HL Deb 14 July 1992 vol 539 cc145-97

6.12 p.m.

Lord Aldington rose to move, That this House takes note of the report of the European Communities Committee on the Enlargement of the Community (1st Report 1992–93, HL Paper 5).

The noble Lord said: My Lords, my colleagues and I on the Select Committee are happy to see that the report that we discuss today has attracted a substantial list of speakers, sweetened and no doubt sharpened by the two distinguished Maidens who I am so glad have chosen this debate in which to make their debut. We all look forward to hearing the noble Lord, Lord Healey, who sits opposite, and my noble and learned friend Lord Howe of Aberavon. I feel just a twinge of pride that they should take part in the debate on the report which I am about to present to the House.

The hour is a little later than I had expected this rather important debate to begin. Therefore in my introductory speech I shall make a shorter summary of the report than the House has grown accustomed to on such occasions. I shall inevitably leave out some points which some noble Lords may consider more important than those which I cover. However, I must do my duty and express the sincere thanks of the committee and of the House to all those who gave evidence to us. I refer in particular to the distinguished ambassadors from Austria, Finland, France, Germany, Sweden and Switzerland, and to three former commissioners who are our colleagues in this House. We also owe thanks to many who helped us in a less formal way, including two vice presidents of the present Commission and senior members of the Commission staff, when some of us went to Brussels. In London we had informal help from the Danish ambassador and from senior Foreign and Commonwealth Office officials who were able to give us advice. However, perhaps our loudest vote of thanks should go to our specialist adviser, Sir John Fretwell, whom many of your Lordships will know. He brought both his high personal qualities and his considerable diplomatic experience to our aid. Everyone should know by now that no report from our Select Committee to your Lordships is possible without the excellent Clerk with whom my wise and tolerant colleagues and I are blessed.

The message in the report is clear and positive. It is set out in paragraph 141. The benefits which can flow from enlargement are powerful for the future of the Community, its existing member states, new member states and also for the United Kingdom. Economical:), there will be gains in industrial and financial strength from the EFTA countries as they join us. The Community will gain from added diversity. Democracy and stability in Europe will grow stronger when the Community grows eastwards after its western, southern and northern extensions, as we confidently expect. The enlarged Community will carry more weight in the world, and its diversity will safeguard its ability and its will to look outwards and not inwards.

That vision is clear. However, the reality is complex and in many ways difficult. We have tried to outline the problems. To admit as new members, states which cannot fulfil the criteria of membership, even after allowing some derogations over a specified time—and derogations have been allowed, I believe, to all new members since 1971, including the United Kingdom—would do damage to the new members and to the old. It would weaken the effectiveness of the Community, and weaken, too, its attractiveness to other new applicants. It would also reduce the weight of the Community's economic and political position in the world.

Aspirants to membership do not hope to join just a forum for discussion; there are plenty of those—and valuable associations, institutions and organisations they are. Indeed, the noble Lord, Lord Jenkins of Hillhead, described such a forum, for all its importance, as a soft organisation. But such aspirants seek to join a Community with obligations and powers to make laws and to take action in agreed fields. The noble Lord, Lord Jenkins, described that concept as a hard organisation. It is the success of the Community to date, with the important improvements of the Maastricht Treaty, many of which spell out, as my noble friend Lord Cockfield said on 2nd July—and I am glad that he will speak later—what has been evolved in recent years and has begun to work already, which has attracted the new applicants and many others. It is the success of the Northern Atlantic Alliance which has opened the gates to the East and made possible applications from the countries of Central Europe and Eastern Europe.

Perhaps I may add this thought. Those who find fault with the concept of European union as set out in the Maastricht Treaty might pause for a moment and ask why so many other countries which can also read what is contained in the Maastricht Treaty want to join that union, for it is that union which they are applying to join.

Indeed, there are difficult and complex problems to be resolved and they have to be resolved bilaterally between the Community and each applicant. They have also to be resolved internally within the Community and within the institutions of the Community. Those problems are difficult and complex but we are convinced that they can be resolved given the will and the timing.

The EFTA country applicants should, in our view, be dealt with first. I am very glad that preparations for negotiations with those which have applied will begin under the United Kingdom presidency. We expect the principal difficulty with those countries to arise from the so-called neutrality problem. We set out our views in paragraphs 168 and 169. We said that there are two vital questions which should be asked. I should be interested to know whether noble Lords agree with those two questions and also agree with us that no conditional response can be accepted.

We believe that the existing applicants which are not EFTA countries—Turkey, Malta and Cyprus—should wait a while, for the reasons that we have given. In relation to known aspirants for membership, we advise early, perhaps immediate, negotiations with any EFTA country which decides to apply. However, we advise that appropriate time should be given to Poland, Hungary and the Czechoslovak countries, if that is what they become.

However, we call for closer association agreements with all European countries—including Turkey—as relations develop, particularly on the political front. The idea of a European political area which does not attempt to copy in every way the European economic area which will be in force next year with EFTA, was voiced earlier in the year at a United Kingdom conference, and, I was interested to see, was picked up in the Commission's report.

Those who cannot yet meet the undoubted challenges of the single market need to feel that they will be more closely linked politically to the Community or to the union while they wait for full membership. I welcome the plans of the United Kingdom presidency to develop political co-operation at the top level with the three or four Central European states.

It is important to keep up the tempo of the association process with all European countries, a process which starts with trade and co-operation agreements and develops into full and close association. In the Select Committee we saw examples of those trade and co-operation agreements with the Baltic states and others.

The timing of accessions after those of the EFTA countries is difficult to forecast now. Indeed, it would be unwise to try to do so. However, it is right to set targets to encourage economic progress and change. Those countries will need encouragement bccause the targets will not be comfortable.

Whenever other new members join after the EFTA countries, the Community will need to adapt its institutions and procedures to meet the needs of an effective Community or union of more than 20 members. On the basis of the evidence given to us we believe that institutional change is not necessary in the first years of a community of 15, 16 or 17 members which includes new members from the EFTA countries, though some procedures may need to change. However, soon after 1995 members will need to agree new rules concerning the Commission, most likely in relation to its size and portfolios; the Council, its voting and the rotation of the presidency; languages; and some adaptations to the other institutions. They will also need to consider the position of small states which become members later. Most of those issues are sensitive and will need careful handling. We decided to offer no blueprint.

The German Ambassador said that it is up to the union to adapts its institutions, structures and procedures to the number of members and not the other way round. We strongly agree. Of course it will be difficult to adapt the Community's balanced structure from that created for six members to one suitable for 26. With political will the problems can be resolved. I am reminded of Sir Winston Churchill's exasperated advice to his minister and staff: Don't make difficulties. They make themselves! ". Subsidiarity will help. That principle is indeed essential for administrative reasons, as the Secretary General of the Commission made clear to us. Other difficulties facing the Community from further enlargement include budgetary problems. However, in the early EFTA stage, the budget will gain. It will be assisted by nearly 3 billion ecus net contributions, rising to more than 4 billion ecus if Switzerland joins too. We set out those figures in Tables 2 and 3 on pages 25 and 26. Those tables show also that with later accessions there will be a real strain on the budget if the economies of the new members who join later do not improve in relation to the Community. That extra strain on the budget could amount to 22 billion ecus.

That is a short summary of our report. We have sought to analyse the facts, the opinions and the choices. As I said at the start, I believe that our message is positive. I also believe that too much of the debate about Europe, not only in the United Kingdom but elsewhere, has become negative. The United Kingdom as well as the Community gains greatly from our membership. It gains in trade, in financial strength and in position in the world. It will gain further from enlargement.

When we reported to your Lordships on political and economic union in 1990 we remarked on the importance of public opinion being helped to understand the Community's objectives. I hope that this report will help as a useful background to the discussion in Britain and the other countries of the changes that will be necessary within the Community as a consequence of enlargement. I also believe that the report is relevant to the continuing discussion of the Maastricht Treaty.

As we say in the concluding paragraphs, the 1996 review of the Community's structure and rules will raise considerable political issues. Such decisions cannot wisely be rushed or taken without public debate in each state. Perhaps I may be allowed to hope that this debate in your Lordships' House will help at the start of that longish process of public debate. In most political matters—so it seems to me—and in all political matters affecting the Community, there are major objectives that have to be balanced and that balance has to be understood. We have sought to help in explaining those major objectives and all that goes into that important balance. I beg to move.

Moved, That this House takes note of the report of the European Communities Committee on the Enlargement of the Community (1st Report 1992–93, HL Paper 5).—(Lord Aldington).

6.30 p.m.

Lord Healey

My Lords, it is a great honour for me to be making my maiden speech in this House following the noble Baroness, Lady Thatcher, and on somewhat the same theme. It is perhaps appropriate that the sandbag should follow the handbag. I am delighted to see that another sandbag will be speaking in this debate—my good friend and old sparring partner, the noble Lord, Lord Howe of Aberavon. If I may use Lady Thatcher's metaphor: I come here after more than 40 years before the mast in another place, and after nearly seven years before that oiling the wheel at Transport House. Almost the whole of that political career of mine has been dominated by the set of problems which we are discussing today.

I sincerely praise the noble Lord and his colleagues for producing such a clear and comprehensive report which sets out the structural and juridical problems with admirable clarity and objectivity. I strongly support his conclusions, particularly that we should aim at enlarging the Community to include those EFTA countries which wish to join by 1995. I slightly disagree with him on one point: I do not think that neutrality will be more of a problem for them than it was for Ireland. I hope that we can bring in at least Poland, Czechoslovakia and Hungary from what I still call Eastern Europe as soon as possible thereafter.

Some may feel that there is one potential shortcoming in the report. It may lead some readers to assume that the Community is embarking on this voyage of enlargement in weather that is far more serene than the whirlwinds which are whipping up the oceans at the present time and which are likely to produce even greater turbulence on the ocean we sail in the years to come. Indeed, in my view, unless we start acting now to try to reduce that turbulence, we may find that our enterprise ends in shipwreck.

The leaders of the seven richest countries in the world told us last week: Strong world economic growth is a prerequisite for solving a variety of challenges we face in the post cold-war world". If that were true, there would be no hope, because the G7 summit gave us no reason to believe that we shall get a resumption of growth on any substantial scale in the near future, and none of the governments represented there suggested any policies which might change the current situation. But I might verge on the controversial if I were to pursue that theme, and it was the subject of the debate which has just taken place on the Finance Bill.

The point that I want to make is that the present economic weakness of the Western World is no excuse whatever for continuing to ignore the threat posed to us and to the countries of Eastern Europe by the tragedies which are now taking place in what used to be the communist empire. In 1990, the last year for which we have reliable figures, when recession had already hit Britain and the United States and many other English-speaking countries, the G7 countries between them produced 14,000 billion dollars worth of wealth. Their governments spent more than 5,000 billion dollars of that from the public purse, including 500 billion dollars on defence. That was the year after the collapse of the Berlin Wall, when the end of the communist empire was already in view.

The question I want to put is this: is it really necessary to limit aid, for example, to the former Soviet Union, to one-fifth of 1 per cent. of the output of the seven richest countries in the world when, in the years just after the last war, the United States alone from a far smaller output could spend six times as much in Marshall Aid? To spend money in reducing instability in the ex-communist world is not a matter of charity. It is direct self-interest.

We are still slaughtering sheep in Cumbria because a Soviet atomic plant exploded years ago in the Ukraine. Eastern Europe today is studded with similar unsafe Soviet nuclear plants. Yet, last week, the G7 could only offer 100 million dollars to help deal with that problem in Eastern Europe and the Soviet Union too, when the estimated cost of making the plants safe is something like 10 billion dollars.

The United States Government rightly offered Mr. Yeltsin help in the extraordinarily difficult, expensive and lengthy task of dismantling and making safe the ex-Soviet nuclear weapons which are now surplus to the agreement reached the other day between Russia and the United States. The cost of such an operation again will run into tens of billions of dollars; but the United States has offered only 700 million dollars. That runs out in September and President Bush has not asked Congress to renew it for the coming year. All this in a year when the United States is spending 300,000 million dollars on defence and justifying that expenditure, as we justify our defence expenditure, partly by the possible threat that the Soviet nuclear weapons may fall into the hands of evil men.

I believe that we in the West have the most direct national interest in helping to solve those problems, and I doubt whether any of us would dispute that. I hope that that is an uncontroversial remark.

Meanwhile, the economic situation in Eastern Europe is one of collapse. In three of the countries we have identified as potential members of the Community, output has been falling steadily and heavily for two years and unemployment has already reached levels which we have never known in the Western world.

I suggest that the scale of the problem can best be understood by looking at Eastern Germany, which had the immense good fortune of joining the Community automatically by the simple act of voting to join Western Germany in a united republic. The Bonn Government, which is the only western government which, in my view, has shown any sense of the scale of the problems that we face, are spending about 160 billion deutschmarks a year, certainly until the end of this century, in aid to the East German economy. On top of that, they are giving unprecedented help to the political parties in Eastern Germany and are providing the financial and logistic infrastructure which is essential to bring East Germany up to western standards. Yet they now admit that it will be well into the next century before the people living in East Germany will enjoy the same living standards as those in West Germany. We already see political tensions growing in East and West as a result of this problem.

If the rest of the Community continues to fail to give help on a similar scale to the potential East European members of the Community, I think we shall face not only economic disaster but political tensions which will lead to a growth of nationalism and extremism throughout the area. Already in Poland, President Walesa is casting himself more and more in the role of the old dictator, Marshal Pilsudski. President Havel only the other day pointed out that in Czechoslovakia its release from the prison of Soviet authority produced, an enormous and dazzling explosion of every imaginable human vice. Anyone who has read any of the reports about the growth of crime in Eastern Europe, and even more of course in the Soviet Union, will find it difficult to contradict his words. Slovakia has now already decided, we hear, to break away from the Czechoslovak Federation, creating enormous anxiety among the 700,000 Hungarians who I think live in Slovakia. If we look at Hungary, that country finds itself, amazingly, faced with four states as neighbours which did not exist two years ago: Slovenia, Croatia, Ukraine and, shortly, Slovakia. They already face a very serious national problem with the ethnic minority of Hungarians in Transylvania.

It seems to me that unless we act on these problems, which we can all witness and see described in our newspapers every day, we shall see the Yugoslav tragedy repeated elsewhere in Eastern Europe. At this moment the Croatians are pushing refugees across the frontier into other sovereign states like Austria and Italy, because they claim they can no longer look after them. We also face the immediate possibility of war in Macedonia, which could bring in a number of sovereign states: Albania, Bulgaria, Turkey and Greece, as well as Serbia, if we so describe it. Incidentally, although this is not directly relevant, I cannot understand, if we believe in peace-keeping, why we do not organise the presence of United Nations troops in Macedonia now, before the war starts. Once it starts, as in Yugoslavia, it will be too late.

The question I ask us to consider is this: cannot the European Community, so much wealthier now than America was when it launched Marshall Aid, offer help commensurate with the danger? It will be much easier to do so once we get the EFTA countries in, because each of those countries has a higher per capita income than any of the existing members of the Community, including Germany.

When I started my political career nearly half a century ago, I remember Jim Griffiths (who I think later became a member of your Lordships' House) saying, Science has turned the world into a parish, but men have not yet learnt how to be neighbours. That has reverberated in my mind ever since. It has latterly been an unfashionable way of looking at things. I have heard it said by a head of government not so long ago that there is no such thing as society, and that consensus is a dirty word, fit only for quislings and traitors. But we cannot afford isolationism and we cannot achieve isolation in the modern world. We are going to be directly and possibly disastrously affected by what will happen in Eastern Europe in the coming years unless we take very drastic and collective action now to deal with it.

Surely the lesson of the Rio conference is that we do now live in one world, where the burning of trees in Brazil can raise the level of the seas all over the world. I suggest that we might return to an older wisdom because 370 years ago a dean of St. Paul's, by name John Donne, preached the following sermon: No man is an Island, entire of itself; … If a clod be washed away by the sea, Europe is the less. Any man's death diminishes me, because I am involved in Mankind; And therefore never send to know for whom the bell tolls; it tolls for thee.

6.46 p.m.

Lord Pym

My Lords, it is a great privilege for me to be the first to congratulate the noble Lord, Lord Healey, on behalf of the whole House, on his maiden speech. It was a characteristically robust and interesting speech, which we all listened to extremely attentively. The noble Lord has always enjoyed Parliament and politics; and the long experience, wide knowledge, wit and sense of enjoyment which he brings to this House are valued and valuable assets, from which we shall undoubtedly benefit. The only problem I have in relation to the noble Lord is that he is not part of the Opposition Front Bench, but wherever he speaks from we look forward to many more speeches from the noble Lord. May I add here how much we are looking forward to the maiden speech, and with equal enthusiasm, of my noble and learned friend Lord Howe of Aberavon.

The Government are absolutely right to make enlargement a top priority for the Community. There is very wide agreement about this, and this report is very helpful in analysing that process and the likely progress of enlargement. It is a very clear and crisp assessment, and I congratulate my noble friend Lord Aldington and his colleagues on it. It was to be expected that it would be an assessment of the way forward, as viewed from here—that is to say, from the Community's point of view. Of course that was the Committee's remit, but there is another side to the coin, and that is the situation in Eastern Europe, about which the West so far has taken much too rosy a view. I want to speak on that aspect, and I am very much in sympathy with what the noble Lord, Lord Healey, has just been saying.

The dismantling of the Berlin Wall was the symbol of one of the major turning points of the 20th century. The entire geopolitical landscape changed overnight. Suddenly and dramatically we were all faced with the opportunity we have been working for ever since the war: the opportunity to rebuild Europe once again. This is something that happens only very rarely, about once a century: 1714, 1816, 1918. The last was of course a failure, leading to the Second World War and the subsequent division of Europe by Stalin. Now suddenly we find ourselves at a new beginning, with the chance to achieve what our predecessors failed to achieve before.

Ever since the Berlin Wall came down I have had the feeling that the West has underestimated quite seriously the scale of the deprivation of all those unfortunate nations that were part of the Soviet empire. They have lost out on practically all the technological advances and the social and political changes that we have grown up with. They long to have the same prosperity as we enjoy. But they are handicapped with enormous burdens; bankrupt economies, no institutional infrastructure and no experience or practice in pluralist democracies or market economies. Their position is far worse than ours was in 1945. No outside help is available to them on the scale that we enjoyed at that time. Surely our primary strategic objective must be to convert the whole of Europe into one diverse but coherent and cohesive entity. With so many different nations, cultures, traditions and languages, not to mention the chasm between the standard of living of the richest and the poorest, obviously that will be difficult.

What concerns me is that the thinking and the language used throughout the Community seems to be based simply on the conditions which must be fulfilled before a nation can join."We are not going to change", appears to be the message which goes out—"You must conform to the club otherwise you cannot join". That approach is the natural one from the Community's point of view. It is appropriate for enlargement of the EFTA countries, whose profile is essentially the same as that of the Community countries.

However, as regards the countries of central and Eastern Europe a very different approach is required because their circumstances are so different. The ultimate aim is for them to be in the same kind of political and economic position as the rest of us in the West. But that prospect is so far off that it is no more than a dream. Having thrown off their communist oppressors they find that in many ways their everyday life is worse than before. The glitter of western prosperity is not available to them and it will take decades to put in place the necessary investment and training to make that available. The danger is that the disappointment and bitterness felt by so many people could well lead to political difficulties, uprisings, conflicts and to anything one might like to imagine.

The seeds of discontent are already highly visible, which is not surprising. Currently we read articles in our own press arguing that unless the recession here ends soon the people will become impatient and force change. The equivalent in Central and Eastern Europe is 10 if not 100 times worse and so few people seem to appreciate that. If one wants an object lesson in what may happen if people start taking the law into their own hands one need look no further than Yugoslavia. Post-communist Europe is a very sick man and in need of intensive treatment; that is mentally and psychologically as well as physically.

Against that background—that is, the actual situation in Central and Eastern Europe—the posture of the Community appears to some to be inadequate, unimaginative and actually inward looking. Of course, we want to maximise the economic strength of the Community in order to help Eastern Europe but the whole context in which the Community operates changed when the Berlin Wall came down. I sometimes wonder whether people actually noticed that. The question is: how can policies and methods best be adjusted to this wholly new situation?

There are in place at present the European agreements with Poland, Hungary and Czechoslovakia. Certainly they are a valuable start and can be developed, but by themselves they will prove inadequate. I should like to see two new initiatives taken. The first is one which I have previously proposed in this House. It is a structure, a forum, where all the countries of Europe are represented and where the European picture can be considered comprehensively, continuously and as a complete whole. The most urgent needs and crisis points can be identified there and priorities can be recommended.

I believe that that role can best be undertaken by CSCE. The fact that that organisation includes the United States and Japan appears to be an advantage. At its recent meeting CSCE slightly enlarged its role by making some new special arrangements for national minorities. That is a welcome development, but in my view something altogether more substantial is required. Obviously it is important that the numerous initiatives already being taken by govern-ments, by industry and commerce, by the banks and by many international organisations continue. The more links that are built up between East and West the better. But those individual initiatives will be more beneficial and cost effective if they are targeted in the light of the political and economic landscape of Europe as it is at the time.

I shall not repeat what I have said on previous occasions about the many bridges which need to be built across the divide. But unless there is some structure in place to facilitate the process I doubt whether we shall be able to manage the transition successfully or peacefully.

The second initiative that I wish to suggest is the study of the nature and structure of the Community when it is enlarged to 20 or more members. My noble friend Lord Aldington touched on the issue. The present arrangements were designed for a much smaller group of countries and I am doubtful about their appropriateness for a Community of more than 12. But even if they are adapted successfully for, say, 16 members—the EFTA countries—beyond that a new design will surely be necessary for a group of 20 or 25 countries. At present no thought appears to have been given to that.

I believe that the transition process would be helped if we could formulate together joint ideas from East as well as West on how exactly we see an enlarged Community working. I know that vested interests in the status quo make that difficult, but we must rise above that and use our imagination and experience to design methods and systems which are appropriate for a group of 20 or 25 countries, which will be new territory.

My view is that such consideration will lead us to conclude that the Community at the centre must concentrate on broad strategic issues, in particular political co-operation, and play a lesser role in matters of detail. But however that may be we ought to be clear in our minds about the kind of enlarged Community that we should be working for, the form of the institutions that it will need and how it will work.

In conclusion I wish to quote two sentences from a speech made by the Prime Minister in another place on 20th May. He said: It would be fatal to take the attitude that we have our prosperous club and that nobody else can join unless they are prepared to pay a heavy price. We the Community, this country—would all pay a heavy price if, by our attitude, we damaged the chance of re-establishing for the first time in 50 years a firm democracy throughout the whole of Europe".—[Official Report, Commons,20/5/92; col.272.] We should indeed pay a very heavy price.

In my view we must reject any flavour of,"I'm all right, Jack". Rather we must see that central strategic objective of bringing the whole of Europe together in one diverse but cohesive entity as a challenge to every country in Europe—to East and West, North and South, rich and poor. We shall all have to work closely together, and contribute whatever we can in a variety of ways according to our circumstances, if we are to maximise the progress of Central and Eastern Europe towards greater prosperity and thus attain our European goal.

7 p.m.

Lord Howe of Aberavon

My Lords, as I embark on my first speech in your Lordships' House, it is a privilege to be able to do so following the distinguished and perceptive speech of my noble friend Lord Pym, just as I followed him, as it happens, in the Foreign and Commonwealth Office some years ago. It is some comfort also to be taking part in this debate in the company of my old friend the noble Lord, Lord Healey. I dare to venture the observation that even this House has seldom perceived before such a gnarled and battle-scarred pair of maidens.

Perhaps it is less of a coincidence that I find myself speaking on the same topic as my noble friend Lady Thatcher (who tells me that she is in her former constituency this evening) because both she and I were swept off the Front Bench of another place by one of those European storms of which the noble Lord, Lord Healey, spoke; and now, rather like the characters of Twelfth Night or The Tempest, we have both survived that turbulent experience and after some time adrift have been washed on to the red leather Benches of the same friendly shore. Some may wonder whether it is Illyria or Caliban's island which we have reached. However, your Lordships may think it wise for me to refrain from speculation about that. Suffice it to say that in both those places the natives were friendly and all was well that ended well.

It is a particular pleasure for me to find on the Benches opposite not just an old friend but a former constituent of mine, the noble Lord, Lord Houghton of Sowerby. He was never able to vote for me because he was always a Member of this House. But, although I am sure he will not remember it, he welcomed me as the Minister replying to the debate after my maiden speech in another place many years ago.

I am particularly glad also to be able to speak upon the basis of the excellent report from the Select Committee presided over by my noble friend Lord Aldington. I join in congratulating him and his colleagues on the quality of that report. Reports of such quality have done much to give your Lordships' House the reputation—and I can testify to this from personal experience—of probably the best informed and most expert parliamentary assembly in Europe.

I agree with the Select Committee that all member states now rightly accept enlargement as "both inevitable and desirable". Way back in 1983– 84, I was the first Western Foreign Minister to visit every one of the East European capital cities. In those days I felt the full force of their yearning for escape from Soviet bondage. How much I agree with the Select Committee that those countries now look to the Community, as they did then, as "an anchor" and "a source of strength for their crippled economies" and, above all, as a "guarantee that they will not be sucked back into the quagmire from which they have just escaped".

Of course they want to join us. But what is it that they want to join, and why? I believe that it is important to appreciate the central, dynamic, magnetic role played by the Community in inspiring those revolutionary changes that have taken place in Eastern Europe. They now wish to join our Community because of their admiration for its central achievements: first, its success in curbing nationalism without suppressing patriotism; secondly, its success in finding ways of sharing sovereignty without destroying the nation; and, thirdly, its success in setting the magic of the marketplace to work in the cause of wider unity.

No achievement was more important in that respect than the Single European Act which my noble friend Lady Thatcher and I negotiated together at Luxembourg now almost seven years ago. It is not the precise equivalent, but I agree with my noble friend Lord Mackay who said the other day that it was, every bit as great a milestone as the Maastricht Treaty".—[Official Report,2/7/92; col.944.] Certainly there can be no doubt about the scale of the achievement of my right honourable friends the Prime Minister and the Foreign Secretary at Maastricht because there can be no doubt about the extent to which it was applauded in this country and welcomed throughout the Community. There is little room for doubt that that success was due to our Prime Minister's sustained and, most importantly, continuing commitment that Britain should no longer be seen as "anchor to windward" of Europe but rather as in the engine room of the Community, as part of its driving force. Equally certainly, any attempt now to repudiate Maastricht would be, in my judgment, for Britain as well as for Europe a disaster of the greatest magnitude because it would be the loudest possible signal for a resurgence of the worst kind of nationalism, which is the most persistent and pernicious of all European diseases.

We forget at our peril that Balkanisation is not a disease which is or can be regarded as safely confined to the Balkans. Sarajevo is for the second time this century the tragic symbol of that—a brutal reminder of the need to keep up the search for a better way of handling the emotive nationalism that can give patriotism such a bad name. I agree with the noble Lord, Lord Healey, and my noble friend Lord Pym on the need for positive solid help to the countries of Eastern Europe as soon as we can manage it.

None of that implies any disposition on my part to ignore the implications of the Danish vote or to dismiss out of hand the message underlying that event. I agree with those who have argued that we have been given an opportunity to think again, but emphatically not an opportunity to make a fresh start, or anything like it. Of course as we proceed towards enlargement we need to think again about the best way forward from Maastricht, but equally certainly we must not end up trying perversely to retrace our steps in the opposite direction.

Certainly the way forward must embrace the search for a clearer, firmer entrenchment of "subsidiarity". It would be desirable to fortify subsidiarity with a buttress even more secure, if we can find it, than Article 3b of the treaty, as that may be interpreted by the European Court of Justice. Ideally that buttress should be located in the Council of Ministers, for that is where the laws are made. All too often it is Ministers in Council who have adopted the very laws of which they later complain as reaching into the nooks and crannies of national life. Why should we not have a real subsidiarity test in the Council; for example, a requirement that there should be unanimity on the legal base for any new measure?

The Select Committee was certainly right to emphasise that this, subsidiarity, must be the key to the effectiveness of the enlarged Community". Perhaps I may use the words of President Jacques Delors himself when he said that we need: a constant counterweight to the natural tendency of the centre to accumulate power". And it would be good indeed if we could locate a large part of that counterweight at the very centre in the Council of Ministers itself.

Finally, let me make three points about enlargement. First, I agree with the Select Committee and my noble friend Lord Pym that enlargement will require changes and adjustments in the institutions and procedures of the Community. The key question is how far they may—I would say "will"—require change with the addition of five or more small countries. From having been until 1973 a Community with three large countries out of six, it will in due course and quite quickly become a Community of 11, 12 or more small countries alongside five large countries.

I agree with the Select Committee and my noble friend Lord Pym that that must raise at least three questions for early consideration: first, voting weights in the Council; secondly, the pattern of rotation of the presidency; and, thirdly and most obviously, the number of official languages for use in ordinary proceedings.

Also we need to question whether such a large convoy can or should all continue to move at one speed. I once had misgivings about separation of speed in that way because I feared that we may inadvertently or deliberately get left behind. However, despite those earlier misgivings, I am increasingly persuaded that a two-speed, or more probably a variable geometry, Europe may be inevitable. If that be the case, it becomes all the more important to ensure that the United Kingdom remains at the heart not just of the Community as a whole but of the inner core of that organisation.

That brings me to the final point I wish to make about the framework within which enlargement should take place. We should take care not to underestimate the importance to prospective new members of the Community, as well as to present members, of the Maastricht commitment to, progressive realisation of economic and monetary union". This is neither the time nor the place for me to argue the case, which I support, for the objective of a single currency. But certainly we should not overlook in the context of the enlargement debate the extent to which applicant countries wish to be part of EMU. Norway, Sweden and Finland at least are already committed to shadowing the ecu as the anchor of their own monetary stability. For us too, our present attachment to the disciplines of the exchange rate mechanism is a vital feature of our own monetary as well as political constancy.

My noble friend Lady Thatcher was absolutely right to emphasise, when we joined the mechanism under her premiership, that entry should be seen as, an extra discipline for keeping down inflation".—[Official Report, Commons,30/10/90: col.888.] Just as she and I stood together—now more than a decade ago—and as others have done before us, in defence of our joint commitment to monetary policy as the then foundation of our policy to defeat inflation, so it is no less essential to be just as constant, indeed courageous, in defence of today's, discipline for keeping down inflation". I judge that the present Prime Minister has been absolutely right to commit our country to participation at the heart of Europe. So too he has been right, together with the Chancellor of the Exchequer, to emphasise our commitment to the discipline to which we have committed ourselves of the European monetary system. Each of those commitments is in line with the long-term needs of the United Kingdom; each of them therefore deserves the wholehearted commitment and support of this House.

Viscount St. Davids

My Lords, There is a suspect car in Parliament Street. There will be a controlled explosion in a few minutes but let us not allow it to interfere with our debate.

7.12 p.m.

Lord Hunt of Tanworth

My Lords, it is my privilege and pleasure, on behalf of the whole House, to congratulate the noble and learned Lord, Lord Howe of Aberavon, on his maiden speech. He has unique experience of dealing with the Community, but the manner and thoughtfulness of what he has said today will, I am sure, mean that we shall want to hear him on many more occasions in this House. We have heard two remarkable maiden speeches and, as someone who as a former Cabinet Secretary was more used to trying to keep up with the eloquence on the opposite side of the Cabinet table, perhaps I may say how nice it is to see both speakers here today.

I was privileged to serve on the sub-committee of the noble Lord, Lord Aldington. I support what he had to say today. In particular, at a time when there seems to be in this country undue pleasure in sniping at the Community, it was salutary to listen to witnesses from applicant countries, all of whom were to be net contributors, who spoke of what they saw as the Community's success and their wish to be part of it. Similarly, I have no doubt that we in this country should benefit from enlargement. I am not thinking of the effect on our budget contribution but rather of the advantages which an even larger single market will give us and the advantages of a stronger and more outward-looking Community.

The arrangements to be made with the central European states with a view to their co-operation and possible membership of the Community in due course are of enormous importance in the context of stability and democracy in that region. But I propose to confine my few remarks tonight to underlining two points relating to the EFTA countries and the more immediate future.

The Community has enlarged before—the United Kingdom, Ireland and Denmark and then Spain, Portugal and Greece—but the next enlargement will be of a different order for three reasons. First, the new members will be joining not just the European Community but the three pillars of the European union and the completed single market. In other words, as one of our witnesses put it, we have "raised the integration threshold" which new members have to cross and also the ultimate goals of membership. They are joining a more developed Community. That may yet cause problems for one or two of the neutrals, but I hope not.

Secondly, the distinction within Western Europe between those countries which are members of the Community and those which are not will largely disappear, while of course the East-West division is also disappearing.

Thirdly, there are already other applicants in the offing, which makes it much harder, even though it will be necessary, to deal with this wave of enlargements on a discrete basis. Indeed, we are already having to talk about devising new forms of waiting lobbies and half-way houses. Therefore I do not believe it will be the same as previous rounds of enlargement.

That brings me to my second point, which relates to institutional reform. I entirely support and share the committee's view that institutional difficulties must not hold up the next round of enlargement. I accept also that the EFTA countries can join in advance of any structural reform, although the elastic will be stretched pretty thin. I fully understand the reluctance of governments, having endured the IGCs recently, to embark upon another structural review before 1996. However, it seems to me that some of the consequences of the next round of enlargement cannot be divorced from other questions which will need to be considered shortly relating to the sort of Community we wish to see developing.

In other words, I am not thinking so much about the number of commissioners, the changes in qualified majority voting, the arrangements for the presidency, the number of MEPs and so on; I am thinking more of what the Community is going to do and how it will operate. A framework for six, nine or 12 countries—as we have at present—is not necessarily suitable for 16 or 20. We may need to think again about what we mean by integration and how the borderline between Community level policies and national policies should be drawn in an enlarged and different Community. We may even need, as the noble and learned Lord, Lord Howe, suggested, some kind of variable geometry to take account of the more varied composition of the Community, although how much of that will be tolerable if the Community is to remain effective and strong is a big question.

"Subsidiarity" is currently the buzz word, but flesh will need to be put upon it. I am not sure whether anyone knows at the moment what we mean by it. At one extreme it could mean having a cost-benefit analysis done of all draft directives to see whether it is better and more efficient to do it at Community level rather than national level. It could mean the repatriation of some powers to national or regional authorities from Brussels. Some repatriation may be necessary anyhow in the context of an enlarged Community. Therefore discussion of the future of the Community and what it will do—I am not thinking simply of institutional reform—needs to take account of enlargement.

My argument is that, although some short-term decisions on commissioners and MEPs will be necessary when the EFTA countries come in, and although major institutional reform may have to wait until 1996, we should not think of enlargement as a single one-off subject on its own where one negotiates with a round of people, brings them in and that is that. We need to see the consequences of how a larger and wider Community will develop post-Maastricht and in particular the meaning to be given to "subsidiarity". Otherwise the Community will seize up.

I would like to emphasise that in saying that I am not arguing for dilution or emasculation of the Community. I know that some people have felt that this country wants to see enlargement because we wish to see the Community weakened. That is not my point at all. The Community needs to be enlarged but it also needs to be effective within the agreed role for it, and in the context of enlargement that may need some modification.

The subject is an important one and no doubt we shall return to it in due course. My point is that enlargement this time is not something which can be seen as a one-off negotiation to accept new members; it is something which can strengthen the Community provided its link with subsidiarity is maintained. If we do that, the somewhat artificial argument between widening and deepening will disappear.

7.20 p.m.

Lord Desai

My Lords, we have already heard two excellent and thoughtful maiden speeches by noble Lords who are much more experienced in these matters than I shall ever be. Therefore, I shall keep my comments brief because there are many more experts to come. When I was getting my doctorate in the early 1960s in America there used to be EFTA and the Common Market. Europe was at sixes and sevens. It was not at all certain which association would prove to be the more durable. Although many people thought that EFTA was an entirely economic interest with not much political or ideological structure, it was believed that it would be more likely to expand than the Common Market as it was then called.

History has shown that it is the Common Market which has grown into a European Community. The reason it has done so is that it has depth and not just size. The success of the European Community is due to the fact that it commits its members to a much more sterner test of membership. much more sovereignty has to be pooled and much discipline has to be accepted if one is to join the club. If the Community is to enlarge it can only do so successfully by not losing depth while at the same time gaining additional membership. That is an important principle which we must bear in mind in discussing this excellent report which the noble Lord, Lord Aldington, and his Committee have set before us.

When there were only six members there was a clear economic and political programme, as the noble and learned Lord, Lord Howe, has pointed out. The programme was to overcome nationalist divisions in Europe. It was built round the Franco-German axis. That gave the organisation backbone. Membership has grown from six to 12 and we have had some problems. I believe that the Danish vote on Maastricht gives us an opportunity to think very carefully about the political logic behind the Community. The economic logic of the Single European Act is quite clear.

But what is the political logic of the European Community? In that respect in many senses we have not yet had a real debate. The move towards Maastricht and a single economic and monetary union has been driven by Brussels and the Commission. The large populations in the many nations of the Community have not as yet played as great a part as they should be playing if they are seriously to contemplate a deep European Community. We do not have a sufficiently good model to aim at.

What is the ideal towards which the European Community should aim? The membership of six was built on two conflicting ideals, one of which was the Benelux customs union which was straightforward and has now grown into the Single European Act. The other model was the coal and steel community which was dirigiste, bureaucratic and harmonising. I believe that the conflict between those two tendencies continues to this day. Half the time we are for the liberal movement of capital and labour across frontiers and for the other half we are for harmonisation, regulation and so on. That conflict needs to be sorted out.

The Danish vote on the Maastricht Treaty allows us, while committed to the goal of the Community—I have no doubt that I am very committed to that goal—to think again as to what is the political logic behind the Community. As regards Maastricht and the discussions around it, we have not paid sufficient attention to the political dimension (the democratic deficit) which is at the heart of the European Community. Unless we do something much more drastic about the democratic deficit within the Community I believe that we shall have difficulties. They will increase when the EFTA countries enter because the union of five or six large countries and many more smaller ones is bound to create many problems. The small countries will feel threatened by the large countries which will not wish to share power on an equal basis with the smaller countries.

This debate should give us an opportunity to say much more about the political logic behind the Community. As the noble and learned Lord, Lord Howe, said, it may be that we have variable geometry at the heart of this new Community. Something of that kind is already happening with the economic and monetary union. The convergence conditions are such that we may ultimately end up with an economic and monetary union of fewer than the 12 plus five and have a periphery of countries which are not quite ready to join. If that kind of variable geometry is admitted in the economic and monetary union we may again have variable geometry also on the political front with a different cluster of countries which are more committed to political union than others. These kinds of models have to be thought through.

As regards Eastern Europe, I am very doubtful that we can say very much at all as yet. I quite agree with my noble friend Lord Healey, whose maiden speech I enjoyed very much, that our task concerning Eastern Europe is not so much to think of them as potential members of the club as to help them out of their immediate dire need. Our task right now is to help them to be restored to some semblance of economic and political health. It will take much longer before one can accept the countries of Eastern Europe or the CIS as full members of the European Community. If that happens the variable geometry will become even more variable. We shall have several layers of association in the EC.

The EFTA countries will join the Community without any great economic problems. That should give us pause for thinking about the political basis on which we are going to enlarge the union. Even if it is not enlarged, what will be the political basis on which we will maintain the existing Community? If we do not think about that, there will be the danger that some countries may break away from the Community.

7.28 p.m.

Lord Cockfield

My Lords, I have, in one capacity or another, served with both the noble Lord, Lord Healey, and my noble and learned friend Lord Howe of Aberavon. I regarded them both in their own way as very formidable Chancellors of the Exchequer and no doubt very successful ones in the light of the policies which they were endeavouring to pursue. Indeed, had it only been possible to amalgamate them, they would undoubtedly have been the most successful Chancellor of the Exchequer of the present century. They have already contributed notably to our debate this evening. I am sure that we shall have a very great deal to learn from both of them.

We are debating a very wide ranging and careful report which deals with a vast panorama in a very judicial, careful and penetrating manner. In so far as in some instances I may appear to be critical, I am not critical of the report but of some of the ideas that have been advanced outside its ambit. The report and my noble friend Lord Aldington have wisely distanced themselves just a little from some of what I would regard as the rather wilder ideas that we have seen in recent months, if not recent years.

I shall deal with only two issues. I hope—and I propose—to deal with them not on a political or philosophical level, but essentially on a purely practical one. The first issue was the decision at the Lisbon summit that negotiations on the enlargement of the Community to include the EFTA countries should not take place until after the ratification of the Maastricht Treaty and after agreement on the Delors II package. I do not think that we should take that too tragically because all experience shows that the hard work is not done at the formal negotiations, but before the formal negotiations start.

As I said in the debate in your Lordships' House on 2nd July, in the case of the United Kingdom's accession to the Community the formal negotiations took only three days; but that was in the golden days when Mr. Heath (Sir Edward Heath as he now is) was Prime Minister. I would not expect to see such a remarkable turn of speed in these days. Dr. Manfred Scheich, the chief negotiator for the Austrian Government, has suggested that the formal negotiations could take six to nine months, which seems to me to be a reasonable estimate. I should have thought that if the preparatory work is done under the British presidency, in the case of Austria, Sweden and Finland it should he possible for the accession of those three countries into the Community to be achieved by 1st January 1995, which is the target date.

The other issue that I wish to deal with is the cost of enlargement. On many occasions I have suggested that it would be wise if figures were produced showing what the cost of the enlargement of the Community will be. I am glad to see that those figures are now included in the Select Committee's report. The only trouble is that I do not believe them. This is no criticism of the Select Committee because the figures are derived from the Foreign and Commonwealth Office—and that gives me even less confidence in the figures.

Lord Howe of Aberavon

My Lords, it obtained them from the Treasury.

Lord Cockfield

My Lords, that reveals internal workings of the Government that are better shrouded in secrecy.

Let me start with the EFTA countries. I have said on many an occasion that the EFTA countries are relatively wealthy countries and that their accession to the Community would impose no burden on Community finances. However, I have considerable doubts about whether the figure of a benefit to the Community of 3 billion ecu a year can be justified. There is in fact no connection at all between wealth or income per head and the benefit or cost of Community membership. In the case of Holland and Denmark—if I may take two of the more prosperous countries—the Dutch benefit to the tune of £15 per head of population per annum, and the Danes benefit to the tune of nearly £60 per head of population per annum. On the other hand, Spain, which is one of the poorest of the countries, benefits to the tune of only £30 per head per annum and, but for the transitional provisions, might even have been a net contributor. I shall not say very much about the United Kingdom; but The Times this morning described the United Kingdom as, eighth in the ranking of GDP per head of population … the poorest country in the EC not receiving cohesion funds". However, although the poorest country not receiving cohesion funds, we contribute no less than £41 per head per annum to the financing of the Community.

Therefore, there is no nexus whatever between the wealth of a country and what it has to put into or draw out of the Community. That is my first point and I go no further than saying that, in the case of the EFTA countries, I am sceptical about the figures. I do not think that those countries will be a burden on the Community, but we should be wrong to regard them as a source of net income to the Community.

When we come to the Central European countries, I do not believe the figures. On this my views are very similar to those expressed by the noble Lord, Lord Healey. Let me start with the figures that actually appear in the report. As I have said, they are derived from the Foreign and Commonwealth Office; but, as my noble and learned friend Lord Howe of Aberavon confirmed, they came ultimately from the Treasury. The report states that those countries will cost approximately 10 billion ecu per annum in terms of net support from the Community. The present position is that our own Government—and I am not in any way criticising them—have strongly attacked the Delors II package on the ground of its excessive expenditure. That amounts to an increase in Community expenditure of 20 billion ecu per annum. I have said that I think that the figures are probably too high so I am not unduly criticising the Government for that. However, by bringing the Central European countries of Hungary, Poland and Czechoslovakia into the Community, they have now proposed to increase the cost of the Delors package by no less than 50 per cent. I simply do not believe that when it came to the point that would be regarded by our own Government as a tolerable outcome.

However, I go further than that and say that I do not believe the figures. I shall explain why. I suspect that they have been compiled on what is sometimes called an "as is" basis—that is, they assume that everything will remain the same. However, the lesson of every single enlargement in the past is that things never have remained the same. After the accession of the United Kingdom, for example, we had the foundation of the regional funds. After the accession of Greece, we had what we call the IMPs, the Integrated Mediterranean Programmes. Then after the accession of Spain and Portugal, we had the doubling of the structural funds. A further massive increase is now proposed under the heading of "cohesion". Perhaps I may illustrate what has happened by going back to 1987 when the cohesion and structural funds—there is no difference between the two except in the terminology—amounted to 9.1 billion ecu per annum. By 1997 under the Delors proposals they will have risen to 29.3 billion ecu per annum. That is a threefold increase.

If we look at these three central European countries, Hungary, Poland and Czechoslovakia, we should start by looking at what happened in the case of East Germany, as the noble Lord, Lord Healey, said. The cost to the Federal Republic of Germany has been estimated at various figures up to 500 billion deutschmarks—not per annum, but in total. The noble Lord, Lord Healey, gave the figure of 150 billion ecu per annum. But the fact of the matter is that nobody knows what the figure is other than that it is astronomical. Indeed, it has almost brought the most powerful economy in Europe to its knees. The problems that were being discussed in our earlier debate on the Finance Bill—rates of interest, which are so greatly determined by the Germans, rates of inflation and so on—are essentially a reflection of the tremendous burden that the Federal Republic has assumed as the price of the unification of Germany.

The population of East Germany is 16 million. The population of Hungary, Czechoslovakia and Poland combined is 64 million—four times as much. Poland, if anything, is in an even worse industrial and economic state than East Germany was. Slovakia, which is the industrial end of what is now called Czechoslovakia, faces similar problems. Hungary is in a much more fortunate position but it is a small part of this total of three countries. There is no way whatever that the accession of these countries to the European Community could be financed within a figure of 10 billion ecus per annum, the figure which appears in the report. The authors of the report are not responsible for that figure. It has come from Government sources.

There is one other matter with which I ought to deal. It is very difficult and delicate. The report assumes that the United Kingdom will receive a two-thirds rebate on the cost of these proposals. I entirely understand that in the present delicate situation the Government have to maintain the integrity of the British budget rebate—I accept that. But this is a different matter. This is a policy that our own Government are promoting. What rational chance is there that the other members of the Community will agree to give the United Kingdom a two-thirds rebate on the cost of the United Kingdom's own proposals?

It is no good saying that we have a veto and that the United Kingdom rebate is entrenched in the regulation. That is valid so far as concerns existing policies; but what will happen if we come along and say that our policy is to bring these people into the Community, which will bring with it a certain figure, and then claim a two-thirds rebate? Unless we are prepared to meet the other countries on the cost of our own proposals, the other countries will simply refuse to accept our proposals. We already see this in the case of Spain and the EFTA countries. Spain has said that unless we pay up under the cohesion fund it will block the accession of the EFTA countries. Spain has probably put it more politely than that, but I am stripping out the sense of what is said. That is what will happen when we come to the hard negotiations on the enlargement of the Community.

In conclusion, we have a responsibility and a duty to these countries. That is true and I have said so repeatedly. But what we must have also is a policy which is realistic, which is achievable and which can be achieved. Almost certainly we will go down not the path of immediate enlargement. We will not go down the path of concentric circles or different layers of membership. They raise impossible problems on the decision-making process. One has only to look at what has happened on the EEA negotiations to see that. What we shall have to do is to start on a free trade basis, extend that into a Customs Union, bearing in mind that the Customs Union was the foundation stone of the Community, and by specific agreement extend this area of co-operation to the services.

By the time that has been done it may very well be that these countries will have reached the stage at which they can be welcomed into the Community without creating impossible strains. But, quite frankly, that is likely to be well into the next century. If we try and hold out hopes which cannot be achieved, if we offer what cannot be delivered, it will end up in tears, in disappointment and in recriminations. What we have to do is to have a policy which clearly leads to success. That is the kind of policy which I hope will be hammered out in the course of the United Kingdom's presidency of the Community.

7.45 p.m.

Lord Bridges

My Lords, this is a debate about enlargement. Before embarking on that subject I should like to say a few words about the effect of the considerable influx of new Members into your Lordships' House over the past few weeks, something which could, I suppose, be called an enlargement of our own number. We have seen the effect this evening with two remarkable and very distinguished maiden speeches, which did not in the least surprise me knowing as I do the quality of the two noble Lords in question. I suppose that there is a certain irony in that two noble Lords who have spent a large part of their political lives engaged in almost mortal combat in another place—"savagery" is one of the words that was used at one time—should have come together in what might be called a combined performance. Their maiden speeches have given us much food for thought.

As one who was fortunate enough to serve on the sub-committee presided over by the noble Lord, Lord Aldington, I join him in commending the report to the House. It is a useful and timely document and it is valuable that we should have the opportunity to discuss the subject before the Recess, given the great fluidity and uncertainty of the European situation at present. I shall attempt to cover only those aspects which seem to me to be of immediate relevance.

My first comment is that the subject has changed greatly since the sub-committee set the work in hand at the beginning of the year. At that time there was every reason to believe that preparation for the enlargement negotiations would fall during our presidency and that this would be one of our most crucial tasks. We reasoned that the period between the signature of the Maastricht Treaty and the end of the ratification process—that is, during our presidency—would be the time when serious thought would be given to the way in which negotiations for accession would he undertaken; how, and with whom, in what order, and so on. The report was conceived to give some guidance on these matters to the House and to the Government. Now the Danish referendum has fundamentally changed that perspective. Recognition of the changed circumstances is explicit in the conclusions of the Lisbon European Council last month, to which the noble Lord, Lord Cockfield, has just referred.

It is clearly stated there that the negotiations for accession will begin only when three other things have happened: first, when the Community has terminated its review of its own resources—that must include our own budgetary contribution, to which the noble Lord has just referred; secondly, after all ratifications of the Maastricht Treaty have been completed; and thirdly, after agreement has been reached on the Delors II package. That is a rather formidable programme. I do not say that this means putting off enlargement until the Greek calends. But clearly there is a quite different timescale and we cannot be confident when the negotiations will begin.

One significant factor in ratification of the treaty will be the state of internal political affairs in a number of member states, whether these concern economic and constitutional questions, as they do in Germany, or the standing of an individual government, as happens in France, where the referendum will be just as much about the presidency and the ruling government as about Maastrict itself. So the outcome seems to me to be unpredictable. What appeared to be a racing certainty only a few months ago is now much more questionable.

The second comment I would offer to the House is that we should not allow these current doubts to cloud our long-term judgment. The opinion of the committee at paragraph 184 of the report is that enlargement is in the long-term interest of Britain. I strongly support that view. In the coming years the Community, and we as part of it, would greatly benefit from the accession of those members of EFTA who wish to join. Their support would be invaluable to the existing 12 member states—partly because the economic activities of those countries are in the main strong, prosperous and complementary to our own.

I was interested to hear what the noble Lord, Lord Cockfield, said in that connection. At least they will not benefit from the cohesion fund; in fact I strongly hope that they will contribute to it. Those states are also democratic and soundly based, with an excellent political and social record. Whatever we may think of Maastricht, it would be a great misfortune if a prolonged controversy about that treaty were to impede the accession of states already so close to us in many ways—not least, they are just as European as the existing 12 members of the Community.

The issue of the definition of Europe in the Community context is an intriguing subject and one which detained the sub-committee for some moments. Thoughtful advice was proffered by a number of witnesses, notably by the noble Lord, Lord Thomas of Swynnerton. My own conclusion is that we need not worry over-much with dictionary definitions of Europe but that we should pay due attention to the historical factors which condition public attitudes. The concept of Europe is, happily, an elastic one which need not be a barrier to the decisions which face the Community at present.

We should also beware, I suggest, of geo-political notions; that is, a priori concepts about the extent of Europe. They are quite common, they often mislead and they can be unhelpful to the actual conduct of affairs by government. Of course there will be problems at the geographical margin in future; for example, how European is Russia or the Ukraine? But those questions are not on our current agenda.

A further comment that I should like to suggest to your Lordships concerns the difficult issue of neutrality. The report has two pithy paragraphs on the matter—namely, paragraphs 168 and 169. Those words reflect a lot of thought and discussion and seem to me to address one of the most essential parts of the whole subject. I support the committee's conclusions. The problem arises because a number of countries seeking membership have followed different forms of neutrality in the past—sometimes with rather specific public commitments to that effect—or have chosen to follow neutral foreign policies as a question of political judgment in relation to a current situation. At present we have only one member state in the Community with a policy of that kind. My concern is that a future Community, with, say,20 members, of which four or five had a preference for neutral policies, might find its choice and freedom of action limited by such historic preferences.

I have no personal blueprint of my own about the way in which the Community might develop in the field of political security or collective collaboration on defence. But I believe that it needs to have a wide freedom of choice over policy because we cannot foresee how its security needs may develop. The current situation in Bosnia illustrates just how uncertain the future roles of the various organisations appear to be, with the United Nations, the European Community, the Western European Union, NATO and the CSCE all involved. The words at paragraph 169 of the report are surely correct: We are of the firm opinion that Ireland's neutral status should not be considered a precedent for applicant States to follow". I agree with that; indeed, one might go further. There is a case for saying that the question needs to be explicitly recognised by acceding member states, perhaps even in the form of a clause in each agreement renouncing any previous obligations or traditions of a neutral character and making instead a commitment for the Community's future foreign and security policy. At least there should be no ambiguity on the subject.

Those who have spoken in the debate have shown how important they regard the subject to be. In general, the debate has given clear support to the approach suggested in the report. If we do agree that enlargement is in the common interest, I suggest that the only practical policy to give effect to that wish in the course of the next few years is by ratification of the Maastricht Treaty. If that can be achieved, the conclusion of accession agreements themselves should not be too difficult. But if Maastricht should fail, I believe that we would enter a long and difficult period of European debate. That would be divisive, uncertain and demoralising.

No European state outside the Community will wish to begin negotiations for accession until it knows what it is joining. In particular, none of the Nordic states will be interested now until they know whether Denmark has or has not reversed the decision in the referendum. So I offer my opinion that the only certain way of bringing about the next enlargement—or, rather more accurately and in deference to what the noble Lord, Lord Cockfield, said, the first step of enlargement—is surely to see it as the key to the development of the Community in the way that we wish to see it. We must continue on the path followed by the Government in seeking to ratify the treaty. After all, it was endorsed in an emphatic way only a few months ago in another place. I hope that steadier counsels will prevail and that the current policy will succeed, both in the United Kingdom and in the other member states.

7.57 p.m.

Baroness Elles

My Lords, the chairman of our ad hoc committee, the noble Lord, Lord Aldington, is to be warmly congratulated on producing a quite excellent report, the opinion of which I wholly endorse. I should like to thank him for the work that he did. I should especially like to take this opportunity to thank Dr. Tudor, our very hardworking Clerk, and all her assistants who on successive days organised meetings for us on a very restricted timetable. They managed to produce vast amounts of paper which I believe we all read with great attention. She is to be warmly thanked, as are all those who assisted her in a mammoth task, especially in getting the report prepared within the timescale required.

At this point, as what I might call a foot soldier on these Benches and as a modest Back-Bencher, I should like to say what a privilege and honour it is for us to be able to have in this House politicians and statesmen of the stature of those who made their maiden speeches tonight. I refer of course to the noble Lord, Lord Healey, and the noble and learned Lord, Lord Howe. They are representative of the statesmanship of our country over several years. We should be thankful that this House exists and that we can receive these great statesmen into our Chamber. Thus they are not wasted in the countryside but can take part and contribute to the political debate at the high level that we have had tonight. I warmly congratulate them.

The opinion of the committee is wholly to be endorsed, with practical emphasis on the rapid acceptance of the four EFTAns' request for membership to be completed, as I understand it, by the end of 1995. There is certainly no reason why they should not be able to complete that, considering the work that has already been completed in the European economic area which must have overcome many of the issues that would normally cause so many problems during accession. Therefore, we should possibly be able to conclude those requests within a reasonably short space of time; indeed, I believe that one noble Lord suggested six to nine months.

Although we made somewhat heavy weather of the issue of neutrality in the report, it was most encouraging to read recently the statement of the former Austrian Foreign Minister, Mr. Jankovitsch, on the subject of Austria's neutrality. He said that, the concept of neutrality, as we understand it, is flexible and has to be adapted to political and military circumstances in Europe and Eastern Europe. It has to he interpreted constructively and this is how we will explain to our citizens that our country's neutrality is no longer what it was in 1955". He went on to say: Austria subscribes 100 per cent. to the Maastricht Treaty"; that the treaty was in no way incompatible with Austrian neutrality; and that, Austria was ready to take part in a common defence policy". He continued: We are even ready to take an active part, alongside our Community partners, in peace keeping operations to fulfil our role in the case of an international crisis, as Austria has always done". Our view of neutrality in the report has been overshadowed by that recent statement. I hope that other applicant countries will follow that line. When the Swedish Ambassador gave evidence to the ad hoc committee he indicated that was the way Sweden would be looking. It is to be assumed that accession will be to a post-Maastricht Treaty Europe. Requesters will be bound by the three criteria set out in the treaty—European identity, democratic status and respect for human rights. That provision implies that the best point of entry is to cross the threshold from membership of the Council of Europe, which already includes 27 European states.

It might well be conjectured that if Yugoslavia had been able to become a member of the Council of Europe the present tragic situation might never have taken place. The prospect of the central European states joining the European Community is to be warmly welcomed, even if it is a distant prospect. The timing will be a political decision. Recognition of the need to fulfil the aspirations of people newly restored to freedom with those aspirations of greater prosperity, the change in regime causing temporary economic and social disadvantage in many cases, and the complex structure of a modern democratic system, coupled with the European Community's legislation, demand balanced judgment as to the time of entry.

The European agreements are helpful in what might be called a preparatory process to meet the exacting demands of the existing Community. It is necessary only to think of the provisions of free movement and rights of residence to be aware of some of the many problems which are certain to arise. In the meantime, emphasis on education and training opportunities, fostered by Her Majesty's Government's Know-How programme and the European Community's PHARE and TEMPUS programmes, are to be warmly welcomed and encouraged.

There needs to be a balance between, on the one hand, the political imperatives of including those nations whose new democracies would be sustained by taking part in a flourishing part of Europe and being involved in joint decision-making in the region and, on the other hand, consideration of how such countries would be able to accept, implement, apply and enforce the corpus of European Community law, with all the implications that that involves.

Institutional problems envisaged, following en-largement to 16 member states, should not be very arduous. I believe that that was accepted when we visited the European Commission in Brussels. But, at over 16, membership is bound to invoke changes. With an intergovernmental conference by 1996 surely they can then be considered.

We have to face the fact that there are at least two options as to the direction in which the European Community will go: first, a closely knit system of institutions, with qualified majority vote, or even a single majority vote, becoming the norm in the decision-making process, and more effective scrutiny and control by the European Parliament; or, on the other hand, a more loosely-knit system of intergovern-mental action. It should be the task of policy makers to see how an effective compromise, if that is what is required, can respond to those apparently incompat-ible approaches so that an evolutionary process within the institutions responds to the demands and expectations of the people of Europe. I hope that the result of the Danish referendum has taught us a lesson in that regard.

There will be many opportunities to debate further changes and the demand for institutional changes before the next intergovernmental conferences are due. It is sometimes to be recalled that the United States—although perhaps not a model for Europe—took from 1787, with seven states, until 1959 to become 50 states. We do not necessarily have to be in a hurry to complete what one would imagine to be a European union.

The overriding imperative is to ensure that applicant states are encouraged in the process of preparation for membership so that they might in future be able to envisage a Europe of dimensions from the Atlantic to the Urals. Yesterday there was a reception in the Locarno Room in the Foreign and Commonwealth Office. Many people there could not remember, or perhaps did not know, who had signed the Locarno Treaty. I took the trouble to look it up in the History of Europe by H. A. L. Fisher, in which there was a telling phrase that Aristide Briand, as one of the signatories, had made the comment: There is a new language in Europe; it is the European language. Perhaps that is the language that we should now be learning". That was in 1925 so perhaps there is still a great deal for us to learn.

8.5 p.m.

Lord Bruce of Donington

My Lords, I too should like to congratulate my noble friend Lord Healey and the noble and learned Lord, Lord Howe, on their maiden speeches in this House. In the past it has been my fortune to listen to them from time to time from the safe haven of the Peers' Gallery in another place. After listening to them there for many years, and hearing them here this afternoon, it seems possible that I may be able to engage in arguments of amiable dissent with both of them from time to time. That is always an agreeable prospect. I should like also to associate myself with the remarks of the noble Baroness, Lady Flies, on the sterling work done by the committee staff, in particular, Dr. Tudor on sub-committee A. The volume of work, the lucidity and carefulness with which the various items of evidence and argument were put forward reflect great credit upon her as well as, if I may say so, on the noble Lord, Lord Aldington, himself.

Those of us who believe that the GATT negotiations are a vital ingredient in securing a more prosperous world and far greater trade between member countries, can hardly dissent from the concept that the European Community should welcome to its ranks other European countries, with the objective of extending the area within which freer and more extensive trade may take place. They are vital to the development of Europe and, as the noble Lord, Lord Cockfield, has pointed out, subject to certain conditions, to the remainder of Europe as well, including those countries that are now in the Commonwealth of Independent States, and the various other countries between the existing Community and the CIS.

It is inevitable that in putting forward the proposals which are so admirably dealt with in the report there should be an element of enthusiasm which should express itself in optimistic terms; but it is occasionally necessary that we should sound a note of caution in some of the more optimistic assumptions that we make. I quote, for example, from paragraphs 141 and 146 of the report, in which the Committee states: The Community's advantages of democracy, stability and prosperity can best be extended to Central and Eastern Europe by integrating those countries, when ready, into the Community". A similarly optimistic note is sounded at paragraph 146 which says: The Community of 12 has proved so successful that there will be pressure for its membership to double or treble over the next 15 to 20 years … They look at its economic successes". There can be no doubt that progress has been made in all the countries of the Community over the past 40 years. However, we ought to remember that, in all the countries apart from the United Kingdom, democracy as now practised within member states is only 45 to 50 years old. It is essentially of post-war vintage and varies in quality. One should not denigrate it in any way, but it is variable.

For example, at present it is not possible for certain areas of Italy to be brought firmly under the control of central government. Large sections of its land, population and finances are under the control of the Mafia. That is well known. The degree of law enforcement which we take for granted in this country is not always universally applied among members of the Community. That is not in any way to disparage or criticise them, it is merely to acknowledge that there are differences.

As to economic successes, we must be careful. Most of us in the House and, to some extent, in another place are sheltered from the harsh realities of life. We tend to think in terms of concepts and ideas, as we are bound to. After all, that is partly what we are here for. But we do not always take into account the harsh realities of the lives led by millions, not only in our country but in Europe as a whole. When we talk of economic success, we should bear in mind first that in Europe as a whole the rate of growth is significantly lower than that of either Japan or the United States. That is to dampen our sense of self-satisfaction a little.

We should also bear in mind that unemployment in Europe at the moment in the Twelve is at the unacceptable level of over 17.5 million, including 2.7 million in this country and probably, on the old count, nearer 3.7 million. So there is an unemployment level of significant dimensions. We should never underestimate its effect. Already there are signs in some parts of Europe of neo-fascism and fascism emerging again. There are also incipient signs in France. There are, as I said, areas of Italy which are not under government control. Let us bear these points in mind before we smugly say that we are economically successful and imply by that that everything in the garden is more or less lovely, apart from certain unmentionable matters at the periphery of which, perhaps fortunately, we have no personal experience.

That brings me to the question of what form enlargement of the Community should take. There has been much talk of the necessity for cohesion—a term which the noble Lord, Lord Butterworth, who will address the House presently, and I have been trying to clarify for some time. The nearest definition that I can find presupposes the existence of disparities between regions or groups, but insufficiently to make them socially or politically intolerant. That is the nearest definition that I have been able to obtain.

Clearly, there are countries within the Twelve in which there are wide disparities. We have them in the United Kingdom, Spain and practically all the countries. One question that will have to be addressed sooner or later is whether the disparities that exist within member states should be addressed by action taken by the Community as a whole, by decisions from the centre, or whether the disparities should be dealt with within the member states.

There should be considerable argument about this because so far—and reference to the European Community's annual regional reports confirms this—in spite of massive sums being diverted from member states' own resources to various other member states qualifying for regional aid, regional disparities have not diminished over the years. Year after year, we find that the differences between the richer and the poorer member states remain substantially the same despite massive injections of money into their infrastructure and for various other purposes.

The position would be far worse, of course, if no such aid were provided. However, it raises the question as to whether, to be really effective, such issues should be dealt with by member states themselves or whether it is wise for them to be determined centrally. That is a matter for consideration.

That is why I welcome the present discussion on subsidiarity. Despite its summary dismissal as something that has already been decided, subsidiarity will, I assure your Lordships, be the subject of argument for a considerable time. Subsidiarity applies only in areas which are not covered by Community competence. The only way to determine that competence is by reference to the Treaty of Rome. Under Article 155, the Commission is made the interpreter of the rules of the Treaty of Rome. Thus the matter will be fraught with difficulty, but the decisions have to be made.

I venture to suggest to your Lordships that any suggestion as and when the enlargement takes place, of the establishment from the centre of a level playing field covering the whole is thoroughly out of the question. Someone will have to think a little harder about it. Moreover, when new members join—and I hope that, for the reasons that have already been eloquently described by the noble Lord, Lord Cockfield, no hindrance will be placed on them—they will face the fact that they will be required in a greater or lesser degree to accept the acquis communautaire. That means the existing body of laws already in existence within the Community. Noble Lords will find that paragraph 50 of the report involves 12,000 pages of rules and regulations, not all of which may be acceptable to the new member states. If derogation is required, it will involve detailed documentation occupying so many further acres of paper that we shall massacre hectares of forest well into the next five or 10 years.

Those are important matters. I sincerely hope that the Community will enlarge. However, I hazard the view that it will be far better if the member states come together at their own speed and on the basis of unanimous co-operation between the other member states rather than being artificially propelled by the non-elected Commission, which may have entirely other purposes in mind. It would be better to do what we are going to do solemnly rather than being hurried into action which many of the countries and most of their populations may not understand. They may resent its full impact when what is done in their name is finally carried out.

8.21 p.m.

Lord Beloff

My Lords, we are much indebted to the noble Lord, Lord Healey, who began his maiden speech by saying in the politest of ways, as is proper for a maiden speaker, that there was something lacking in the report: a sense of the immediacy of Europe's problems. Not being a maiden speaker, I have no obligation not to be controversial.

I would say that the most marked feature of the report is that, while the issues are discussed with great learning, knowledge and technical competence, the report resembles much of the work that comes from your Lordships' committees on Europe—it takes the Community at face value. Perhaps the noble Lord, Lord Healey, was too polite to ask why the Community and its members seem so indifferent to the sufferings in Yugoslavia and potentially in the remainder of Europe. He could have enlarged on the problem of refugees; he referred to them. He could also have called attention to the fact that what worries many European countries is the likelihood—we already see its beginnings—of massive migration even from areas which at present are not victims of internecine strife.

Having asked the question on behalf of the noble Lord, Lord Healey, the reason is clearly that the Community is not a community. It is still a collection of countries which, reasonably enough—it is, after all, true of politics through the ages—look to their own interests and concerns and take a view of successive events in the light of those concerns. The more closely those countries are in touch with their own public opinion, the more likely that will be the case.

Let us consider the history of the Community. It begins with a very simple proposition: the need to prevent a new war between France and Germany. To that proposition various other objectives, mostly although not exclusively of an economic nature, have been attached. It has been said by some eminent historian that all wars begin as a crusade and end as a business. I sometimes think that one could say of the movement to European unity that it began as a crusade and is ending as a boondoggle—that is to say, it is a method of creating jobs, of transferring income and of satisfying particular interests in different countries. The language that is used to express the movement's purposes is more and more remote from what we actually see.

If that were not the case it surely would be true that when we consider the situation in Eastern Europe we would first wish to ask what can be done for those people in order to prevent a recrudescence on an even worse scale of what we see in Yugoslavia. But in Yugoslavia the European Community has already proved its total incapacity. It has not managed to produce a solution. It has not managed to do more than belatedly to bring a little material aid to the worst affected people. It offers nothing in the way of resettlement for the refugees who have been created. The reason is simple. There is no Community; there are different countries, some of which are more affected and some less affected by what has been going on.

The noble Lord, Lord Bridges, referred to this point in some detail. It is interesting to note how much attention our committee paid to the problem of neutrality with regard to the EFTA applicants. One would have thought that all the other countries in the Community were equally committed to common action on matters of major interest. But that is not so. Let us take the most important country in the Community; namely, Germany. I believe that this point was referred to earlier. Germany took an important part in framing a policy for Yugoslavia as the collapse of the post-Tito regime became clear. It urged that policy upon its colleagues in the Community. That policy may or may not have been correct. However, the policy that has been adopted now leads to an involvement of military force, at present not provided to any great extent by this country but involving several other countries. However, if troops are requested from Germany, Germany will say that it cannot send anyone to Yugoslavia because its constitution prevents it from doing so. Are the German constitution's restrictions on the employment of its armed forces more important than the potential neutrality of Finland?

We have to ask ourselves whether we wish to enlarge the Community because it will make the Community more effective, or because we believe that we have a commitment to the remainder of Europe which will not be fulfilled unless in some way those countries are brought into a common organisation.

I do not know how many noble Lords have read the evidence, in addition to reading the report and listening to the noble Lord, Lord Aldington. The evidence gives a picture of a situation which is totally different from the picture given in the report. No doubt much time and effort went into the giving of evidence by the ambassadors of the Federal Republic of Germany and France. If one reads that evidence and the document submitted on behalf of Italy, one will see that the emphasis which they place on, let us say, the importance of deepening as against extending the Community is quite different from the emphasis given by Mr. Garel-Jones and others who spoke on behalf of Her Majesty's Government.

Those are major differences of priority. It is clear, for example, that from the French point of view anything which diluted the pressure towards common policies and common institutions, which they regard as their lifeline against the growing predominance of Germany in Europe, would be rejected irrespective of the possible consequences for the rejected applicants.

On the economic side it has been argued frequently that what the countries need—apart from the massive aid which was referred to by the noble Lord, Lord Cockfield, as probably being beyond our reach—is opportunities for selling their produce, not only agricultural produce but in some cases, particularly in the case of Czechoslovakia, industrial products. As has frequently been commented on by those who study these matters, the reaction of Community countries towards their demand for markets has hitherto been heavily and distinctly protectionist.

That is not surprising because the dominant element in the framing of the Community is the Commission. The Commission is dominated by Monsieur Delors and Monsieur Delors is a French socialist planificator in the mould of the great Colbert. France is true to its protectionist traditions. This country on the whole is still at heart Cobdenite. Why should one think that they could get together and in an institutional fashion devise a new Europe for the countries which wish to enter?

That question relates particularly in my mind to the timetable and to what the noble Lord, Lord Healey, said. It would be very nice if we could say that we would proceed bit by bit and by early next century or by the year 2020 this little group of 12 will become 20 or 25, or whatever it may be. Time does not wait for bureaucrats. Time does not wait for negotiators. Time is against us, not for us. As the noble Lord, Lord Healey, said, the position in Central and Eastern Europe is grave—and as the noble Lord, Lord Bruce of Donington, said there are already repercussions in the rest of Europe. The idea that one can spin out the process and can say that in 1996 we shall look at one matter and in 1999 we shall look at another seems to me to be running away from the major obligations of governments and of parliaments.

I hope that this little element of controversy will not upset your Lordships too much.

8.32 p.m.

Baroness Hooper

My Lords, my noble friend Lord Aldington and his committee have once again provided us with an excellent report to debate. I predict that it will be scrutinised and used by many not only in those countries which seek to be part of the enlargement process but also by other countries in other parts of the world which are attempting to set up or to develop regional organisations on the same lines as the European Community. Our blueprint and the changes and modifications we make to it are of considerable interest and influence outside Europe as well as within.

My noble friend opened the debate in his customary vigorous and constructive style. It has been a debate which has given us the opportunity to hear two memorable speeches from two distinguished new Members, from whom we all expect to hear much more on many topics in the future.

I unreservedly join those who welcome the conclusions of the report, despite the stern warnings just given by my noble friend Lord Beloff. Enlargement of the Community has always seemed to me a wholly desirable objective. After all, without the possibility of the process of enlargement we would not be here today debating the report, and certainly not from the strong position which the presidency of the Council of Ministers gives us.

It is that opportunity to have a voice in the development of the European Community which I believe, and indeed know from my contacts with individuals in Sweden and Finland in particular—individuals incidentally who are not also politicians—those countries want. As my noble friend Lord Aldington said at the outset, they already have virtually all the economic and market opportunities which membership of the Community brings. Yet they want more. As mature and developed countries which have given lengthy consideration to the consequences, they still want the closer partnership of full membership, the Maastricht Treaty and all. I see the Maastricht Treaty as a considerable advantage in all this since it has succeeded, as my noble friend Lord Cockfield said in the presidency debate last week, in crossing the "t"s and dotting the "i"s. It has clarified some definitions and tightened up scrutiny procedures.

Nevertheless, I agree with the noble Lord, Lord Hunt of Tanworth, who put the matter so clearly, that since subsidiarity will be crucial to any future enlargement we shall need a full and practical definition of subsidiarity and what exactly it means in practice.

Enlargement is not a simple process—we know that from our own entry experience. Having been a Member of the European Parliament at the time, I remember the complexities of enlargement during the entry of Greece, Spain and Portugal. However, I believe that enough has been said about the advantages of the addition of the EFTA countries to the Community, both in the report and in the course of the debate, to make it clear that it will be a worthwhile exercise to overcome those complexities.

It is on the importance of Central and Eastern Europe that I wish to concentrate my few remaining remarks. Again, despite what my noble friend Lord Beloff said so powerfully, I believe that it is of great importance to make it clear to those countries that they are welcome in the family of the European Community and that we recognise the need to support their new-born democracies. However, I believe that we should regard that as a much longer-term goal than even perhaps the Select Committee recommends. In the interim, however, they need a clear timetable, a step-by-step approach very much on the lines elaborated by my noble friend Lord Cockfield. Without some form of commitment they will inevitably feel abandoned. A slow and steady process which takes account of the changes in those countries, the changes in the Community itself and changes in the wider world is essential.

As an interim measure my noble friend Lord Pym proposed the setting up of a forum representing the wider Europe. He referred to the CSCE in that context. However, we should not forget the Council of Europe, which was mentioned in the report and brought to our attention again by my noble friend Lady Elles. Poland, Hungary, Czechoslovakia and Bulgaria are already members. Applications are on the table from Romania and the Baltic States. At a meeting of the Parliamentary Assembly of the Council of Europe in Budapest some two weeks ago representatives of all those countries were present and participated in the debate.

I know that my noble friend Lord Finsberg gave evidence on that aspect to the Select Committee and pointed out the fact that countries unable to pass the Council of Europe's tests on human rights would be highly unlikely to be admitted to the Community. That in itself is important. I believe that the Council of Europe should therefore be used as a vehicle to provide a halfway house.

However, if that is to be an effective and useful role for the Council of Europe, we have to show that we take the work of the Council of Europe seriously and that we do not regard it as a so-called soft organisation. There needs to be far more collaboration between the European Community and the Council of Europe itself and perhaps—dare I say?—more recognition of the work of the Council of Europe in our national Parliament. I need hardly add that as a new member of the parliamentary delegation to the Parliamentary Assembly of the Council of Europe I am hoping to make a contribution on that score.

I believe that the only way that we can show the countries of Central and Eastern Europe that have been through so much that we are in earnest in our support is to give them a concrete goal at which to aim. It is essential to do so to fulfil the ideals of a united and peaceful Europe, which, in my view, is what the European Community is all about.

8.41 p.m.

Lord Thurlow

My Lords, along with the noble Lords, Lord Jellicoe and Lord Pym, I had the privilege of going to see M. Delors in January on behalf of one of your Lordships' committees. After expressing the Commission's high appreciation of the value of the reports of the Select Committee in general, he went on to express the hope that the committee would undertake a study on enlargement. It was gratifying to hear that the member of the Commission's staff who was responsible for its own recent study of enlargement had expressed his own personal appreciation of the help that the sub-committee's report had given him. As a member of the sub-committee, I pay warm tribute to our chairman for the enormous amount of work which, together with our clerk and specialist adviser, he put into the production of this report and other reports for which he has been responsible.

I was interested in the recommendation of the noble Lord, Lord Pym, that the time had come to address the question of the future structures that may be necessary as the process of enlargement develops. It seems to me that the central issue is how the Community—the union—is to retain a fair ability to be able to take prompt and effective decisions on difficult and controversial issues. Most of the main fields of policy outside the single market area are subject to unanimity. One small government can block any decision, as the Greek obstruction over Macedonia and also, I believe, over closer political association with Turkey has vividly illustrated.

If that blatant abuse of the veto by a small state has occurred in a Community of 12 states, how often would it occur in a Community of 20 to 30 states? But the power of veto nevertheless remains the only present safeguard against the overriding of vital interests of a major country by the concerted action of others. I was very interested in the observation of the noble Lord and learned Lord, Lord Howe, in his excellent maiden contribution to your Lordships' debates; namely, that perhaps the time has come when the Council might seek to adopt a legal base in unanimity for certain directives.

The noble Baroness, Lady Elles, posed the choice for the direction of future development after enlargement between the extension/trimming of the existing institutions on present conventional lines or alternatively some more loose-knit kind of future inter-governmental relationship within the Community. It is argued that qualified majority voting has served the Community exceedingly well over the wide spectrum especially of single market and related matters.

The Maastricht pattern—and like other noble Lords, I certainly hope very much that the treaty will be ratified by all members—of separate "pillars" retains normal inter-governmental processes as a possible form of procedure. The crunch will not come before 1996; but the pressures to extend centralised European decision-making remain.

I should like to throw into the ring of public debate something that had very little emphasis in the evidence given to the sub-committee; namely, the problem of how to establish some kind of effective decision-making or assistance to effective decision-making as the process of enlargement proceeds. Do we not want some kind of formalised inner grouping to act on behalf of the councils between meetings? I believe that the favoured label is directoire. There could be various patterns of membership of course—a few permanent members, as in the case of the Security Council, with rotation of others; bringing in the troika. But resistance from the growing number of smaller states would obviously be strong and apparently such a bogey played a certain part in the unfortunate development of Danish opinion over the referendum.

Can one imagine any ordinary group of 30 partners in an enterprise managing without delegating substantial powers to an inner committee? If there is no formal inner committee as time goes on, the same kind of processes of consultation between the major powers will undoubtedly take place behind the scenes. We must resign ourselves to a very long timescale for significant change. But external pressures may force the pace. Also, as the institutional mechanisms finally depend on the development of public opinion in all European countries, it may be that with the younger generation subject to common television programmes and, it is to be hoped, the greater use of English in all countries, new attitudes will come more quickly than we may at present suppose. I submit that eventually there must be a greater correspondence between the reality of national resources and the Community's decision-making. A solution may perhaps lie in the variable geometry Europe to which the noble and learned Lord, Lord Howe, referred as a possibility.

8.50 p.m.

Lord Butterworth

My Lords, I have long been convinced that the expansion of the Community is in the British interest and my membership of the sub-committee on expansion has only served to strengthen that conviction. I should like to pay tribute both to the chairman and to the Clerk for guiding us through the perils of this subject and producing the report which is before your Lordships this evening. It is so late that I shall deal only with two topics and I shall try to deal with them briefly.

First, much has been said tonight about the nature of the Community both now and in the future. Our report at paragraph 140 describes the structure of the Community in terms of what is often now identified, and indeed has been identified tonight, as the "pillar" concept. However, in paragraph 171 the report adds an important rider that the advance towards EMU and some of the social legislation do not go to the core of the Community.

In this matter the report is doubtless accurate in representing the views of the great majority in the United Kingdom, but does it represent a general view in the Community?

While we do not know what the founders of the Community had in mind, their vision has come to be encapsulated in the words "European union"—a concept which is continuously being developed and constantly being made more specific: from the first reference to "ever-closer union" in the Treaty of Rome, given prominence in the Solemn Declaration of Stuttgart in 1983, again featured prominently in the Single European Act, and now much more precisely in the Maastricht Treaty.

It seems to me that we fall into the trap of construing Community legislation such as this as if it were a British statute. The Community cannot be understood by considering it as a legal structure created either by a single treaty or a series of treaties. Rather, in my view, it should be seen as an objective or a series of objectives which have been agreed in outline and to which the judicial and political processes of the European Community are gradually giving detail and life—a wholly new form of complex political relationships which are gradually evolving.

In that evolution, states of course abandoned some sovereignty and some freedom of action in order to bring into being the common agricultural policy, the single market, the ERM and ultimately the ecu. To that extent the relationships between the states have federal characteristics in so far as a federation merely describes a division of responsibilities between a central power and state powers.

In 1990 President Mitterrand suggested that Europe should be looked upon as:

"a federation in monetary matters and a confederation in political ones".

It may be that words such as "federalism","confederation" and "sovereignty" belong to an old political order and are unsuitable to express the concepts of a new political ordering which is gradually emerging from the European Community. However, President Mitterrand's analysis is in one sense prophetic of the "pillar" motif—a further stage in the gradual crystallisation of the political vision of Europe's future, unlike any arrangement between states that has been attempted by earlier generations. It was in Amsterdam that a Dutchman told us:

"The British, as islanders, have no conception of the European desire for a political organisation which would transcend national boundaries".

He then thought for a moment and added: Of course, we will never give up our right to hate the Germans". What I should like to suggest is that this ability to grow and to develop, which is something quite unique in the development of Europe, is a process by which the problems that we face today over enlargement might well be solved. The future wider Community must be welcomed as an opportunity to continue to change the Community and, far from weakening it, those changes must be ordered so that it is strengthened.

My final point concerns the "multi-speed Europe". Paragraph 171 of our report, to which I have already referred, may contain the seeds of a solution to one problem. It proposes that the options and derogations which do not go to the core and which were made available to us at Maastricht should be available to new members. The basis and the core of the Community, or union, should be the single market, and all its obligations must be accepted on membership, subject to the process of derogations. But a would-be member must have achieved sufficient economic convergence to stand up successfully to the strain of the single market.

A much greater degree of economic convergence is required to fulfil the stringent tests laid down by Maastricht before a member will be allowed to adopt the ecu. So often the implication is that the ability to adopt the ecu is fundamental to membership of the Community. Why not a multi-speed Europe? States could be admitted to full membership when they have achieved sufficient economic convergence to participate in the single market, and countries such as the Visegrad 3, the Eastern Europeans, might defer their acceptance of the ecu until such time as they consider themselves, and were considered, to be economically strong enough. This might be something that would make amends for what I would regard as the stinginess of the European agreements.

While it is appropriate that one of the aims of the Community should be to lessen the economic differences between member countries, the primary obligation to achieve convergence should rest upon the individual member states themselves, and if we were able to get ourselves into that position then we might reduce the financial burden which Delors II foresees because of the construction which the Commission is currently putting upon Maastricht. I submit that it would also enable the Community, or union, to be expanded more rapidly.

My noble friend Lady Elles had cause to quote H. A. L. Fisher. I hope that your Lordships will bear with me while I too give a quotation from Fisher. He begins his History of Europe with the assertion that there is a specific European civilisation which can be distinguished from all the other great civilisations of the world. He concludes with this sentence: Ever since the first century of our era the dream of unity has hovered over the scene and haunted the imagination of statesmen and peoples. Nor is there any question more pertinent to the future welfare of the world than how the nations of Europe, whose differences are so many and so inveterate, may best be combined into some stable organisation for the pursuit of their common interests and the avoidance of strife". My noble friend Lady Elles reminded your Lordships that that was written in 1925.

9 p.m.

Lord Bonham-Carter

My Lords, I too thank the

noble Lord, Lord Aldington, who chaired the sub-committee on which I was proud to serve, for his chairmanly skill and for his extraordinary patience with other members of the committee. I congratulate the noble Lord and the clerk for having produced from our deliberations a report with which I agree in principle, although I may differ from it in respect of some points of emphasis.

I wish to join other noble Lords in expressing the pleasure and genuine feeling of respect which we had when listening to the two speeches from the two battered old maidens who have joined us today. We look forward to hearing from them again. The distinction of this House has been increased by their presence; and our deliberations will be improved if they come here frequently to give us the benefit of their knowledge.

I must confess that I listened to the words of the noble Lord, Lord Butterworth, with great interest. He rightly put on the construction of Europe a far more Burkeian interpretation than is common in this country. He described its development from the Coal and Steel Community, on through the Common Market, through the European Community and to an idea of political union as a process of accretion and learning. That is what it has been. Too often we in this country see Europe as a kind of doctrinaire, continental approach imposing a preconceived pattern on us pragmatic Britishers who move slowly, step by step, without any vision on the horizon towards which we are aiming. His remarks seemed a healthy corrective to that attitude.

I propose briefly to touch on three aspects of the report. First, I shall deal with the criteria for membership of the Community, which lies at the heart of the problem of enlargement. Your Lordships will remember that the Maastricht Council presidency conclusions provided that any European state whose systems of government are founded on the principle of democracy may apply to become members of the union. That statement mentions two of the criteria necessary for membership; first, to be European—and in that respect the quotations from H. A. L. Fisher are highly relevant—and, secondly, to have a government founded on the principle of democracy. In practice it is now, in addition, necessary to become parties to the

European Convention on Human Rights. It would also appear to be necessary that the applicants, if I may so describe them, should be moving towards a market economy in order that their economies are strong enough to live within the Community.

Among the many obscurities embedded in those criteria it will be noted that the term "European" is not defined. Although it does not appear in the report, your Lordships' sub-committee spent a great deal of time and argument in trying to define what it meant by "European". It can be described geographically, historically or culturally. De Gaulle spoke of a Europe from the Atlantic to the Urals. On another occasion Chancellor Adenauer said that Asia had now reached the Elbe—a rather more restrictive definition. European culture is generally thought to have been Greco-Christian. At that time Greece was largely in Asia Minor, which is now Turkey and which is now Moslem.

All those different factors having been taken into account, I am led to ask two questions of countries which apply to join. First, what is the candidate's political and cultural affinity to the existing membership? Secondly, and perhaps more important, what is the digestive capacity of the Community? The noble Lord, Lord Healey, referred to that matter when he rightly pointed out the difficulties which Germany is having in absorbing, in digesting, what was the GDR and is now East Germany.

That is exceedingly important because what attracts people to the Community is its effectiveness. If it tries to digest more than it can, its effectiveness will be diminished. It is one thing to digest a Nordic country which has a population of 10 million, a strong democratic tradition and a strong economy; it is quite another to absorb a country such as Poland which has a population of 35 million, an incredibly fragile democratic tradition and an economy which is in pretty desperate straits. It is a totally different thing altogether to absorb a country such as Turkey which has a rapidly growing population of 57 million, a rather poor democratic record, a very poor human rights record but which is of strategic importance. However, those differences must be taken into account; they cannot be brushed aside. Nor can we be told that we must absorb them in order to prevent some unknown disaster which may occur.

Thus, while it is quite easy, as the report indicates, to absorb those countries which have come to be called the EFTAns, Poland, Hungary and Czechoslovakia are another matter. In some ways I believe that the report is perhaps slightly bland in its description of the problems which confront the joining of those countries. That is partly because we underestimate the problems not of economic reform but of political reform. The difficulties of economic reform have made the problems of political reform even more acute. If there is a drop in industrial production of 20 per cent, a rise in unemployment of 20 per cent. and a rise in prices of 30 per cent., and if that is associated in people's minds with political reforms as it almost inevitably must be, that undermines the belief in the effectiveness and desirability of those political reforms.

However, what seems to me to require more emphasis than the report has given it, and which the noble Lord, Lord Cockfield, made so abundantly clear, is that the cost of enlargement must be taken into account and must be faced. It seems to me that that has been neglected by the Government in their general approach. The Government have said that enlargement is the theme of their presidency. As I have already said, enlargement to include EFTAns does not pose any severe economic problems. However, enlargement to include the countries of central Europe will require very substantial sums of money from the Community both before and after those countries join. It is ludicrous to pretend that that is not true. They will need money before they join to strengthen their economies and after they join if any kind of cohesion is to be achieved.

As the noble Lord, Lord Cockfield, pointed out, one must see how much money Germany has been pouring into Eastern Germany and how long the cohesion of Eastern Germany within Germany will take. Who will pay for that? The chief supporter of rapid enlargement has been the British Government, the opponent of Delors II. How are we to reconcile those two positions? The British position appears to be, as one cynic commented,"Europe extends as far as the German taxpayer will allow". That is a position which we shall be unable to maintain.

The second point on which I wish to dwell very briefly is the second consequence of enlargement and another which the Government seem to me to be reluctant to face; namely, the impact of enlargement on the Commission's institutions.

It is difficult to accept that thought about institutional change can be postponed until 1996 and that the EFTAns can be accommodated within the existing structure. The idea that we can continue with existing institutional arrangements in a Community of 15 or 17 member states seems to me implausible. In addition to that, it is contrary to common sense to include countries as large as Poland and as small as Malta without radical institutional reform.

The present arrangements were devised for six countries and those countries managed matters basically on a consensual basis with very little voting. That has been put under strain for 12 member states and it will be largely unmanageable for 15 or 17. Therefore, it seems to me that consideration of the institutional consequences of enlargement should be put in train now rather than being postponed until 1996. Indeed, in a small way nothing can demonstrate more obviously the need for institutional change than the language problem to which the report refers.

Those are two matters which seem to me of considerable importance. I add to those problems the problem of variable geometry, to which many of your Lordships have referred. By that I mean that special arrangements must be made for those countries which cannot join the Community but which, if excluded, will feel that they are in some way insulted. One must develop special relationships with those countries to avoid that problem and to avoid the idea that Europe is coterminous with the Community. That is an additional problem that we face.

We must also develop—and it will be exceedingly difficult—a common foreign and security policy. The problem which the noble Lord, Lord Beloff, complained about—our response to Yugoslavia, and so on—is simply because, in my view, the process of developing that very difficult common foreign and security policy is in its earliest stages. Oddly enough, the conclusion that I drew from his remarks was that he was arguing for more integration and less political co-operation. That is one way of solving differences. Political co-operation inevitably means a bargain, a brokering of differences which tends to mean the lowest common denominator.

The agenda is indeed daunting. But if that is so, it is difficult to think of an era in which the role of the Community in Europe was more important both as an economic power house and as a kind of political model; above all, as an element of stability in a Europe which outside, as many noble Lords have said, is in a dangerous condition of flux which may descend into chaos.

9.15 p.m.

Lord Richard

My Lords, this has been not only an interesting debate but also a unique one. Seldom have we been able to participate in a debate with two such notable maiden speeches as we heard tonight. It is a tribute also to the somewhat more clement atmosphere of your Lordships' House that the noble and learned Lord, Lord Howe, and my noble friend Lord Healey managed to make such notable speeches with a non-confrontational, indeed almost a consensual, attitude on both sides. They even eschewed agricultural metaphors; sweetness and light seemed to break out. It was rather like two heavyweight contenders who, having fought each other gamely in the past and having retired from the ring, were sitting down in a friendly way reminiscing about past contests. I sometimes thought that the only thing we missed tonight was,"You know what I mean, Harry"; or,"You know what I mean, Geoffrey" or "You know what I mean, Denis", to make the show complete.

They were remarkable speeches and those who had the privilege of hearing them tonight will long remember them. It may be a little presumptuous of me to say that we hope we will hear them both often again in the future, but we certainly do.

This has been an interesting debate not only because of the quality of the two maiden speeches but also because of the quality of the report we have been debating. This House is used to reports from the committee of the noble Lord, Lord Aldington. But on this occasion he has produced a report which is both timely and pertinent, and, I felt, closely argued. While I felt that these were some omissions and that the gloss I would put on some parts was perhaps not quite the same as that of the committee, nevertheless it is a significant report.

It has also been a good debate because of the quality of the contributions which came from other Members of the House. Obviously one cannot pick them all out. I listened to the noble Lord, Lord Beloff, as always, with great interest and concentration. I have accused him in the past of elegant pessimism with regard to the Community. He perhaps expressed it again tonight—a feeling that things have drifted to such an extent, it is all so large and difficult that it is going to implode and its utility is over.

I give the House only one reflection on that. If that is true it is extraordinary that there is such a queue of applicant countries which wish to join the Community. Not only is it extraordinary that there is a queue of countries wishing to join: they also wish to join the Community as it is now, with its institutions, its present acquis communautaire. I totally accept the point made by my noble friend Lord Bruce of Donington that it runs to a large number of pages and instruments; there may well be a case for consolidation, a new Halsbury's Statutes of the European Community. No doubt that can be done. My point is that it is the existing Community, with all its faults and virtues, that various countries are queueing up to join.

I detected also tonight a tendency—save on the part of one or two noble Lords—to gloss over the institutional problems. One should not underestimate the problems for the institutional structures of the Community that enlargement will cause. I was frightened by paragraph 100 of the report which dealt with languages, which the noble Lord, Lord Bonham-Carter, referred to also. The report pointed out, The worst scenario of the linguistic problems of enlargement was put forward by Gary Titley MEP. The EC currently has nine official languages. This means there are 72 different pairs for translation (Danish to Greek, Spanish to German, for example). With the addition of the EFTA countries and four new languages (Finnish, Icelandic, Norwegian and Swedish) there would be 156 possible pairs. Mitterrand's European Confederation would bring the total up to, say,21 languages and 420 possible pairs. As a result, the Community's single largest expense would be likely to be on translation and interpretation services, which could swallow most, if not all, the budget". Not only could that position not be accepted, but with a Commission which was enlarged to include 25 members—which is on the assumption that, if there were 25 members of the Community, each country had only one commissioner—the existing structure of the Commission could not cope. I suspect that the existing structure of the Parliament could not cope. Without a massive increase in majority voting in the Council of Ministers, for the life of me I do not see how that body could cope. I take the point warmly made by the noble Lord, Lord Pym, that this is something which we should be considering in advance of enlargement and not perhaps rushing to consider when we get to that stage.

The other matter that I found a little strange in this debate is how little has been said about the ratification of the Maastricht Treaty. However one looks at it, there is a linkage between ratification of the treaty and the enlargement of the Community. The Danish referendum result having thrown the ratification of Maastricht into some doubt, it now remains to be seen how that is going to affect the development and the proposed enlargement of the Community.

The committee was in the process of finalising this report when the Danish referendum took place. Consequently, the committee was spared the addition to its already extensive work of the somewhat tortuous task of considering the impact of Denmark's vote against the treaty. The report of the Select Committee clearly recognises the importance and potential advantage of enlarging the Community. Reflecting that, the members of the committee viewed enlargement as the Community's future and almost as its destiny. I am not sure whether the committee actually used that word in the report. The report clearly states that enlargement, must not and need not threaten the effectiveness of the Community". Indeed, the issue for the committee was not whether there should be enlargement—the case for which it found "undeniable", to use its word—but rather how that expansion should proceed; its pace, the changes to the Community's institutions and the procedures which would be necessary to accommodate the accession of new members.

Under Article 237 of the treaty, any European state may apply for membership. Austria, Finland, Sweden, Switzerland and possibly Norway, all now want to join: as do Malta, Cyprus, Turkey and, as far as one can tell, at some stage most of the former communist states of Central and Eastern Europe. To qualify for membership applicants must be democratic and respect human rights, a condition which has so far retarded Turkish attempts to join. In particular, new members have to be parties to the European Convention on Human Rights. They have to accept the right of individual petition and the compulsory jurisdiction of the European Court of Human Rights.

In that respect the Select Committee also recommended that membership should only be extended to countries with the strength and capability to play a full and effective role in the Community. Consequently, the report says, that while the extension of membership of the EFTA countries would strengthen the Community both economically and politically, membership for Cyprus, Malta and Turkey would depend on their ability to overcome substantial economic and political problems. Similarly, membership for the countries of Central and Eastern Europe would have to be linked to whether they could continue to develop democratic institutions and strong, free market economies. In that connection, perhaps I may say how much I share the view of my noble friend Lord Healey who, in his analysis, was grim and perhaps apocalyptic in some ways about what was taking place in Eastern Europe and the possible effect on the rest of us if it goes wrong.

Enlargement of the Community was widely expected to be one of the main issues for the UK presidency. Among other problems, it has to confront the promotion of a peaceful settlement in Yugoslavia; it has to try to effect a breakthrough in the impasse over the ratification of the Maastricht Treaty; and it has to resolve the dispute over the funding of the Community. That is a fair old agenda for a six-month presidency.

During the recent debate in another place I believe it was the Foreign Secretary who compared tackling these issues to pushing boulders up a steep hill. I hope that the efforts are going to prove herculean and not sisyphean in that respect. I should hate to have a situation in which we push and get near the top only to find that the next president has to start again at the bottom.

As my noble friend Lord Healey said, the gravity of the situation in the former Yugoslavia and the mounting incidence of nationalist and ethnic clashes and tensions in Central and Eastern Europe highlight the need to establish now, if we can, closer ties between the Community and the former communist states as a precursor to their eventual accession to the Community. Why do they want those ties? Why do those countries want to join? It seems to me that the Community offers new members the prospect of economic prosperity for themselves and for their people and a greater prospect of political stability than exists in any other conceivable grouping that would be available to them. It is an attractive option to countries which now face the twin challenges of exorcising their communist past and of rebuilding their societies and economies. To promote the peaceful development of Central and Eastern Europe the Community must somehow embrace those fragile democracies by the end of the century or, if not embrace them, at least appear responsive to them—perhaps more responsive than in the past.

Perhaps I may say a word about the membership of the EFTA countries. The Select Committee noted that Austria and Sweden in particular were already well placed to adapt to the Community's economic structure. Admittedly, questions remain about the neutrality of some of these countries, although I personally do not think that neutrality is so great an issue as the report seemed to indicate. I suppose that there are also questions about other aspects of their political and economic policies. In general, however, the EFTA countries are suited to meet the terms of Community membership and should be able to join sooner rather than later. If they do, it seems to me that such accessions would prove an asset to the Community as it moves towards meeting the challenges of the next century.

Having said that, however, we should recognise that the accession of the other applicant countries—Cyprus, Malta and Turkey, for example—would be infinitely more difficult. The Select Committee concluded—and I concur with its conclusion—that these countries will have to make further progress in confronting their economic and political problems if they are to attain Community membership.

Denmark's vote against the Treaty has, to a certain extent, put the enlargement process on hold. That was reflected at the recent Lisbon summit, which agreed (although in the face of some opposition from the Government) that there should be no formal negotiations with countries wishing to join the Community until the Maastricht Treaty had been ratified. I know that the Government have tried to play down the connection between ratification and enlargement because they obviously hope to make enlargement the centre point of their presidency. The Government have also said that they will not allow ratification to dominate the six months of their presidency, but I fear that that is precisely what is bound to happen. Ratification will dominate the presidency because it is now central to the whole future of the Community. Whatever the position in terms of sounding out new members, in reality unless the problem of the ratification of the Maastricht Treaty is resolved, one cannot expect to make any major progress on enlargement.

The Prime Minister has spoken somewhat grandiosely if not exactly originally, as the noble Lord, Lord Bonham-Carter, quoted, of a European Community that extends from the Atlantic to the Urals, adopting General de Gaulle's phrase. If that is the Prime Minister's vision, his task during this presidency is indeed formidable. If he succeeds in it, he may be able at the end of the presidency to say that he has taken the first steps necessary towards achieving that goal. If he fails, we may be looking at the beginnings of an unravelling process in Europe in which nationalism again predominates and in which ethnic tensions again emerge with all the attendant evils that those developments could present.

Europe needs glue. To mix a metaphor, it needs a cement to hold it together as it moves towards the end of this century and into the next. For the life of me I know of no source from whence that can come other than an enlarged European Community. It is in that respect that I reiterate our thanks to the noble Lord, Lord Aldington, and his committee for their report and my personal thanks to all those who have taken part in the debate.

9.30 p.m.

The Minister of State, Foreign and Commonwealth Office (Baroness Chalker of Wallasey)

My Lords, I begin with a tribute to my noble friend Lord Aldington and the other members of his committee for their excellent report. Today has been a very special day, even for your Lordships' House. I was delighted and privileged to listen to the outstanding maiden speeches of the noble Lord, Lord Healey, and of my noble and learned friend Lord Howe of Aberavon. It is only a couple of months since I made my maiden speech in this House. Perhaps the House will allow me to recall a very happy time during my early days in another place. One day, when I was looking rather glum and a little dispirited by the work I was undertaking as a new Member, there was a wonderful shout from up a long corridor of "Hiya gorgeous". It was the noble Lord, Lord Healey, who was seeking to cheer me up. He was the best cheerer up that I could possibly have had in those days. He has continued it. Who knows, perhaps in a slightly quieter vein he may reiterate that remark just now and again, although it is nearly 20 years on.

I well remember the kindness of my noble and learned friend Lord Howe of Aberavon because he encouraged me to make my maiden speech in another place during the Queen's Speech debate some four days after the House first sat. He was responding for the Opposition in that debate. So I suppose it was poetic justice when I said to him the other day, knowing when he would come to your Lordships' House,"How about your maiden speech on our debate on enlargement?" I am privileged to say that his was a far better maiden speech than I have ever made in either House. I compliment him most warmly and I look forward to his tremendous contributions and to those of the noble Lord, Lord Healey.

The report of my noble friend Lord Aldington and his committee is extremely welcome. It continues the tradition of thorough, searching Lords' analysis of Community issues. It is a valuable and timely contribution to the debate. It is helpful in focusing our thinking as we take forward the enlargement dossier under the UK presidency. I can give the noble Lord, Lord Richard, fair notice that we do not intend to stop progress on the enlargement issue, whatever he may think is the hiccup that we face, as we do, with the result of the Danish referendum and the question of the ratification of Maastricht.

The report deserves to be read closely in other European capitals and Community institutions. What it shows is how your Lordships' House has yet again made a first-class contribution to EC discussions. We owe a particular debt of gratitude to my noble friend Lord Aldington, who has so ably steered the committee since 1989. I understand that he may be persuaded to relinquish his post later in the Session, but we know that he has certainly given his successor, whoever may be chosen, one of the hardest possible acts to follow.

We know that no committee report will please all its readers, but I believe that the committee rightly drew its own conclusions from the evidence it heard. There is no contradiction between the evidence and the report. On the contrary, the report seems to be an admirable distillation of a complex subject, as this debate has underlined. It has been praised to the Government by several witnesses who gave evidence, especially from abroad, both from within and outside the Community.

It is, therefore, in that sense that I now turn to what your Lordships said in winding up the debate tonight. The report is not only of great importance to us—that is, the Community as it is; it is also important for the wider Europe. As the noble Lord, Lord Richard, said, it is the quality of Europe and its strength that so many nations outside are seeking to join. In the Select Committee's report and the speeches that we have heard today there is certainly a convergence of views with those of the Government. The European Council decisions on enlargement at Lisbon, which the UK presidency will now take forward, reflect to a very large extent a similar approach to that taken by your Lordships' Select Committee.

The United Kingdom has long argued the case for enlargement and at last others in the Community recognise that fact. There is no doubt that we have great commitment. I should like to say to my noble friend Lord Aldington that I believe the development of closer political dialogue with those outside the Community who are not ready, or not yet ready, to come forward for membership is a very important stepping stone through the European economic area and perhaps through a European political area. That is one of the concepts that I believe we should be investigating thoroughly during the coming time.

There is no doubting the fact that the reason why so many nations wish to join the Community—or, indeed, to draw closer to it if they cannot yet join—is the importance of free trade and the single market which we have developed. Similarly, there is no doubt that the association agreements that we have been developing with Eastern Europe are seen by those in the former Soviet Union as a hallmark of what they too would like to achieve with us in the not too distant future. In other words, the Community's philosophy of opening up trading between our nations, and from outside with the members of the Community, is the most important bedrock on which those nations aspiring to the Community are placing their hopes. That is why I agreed so much with what my noble friend Lord Cockfield said when he talked about the progression from free trade to Customs union to service, without imposing impossible strains. I believe that that is exactly the way your Lordships—and, indeed, those in another place—would have us go. I shall return to that aspect later.

I must tell my noble friend Lord Cockfield that the figures in the report are of course figures which we were invited as a department to provide to your Lordships' Select Committee. They are figures from the whole Government and not solely from the Foreign and Commonwealth Office. Moreover, as my noble and learned friend Lord Howe of Aberavon said, sotto voce, there was another place called the Treasury that had a considerable influence on producing the figures. We were invited to produce figures on the basis of a series of necessarily artificial assumptions. I am glad to see that my noble friend Lord Aldington agrees with me on that.

One country joining alone, and so on, is simply not a possibility in the present day. But we have to have a starting base from which we can then further develop the figures. That is something that we must do. Nevertheless, it is clear that the main conclusions likely to be borne out in real life are that the EFTAns will be net contributors; that Turkey will be a major net recipient; that Malta and Cyprus will be minor net recipients; and that the Eastern Europeans, should they join now, would be major net recipients. However, it may be different in a few years' time. I shall deal with the remarks made by the noble Lord, Lord Healey, in a moment.

The figures that my noble friend Lord Cockfield gave on the Eastern European economic malaise demonstrate more clearly than anything else the need to bring Eastern Europeans much closer to the economic levels of the Twelve before joining. That would at least be of real use to those countries. That is why as a nation we have spent so much time on the association agreements for those nations.

The noble Lord, Lord Bruce, in an uncharacteristically mellow speech, if I may say so, spoke about the importance of the GATT Uruguay Round. He will be aware from the many speeches that I have made in your Lordships' House and other places how essential not just the Government, but, I believe a conclusion to the Uruguay Round is for us. It is a top priority for our presidency. It is essential for boosting world economy, and the EC/US agreement on agriculture is of course the key to success.

There will no doubt be real discussion with aspiring applicants to the Community, especially those which have large agricultural subsidies, as to what happens to the agricultural subsidies when they apply. But we cannot cross that bridge until we start the negotiations. We must make progress now with the Uruguay Round. That is one of the issues upon which we shall be concentrating our efforts and, as your Lordships are aware, the Lisbon European Council instructed the Commission negotiators to resolve the remaining differences with the United States. I believe that the CAP reform agreed at the end of May will help achieve that. It is because trade is the lifeblood of all our nations that we believe that that must have a high priority.

The noble Lord, Lord Healey, my noble friend Lord Pym in a helpful speech and many other noble Lords expressed deep anxiety about the conditions in parts of the former Soviet Union and parts of Central and Eastern Europe and the pressures and difficulties being faced by the people there. There is no doubt that we have to make many adjustments if we are to help those nations, but we must do so from a firm base. That is why—I believe that the noble Lord, Lord Healey, knows this—it has been the United Kingdom's support for reform in Russia that has caused many other nations to copy many of the things we are doing and the World Bank and the IMF to give particular support to Russia. Our executive director at the World Bank has been carrying out the negotiations with the Russians, as their representative, with the IMF and the World Bank, and will continue doing so until a Russian director is appointed in November.

Not only have we been giving help in that way; of course our Know-How funds have been used to help develop financial institutions not just in Russia but in other countries of the former Soviet Union and other Central and Eastern European nations. My noble friend Lady Elles reminded us of how much was being done through the PHARE and TEMPUS programmes, through Europe, but very much with our help, because time and time again it has been British institutions and the British personnel who have been making those things happen.

I have to say to my noble friend Lord Beloff that I think that he was—I hope uncharacteristically—unfair about what the European Community has been seeking to achieve in a difficult situation in the former Yugoslav Republic. I believe that he was unfair also to our noble friend Lord Carrington, with the tremendous efforts that he has made to try to achieve peace among people who do not at present want peace.

Yugoslavia has had assistance worth £25 million from the United Kingdom in the past couple of months alone. Only today I dispatched eight doctors and nurses to undertake a special series of operations for those poor children in Sarajevo. I do not know how soon they will be able to reach them in the hospitals, but we were prepared, and we have sent them, despite the fact that we do not yet know how quickly they will get through to Sarajevo from Zagreb. We shall continue giving practical help. We will also continue to give political help. The discussions I had in New York last week at the United Nations with the Secretary General and others underline just how much effort has been made by the European Community and by our noble friend Lord Carrington. However, we are facing one of the biggest difficulties that we have ever had with such a country.

Lord Beloff

My Lords, perhaps I may venture to comment on what the noble Baroness said. I made no criticism of the United Kingdom Government, still less of our noble colleague Lord Carrington. Their efforts have been well directed in difficult circumstances. My point was that the Community as a community has found itself unable to act in a constructive way. That is no criticism of Her Majesty's Government.

Baroness Chalker of Wallasey

My Lords, I thank my noble friend. If I inadvertently assumed that he was being critical of Her Majesty's Government or of my noble friend Lord Carrington, I apologise. However, it is fair to say that the Community as a whole cannot move when one notable and clever individual working full time with full support staff cannot even obtain common sense responses from the people who are supposed to be in charge of the various parts of Yugoslavia.

Perhaps I may turn from the former Soviet Union and Central and Eastern Europe to talk of the other aspects of enlargement. One of the successes of Lisbon was the agreement to develop our relationships through association agreements as stepping stones to eventual membership. We aim to begin the effective implementation of the association agreements with the Visegrad 3 and high level political dialogue with them during our presidency. We also hope to conclude association agreements with Romania and Bulgaria. We shall have to consider how to take the discussions and preparations forward over Czechoslovakia when the situation in that country becomes clearer.

I wish to set the mind of my noble friend Lord Pym at rest a little. He spoke of the Community's conditions being too tough for the countries in Central and Eastern Europe. Of course the Community is right to set high standards. As the noble Lord, Lord Richard, said, the Community is attractive because it works, even if we criticise its daily working, as we frequently do in this House. However, taking applicants before they can cope with the economic, political and practical responsibilities would not help them and I do not believe that it would help the Community to help them.

Moreover, maintaining the need for the Eastern Europeans to organise themselves into a position where they can benefit from the responsibilities and opportunities which will come with association agreements and eventually with membership will also help them to reform. That will add strength to the arms of the reformers in those countries. That is why our strategy is to develop the Community's links with Eastern Europeans through trade, co-operation and political dialogue and that is why we are using the association agreements as the vehicle.

We have spoken a great deal about the former Soviet Union and Central and Eastern Europe, but it is absolutely right to turn our minds also to other applicants, seven in total. Let us look at the particular importance of Turkey, Cyprus and Malta. The Lisbon Council agreed on the particular importance of Turkey and that we should be developing our relations by building on the present association agreements and through political dialogue at the highest level. That seems to he happening much better now than in the past. I am pleased to tell the noble Lord, Lord Thurlow, that it seems that no longer will the Greek Government stand in the way of the progress that we wish to make with the Government of Turkey.

It was also right that the European Council decided to strengthen relations with Cyprus and Malta by building on their association agreements and by developing their political dialogue. That is why the work that may be done in advance for the EFTAn countries will give us a patterning which may be useful in future in considering the applications of other nations.

One thing I should like to say in response to the noble Lord, Lord Bridges, who made a most interesting speech, is that, although, yes, it would be right to say that we are not moving as fast as we had hoped because of the Danish referendum result on the Maastricht Treaty, there was nothing at the Lisbon conference that stops us making progress. We agreed at that conference that the official negotiations would open as soon as the future financing was settled and Maastricht ratified. However, as my noble friend Lord Cockfield said, the official negotiations can sometimes take quite a short time, as they did in the case of Britain's application for membership in the early 1970s. Therefore, in the meantime, during our presidency, we are ensuring that we make all preparation for the membership of the EFTAns to the European Community that can possibly be made. I anticipate that we shall be ready by the October Foreign Affairs Council of the Council of Ministers to consider the applications of the first three of the EFTAns in time for the Edinburgh Summit. That is indeed our intention.

We know that Turkey, Malta and Cyprus have very different backgrounds from those of the EFTAns. However, I believe that where we see progress we can encourage those countries further in a pattern that will lead them to be in a position in the years ahead to become members of the Community.

The debate has been fascinating. There is no doubt that we as a Government, and many of your Lordships, believe that the Maastricht Agreement represents the best deal for the UK. It is an essential part of the future enlargement discussion. The Treaty of Maastricht introduced procedures to reverse the trend towards centralism through intergovernmental co-operation and subsidiarity with controls over the

Commission. It is a sound basis for future co-operation. I believe that it firmly indicates that the tide of centralism has been turned.

We took stock a week or so ago with our partners at Oslo on how we should continue. I believe that the stance that we took then, giving Denmark time and space for reflection, is the right way forward. There are a number of options. I am quite sure that your Lordships will wish to discuss those again in the future. However, for tonight and indeed for our presidency, there is no reason to hold up the preparation work that we are doing on the applications of the EFTAns. We should get on with that work; It would be wrong to hold it up because of what has happened. At the same time we must give the Danes the time that they need.

My noble friend Lady Elles asked about the next stage of the Community's development in 1996. My noble and learned friend Lord Howe of Aberavon, the noble Lord, Lord Thurlow, the noble Lord, Lord Bonham-Carter, and my noble friend Lord Butterworth all spoke about the shape of the future Community. It is perfectly true to say that we cannot at this stage foretell what that may be. However, I believe that it will be founded on firm trade and co-operation agreements and that the political reforms have to be developed very earnestly indeed.

I was interested in what my noble friend Lady Hooper said. She talked about membership of the Council of Europe being a half-way house and of looking in detail at the political position of each of the applicant countries because in order to become members of the Council of Europe many of those political conditions which the Community requires already have to be satisfied. Other noble Lords have referred to that.

We have had an excellent debate. The Government firmly believe that enlargement is good not only for the United Kingdom and the existing Community but for Europe as a whole and in particular for those in the queue of countries that wish to join us in membership at some stage in the future. We want a Community that is open, diverse and outward looking. An enlarged Community will be more dynamic, as my noble friend Lord Aldington said in his report. We believe that it will speak with ever greater authority on the world stage and exert ever greater influence. We look forward to working with our present EC partners and with the new members as they join to shape the kind of Community and Europe that will be beneficial for all our people, whether they come from the 12, the 16, the 19, the 21 or the 25. We hope that we shall be able to communicate well. I agree with the noble Lord, Lord Thurlow, that we shall have to turn our mind to the language question very soon indeed. But our hope is there and our determination is there. I believe that, starting with the EFTA accessions, we shall strengthen not only the Community's economic base but also the economic base of the wider Europe for the benefit of those emerging nations in Central and Eastern Europe which today have such dreadful problems.

9.55 p.m.

Lord Aldington

My Lords, I should like to start this very short last speech by thanking my noble friend the Minister for that splendid winding-up speech; for the kind things that she said about the report, my colleagues and myself; for the very interesting new information which she imparted to the House and for the way in which she fitted the debate into the wider framework.

I should like to thank all those who have spoken. I join with all the subsequent speakers in admiration of the quality, strength and depth of the two maiden speeches. They made the debate a very special one and I should like to thank both speakers, as they have been thanked by others. It is a joy to me to see both noble Lords here. They will greatly strengthen our House. That is an example of strengthening by enlargement.

I should like to thank my noble friend Lord Pym, who linked the two speeches and made some pungent and powerful observations which I should like to think about very carefully. I should also like to thank my noble friend Lord Cockfield who once again directed his own distinctive searchlight on to the main problems.

All the speeches have been of enormous value to those of us who continue to study the problems of the Community, its enlargement and its workings. I am conscious of the shortcomings of the report which have been pointed out. There are reasons for them. We elaborated insufficiently on the pressing needs of Eastern Europe and the importance to peace and the future of Europe and the world of tackling those needs. We also perhaps put too little effort into reminding people of the enormous costs and that is partly because about a year ago we prepared a report on those particular agreements and highlighted those points. However, I take the criticism, which is a valid one because that aspect is part of the whole picture.

We may be at fault, but perhaps not to the extent that some speakers indicated, for not attacking the costs of enlargement sufficiently thoroughly. I was warned by the Clerk when we put the tables into the report that they would be misunderstood—and my goodness they have been, despite the small print and despite the elaborate note which appears in the evidence section of the report. I apologise for that, but we needed some figures to give some indication of the effect in monetary terms of enlargement. Nobody pressed us more than my noble friend Lord Cockfield. However, one has learned once again that small print is not always read.

Other points were raised in relation to where we placed the emphasis, but taking the debate as a whole I do not believe that the report has come out too badly. I am most grateful to noble Lords for their comments. I am grateful even to my noble friend Lord Beloff whose elegant pessimism about the Community seems to have extended a little to your Lordships' Select Committee on European affairs. My last words are that the report can claim a little credit for the very high quality of a very interesting debate.

On Question, Motion agreed to.