persuading to do. Even when the beef ban is fully lifted, we shall still have to go out and really sell British beef. Of course, the right hon. Gentleman was right to point out that many Commonwealth countries and the United States of America have a ban in place on British beef.

In respect of the withholding tax, we have made it quite clear all the way through that we are prepared to use the veto if necessary. Countries such as Germany have perfectly legitimate concerns. They experience tax evasion on a significant scale because money simply goes across the border to countries where banking secrecy rules apply and where people can relieve themselves of their obligation to pay their proper tax in Germany. They want that stopped, and we are entirely sympathetic to that. However, as I have emphasised many times before, it must be done in such as way that it does not put at risk what is not just a major British and City of London interest, but a major European interest—namely, the eurobond market.

Mr. Donald Anderson (Swansea, East)

Just 10 years after the fall of the Berlin wall, 10 of the 13 countries recognised as applicants were members of either the Soviet empire or of the Soviet Union. Is that fact not a measure of the historic importance of the decisions that were taken at the Helsinki summit? To show that Europe recognises the importance of that, can my right hon. Friend give us an idea of the working assumptions or the target dates that he and his colleagues have set for the first batch of countries formally to join the European Union? If we do not grasp this historic opportunity, disillusion may well set in.

The Prime Minister

Of course, all the countries are treated the same and according to the same criteria. In a sense, it is up to them how ready they get. In the conclusions, we say that we would want to be ready ourselves to welcome them in by 2002 if they comply with the conditions of entry.

Sir David Madel (South-West Bedfordshire)

In order to make progress on its application to join the European Union, has Turkey been required to undertake that it will withdraw its troops from northern Cyprus? Are we, Greece and Turkey going to continue as guarantors of the 1960 Cyprus constitution, or is that task going to be transferred to the European Union?

The Prime Minister

No, it is not a requirement or precondition for Turkey's accession, but general words in the conclusions of the communiqué make it clear that there is an obligation on people to do their best to resolve border disputes. We have also made it clear—this was welcomed by Cyprus and by Greece—that the resolution of the dispute in Cyprus cannot be a precondition to Cyprus's accession. The hon. Gentleman will find that

most people recognise the importance of resolving the dispute, but do not want it to be a precondition on either the accession of Turkey or the accession of Cyprus.

Mr. Gerald Kaufman (Manchester, Gorton)

Since the Prime Minister has confirmed to the hon. Member for South-West Bedfordshire (Sir D. Madel) that there is now no obstacle to Cyprus being admitted to the European Union—provided, of course, that it complies with the appropriate conditions—will my right hon. Friend further confirm that it would, to say the very least, be anomalous if one country in the European Union had a third of its territory occupied by a country that is a candidate for EU membership? Will he confirm that pressure ought, therefore, to be placed on Turkey to withdraw those forces as soon as possible, under appropriate arrangements, and that the best thing that Turkey can do to advance its candidature will be to urge Rauf Denktas to make an appropriate agreement with the lawful Government of Cyprus?

The Prime Minister

The most helpful thing that I can say is that of course we want the dispute in Cyprus to be resolved. As I said, there is a general obligation on countries to do their best to resolve such disputes. Under the auspices of the UN, talks are being conducted between the respective parties in Cyprus, and I hope that they will be successful. At this stage, that is probably the most helpful and diplomatic thing for me to say.

Mr. Andrew Tyrie (Chichester)

What benefit does the City derive from the Prime Minister's refusal to say that, if necessary, the Government will veto the withholding tax?

The Prime Minister

I have just that I would do that, so the City is probably not in the same state of ignorance as the hon. Gentleman.

Mr. Bill Rammell (Harlow)

Will my right hon. Friend confirm that this European summit, like all European summits, was difficult and that he had vigorously to fight our corner? Is not that logical and inevitable in a Europe of nation states? Is not the alternative, of Britain being outside the European Union, a position in which we would have no leverage, no influence and no allies? Whether the beef ban, the withholding tax or defence co-operation were under discussion, our voice would count for nothing. Is not that the harsh, cold reality—a reality that the Conservative party does not even begin to address?

The Prime Minister

Of course all countries fight their corner on issues that affect their vital national interest, and this country should be no different from any other. [Interruption.] Conservative Members shout that we have not done it very successfully, but I repeat that at the Berlin summit we got a better deal than any other country could possibly have got. We kept the rebate when everyone was saying that, on enlargement, we would have to give it up. The Leader of the Opposition and his colleagues were saying that we would negotiate away the rebate, but we did not. We kept it, and we added to that a good deal for objective 1 status and structural funds, and we did so in a way that did not isolate Britain from anybody. That, in my view, is the proper way to negotiate.

As a result of our negotiations, there is a change in the balance of contributions between Britain, France and Italy. Although we shall still be big net contributors, our contributions will, in future years, be far more in line with those of comparably sized countries. That is safeguarding our interests.

I remind the House that the Conservatives have been accusing me of being isolated on the withholding tax. I am not isolated, but if I were, it would be precisely because I am prepared to stand up for this country's interests. The Conservatives want me to do what they, as a party, now urge, because they have given in to the Thatcherites who, I am afraid, now run the party. That is why I draw a distinction between the way Margaret Thatcher negotiated for the first six or seven years of her premiership and the Conservatives' later negotiating position. Margaret Thatcher negotiated the single European market, and in the course of that she gave away the veto on more items than any Prime Minister before or since. She did so entirely justifiably because that was in Britain's interests. She took Britain into the exchange rate mechanism of the European monetary system.

All that tends to be forgotten, but it is true, and it was only in the later period of Conservative Government that Britain moved into a position of outright oppositionalism and obstructionism. It is a tragedy that the Conservative party forced the next Prime Minister—against his will, I believe—into a similar position, so that on BSE, the ban was imposed and we had a beef war, which is generally agreed to have been a rather humiliating spectacle for this country. I repeat: no matter how much parts of the media or of the Conservative party urge on me a similar course, I shall not pursue it. It is utterly bogus patriotism and it is pretending to stand up for this country's national interests when actually they would be undermined.

Mr. Eric Forth (Bromley and Chislehurst)

When the Prime Minister reflects on Schröder's flouting of the single market on Mannesmann, and Jospin's flouting of European law on beef, as well as, indeed, his own isolation on the withholding tax, how does he assess progress towards the vision of Europe that he and Mr. Prodi share?

The Prime Minister

I am not aware that Chancellor Schröder has intervened in the single market. He is perfectly entitled to make his view clear. I have made it clear all the way through that I believe that the European market is right, and that that is how things should happen. It is curious that the right hon. Gentleman attacks me over these issues, because of course he would like to get out of the European Union altogether. He says to me that I should be doing better in the EU, but I am afraid that his mouth is not the one from which such sentiments should be uttered. That is the choice. It is the Conservative party's tragedy that, I am afraid, the right hon. Gentleman finds more support on the Opposition Benches today than I would ever have thought possible.

Mr. Dale Campbell-Savours (Workington)

The decision on Turkey will be greatly welcomed by most of the members of the Turkish Parliament, who are well aware of the concerns in western Europe over the future of Cyprus, and want to enter the European Union as soon as is humanly possible. Furthermore, it will be a spur to those in the Turkish Parliament who want to implement an agenda of modernising Parliament, including changing the way in which it operates.

The Prime Minister

I wholeheartedly agree with that. Managing to secure this step forward is a great tribute to the Finnish presidency, which performed magnificently throughout its six months; to Turkey, for having acknowledged that the rest of the EU wants to involve it in the candidate status; and to Costas Simitis and the Greek Government, who had the courage to grasp the opportunity. They deserve our congratulations. It has long been our desire to see Turkey more closely involved in the EU. Such involvement is of very big strategic interest to this country and the EU.

Mr. John D. Taylor (Strangford)

Summits of this nature have their difficulties and successes and, in fairness, the Prime Minister has emerged quite well from a very difficult weekend. On the withholding tax, he has stood firm—contrary to the suggestions of some. On Turkey, he has taken a lead that many of us welcome. As one who has taken an interest in Turkey and Cyprus for the past 25 years, I welcome the decision in Helsinki. Will the Prime Minister commend the Finnish presidency for the way in which it handled the matter? I see the different nuances of statements on Cyprus; I can read between the lines and I welcome the change in our Government policy on Cyprus.

Coming from an agricultural constituency, I am obviously very disappointed at the French approach to the beef issue. However, one cannot stop people breaking the law—that is the problem—and they are breaking the law. Now that the matter is going into court and will probably take about 18 months to resolve, will the Prime Minister support the UK beef industry in any claim for damages that may arise following the Court's decision? The Prime Minister mentioned 13 countries, but we cannot really get into Italy because we would have to go through France. Therefore, a beef claim could be built, and will need support.

The summit commended the political process in Northern Ireland and asked for the implementation of the Good Friday agreement in its totality. Did all those present realise that that meant the complete disarmament of all illegal arms in Northern Ireland by May next year?

The Prime Minister

On the latter point, people are very familiar with the detail of the agreement and the need for all of it to be implemented.

In respect of beef, we would of course support UK farmers in their claims for compensation. There has been a transit agreement with France, so we should manage to transport beef through France en route to other countries. The right hon. Gentleman is right to say that the French are breaking the law: they have broken the law. We were right to try to persuade them not to do so because that would have been better for our farmers. As more sensible people understand, getting there by persuasion is more likely to sell beef than doing so simply under court order.

In respect of Turkey, I fully agree with the right hon. Gentleman, who has a long-standing interest in the matter. The decision potentially opens the door to a new era in relations with Turkey.

Mr. Denzil Davies (Llanelli)

On the interdepartmental conference, will my right hon. Friend give an assurance that not only will Ministers report back to the House on progress, but that, when draft proposals are tabled at the conference, they will also be put to the House, so that they can be debated in the House before they are agreed, and not debated only after they have become a fait accompli?

The Prime Minister

We shall keep the House informed in the usual way. Any treaty changes that require the force of law will have to come before the House.

Mr. Ian Taylor (Esher and Walton)

I happen to agree with the Prime Minister that the strength of the European Union when there is an internal dispute is that we have the benefit of supranational institutions such as the European Court. That is why no serious politician would ever advocate withdrawal. I am sure that the right hon. Gentleman regrets having done so in 1983.

On defence, can the Prime Minister clarify the discussions that he had with the new applicants? It is clear that the European Union is expanding well beyond the remit of NATO. It is therefore essential that the EU has some military ability to react in circumstances in which there may be a threat to any future member country, which may not automatically engage American interest. In a sense, membership of the European Union is a security guarantee.

The Prime Minister

Most of the applicant countries rightly see their future in NATO. As we have always made clear, we see NATO as the cornerstone of our own defence. It is important to emphasise that the purpose of the defence identity or defence initiative is to allow us to act in certain circumstances, where there is consent—each country would have to consent to act in a particular way.

The force that we are discussing is confined to what are called the Petersberg tasks—the tasks defined in a strictly limited way in relation to humanitarian or peacekeeping objectives. No one seriously believes that, if an issue such as Kosovo comes up again, we will not want to act with NATO. The proposed force also gives us the ability to put right something that Kosovo laid bare—the lack of proper capability in many of the European defence forces, although probably less so in the British defence forces than in those of most other countries. Although large numbers of forces were available in theory, in practice, we did not have large numbers of forces that could do the type of work that was required. That has greatly stimulated people to ask whether we have the right capability. We, for example, are asking questions about strategic lift and whether we have the capability in that respect. That is entirely sensible.

It is unfortunate that that has become a party issue between us, because it builds precisely on the work that the previous Prime Minister did at Berlin in 1996. To set that hare running, as the shadow Defence Minister, the hon. Member for Chingford and Woodford Green (Mr. Duncan Smith), did by going over to the United States and saying that it is an attempt to break up NATO, is not just wrong, but fundamentally misguided. In the end, it does this country no favours at all.

Mr. Tam Dalyell (Linlithgow)

On Kosovo, where the Prime Minister says that we did not have sufficient capability, when Bernard Kouchner was asked what was needed, he replied, "Money, money, money; police, police, police." Was the parlous situation of winter in the Balkans discussed at Helsinki? In particular, did anybody at Helsinki have any idea how the Danube could be unblocked without the unpalatable prospect of talking to Mr. Milosevic?

The Prime Minister

We have always wanted the Danube to be unblocked, but we are not prepared to start trading with Milosevic the things that he wants. Kosovo was discussed at length at the summit. My hon. Friend is right to say that Mr. Kouchner is making it clear what he needs. He needs armed police, incidentally, which is why the Royal Ulster Constabulary has willingly offered to help.

As for money, we are playing our part substantially. It is right, however, that other countries must realise that our obligation to Kosovo has not ended; it continues. In particular, we agreed that we would consider ways of pushing on the entire stability pact process for the region. That is also immensely important. The countries involved will require a great deal of reconstruction to survive the next few years.

Mr. William Cash (Stone)

In the presidency conclusions to which both the Prime Minister and the Secretary of State for Defence referred, there is mention of determination to develop an autonomous capacity to take decisions and…EU-led military operations in response to international crises. The right hon. Gentleman has said that each of the member states would be able to consent. Does he accept that, under the Petersberg tasks to which all this relates, including a wider defence policy, majority voting applies where a joint strategy and a common action have already been devolved? Does he also accept that, in plain English, as in the Oxford dictionary, "autonomous" means "self-governing" or "independent"?

As for strengthening NATO, there can be no serious doubt that that wider defence policy is causing enormous concern in the United States and enormous enthusiasm in Russia.

The Prime Minister

As ever, the hon. Gentleman is seeing conspiracies where none exists. The full sentence from which he has quoted in part is in paragraph 27. It reads: The European Council underlines its determination to develop an autonomous capacity to take decisions and, where NATO as a whole is not engaged, to launch and conduct EU-led military operations. There is no way in which any country will give up control over its own armed forces. The European Commission and Parliament are not involved in any way. This is where NATO does not wish to be engaged, or where America for any reason does not want to be engaged.

Mr. Cash


The Prime Minister

It is autonomous in circumstances where the alliance as a whole does not wish to be engaged. If the hon. Gentleman reads further, he will see that the document refers to forces capable of the full range of Petersberg tasks. Those are specific and limited tasks.

Mr. Cash

Majority voting.

The Prime Minister

It is not majority voting. No country has any intention of giving over its armed forces or defence to another country. I would not do that on behalf of this country and neither would any other country do it on behalf of its armed forces.

The hon. Gentleman talks about huge concern in the United States. There has been some concern, which has been mainly prompted by senior Conservatives going to the United States and talking complete nonsense. [Interruption.] If I remember correctly, if, in the old days, Labour party spokesmen had started attacking this country's defence policy abroad, the Conservative Government would have had our flesh hanging in strips off the rafters.

Ann Clwyd (Cynon Valley)

I agree with the general thrust of my right hon. Friend's remarks on Turkey. However, may I emphasise again that there are serious human rights concerns about Turkey's candidacy? I have recently written to my right hon. Friend the Foreign Secretary expressing some of those concerns. Torture is a daily occurrence and freedom of expression, especially for Kurds, is non-existent. Several Kurdish Members of Parliament are still in prison, including one woman who is very unwell. If the death penalty were to be lifted, that would be a consideration. However, it is time that the Turks treated the Kurds as human beings and not something less.

The Prime Minister

I cannot share all my hon. Friend's sentiments but I say to her that it is precisely to meet legitimate concerns that it was made clear that the accession negotiations do not begin until the Copenhagen criteria on human rights and democracy are met. I think that that is a pretty good guarantee.

Sir Michael Spicer (West Worcestershire)

Given the hostile nature of France's actions towards this country in recent weeks, why was the Foreign Secretary seen on television last week cuddling the French Prime Minister in Helsinki?

The Prime Minister

That requires a delicate answer. I think that the hon. Gentleman really means that to be a serious question. If anything is an indication of what is happening to the Conservative party, it is that question.

Mr. Ben Chapman (Wirral, South)

Does my right hon. Friend agree that Turkey's road to candidature has been long and sometimes disappointing? Does he also agree that Turkey's accession is important not only because it is a secular democracy, a valuable geopolitical power in a troubled region, an important ally and partner in NATO, WEU and the Council of Europe, and our bilateral relations are good but because the candidature process involves it in opportunities and obligations?

The Prime Minister

I fully agree. It is interesting that the step forward with Turkey has been greeted well in both Greece and Turkey. It is unusual for that to happen. My hon. Friend is right to point out that Turkey is a valuable NATO ally.

Mr. David Curry (Skipton and Ripon)

As it is patently obvious that the rules and arrangements for a Europe of 15 cannot function in a Europe of 25 or 26, what confidence can we have that the intergovernmental conference next year will tackle the matter with greater urgency and efficiency than the Amsterdam conference, which was a total cop-out?

The Prime Minister

It is right that the so-called Amsterdam left-overs are important. We must tackle them, or we cannot make enlargement or a properly functioning European Union a reality. We have already made it clear that we want to maintain a veto on key matters such as defence, treaty change and taxation. However, we must also be prepared to take a view of the European Union that allows decisions to be made in the enlarged body; otherwise, we, as well as the European Union, will be the losers.

Mr. David Winnick (Walsall, North)

Is not it a fact that, while there is justified concern—which I have shared for many years—about Turkey's human rights record, Turkey has, for a long time, successfully resisted all attempts to turn the country into a fundamentalist state where no human rights would exist? Is there not a far better chance for the improvement of human rights in Turkey if that country is a serious candidate for European Union membership?

The Prime Minister

That must be right. It is the reason for our strong support of the initiative that the Finnish presidency has succeeded in pulling off.

Sir Peter Tapsell (Louth and Horncastle)

Although I do not believe that I have ever been accused of being a Thatcherite—certainly not in the ignorant way in which the Prime Minister habitually uses that epithet—does he understand that, while the proposed withholding tax poses a serious threat to the City of London, and must be resisted—I congratulate him on the vigour with which he resists it—it is only the tip of the much larger iceberg of general tax harmonisation? Will he accept that the leaders of the European Union believe, almost unanimously, that the single currency will not work until there is general tax harmonisation? If Britain were included in that, our taxation rates would be much higher, and comparable with those of Germany. Many Germans, at every level of prosperity, are trying to get their money out of the country because of the high rate of German taxation.

The Prime Minister

It is simply not right to say that the rest of Europe is in favour of tax harmonisation. Even if there were a substantial body of opinion in favour, the proper role for Britain would be to get into the argument and stop it, and we could not do that if we were removed to the margins of Europe. The hon. Gentleman put his question to me in a fair way; let me put it back to him. If I were to adopt the position that his leader has urged on me and say in relation to next year's intergovernmental conference that I would block enlargement unless we agreed a clause on flexibility—which no other European country would agree to, and which would not be in our interests anyway—I would lose any influence I had in Europe whatever. I would then face the choice of either complete humiliation, because none of the other countries would agree to that, so I would have to withdraw my block on enlargement, or blocking enlargement, in which case I can tell him that the arguments in respect of Britain would be gone altogether.

Defence is another example. The defence initiative was not invented when we came to office; it already existed as part of earlier treaties agreed to by the Conservatives. We have made sure—and we will make sure, because I shall not agree to it otherwise—that defence policy is made in such a way that it is fully consistent with NATO and does not undermine it in any shape or form. If the British voice were not there arguing that case, Britain would be worse off.

Mr. Barry Gardiner (Brent, North)

Does my right hon. Friend agree that one of the best ways to help the people of Chechnya is to provide maximum assistance to the Russian authorities in combating the international financial crime and money laundering that lie at the root of so much of the terrorism that the Russians fear from the Chechens?

The Prime Minister

My hon. Friend is absolutely right about that, which is why we have to choose with care what instruments we use to try to put pressure on Russia in this situation. For example, we have agreed that some provisions of the partnership and co-operation agreement should be suspended as a result of what is happening in Chechnya, but he is quite right to say that we would be misguided if we tried to undermine our memorandum of understanding with the Russians in respect of organised crime and money laundering because it helps us to try to sort out the situation in Russia. We understand the concerns that Russia and the Russian people have about terrorism, but nothing can justify a disproportionate response in Chechnya.

Mr. Michael Colvin (Romsey)

During the discussions in Helsinki about collective European defence, what was said about the size of our national defence budgets? Is the Prime Minister aware that the United States of America spends nearly 4 per cent. of gross domestic product on defence and this year has increased its budget by 10 per cent. while in Europe the figure is 2.2 per cent. of GDP and falling, as member states scramble to maintain the convergence criteria for the euro? If he wants to give a lead in Europe, should not Britain set an example by increasing its defence budget to overcome the problems of overstretch and to bear a fairer share of the burden of collective defence in NATO?

The Prime Minister

The constraint on defence budgets is nothing to do with euro convergence; it is to do with public spending discipline. Like any other country, we have to remain disciplined in our approach to public spending. The hon. Gentleman is right in a sense, however, because the whole purpose of the initiative is to get European countries including Britain—although Britain probably has less to do than most—to consider what they are spending money on and whether it is being spent wisely. He may be right about the 2.2 per cent., although I do not know the precise figure, but the plain fact of the matter is that although, some countries are spending that much, or in some cases more, if one analyses the defence capability that they achieve as a result, one sees that it is not as impressive as it should be, even for such spending.

The Americans should support the initiative, done properly, because a common complaint of theirs, which they make with some justification, is that Europe expects America to bear the entire burden of defence spending. I am saying that we need a better relationship in which we analyse and improve our own capability and make sure that it can do what we want it to do while remaining entirely knitted together with America on the key NATO issues.

Several hon. Members


Mr. Deputy Speaker (Sir Alan Haselhurst)

Order. I am afraid that we must move on. There is other important business to protect.

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