European Council, Brussels

HL Deb 28 October 2002 vol 640 cc19-34

3.35 p.m.

The Lord Privy Seal (Lord Williams of Mostyn)

My Lords, with the leave of the House, I shall now repeat a Statement made in another place by my right honourable friend the Prime Minister on the European Council in Brussels on 24th and 25th October. The Statement is as follows:

"This European Council set the framework for the final stage of the enlargement negotiations. We are on course to finish those negotiations in December, sign an accession treaty with the candidate countries next spring, and welcome them into the European Union at the beginning of 2004.

"Enlargement has been a goal of successive British governments. It was an historic obligation to offer membership to those nations which won their freedom after the collapse of the Soviet Union. Their membership will establish a single market of 500 million people. We hope that these 10 countries will be joined by Bulgaria and Romania no later than 2007.

"The European Council also welcomed the reforms undertaken by the Turkish Government. The Council agreed that Turkish progress had brought forward the opening of accession negotiations. At the Copenhagen European Council in December we shall decide on the next stage of Turkey's candidature. For our part, the British Government look forward to Turkey's membership of the European Union in accordance with the conditions which all candidates have to meet.

"The last stage of any negotiation is always the most difficult; and the last stage of this negotiation between the existing members of the European Union and the candidate countries is about money: what they pay into and receive from the EU budget, including structural funds and the common agricultural policy.

"The European Union will be generous to the new member states. It is right that we should be, given our own interest in their stability and prosperity. But at the same time we do not want to jeopardise the progress that has been made in reducing agriculture's share of the EU budget from over 60 per cent 20 years ago to 45 per cent now. The reforms agreed in Berlin in 1999 are worth 7 ½ billion euros to EU consumers and taxpayers. We want to extend that reform in two ways. Firstly, the Commission has brought forward proposals for the mid-term review of agriculture under paragraph 22 of the Berlin Conclusions of 1999 which, if agreed, would de-link agricultural subsidies from production for the first time in the history of the European Union. Secondly, we want to limit the growth of direct payments to farmers once the candidate countries have become full members.

"Before the summit, the main argument was whether enlargement could be blocked by the disagreement between France and Germany over limiting agricultural spending. Fortunately, before the summit, they reached agreement that future agricultural spending should be capped up to 2013 at the levels of 2006 envisaged by the Commission. In effect, because of allowances made for an inflation rate of only 1 per cent, this will mean a real terms reduction over and above the original Commission proposals. This agreement was welcomed by all.

"But there then arose the question of whether, in return for that, reform of the CAP prior to 2006 when the current financial perspective runs out would be postponed. This then dominated the latter stages of the summit.

"In our view, such a blanket opposition to reform would have been wholly unacceptable. It would mean effectively destroying the current reform proposals of the European Commission. It would seriously inhibit the offer the EU can make in the WTO Doha trade talks. Those talks are vital both for free trade and for the developing countries of the world. Those poor countries need agricultural reform in Europe and need it badly.

"Eventually, we agreed specifically that the limit on agricultural spending would be without prejudice either to the European Commission's mid-term review of agriculture based on paragraph 22 of the Berlin Conclusions, or to the Doha trade round. These issues can now be taken forward by the Agriculture Council, which, of course, operates by QMV. Despite the difficulty in negotiating this, it would have been quite wrong for the possibility of CAP reform to have been hindered in this way. As a result of the summit outcome, enlargement remains on track and fundamental CAP reform remains on the agenda.

"During the European Council I also discussed with colleagues the issue of Iraq. We are all agreed on the need to ensure that Saddam has no chemical, biologic al or nuclear weapons programmes. We are working hard for agreement on the terms of a tough new Security Council resolution. The key point has to be that the weapons inspectors should return, free to do their jobs properly, without any of the restraints wrongly imposed before. Should there then be further a breach by Iraq, then I have no doubt action must follow.

"We also discussed the development of European defence. We agreed that Macedonia would be a good place to start and that we should therefore work urgently to complete agreement between the EU and NATO. In addition, we had a presentation from President Giscard d'Estaing on the Convention on the Future of Europe. In his speech today I am pleased to see both that the president makes it clear that Europe should co-operate as a union of European states, not a federal superstate, and I believe his proposals on subsidiarity, the role of national parliaments and on Council reform will be welcomed, at least here. We are well placed in this vital debate.

"Before concluding, I should like to update the House on the hostage crisis in Moscow that ended tragically with the loss of so many lives. At 9 p.m. local time on Wednesday, around 50 armed Chechens took several hundred hostages in a theatre in south-east Moscow. Among the hostages were three British nationals: Peter and Sidica Low and their son Richard. Peter Low and a few others were released on Thursday morning. I spoke to President Putin from Brussels on Friday. Britain sent a team of counter-terrorist experts to help. President Putin told me he had no doubt the terrorists were prepared to kill all the hostages, that they were heavily armed with explosives and that whatever decision he took was going to be immensely difficult. After the siege had ended at 5.30 a.m. local time on Saturday, I rang him again to welcome the ending of the siege. I asked him and he was able to tell me they had ensured the safe release of Sidica and Richard Low.

"It is yet too early to know the full facts of what happened. But I ask people to understand that when it was clear the terrorists were starting to execute the hostages, the Russian authorities had to act. I know how hard it will have been to make the right decisions. But there are no easy, no risk-free, no safe solutions to such a situation. And I hope people will understand the enormity of the dilemma facing President Putin as he weighed what to do, in both trying to end the siege with minimum loss of life and recognising the dangers of doing anything that conceded to this latest outrage of terrorism from Chechnya.

"While it is clear that hundreds survived, many did not. The loss of each innocent life will be mourned not just in Russia but throughout the world, and we send our deep condolences to the Russian people at this time".

"The attacks in Bali, the occupation of the Moscow theatre, the other terrorist attacks around the world, and the murder of the American diplomat in Jordan this morning are all brutal and horrifying reminders of this new form of terrorist extremism. A deadly mixture of religious and political fanaticism is being pursued by those who have no compunction about taking human lives, no matter how innocent, and little about losing their own. The only answer is both to defeat them by security, intelligence and policing but also to take head on, especially within the Muslim world, their perversion of Islam in the cause of extremism. I remain of the view that it is not just the methods of extremism but their ideas that must be countered.

"Thanks to the outcome of the summit, the way is clear to finish the enlargement negotiations by December. In the worst days of the Cold War it would have seemed incredible that countries who were under Soviet rule for nearly half a century could find their freedom. But they did. It is this opportunity and challenge of enlargement that has helped them to catch up half a century in the past decade. I hope the House will welcome this important step towards a Europe united, democratic and free".

3.44 p.m.

Lord Strathclyde

My Lords, I begin, customarily, in thanking the noble and learned Lord for repeating the Prime Minister's Statement. We on this side of the House agree wholeheartedly with the sentiments that he expressed about the horrific terrorist outrage in Moscow and its dreadful consequences. It is still too early to judge exactly what happened, but it demonstrates yet again that terrorism knows no boundaries, physical or moral.

I also welcome what the Statement says about the continued progress towards the accession of new member states. That is important for the future stability of Europe, and we welcome the support offered for the decommissioning of dangerous nuclear reactors as outlined in the Presidency Conclusions. The Council agreed more than 200 million euros of support to Cyprus in 2004–06. In the words of the Presidency Conclusions, it is designed to enable the northern part of the island to catch up. Is that spending contingent on a political settlement in Cyprus? What do the Government think should happen if negotiations on the future of Cyprus are unsuccessful?

We also welcome the opening of the door to Romania and Bulgaria, and the more positive attitude towards Turkey. Many find the Commission's sometimes dismissive attitude towards that proud and loyal NATO ally deeply counter-productive. Will the Government urge on our EU partners that positive engagement with Turkey is vital for the future stability and security of the Balkans and the Middle East? The Statement mentions Mr Giscard d'Estaing, who gave a progress report on the Convention on the Future of Europe. The Statement does not say what, if any, reservations the Prime Minister expressed about any of the ideas floated by Mr Giscard d'Estaing.

I turn now to perhaps one of the more controversial aspects of the summit: the reform of the CAP. The noble Baroness, Lady Williams of Crosby, and I have different perspectives on some aspects of European development, but we have both expressed scepticism about the Prime Minister's sometimes complacent statements that Europe is coming our way, or that success for his views is inevitable. With the CAP confirmed in place for more than a decade to come, and with resources rising year by year, will he now accept that such claims ring utterly hollow? Whatever we think of the deal between Mr Chirac and Mr Schröder, does not the fact that it happened before the summit even began show how completely the Prime Minister has been marginalised? Can he confirm No. 10's astonishing admission that he did not even know that France and Germany were going to broker this deal? What talks did the Prime Minister have with Mr Chirac and Mr Schröder in the weeks before the summit? A briefing given by a British spokesman asserted that Mr Schröder did not understand the details of the CAP agreement. Is that really our official assessment of the German chancellor? Why has No. 10 been talking up in its briefing the Prime Minister's rudeness to Mr Chirac? The Prime Minister lost the substance of the argument in Brussels. Spinning insults at other EU leaders is no way to recover from his isolation; it can only add to the long-term diplomatic damage.

How much money on the basis of the Brussels agreement will British taxpayers be contributing to the CAP until 2013? Does the additional one per cent per annum spending limit apply to rural development subsidies as well as farm subsidies? Will he accept that if he cannot give that assurance, the bloated budget of the CAP could soar far into the future? How will this be paid for, and what other EU budgets will be cut? Where does this leave previous statements by the Government that major reform of the CAP would have been agreed by 2004? Was this weekend's summit not a staggering setback for our key diplomatic objectives?

The noble and learned Lord will agree that the rebate secured in 1984 by my noble friend Lady Thatcher was a major achievement, and we welcome the Prime Minister's past defence of that. But can he confirm that Mr Chirac has now linked long-term reform of the CAP to a new look at the UK rebate? What is our assessment of support in Europe for that position? How resolute will the Prime Minister be in protecting British interests on this vital matter, which has been dealt with so successfully by successive British governments over the past 18 years?

Although I recognise that the Statement says that there was some discussion between colleagues on the issue of Iraq, it is equally plain that there was no mention of Iraq in the Presidency Conclusions. EU failure to publish a conclusion on Iraq underlines the crucial importance of the US/UK relationship within the NATO alliance. Is it therefore not depressing that, as the Presidency Conclusions show, so much time was spent at the summit debating the footling fine-print of a European army when a clear and present danger is at our gates?

Was there discussion of the statement by President Prodi that the terms of the EU growth and stability pact were "stupid"? If not, why not? How can we be confident about the future framework for decisions on the euro if the president of the Commission and a number of heads of government are daily throwing the growth and stability pact into doubt? Is it not incredible that this was not discussed in the summit itself?

This was a summit that had nothing to say about CAP reform, nothing about Iraq or the war on terrorism, nothing about the growth and stability pact, nothing about the continuing slowdown in economic growth in Europe and nothing about free trade. It was a summit whose central decisions were decided by the big two before the other leaders even met. It was a summit where, I am sorry to say, the Prime Minister was sidelined and his arguments ignored. There are some very great questions before us in Europe of which enlargement, which we all so strongly support, is but one. Whatever our standpoint, should we not be disturbed that our Prime Minister resorts to carping on the fringes and seems to have no influence on the core?

3.51 p.m.

Baroness Williams of Crosby

My Lords, as one who sometimes disagrees with the Leader of the Opposition on matters concerning Europe, I should begin by agreeing with him in his thanks to the Leader of the House for the Statement. I also agree that, in terms of the United Kingdom Government's achievement, by any standard, this was a fairly mixed summit. I say that with some sorrow because, in many ways, the Prime Minister has been very effective in Europe and represented British interests very well. It would be difficult to conclude from the Statement that that is true of this summit.

There is, however, one great development to applaud—indeed, it would be a great historic mistake for us not to underline the significance of enlargement. Enlargement has been a long, slow, detailed and often difficult process. It has taken a very long time. At long last, however, we can say that it is certain—or as certain as anything can be—that, in 2004, some of the states attempting to join the European Union will do so, and that, by 2007, almost all the applicants from central and eastern Europe will become full members. It is perhaps worth saying in our cynical age that that is a very remarkable achievement indeed. For the first time in history—or at least for the first time since the Habsburg empire, which really was quite a long time ago—central and eastern Europe will be brought together with western Europe. So, on that, let us congratulate not only the Prime Minister but the other 15 members of the European Union.

At this point, congratulations turn into great concern about the common agricultural policy, about which the Leader of the Opposition has also expressed his concern. The CAP disfigures the European Union in two ways. First, it has done extraordinarily little to help the smaller family farmers upon whom the health of the rural sector depends. A great deal of the money in the CAP has gone to very large farmers who have done very well from the CAP. Around those large farms, however, villages have disappeared and large tracts of countryside are no longer characterised by prosperity. All too often, even in our own case, there is prosperity for some in the countryside while small farmers go bankrupt. The argument for supporting the whole spectrum of rural development—agriculture, tourism and local industry—is far stronger than the argument for pouring money into guaranteed prices which benefit above all those who are already fairly well-off.

The second element of the CAP which is profoundly disturbing to noble Lords on all sides of the House is the fact that we are essentially backing away from what was promised to the third world at Doha. We have often been told—most recently in a debate in this House—that the single most important step we can take to help the now desperate third world is to remove the controls and protection extended to agriculture and associated industries in the EU countries. There is no longer any case whatever for the type of protection offered in the European Union. Moreover, there is a great temptation for the United States to follow those same procedures, and to point to the EU and say that we are not serious about helping the third world either.

I believe that we are serious about helping the third world and that the Government have tried very hard to do so. However, we have to be frank about this. The greatest single action we could take to help would be to undertake major reform of the CAP. At the moment, however, that seems to be off the agenda. Nothing in the Statement—with great respect to the Leader of the House—did more than imply the smallest moves toward CAP reform. A real-terms increase of 1 per cent rather than perhaps 2 per cent over the next 10 years is hardly a major reform.

Can the Leader of the House tell us anything at all about the Government's attitude to the Fischler reforms which now seem the sole remaining hope for sorting out this truly absurd policy? The Fischler reforms imply a major shift from supporting prices to supporting rural development in the widest sense. If the noble and learned Lord can tell us that the Government are committed to doing everything they can to bring the Fischler reforms into real operation, it would go a little way in mitigating the disappointment that both the Leader of the Opposition and I feel about the relative failure in this sphere.

I was pleased to hear about the further development on the possible accession of Turkey. I believe that Turkey still has some way to go, but that we would be less than generous if we did not recognise that the Turkish Government have made some attempts to deal with the worries about human rights, prison policy, torture in prisons and other matters that disfigure that great country. I think that we all wish to see further reforms and advances. It is excellent that Turkey is advancing along these lines.

I shall touch briefly on two other issues, the first of which is Chechnya. Perhaps the Leader of the House can tell us the final assessment on the number of casualties. I am sure that all noble Lords will wish to extend their deepest sympathy to the Russian nationals and the British and other foreign nationals who have suffered so grievously as a result of this terrorist attack. My only comment at this point is that it would be immensely helpful if we were to do whatever we can to keep some kind of political channel open with Chechnya. The war in Chechnya between the Russians and the Chechens has been particularly brutal and bitter. It has now lasted many years. Surely we in this country know better than most that political processes are essential and that trying to crush a national revolt of this kind results only in revenge after revenge leading nowhere.

The final point which I wish to raise with the Leader of the House is a very important question on Iraq. Whatever our views on Iraq, all of us agree that the best possible answer lies in getting the inspect ors back, ensuring that inspections are effective, and gaining access to all the possible development sites for weapons of mass destruction. However, can he assure us that the decision on whether the terms of the resolution currently being debated at the United Nations in New York have been complied with will be based on the recommendations of the inspectors themselves, led by Hans Blix? I hope that everyone appreciates how serious it would be if any Security Council member—be it the United States, Russia, France or the United Kingdom—took upon itself the decision on compliance. I hope that the noble and learned Lord can assure us that that will be an independent judgment made by those who are accountable to the United Nations and not by those who are accountable to any member state, however important and powerful that state may be.

Many of us on these Benches are profoundly concerned about the possibility of moving our focus away from the need to fight terrorism. We are not yet completely convinced that the best way of dealing with terrorism is to concentrate so totally on the subject of Iraq.

4 p.m.

Lord Williams of Mostyn

My Lords, I am grateful, as always, to both the noble Baroness, Lady Williams, and to the noble Lord, Lord Strathclyde, for their responses. However, the noble Lord, Lord Strathclyde, rather overplayed his hand. It is always dangerous to underestimate the determination of a quiet man. If one looks at the matter objectively, as I always do on these occasions, the Prime Minister had an enormous series of successes. It seemed from the entirely synthetic drama that was puffed up for the weekend newspapers as if the Franco-German alliance had reached conclusions and enforced them on the conference. However, nothing could be further from the truth, as even a second reading of the Statement indicates. I shall give some examples.

For years the Prime Minister has stressed the importance of the 10 candidate countries moving forward to full membership. He has succeeded in that. The overwhelming majority of those countries—Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia and Slovenia—as the Prime Minister said, have laboured under tyranny for 50 years. Within a short period of time they will be welcome to join us—if we have the largeness of imagination and heart within the European Union—to contribute to a democratic community.

The Prime Minister has always stressed the importance of Turkey. That has been recognised. The noble Lord, Lord Strathclyde, and the noble Baroness, Lady Williams, referred to Turkey. I endorse what the noble Baroness said; namely, that Turkey has taken significant steps. I refer to the abolition of capital punishment, which is not, apparently, universal among all those countries with which we deal; the treatment of the Kurds in terms of education; and the other aspects of which the noble Baroness spoke. Those are significant steps and they should never be undervalued.

The noble Lord, Lord Strathclyde, asked whether the moneys to Cyprus were specifically contingent. I do not believe that they were. Let us see what the Prime Minister said in the Statement. The question of CAP reform was never on the agenda; the presidency made that perfectly plain. The Prime Minister has said that as a matter of political judgment it is irresponsible and foolish to confuse enlargement, which was the agenda of the meeting, with CAP reform. I take up the observations of the noble Lord, Lord Strathclyde, and those of the noble Baroness. It was made absolutely plain at Brussels that there is no question of our giving up on further CAP reform before 2006 in return for EU agreement to put a ceiling on expenditure from 2006 onwards. The Brussels conclusions make plain that both the CAP mid-term review and the commitments under the Doha development round remain unaffected. I am happy to reaffirm that and perhaps to give a degree of comfort to the noble Baroness.

It was said in the newspapers—so it must be true—that Mr Blair was rude to M Chirac. I dare say that he was robust. Whether or not he was robust, he certainly maintained, sustained and delivered the United Kingdom's position. Speaking for my own part, having known the Prime Minister for a little while, I have never seen him be rude on any occasion, not even to colleagues, despite the provocation which the Chief Whip sometimes offers him. The question of the rebate stands intact. It was not open for discussion, as Jack Straw and the Prime Minister said. Our position on the rebate has not been touched in the slightest. Indeed, the 1999 Berlin position remains.

There is a mention in the Prime Minister's Statement of Iraq. The noble Lord, Lord Strathclyde, and the noble Baroness, Lady Williams, referred to it. The noble Baroness, Lady Williams, asked about discussions on the proposed resolution at the Security Council. Those terms are still being debated, therefore, I cannot give any particular assurance on that, although I remind your Lordships that Secretary of State Powell said that he was hopeful that we would move to a resolution in the earlier part of this week. I simply transmit what Secretary of State Powell said. There have been delicate and long drawn out discussions.

As regards the casualties the noble Baroness mentioned, my most up-to-date information—I do not pretend that it is necessarily perfect—is that of the 117 casualties two were shot and 115 died as a result of gas. I underline that that is my present information. I stress that in the nature of things those cannot be more than tentative figures. I am trying to help the House as much as I can.

We hope for agreement on a resolution on Iraq. It is critically important that that situation should not be allowed to drift in limbo. I reaffirm what the Foreign Secretary and the Prime Minister have said so often; that is, that it is the policy of Her Majesty's Government to act only in accordance with and in conformity with international law.

The noble Lord asked specific questions about Doha and the WTO which I have already dealt with. The purpose of the Prime Minister's attendance was to protect United Kingdom interests in the wider context of the European Union. We believe—firmly I know that not everyone on all sides of the House believes this—that they are coincident, or are capable of being, and that they are not alternatives. If the Prime Minister's dream of the 10 candidate countries becoming full members by the beginning of 2004 is achieved, it will constitute a significant achievement and advance.

4.6 p.m.

Lord Biffen

My Lords, the noble and learned Lord the Lord Privy Seal has given a measured account of the recent discussions and inevitably has concentrated on the reform of the common agricultural policy. But, as with St Augustine thinking of perfection, it is always to be deferred. It seems to me that reform of the common agricultural policy is always being deferred. But, surely, it is unwise to suggest that there is not a link between reform of the common agricultural policy and the enlargement of the European Union. Is it not a fact that the aspirant countries for enlargement have living standards roughly between one-third and one-half of those of the existing European Union countries? Is it not also true that their economies are substantially dependent on agriculture in terms of economic considerations, but perhaps even more in terms of social considerations? Therefore, surely it must be wise to think in terms of CAP reform and prospective enlargement of the European Union.

Lord Williams of Mostyn

My Lords, I hope that I did not imply to your Lordships that there was no link. I was careful to say that CAP reform was not on the agenda on this occasion, and that, indeed, the presidency had made that plain. Inevitably, as the noble Lord, Lord Biffen, said, there is a connection but it is wrong I o confuse the two issues and think that they are the same. However, they are plainly linked.

All governments of whatever complexion—certainly in the 10 years that I have been here—have constantly struggled with that matter but the runaway, out of control CAP budget is now capable of being controlled. That is an important step. Of course, economies such as that of Poland are significantly dependent on agriculture in a way that ours is not, and a much greater proportion of its citizens are dependent on agriculture in a way that ours are not. I reaffirmed Her Majesty's Government's commitment to the third world, as the Prime Minster mentioned in the Statement, and which the Doha round will continue. We cannot simply continue with the CAP; I do not think that any serious political thinker proposes that we should. Equally, we cannot abandon it overnight.

Lord Williamson of Horton

My Lords, does the noble and learned Lord accept that it is welcome that the mid-term review of the substance of the agricultural policy, including a greater emphasis on rural development, remains to be negotiated because comment before the summit implied that that might not be the case? Of course, budget limits, which were discussed at the summit, have a role, but we have a lot of experience of substantial underspending below the budget limits. Does the noble and learned Lord agree that the right policy for us is to continue as we were before towards the substance of change on the basis of the mid-term review in, if I may say so, a bulldog style?

Lord Williams of Mostyn

My Lords, the noble Lord, Lord Williamson, is absolutely right. The Prime Minister tried to stress that point in his Statement and I have tried to ventilate it a little more in answering questions. We want to shift spending from the old-style CAP—which was far too rigid and inflexible—to rural development.

Lord Grenfell

My Lords, I thank my noble and learned friend for the Statement. Like the noble Lord, Lord Williamson, I am pleased that the limit on agriculture spending will be without prejudice to the Commission's mid-term review of agriculture or to the Doha trade round and that the fundamental CAP reform that is obviously vital is still on the agenda.

This is not a popular subject on any side of the House, but I should like to ask about President Chirac's attitude towards the British rebate. My noble and learned friend may be aware that President Chirac is not likely to give up on this one over the years to come. My noble and learned friend may recall that in March 1999, in a unanimous report, the European Union Select Committee recognised that, as a major net contributor, the United Kingdom had a problem, but we considered that the rebate would not necessarily be the best way of solving it for much longer. We proposed that a realistic negotiating result for the United Kingdom would be an agreement to forgo the rebate on condition that—and only when—the loss could be made up permanently through the savings of a reformed CAP and stabilised overall expenditure.

When the time comes in 2006, when I am sure that the rebate will be back on the table, does my noble and learned friend agree that we might be able to turn the tables on President Chirac, assuming he is still there, by calling his bluff and saying that if he is prepared to reform the CAP properly, we will be prepared to put our rebate on the table, provided we are assured that the CAP savings will compensate us for forgoing or cutting our rebate?

Lord Williams of Mostyn

My Lords, I am grateful to my noble friend Lord Grenfell for that contribution, which is worth bearing in mind. The Prime Minister's adamant stance was that the abatement was not up for discussion or negotiation. That stance has succeeded. Without the abatement, the United Kingdom would have been paying 12 times more than the French, on an absolute or a per capita basis. We are a very generous contributor—more generous than France. France has benefited in a way that we have not. The whole structure of the CAP needs reform in the long term. As I said earlier, all governments have said in the past that they wish for reform. Undoubtedly, the timetable to which the noble Lord referred will be an important stimulus to reform, which must come one way or another. The policy is wholly ruinous in two ways. First, it does not bring about desired consequences. Secondly, it is an unjustifiable economic drain.

Lord Renton

My Lords, unless the CAP is reformed, how will those of the 10 new applicants whose economy depends mainly on agriculture know before they join how their economy will fare? Will they not be entering into a state of uncertainty?

Lord Williams of Mostyn

My Lords, in the nature of things, all political advance involves some uncertainty. That is what political judgment is about, as I am sure the noble Lord agrees—particularly following the 1997 election. There are some key messages on the financing of enlargement. There will be a significant amount of new money. That will be within the ceilings already agreed at Berlin. We will seek to ensure that no candidate is worse off after enlargement, but they cannot continue to expect to be subsidised by others indefinitely without change.

Lord Dahrendorf

My Lords, like others who have spoken, I particularly appreciated the brief but clear reference in the Statement to Turkey and its future. The key fact for me is not just that there have been recent changes, to which my noble friend Lady Williams referred, but that Turkey is an Islamic country with a tradition of secular law. That is the key reason why we should decide that Turkey belongs in the community that we are forming in Europe. While I appreciate the Government's position, what reason is there to believe that they can prevail come December?

Lord Williams of Mostyn

My Lords, I am grateful, as always, to the noble Lord, Lord Dahrendorf. Her Majesty's Government's position has always been generally supportive of Turkish accession to the European Union. All such conclusions are partly altruistic and partly selfish. We firmly believe, not least because of the reason that the noble Lord, Lord Dahrendorf, gave, that Turkey becoming a full member would be of benefit to the European Union—and therefore to the United Kingdom. I accept that we are brought to that optimistic conclusion not simply because of the recent advances that Turkey has made, but those advances are very significant. The noble Lord referred to Turkey as an Islamic religious culture, but a secular state. That has been the position for a relatively short period—only since the end of the first quarter of the last century. These discussions have been beneficial to the European Union and to Turkey. There is plainly an advantage to Turkey in being a full member of the European Union. There is no doubt that the internal reforms have been assisted by the context of application for entry. It will undoubtedly be of benefit to the European Union if Turkey joins. The European Union is capable of being an oasis of stability in a world that is becoming increasingly fearful and uncertain.

Lord Stoddart of Swindon

My Lords, I shall also refer to Turkey. It is an important country that is already 60 million people strong and is projected to reach a population of 110 million in a few years. At the same time, Germany's population is projected to drop to 60 million. That means that Turkey will be a dominant country in the European Union. I hope that has been taken into account in discussions on Turkey's future in the European Union.

What are the Government's reactions to Mr Giscard d'Estaing's proposals? The noble and learned Lord touched on the issue. Are the Government really in favour of a written constitution? Are they in favour of abolishing the rotating presidency in favour of a semipermanent presidency? Are they in favour of the virtual abolition of the national veto and of the imposition—or, rather, introduction—of a legal personality for the European Union? What, in his view, would be the implications of such a legal personality?

Lord Williams of Mostyn

My Lords, I would not say that Turkey would become dominant, but, as the noble Lord, Lord Dahrendorf, implied, it will be extremely important. There is a distinction. It is important to bear in mind that Mr Giscard d'Estaing has indicated his preliminary views. He is not able to impose his views, nor does he seek to. The convention will not make its final report to the European Council until June 2003. At the moment working groups are producing their reports and four new groups are to be established in the autumn. Questions of legal personality and so on are matters for discussion and elucidation. To my noble friend Lord Stoddart I say that it is a mistake to believe that the expression of a preliminary conclusion necessarily binds the outcome.

The Earl of Sandwich

My Lords, I do not believe that the noble and learned Lord has commented on the point raised by the noble Lord, Lord Strathclyde, that there was no mention of the coalition against terrorism. Rightly, the Prime Minister spent some time on the Chechnya crisis, but why is it that European leaders cannot produce regular statements on the coalition against terrorism as opposed to other major concerns like Iraq?

Lord Williams of Mostyn

My Lords, I suppose one tries to focus on the agenda of a particular meeting. To my knowledge the discussions about the coalition against terrorism between the Prime Minister and his international colleagues continue on a weekly basis. That was not the focus of the agenda at Brussels, and the Prime Minister was reporting on the discussions at Brussels. There may be some value, but on a continuing basis I am unsure how much value there is in constant repetition from the European Union of what is well known to be the position.

Lord Monro of Langholm

My Lords, speaking as a farmer, does the noble and learned Lord appreciate that agriculture requires long-term planning which is not forthcoming from the Government? Can he be more specific? Do the Government have in mind that the present agricultural production grants will continue to 2006, plus or minus what may be decided after the Dohar discussions, and that thereafter to 2013 the grants will continue with a limited increase for the future? If not, can he spell out where they are going? It is all very well to say that the CAP will be reformed, but as no one knows what the reforms will be, agriculture is placed in an impossible position.

Lord Williams of Mostyn

My Lords, the allowances will continue up to 2006, but beyond that, to the year 2013, as the Statement indicates, future agricultural spending will be capped. Because of the effect of the calculations on a notional inflation rate of only 1 per cent, in real terms there will be a reduction from the original proposals.

Lord Richard

My Lords, I am sure that my noble and learned friend is aware that reform of the common agricultural policy is not exactly a new subject in European affairs. When I was a member of the Commission 20 years ago, we spent most of our time on two issues: first, the British budget rebate, and secondly, reform of the common agricultural policy. Does my noble and learned friend accept that, if the common agricultural policy is to be reformed, it will be carried out, not as the Conservative Opposition now suggest, by a crusade—one cannot avoid observing that they were not altogether successful at achieving it in their 18 years in office—but by what Sidney Webb said in another context, "the inevitability of gradualness"?

My figures may not be totally accurate, but I recollect that 20 years ago the common agricultural policy was taking around 75 per cent of the budget of the EEC. That figure is now down to 45 per cent. I hope my noble friend agrees that the way to handle the CAP is to recognise that it is a matter of some considerable importance to other countries in the Community, and to let the Commission and the process proceed in the way that it has.

After listening to the noble Baroness, Lady Williams, I cannot help but observe that it would be wrong—I hope my noble and learned friend agrees—to leave the decision as to whether or not Saddam Hussein was in breach to Mr Blix. If anyone has to decide that it should be the Security Council because it is a matter of the most enormous importance and surely cannot be left to United Nations' officials.

Lord Williams of Mostyn

My Lords, I am grateful to my noble friend Lord Richard. I was pleased to hear his citation of the "inevitability of gradualness" in the presence of the former general secretary of the Fabian Society. My noble friend is right to say that the proportion has reduced to 45 per cent. I agree with him in his adjudication of how further reform should be taken forward. In fairness to the former general secretary of the Fabian Society, I am unsure whether she said what my noble friend Lord Richard may have heard. I did not understand the noble Baroness to say that it must be left to the inspectors; I thought she said that it should not be left to a single interested participant, aka the United States of America.

Lord Phillips of Sudbury

My Lords, on the reference to the president of the European Union reassuring us once again that subsidiarity would come to our aid with regard to the bureaucratisation and centralisation of the European Union—subsidiarity runs like a leitmotif through the rhetoric of the European Union it is not always apparent where one can find concrete examples of the principle in action. Are the Minister and the Government concerned about the rate at which Europe continues to centralise and the rate at which it continues to legislate? For example, last year there were over 3,600 directives and regulations. Is the Minister concerned, as I am, that the countries in line to become members of the European Union—like everyone else I am extremely happy at that prospect—may have second thoughts, in the run up to the referenda that each of them will have to hold, about the impact on their democracies, sovereignty and autonomy of the direction in which the European Union is heading? Have the Government any concrete and specific plans to give some reality to the principle of subsidiarity?

Lord Williams of Mostyn

My Lords, I hope I can assist the noble Lord, Lord Phillips of Sudbury. This chimes with discussions we have had in your Lordships' House and in the European Union Committee, chaired by the noble Lord, Lord Brabazon, with the noble Lord, Lord Grenfell, as vice-chairman. One of the working groups to which I referred presented its conclusions. The conclusion on subsidiarity, which I shall paraphrase because of time, was the necessity of an agreement, as the noble Lord implied, on how to improve the enforcement of subsidiarity, not least through an early warning mechanism involving national parliaments. I know that that is a cause dear to the heart of the noble Lord, Lord Phillips, and I hope it is some reassurance.