HL Deb 03 March 2004 vol 658 cc744-65

8.38 p.m.

Lord Ponsonby of Shulbrede rose to ask Her Majesty's Government how the European Union is developing its policy towards Moldova, Ukraine and Belarus.

The noble Lord said: My Lords, the purpose of my Unstarred Question this evening is to look at the European Union's new eastern neighbours, namely Belarus, Moldova and Ukraine. Of course, these neighbours rightly see themselves as being at the heart of Europe—not at the eastern edge but at the centre.

On 1 May the EU's border will move and a new border will be formed. It will be a physical border of some 5,000 kilometres. It will represent the border between relative wealth and relative poverty. Some will see it as a new frontline between East and West. I believe that it is of the utmost importance for the European Union to counter such a perception. While it is true that the EU has its own values and that not all countries on this border share those values, it is also true that the European Union has its own interests and those interests should be advanced. The EU has an interest in expanding the zone where the same economic rules apply, where the fight against crime and terrorism is co-ordinated and where migration issues are addressed. In short, the EU has an interest in a border that is both open and secure and the best way to achieve that is through co-operation with our new eastern neighbours.

The EU has said that it wishes to agree action plans for each of the countries on its new border. It has also said that "differentiation" is a key word since no single policy would be appropriate or desirable for each of the new neighbours. So I shall deal with Belarus, Moldova and Ukraine in turn as they too each have their own interests and aspirations.

First, I shall deal with Belarus. Belarus has expressed no desire to join the European Union. It sees its main ally as Russia and one still hears the echoes of the Cold War in the speeches of President Lukashenka. There is a debate in the international community about the extent to which we should engage with the authorities in Minsk. There are those, led by some American politicians, who wish to punish Belarus for its human rights abuses, for lack of freedom in the media and for lack of economic reform; and there are others who argue for selective engagement and the expansion of constructive programmes in parallel with isolating the President and his close administration. I have been actively involved in this debate over the past few years and I have two observations: first, that the countries physically closest to Belarus seem to favour selective engagement—here I am thinking of Poland, Lithuania and Sweden in particular—whereas countries further away from the new border are more ready to see Belarus remain isolated. My second observation is that the Belarusian leadership do nothing to help themselves. Barely a month goes by when I do not receive an e-mail about an NGO being shut down, or a newspaper being closed. With the growth of the Internet and the availability of media from Belarus's immediate neighbours, this seems a particularly shortsighted and counterproductive activity by the Belarusian authorities.

I would argue that the expansion of the EU to the Belarusian border offers a new opportunity to engage with the people of Belarus. The OSCE office is up and running again and important decisions will have to be taken about the forthcoming elections. But where is the European Union? Why is it that there is no EU office in Minsk? It seems bizarre that the EU has offices from Barbados to Nepal but nothing with its new next door neighbour. I would argue that the EU should open an office in Minsk with a view to disseminating information about its activities. If there is to be a policy of differentiation between countries, there can also be a policy of differentiation within Belarus itself. It seems to me that when Commissioner Prodi offers the EU's neighbours four freedoms— freedoms for people, services, goods and capital—he should also offer to help those countries, including Belarus, take advantage of those freedoms with practical projects. President Lukashenka will not be in place for ever and it is important to work for good will between the people of Belarus and the European Union.

Next I shall speak of Moldova. Moldova is a different case as it borders Romania and Romania aspires to join the EU in 2007, so there will not be an EU border with Moldova in the near future. Moldova, however, does aspire to join the EU, which seems logical given its close relationship with Romania. The Transnistria conflict and its economic dependence on Russia will hamper Moldova in its aspiration to join the EU; nevertheless, the very fact that Moldova even aspires to join the EU gives an opportunity for the EU to influence Moldova's development. Moldova is a small country and it is a poor country. Many of its people have become disillusioned with the political process due to falling standards in the economic and social spheres and this was reflected in the 2001 elections when the Communist Party won landslide victories. This all adds up to a fragile country where maintaining stability should be at the top of the EU's agenda. The longer term goals of attracting foreign investment, fighting crime and corruption and building stable institutions mean that the EU should see its goal as helping to normalise the legal structures and to give confidence to potential investors be they domestic or foreign.

The situation in Transnistria is fluid. I do not want to say much about that as I know that the Russians have advanced possible solutions and the OSCE and the Council of Europe are actively involved in trying to find a way ahead. My only comment on this matter is that it is difficult to imagine the Moldovans solving this problem for themselves and that whatever the final solution is, the Russians and the international institutions will be central to finding the way ahead.

Finally, I shall say something about Ukraine. In my view Ukraine will be the key to the success of the whole of the EU's policy to its eastern neighbours. It is a large country with extensive links with Britain and other countries in the West, and, importantly, it aspires to joining the EU. The EU should promote Ukraine's independence and the best way to do this is to base EU policy on the Copenhagen criteria for EU membership. This approach has proven to be successful with the current new member states and offers a tested framework for reform and the implementation of those reforms necessary to join the European Union.

In previous years I have been a rapporteur for two papers concerned with Ukraine. The first was about how the minority Tartar people were treated on their return to Crimea from other parts of the former Soviet Union. The second paper was about the financing of the shut down of the Chernobyl nuclear power plant. In both cases, while I was critical of particular aspects of Ukrainian government policy, I was extremely impressed by the importance that Ukrainian officials, institutions and politicians attached to the views of the international communities of which I was a part It was refreshing that we were taken so seriously.

I know that there are concerns regarding Ukraine. Its treatment of journalists and some dissidents, for example, is not so very different from other countries in the region which are regularly pilloried by the international human rights organisations. Nevertheless, there is an active and organised opposition in Ukraine; the parliament is a focal point for national debate, and its economy is growing so quickly that I recently overheard one international diplomat complain about it. He said that we could lose influence there because they will not need to borrow so much money in the future, which seems a perverse argument. Nevertheless, most importantly, there is the aspiration to join the EU. For these reasons I argue that Ukraine should be seen as the key to the success of the EU's policy towards its eastern neighbours and therefore a constructive programme of working towards the Copenhagen criteria should be a central part of the action plan for Ukraine.

Throughout my contribution I have tried to avoid mentioning Russia. The reason for this is simply that when one brings Russia into the equation it so dominates the considerations that it almost denies debate about the countries concerned. There could be no clearer illustration of this than when on 18 February this year the Russians cut off the gas to Belarus for 24 hours in a dispute about tariffs, one was immediately catapulted into debates about security of energy supplies and all sorts of other things. It is then difficult to get back to talking about the immediate neighbours. However, it is impossible not to talk about the influence of Russia.

I opened my contribution by saying that there is a fear that all that EU expansion will achieve will be to redraw the dividing line between East and West, which is the dividing line between Russian and western influence. I argue that, given that Russian influence is so dominant in Minsk, Chisinau and Kiev, the Russians should be a partner in the wider Europe process, but also that the EU should actively and independently co-operate with its new neighbours in the new neighbour policy.

The new neighbour policy of the EU should concentrate on Belarus, Moldova and Ukraine, but the wider Europe policy should include Russia and its strategic concerns. There may well be limits on how far the EU can export its model for free trade and social democracy, but other international groupings, namely the OSCE and the Council of Europe, can be used to bind Europe together.

However, when one looks at how the EU treats its other neighbours in south-eastern Europe, it is difficult not to make comparisons which are unfavourable. The EU has invested far more in south-eastern Europe. The funding for CARDS is double that for TACIS, while it serves only 10 per cent of the CIS population. I understand that comparisons of this type are always invidious and they are difficult, but I believe there is a strong argument for putting the treatment of Belarus, Moldova and Ukraine on a new financial footing.

I want to conclude on a lighter note. At the time of the last European IGC in Strasbourg, I met a couple of Belarusian officials and I made a joke. Belarusians are fond of jokes. I said that the Polish were the new tough guys in Europe since the Sun newspaper said that Poland had saved Britain from the new European constitution. The Belarusians laughed like drains: they loved the idea of Poland saving Britain from Europe. It seems to me that the example of Poland as an assertive and assured partner in Europe could give as much encouragement to the Belarusians and to others to reform as any amount of finger wagging by the international institutions.

It is a very select group of Members of this House who take an interest in these matters. However, I know that what my noble friend says here today will be of great interest to many people at the heart of Europe.

8.51 p.m.

Lord Howe of Aberavon

My Lords, I rise in this exclusive climate, conscious of the extent to which my familiarity with European institutions is fading fast and that I am a fading Euro buff. However, I am reassured by the aura of authority and wisdom that has been manifest in the speech made by the noble Lord, Lord Ponsonby, and I am confident that I shall be rescued from any misunderstanding by the noble Baroness, Lady Symons, in due course.

I speak, in the old Chinese fashion, as an "old friend of Ukraine" and I declare an interest as having received the honour of the Order of Public Service of Ukraine, of which I am very proud. It does not need me to underline the point made by the noble Lord that Ukraine is an important nation. One tends to forget that in terms of population it is on the same scale as the United Kingdom—much larger than that—and that we have many human links with Ukraine. I always think with affection of the fact that Stefan Terlezki became a Conservative Member of Parliament, having been a refugee in his teens from Ukraine. One of the individuals I was able to get Mr Gromiko to release from Ukraine to come on holiday to this country was Stefan Terlezki's father. It is the kind of human link that lives in one's mind to remind one of the humanity of the relationship. I am sure the Minister will agree that Terlezki is an honorary Welshman born in Ukraine.

I first went there in 1988 when it was still part of the Soviet Union. I last went as a parliamentarian leading an IPU delegation with the noble Lord, Lord Morris, the late Lord Dormand of Easington and Ann Clwyd, who is now chairman of the Anglo-Ukraine Parliamentary Group. I made a number of other visits in company—if the noble Lord, Lord Wallace, will not misunderstand this—with the noble Baroness, Lady Williams of Crosby. We were both members of the Economic Advisory Council of the Supreme Rada for a number of years.

In those early days one had a glimpse of the difficulties that were to develop. On our first meeting with President Kravchuk, some time after Ukraine's claim to independence, one of us was surprised to see on the wall behind him in his office the picture of Lenin still in place and asked, "Mr President, forgive us for asking, but why is that picture still on the wall?". We got the rather disarming reply, "You can't expect us to do everything at once". At the same time, I remember an observation by the then American head of mission saying, "You will have to go through simultaneously what the United States went through in 1776, 1861 and 1931". That is the scale of the problems that they have to face.

One must admire the courage of those who have grappled with them over the years, particularly given their loneliness on the edge of the European Union, in a region not renowned for its security. One thinks of the tragically poor economic performance of the country for its first decade. Although Moldova is the poorest of the three countries, with an income of 417 euros per head, Ukraine is not far behind at 855 euros per head. Happily, real progress has been made in the past three years. That was confirmed to me today when the Anglo-Ukrainian parliamentary groups had a meeting with the First Deputy Minister for Foreign Affairs for European Integration, Mr Olexandr Chalyi. He was confident that that economic performance would be maintained. He pointed out that the scale of Ukraine trade with the European Union is one-third of its total turnover. The European Union is of great importance to it. The percentage of EU trade with the Ukraine is insignificant. That might tempt us to feel that it is not a country of significance to us. Happily, that is not the view that we have been taking.

Its success matters hugely to the stability of the region and to us. In that respect, the European Union has been giving an enormous amount of help. It is perceived as one of the targets as regards the way in which Ukraine develops itself. The United Kingdom is seen genuinely as one of the countries which can do the most within the European Union to help it in that direction. There is no doubt about its economic and political aspirations.

I dare to mention the Russian factor at this stage. There is no doubt about the competitive nature of Russian foreign policies in relation to Ukraine and the European Union. They have been offered the prospects of a customs union, a single currency union and joining the security umbrella of Russia. As the noble Lord pointed out, one has somehow to conduct the European Union's management of those questions in a fashion which does not provoke increasing rivalry and hostility. That is why I underline his point about the need for our relations with Russia to be part of our general relations internationally.

In preference to that road, Ukraine wishes to set the prospect of the closest possible relationship with the European Union, aspiring to membership of the Union and of NATO. There is no doubt that it attaches real value to the partnership co-operation agreement. It looks forward to early completion of the agreed action plan—agreed to the extent that it will then be able to claim ownership of that with clearly stated goals for the next steps they want to achieve along the road, and rightly so.

It had doubts about the wisdom of that course at one time when the Balkan war was at its height and there was a tendency to resile from a European partnership. Happily, that has now given way, if to anything, to hesitation about the Chechnyan alternative. That is another reason for us to want to hold out a welcoming hand.

I wish to stress the need for help, not solely or primarily in the economic field. I certainly would not enthuse over the past economic policies of Ukraine, but now at least they are on an upward path. It is still the politics which lack confidence, coherence and authority. Political stability—the need for an effective political structure founded on electoral legitimacy—is probably the most important feature that we can now commend to it. Its constitution makes life very difficult in that respect. It has carried intellectually the concept of separation of powers even further than has the Lord Chancellor, the Secretary of State for Constitutional Affairs. I remember making an observation quite early on in my presence in Ukraine to the effect that Montesquieu threatened to do far more damage to Ukraine than Marx had ever done. That is at the heart of what has been happening. There has been gridlock of the most frustrating kind between the president and the Rada.

In that context, in the past few months, quite dangerous change in constitutional reform has been attempted. It has been criticised—certainly understandably—by the opposition as being no more than a device to prolong the tenure of President Kuchma. On the other hand, if one is charitable, one can see arguments in favour of altering the balance of power as between the legislature and the presidency. That may be one explanation for what has happened recently.

However, it certainly appeared to the opposition and to outsiders that the changes made at about Christmas-time were designed by the Rada members who voted for them, as well as by the courts, to prolong the president's term and legitimise the prospect of his remaining in office for a third term. Then the changes were observed as being designed to guarantee that, if he did not become president, the powers of the presidency would be reduced and would be exercised by Parliament instead. Therefore, one can see the possibility of sinister interpretations being made of the situation. All that has happened without consultation with the opposition or with the country.

In those circumstances, the Council of Europe and the Strasbourg institutions rightly protested about what was happening and the way in which it was happening. Happily, those protests seem to have led to the repudiation and withdrawal of all the earlier measures. It is important that that change of heart should be genuine and complete. We now have an assurance from President Kuchma that he will not seek to stand as president for another term; nor will he seek to stand for election as Prime Minister or Speaker. However, I heard this morning that he intends to establish a foundation for the study of the future of his country, rather following the fashion set by Mikhail Gorbachev and others.

It is now most important that we do all that we can to ensure progress along this line of development of bona fide democratic institutions. I wonder whether we are yet putting enough resources and coherency into the delivery of political advice. I remember being very struck in the early years by the extent to which the Ukrainians had been confronted by visiting delegations. Our advisory council was bundled out of the room to be succeeded on one occasion by a group of wise people from Harvard and even, on another, by wise people from the London School of Economics. The poor Ukrainian Government had to select from this pot-pourri of advice without knowing whether they needed a plumber, an electrician or an economist.

I believe we should try to do all that we can to integrate the wisdom that we offer so as to ensure that the process towards a clean, democratically legitimate government—president and Rada alike—really does emerge. Here, I should declare an interest. I am president of the British-Ukrainian Law Association—a rather modest organisation but, for what it is worth, it is there. We should also try to ensure a coherent rule of law.

As the noble Lord pointed out, free and fair access to the media is probably the most worrying feature. Free and fair elections should be carried out and delivered to the genuine satisfaction of independent election monitors, including, in particular, the Office for Democratic Institutions and Human Rights of the OSCE—all in compliance, I hope, with clearly laid out benchmarks.

Today, I had the clear impression that, as the noble Lord pointed out, there is a fund of good will within people on all sides in Ukraine. They want the path to be made clear and they want help and guidance in going along it. Therefore, I hope that we shall ensure that the resources, whether intellectual or economic, of the European Union, the United Kingdom and the United States that go into Ukraine are concerted as well as possible and that they contribute to one flow of wisdom and to securing the legitimacy of the political process in that country.

We cannot, of course, do it all for them. When considering what to say today, I was reminded of a quotation in Rodric Braithwaite's CER pamphlet. The quotation is from George Kennan in 1951 talking about Russia, but the same argument applies here: When Soviet power has run its course, or when its personalities and spirit begin to change (for the ultimate outcome could be one or the other) let us not hover nervously over the people who come after, applying litmus papers daily to their political complexions to find out whether they answer to our concept of 'democrats'. Give them time; … let them work out their internal problems in their own manner. The ways by which people advance towards dignity and enlightenment in government are things that constitute the deepest and most intimate processes of national life They have had time; the ball is still in their hands and not in ours. We can and must do all that we can to help, but in the last resort it is for the people of Ukraine who will save themselves, as I am sure they intend to do. They have all our good wishes in that respect.

9.6 p.m.

Lord Selsdon

My Lords, I am most grateful to the noble Lord, Lord Ponsonby, for introducing the debate. I was not aware of his interest in these areas until I went—I was not dragged unwillingly to school—to a Foreign Office seminar one day, where I saw he was in charge, surrounded by people with the most amazing collection of names that I could not pronounce and whom I thought were masquerading as British. It made me realise what little involvement we have had to date in these countries. At this time of night I shall not try to entertain your Lordships, but I want to express a few views as I stand here and look towards, say, the east, or perhaps the Baltic with Estonia, Latvia and Slovenia somewhere nearby—one Division Lobby—and the Black Sea on the other side.

Geography plays an important part, as it always has done, in our economic and political history. There is a line of states but I do not know whether they are beyond the border of Europe. I have yet to find anyone who can tell me where the border of Europe is and draw that line in the sand or on the hills. I was always told that it was the Urals. Once upon a time children studied geography at school. This evening I went to the Library to consult a map to see where the Danube came out because I was not sure. One fact that I knew is that the main rivers of Europe often flow in that direction.

Now we have a time of change. I should declare an interest as I have worked in and with the countries of central and eastern Europe on and off for years. Perhaps I should say that I have tried to work in and with them but somehow they have always won and I have never had much success other than receiving two Know-How Fund grants. Change in those countries does not happen quickly. I know nothing of Moldova. I have a great affection for the Ukraine, where I have been many times. The noble and learned Lord—"Sir Howe", as he is called there—is heavily respected because he is an island unto himself; he is a form of Crimea in Europe, as they have described him to me.

I do not want to consider the European opportunities, but the British opportunities. At this moment our competitors—we have competitors within the European Union—in matters of trade and economic affairs are reeling a little. Germany is bankrupt because of the cost of eastern Europe; France has too much capital expenditure; we, as a country, for whatever reason—there is no political credit—are in a position where enormous resources are passing through London which can be directed almost anywhere in the world. We are now the third largest investor in the world but with the lovely phrase OPM—other people's money.

I return to my favourite country in that part of the world, Ukraine. I first became involved with two countries because originally Scotland was called Albania—the white people—and because Ukraine is next door to the United Kingdom in the alphabet. I went out there to see one of my Ukrainian friends. I have been privileged to sit with most of their politburo and found that your Lordships' card with the red and white stripes gets one into the KGB and anywhere in the Ukraine. I thought that it would be nice if we could build ships so we set up "British Ukrainian Shipbuilders". The idea was that they would build the hulls and we would equip them and trade with them. At the end of the day, they did not need us. The Black Sea shipping company—BLASSCO—was one of the most successful in the world and traded almost everywhere. Their shipbuilding did not have to rely upon the need to produce profit. Profit was the picture you hung on the wall and dreamed about one day, but it did not come into the scene.

Shipbuilding interested me first, and from that came the spin-off—the technology of trying to turn swords into ploughshares. I did not realise the remarkable economic and industrial strength that there was in the military, with 40 per cent of Ukraine's economy defence-related, but with parts of that defence being in a fairly high-tech area. I mentioned this in your Lordships' House some years ago. When I was first taken out there, they set me up a bit. I was asked if I would like to go and look at a factory. I ended up in the SS24 missile factory in Dniper Petrosk, where I was taken in, supposedly through the clean rooms. The doors squeaked shut, and I suddenly found that my colleagues had walked round the outside, because their equipment was designed to work in any area at all.

When the first Ukrainian Airways flight took off and went out there it was run by Aer Lingus. The pilot who I happened to sit next to—we were on a Boeing, because they did not think that people trusted Ukrainian or Russian aircraft—said, "The one thing that you should never do is fly on a plane where the only training that the pilot has had is from Boeing, because we know in our country that anything that can go wrong will go wrong". We discussed Murphy's Law, and in Scotland MacDonald's Law says that Murphy was an optimist. He said, "We are used to anything going wrong that can go wrong. We have the extremes of weather. I could even land this Boeing with a hook on one of the aircraft carriers that we are trying to sell to you".

Going in to the missile factory, I realised that these were people who sent things into space; but they did not have the lightweight technology, the software. It was only then that I realised the association that goes back to the twelfth century between Kiev and Belarus, and Belarus was the country that had some of the greatest software and the lighter parts of high technology. I suppose the former Soviet Union had deliberately tried to divide or control its empire by allocating to some areas one form of technology and production and the others to another area. The engines for ships were not made in Ukraine, they were made somewhere else. The transfer prices after perestroika were such that it was not possible to make it economic.

I realised that with these countries the words economic and profit did not seem to apply. The wonderful concept of PPP, or privatisation, was a much simpler issue. The general manager or the management of a company in most of these countries would find that he no longer had the resources from central government, so he would ask if he could have control. There would be a government decree that would effectively hand over the business to him and his former colleagues. He may not be allowed to have two cars or four secretaries, but his job was to make sure that the workforce was paid, and that it received its facilities in sport and other areas. The community of interest became more isolated from the centre.

This is where our country could step in. We have much to offer that part of the world. In general, we are not disliked. I think that we are regarded as a friend, and not as a competitor. There are little things that stick in my mind. I never realised that the two presidents, former and current, had flats next door to each other, although they were each other's main rivals. When you went out to a dacha up on the way to Chernobyl, you looked to make sure that the pine cones were on the trees, and that you were not too near to that area. You would find their dachas were next door to each other. I took the occasion to invite them out to dinner. To show me that things had not changed, we had an excellent dinner of lobster, champagne, and so on. When the bill came for eight people, I was told that it was so many local currency. I asked how much it was in dollars. "We do not take dollars, my Lord. It is £5, preferably an old white £5 note". That showed the devaluation of the currency.

I got to like these people. When they asked whether I could help them in the management of their football club, or by looking after that young, slim skater, who came to the West and did extraordinarily well, I realised that we were dealing with a deep culture that somehow struck at one's soul. One only had to go to an opera in Kiev and it was like a pantomime. Suddenly, just before the curtain went up, the children would come in dressed in uniforms, each carrying a stool. They would sit in the aisles and learn about their culture.

I am not trying to promote a country such as that. However, I had to open my own eyes as I had previously understood that we were dealing with a military power. I was drawn through and told that 3 million people had been killed or starved to death under Stalin and that 3 million had been killed by the Germans in the war. I was told that it was the breadbasket of central and eastern Europe. Black grow bags, almost as if they were from Fyson's, came down from the delta, and there was an ability to grow as much food as one could wish, but without the organisation of the farms. Under Lazarenko, all the technology and finance had been allocated to the military and people were still raking by hand in the fields.

Then, I suddenly became interested in Belarus, for one simple reason. It is quite intriguing when a president has his own website. When a man says, "In order to unite my country we must gang up together against our common enemy, and our common enemies arc the United States, Russia, Japan and Western Europe", you have to say, "There is a man who has an idea. He may become a benevolent dictator rather than what people call him at the moment". I thought it might be a good idea to go there. The noble Lord, Lord Ponsonby, will remember the advice given by the Foreign Office: "It might be a hit dangerous to go there. We do not have a lot of interests".

So I thought that I would go off and meet the people. I met the Foreign Minister in Geneva and said, "Why don't you come to lunch and see us here". He said, "I am not allowed to". We are not allowed to exchange ministerial visits; I have forgotten how far back that convention goes. I ask the Minister whether it would not be possible to allow Ministers to go freely unencumbered from one place to another in the world. Do we really have to wait until all sorts of things happen before we make friends again? I speak from my time in the Middle East. Whenever a Minister could not go, they would send traders like me to Libya, Iran, Algeria—it did not matter where—because we could not have official relations.

This line from the Black Sea up to the Baltic is critical for the future. On the other side of that line lies enormous oil and mineral wealth. As the Drushba pipeline which runs through Ukraine demonstrates, these countries are interposed in an important way as regards materials exported from the east. No one has yet managed to produce a true mineral map or an oil map of those parts of the world, I suppose because it was a secret. I remember, at an oil conference, being asked whether the British had the technology to tell the countries where the oil pipelines ran through their countries. They had been kept secret.

I am grateful for this debate. As noble Lords have probably gathered, I have a lot of affection for these people who stare at you, do not smile for maybe two to three years, but then suddenly become one's friend. I think that we need some of their technology. With our industrial base so eroded—as outlined in the previous debate; I was able to hear only part of it—I think that there are new opportunities which we could explore bilaterally and not necessarily through the EU. Part of me says, "Let us keep the EU out of this and let us do it bilaterally". However, I still have great affection for Kipling and the Great Game as you can find it. There are so many opportunities in countries which are yet unknown to us. In almost all cases, we will probably have to pass through one of the three countries which are the subject of this debate.

9.18 p.m.

Lord Wallace of Saltaire

My Lords, I have been sitting here thinking we all go out to these countries in one capacity or another. They welcome us all as we go there. I hope that we do more good than others. I visited many of the countries in the early 1990s in, I am ashamed to say to the noble and learned Lord, Lord Howe, the capacity of an expert—he will know that one of the definitions of an "expert" is "someone carrying a briefcase a long way from his office"—while I was working for the Open Society Foundation. I remember staying in a hotel in Yerevan and being told in hushed tones by the key lady on my floor at the hotel that the noble Baroness, Lady Cox, herself had stayed on that floor only a few months before. So we leave impressions behind us of one sort or another.

I also remember a particularly fascinating but frustrating conference in Kiev when Ukraine had been independent for only two weeks. I again regret to admit to the noble and learned Lord, Lord Howe, that I was part of a joint Harvard/LSE delegation—at least it was joint—in which the Foreign Minister arrived to say as his opening message to us that Ukraine had two strategic objectives in its foreign policy for the next two years. The first was to join NATO and the second was to join the European Union. That was some time ago. I recognise the frustrations that NATO and the European Union have had in dealing with Ukraine and even in attempting to deal with Belarus and Moldova.

Those three states suffered immensely in the 20th century—above all, in the Second World War. After all, the grandchildren of many displaced Ukrainians arc still living in this country. I pass the graves of many in Bradford when I go to see where some of my own and my wife's family are buried. I remember a sad joke that was told in Rochdale a generation ago: Rochdale had three Ukrainian clubs one for those who had fought with the Germans; one for those who had fought against the Germans; and one for those who thought that you should not argue about that any longer. Ukrainians suffered desperately during the Second World War. It was only after the Cold War that some of those disappearances began to come to light.

Those three countries are caught between the European Union and Russia; they are desperately dependent on both; and they have so far failed to organise their own future orientation or, in the case of two of them, even to manage their own state. The European Union has tried to extend its conditionality policy from the new states that are joining the EU this coming May to the next set of neighbours through neighbourhood policy, because that works only if the potential partner is interested in bargaining by the same rules.

The noble Lord, Lord Ponsonby, compared the situation with the western Balkans. The EU is in a very different situation in the western Balkans. In effect, it is operating in a trusteeship situation in Bosnia and Kosovo; and for Albania and Macedonia, the recognition and acceptance of dependence on the EU is strong. Belarus does not accept its dependence on the EU. Ukraine sees itself as an important country, but certainly does not see itself bargaining on the same basis as the western Balkans. For all the difficulties we face in the western Balkans, there is in some ways a more straightforward understanding on both sides of the nature of the relationship.

We clearly have immense common interests with our three new neighbours. Border management is difficult enough. Three years ago, the Belarusian authorities had not even finished demarcating their side of the boundary with Lithuania and Poland. We need to ensure that there is as much continuing cross-border trade and contact as possible—after all, there are links between populations on both sides of the border—but at the same time, we have to control illegal transactions. A great deal of smuggling and illegal immigration takes place. In preparation for our debate, I read of the large number of illegal immigrants in Belarus and Ukraine who are waiting to cross the border and move west. Therefore, the control of cross-border crime, illegal immigration and smuggling are clearly important factors.

The European Union is trying to export stability from western Europe across those states and it is conscious that unless it succeeds in doing so, it will import instability. Indeed, it has to some extent already done so. I note from the figures that I was looking at that the population of each of those three states has gone down on the official figures by at least 10 per cent in the past 10 years. In Moldova, I understand that the population is much more likely to have gone down by 15 to 20 per cent. There are substantial Moldovan and Ukrainian minorities in Portugal. On my previous visit to Athens, I met a Moldovan couple who had walked through Bulgaria to Greece. That is desperate poverty. How we reverse that flow and give those people an opportunity to make something of their own countries is a real problem.

We have a substantial problem in parts of Europe of Ukrainian criminal networks operating within the European Union, particularly across Hungary and the Czech Republic. There are also problems of arms traders into Africa and elsewhere based in Ukraine.

Belarus presents a particular problem for the European Union. We really do not know what to do with it. I have been struck at many meetings by the number of occasions on which Belarus simply is not mentioned when it comes to talking about the wider Europe because no one really knows what to say. The European Union embassies have had their great difficulties; the OSCE was excluded for some time. I hope the Minister will tell us what the position is with the OSCE and the monitoring group. Belarus will, after all, be a transit state between two parts of Russia once the EU has expanded, and the problems we will have with managing the Kaliningrad issue will necessarily involve a close relationship with that extremely difficult country.

With Moldova, I understood that some months ago there was some prospect that we would manage to persuade to negotiate withdrawal of the remaining Russian troops from Transnistria and that discussions were under way within NATO and the EU about sending a limited number of troops to play an intermediate peacekeeping and peace monitoring role as we achieved a reunited Moldova. But that appears to have stalled, and I would be very grateful if the Minister could tell us whether anything is now moving forward, or whether we have again reached an impasse over the Transnistria situation.

With Ukraine, we have seen very limited transition so far. There is a semi-democratic Government with a semi-legal system and a semi-market economy. Real assets, as other speakers have said, include agriculture—underutilised at present—and heavy industry, some of which is still valuable. I have been doing some work on the European defence policy and have noted that the number of members of the European Union which depend on Ukrainian Antonovs to get their troops to anywhere outside Europe is high. There are clearly assets which we use and could use more.

We all understand that Ukraine is a key state, and have a direct interest in its independence because Russia, without Ukraine, is a state, and, with Ukraine, is an empire again. But I am not sure whether full EU membership, as offered, is necessarily the answer, because there is a problem with just how large the European Union becomes. I say this with some passion, because I spent this afternoon with a group of Turkish students and academics who were all arguing that Turkey has to become a member of the European Union but there is no reason why Ukraine should. It seems to me that the two necessarily go together; the question of when the European Union becomes too large to be manageable is raised by these very major states to our east.

The European Union needs a new strategy for Ukraine. I hope the Minister will tell us what is in mind. Should we be putting more money into education? Should we be attracting more Ukrainians over here for technical, administrative and military training? What can we do in this difficult situation?

The new members of the European Union can clearly play a very important role. I know that the Poles have already been talking actively about future relations with Belarus and Ukraine. It is important that everything we do goes alongside and works with Polish efforts. But we all recognise that this is a hard and unrewarding row to hoe, and we hope that the British Government will nevertheless continue to try to hoe the ground.

9.29 p.m.

Lord Astor of Hever

My Lords, I, too, thank the noble Lord, Lord Ponsonby, for raising this issue. The importance of this debate is surely shown by the fact that there are as many officials here tonight—six—as we have speakers.

We welcome the enlargement of the EU and hope that Romania and Bulgaria will join in 2007. We also hope that negotiations will eventually lead Turkey into membership. The EU acknowledges that closer cooperation with countries on its new border is inevitable from 1 May this year; but there is still a vast amount to do regarding the EU's relationship with the Ukraine, Moldova and Belarus. How these will complement or contrast with the EU's relationship with Russia is also a significant issue. It would be a tragedy if the result of enlargement was to weaken the ties that those countries enjoy with the rest of Europe.

The assumption that the regional degrouping that took place after the collapse of the USSR would result in those countries remaining closely allied with Russia has, in many cases, been proved wrong. The noble Lord, Lord Ponsonby, mentioned the recent dispute between Russia and Belarus, in which Russia accused Belarus of tapping illegally into the Russian gas giant Gazprom's pipeline, and natural gas supplies were cut off. That left a huge swathe of land stretching from Germany to Lithuania without its main source of fuel in the dead of winter.

The Ukraine, Moldova and Belarus are three ex-Soviet countries with serious problems, both social and economic. These include human rights, democracy and the rule of law. For example, Moldova's failure to establish a functioning, stable economy and internal tension between the ethnic Russian and Romanian populations; Belarus's ongoing issues with human rights and the worrying deterioration of democracy; and the Ukraine's problems with law and order.

The Centre for European Reform has rightly said that, EU states can never be sale so long as their neighbours are poor and unstable countries, rife with the trafficking of arms, drugs and people". Can the Minister update the House on the EU's delegation to these three countries and their progress in fulfilling their mandate? What is the current status of implementation of the partnership and cooperation agreements—PCAs—between the EU And Ukraine, and the EU and Moldova?

My noble and learned friend Lord Howe gave a fascinating overview of Ukraine, a country of which he is obviously very fond and where, as my noble friend Lord Selsdon said, he is highly respected. I agree with my noble friend that one must admire the courage of' those in that country who have grappled with its problems, particularly, as we have heard from both my noble friends, when things move slowly.

As my noble friend said, one-third of their trade is with the EU, and I agree that we should do everything that we can to help them. As my noble friend Lord Selsdon said, we have much to offer them.

Relations between the EU and Ukraine are fairly advanced—the most advanced of the three. The EU gives Ukraine generous aid—48 million euros plus an additional 126 million euros based on regional programmes last year alone. This goes to a country that, despite being well placed to take advantage of the benefits of EU enlargement, continues to have significant problems with law and order.

Denis MacShane, the Minister for Europe, has said: It is difficult to talk seriously with our Ukrainian friends while the rule of law … remains broken". The Foreign and Commonwealth Office Human Rights Report 2003 highlights serious failings in women's rights, particularly in rural areas; minority rights; the censorship and control of the media; and disabled people's rights. Can the Minister inform the House what steps the Government are taking to help to ensure that the presidential elections this October will be free and fair?

Despite Moldova's president stating that, integration with Europe is an absolute priority in Moldova's foreign policy", it still has significant child abuse and prison reform problems, and issues with disabled rights. The most worrying is the continual ethnic tensions between the Russian and Romanian populations, which have not eased since the 1992 war. Some 1,500 Russian troops remain in the Dnestr region, and the unrecognised separatist government there have said that, if international troops are sent in, Europe will see another war. What discussion have Her Majesty's Government had with Russia on that issue to work towards preventing such a situation occurring?

Belarus remains the most out on a limb of the three. We strongly welcomed the introduction of sanctions in 1997 as a response to its poor human rights record. President Lukashenka's moves towards authoritarian rule and his rejection of several overtures by the EU to assist the return to basic democratic standards are of great concern, bearing in mind the importance of Belarus as a future neighbour come May this year. It has never expressed any interest in joining the EU and remains the only European successor state of the former USSR without a ratified partnership and co-operation agreement. Its application for WTO membership is still under consideration nine years on. There are signs of growing trade. Imports have nearly doubled since 1996 and exports to the EU are up by nearly half over the same period. As the noble Lord, Lord Ponsonby, said, it is important that the EU works very closely with Belarus, so it seems surprising that there is no EU office in Minsk.

We must not back down on our position regarding human rights and good governance in that country. Will the Minister assure the House that Her Majesty's Government will not support the lifting of sanctions until Belarus is back on the track to democracy?

9.37 p.m.

The Minister of State, Foreign and Commonwealth Office (Baroness Symons of Vernham Dean)

My Lords, I, too, thank my noble friend Lord Ponsonby of Shulbrede for bringing this important issue before the House. As he says, the imminent enlargement of the European Union has given new impetus to strengthening relations with Ukraine, Belarus and Moldova. The EU has a clear interest in ensuring that the countries on its borders are stable, democratic and prosperous.

As my noble friend reminded us, from 1 April the EU will, for the first time, share a border with Ukraine and Belarus, and Romania's accession in three years' time will give the EU a shared border with Moldova. All three countries will share with the EU a greater interest in increasing trade and investment and co-operating on cross-border issues, such as counter-terrorism, immigration and the environment. Those are all very important issues, as the noble Lord, Lord Wallace of Saltaire, reminded us.

My noble friend is right that the very proximity of those countries will create some challenges for us, and how we react will be crucial. It was, of course, the United Kingdom that first proposed the creation of the "wider Europe" policy. Our aim was to deliver to the people of the EU and its near neighbours the mutual benefits of security, stability and development. As we know, that UK initiative has now been developed into the European "neighbourhood" policy. That policy sets us a new agenda; it aims to develop a zone of enhanced economic growth and stability, which is enormously important across a range of industries, as the noble Lord, Lord Selsdon, told us, in his characteristically interesting intervention. It will offer to the near neighbours closer co-operation and greater integration with Europe, in return for political and economic reform.

The noble and learned Lord, Lord Howe of Aberavon, was right. We—that is, the European Union—want and need those countries to have real success in their trade and commerce and their economies as a whole, because that in turn will increase our own security and prosperity as their close neighbours. Of course, both Ukraine and Moldova have ambitions to become members of the European Union. As the noble Lord, Lord Wallace of Saltaire, implied, both countries have some way to go along the path of reform before the question of their possible EU membership can be addressed. Belarus under the present leadership, as many of your Lordships have remarked, has no ambitions towards EU membership.

The European neighbourhood policy should be seen as a response to the practical issues posed by proximity and neighbourhood as we see them impending and as separate from the question of accession. We believe that our new eastern neighbours should focus for the moment on their domestic reforms and take advantage of what the European Union is offering in this neighbourhood policy. What is on offer includes the prospect of eventual full access to the EU's internal market and the gradual extension of the four freedoms of that internal market—the freedom of movement and people, and the freedom of goods, services and capital. It is significant that that would represent a fundamental advancement in relations, were that to be achieved. As the noble and learned Lord, Lord Howe, implied, it is a tremendous opportunity for those of the EU's neighbours who are ready to seize that opportunity.

How would the European neighbourhood policy work? The countries that border the enlarged EU are very different judged by most standards. A key element of the European neighbourhood policy will be differentiation, which is the country's specific action plan, setting out clear targets and benchmarks by which progress on reform can be judged over several years. Those will form an integral part of the policy. In order to encourage progress, the benchmarks for reform and the action plan are linked to credible incentives, such as preferential trading relations and targeted development assistance.

As the noble Lord, Lord Ponsonby, and the noble and learned Lord, Lord Howe, indicated, action plans from Moldova and Ukraine are now being drawn up. The European Union Commission has been asked to work closely with each country throughout this process.

The noble Lord, Lord Astor of Hever, asked specifically about progress on those two action plans. The precise content of each country's action plan— the benchmark for reform— is under discussion, so I am unable to give any details as those discussions are still in progress. However, I can give some details of the areas that are likely to be covered by those plans. They include OSCE validated free and fair elections. I hope that that answers the point raised by the noble Lords, Lord Wallace of Saltaire and Lord Astor of Hever. In addition, they would also cover media reforms, progress on other human rights, such as judicial reforms, economic and social reform, the improvement of environmental standards and achievements on other cross-border issues, such as drug trafficking and illegal immigration, which were important points raised by the noble Lord, Lord Wallace of Saltaire.

The noble Lord, Lord Ponsonby, asked about Moldova in relation to the settlement of the Transnistria dispute. The Government are working with all parties to help where we can to achieve a political settlement in Moldova and to end the frozen conflict—if I can put it that way—with breakaway Transnistria. On Moldova, we expect progress on finding a solution to the problem to be included in action plans in the way in which my noble friend implied. We hope that negotiations with Ukraine and Moldova will be completed by May of this year and action plans endorsed at the June European Council. I hope that that gives the noble Lord, Lord Astor of Hever, a benchmark in terms of the progress that might be made this year.

The noble Lords, Lord Ponsonby, Lord Selsdon, and Lord Wallace of Saltaire, and the noble and learned Lord, Lord Howe of Aberavon, spoke about Ukraine and the constitutional changes. I was grateful for the thoughtful way in which the noble and learned Lord, Lord Howe, with his considerable experience, approached the subject.

Your Lordships will recall that late last year Ukrainian authorities pushed for constitutional amendments to reduce the next president's powers to shorten his term of office and to have his successor elected by Parliament instead of by popular vote. The main opposition party resisted. The noble and learned Lord, Lord Howe, set out a number of rationales for all that. The EU, the United States and the Council of Europe protested that the changes were ill-timed—only months before the presidential elections—and that they were being forced through without full consultation. We are glad that the authorities have now amended the draft proposals and that the president will remain elected by popular vote. President Kuchma has also declared that he will not stand again and will retire from politics.

We hope that President Kuchma's lasting legacy will be free and fair elections, providing for a democratic transfer of power, with any new constitutional framework agreed through full consultation.

My right honourable friend the Secretary of State made it clear to the Foreign Minister in January that Ukraine's closer relations with the EU were dependent on the democratic process. The extent to which the 2004 presidential elections are free and fair will be an absolutely crucial test of the Ukraine's readiness for this. Again that addresses the points raised by the noble Lord, Lord Wallace of Saltaire.

So, I hope that my noble friend Lord Ponsonby and the noble and learned Lord, Lord Howe of Aberavon, will be pleased to know that the Department for International Development and the FCO have committed almost £3 million to enhance the independent Ukrainian media to enable them to expose any electoral malpractice. We believe that this will make a real contribution to creating the right environment for democratic elections.

I turn to the fraught question of the inclusion of Belarus in the EU. A number of your Lordships were in some ways quite critical of what was seen as a disengagement or rate of disengagement in relation to Belarus.

In 1997, EU/Belarus relations did indeed stall as a consequence of serious setbacks in the development of democracy and human rights in Belarus. That year saw the replacement of the democratically elected Parliament with a national assembly nominated by the president in violation of the constitution. So, together with our EU partners in the General Affairs Council we reacted swiftly to these very unwelcome developments.

We immediately froze conclusion of the EU's Partnership and Co-operation Agreement with Belarus. That is why we restricted ministerial level contacts and the scope of EU assistance. I hope that that gives some real explanation to the noble Lord, Lord Selsdon, and other noble Lords who were worried about that point.

Like my noble friend Lord Ponsonby, I am dismayed that despite repeated approaches—and there have been repeated approaches—by the EU, the OSCE and the Council of Europe since 1997, Belarus has applied a constant policy of deviation for the commitments it made in international forums.

The fact is that we deplore the current situation regarding freedom of speech and religion and basic human rights. There is oppression of civil society, harassment and closing of the independent press, of trades unions and NGOs. There is increasing pressure being brought on the OSCE office in Minsk. These are all very important issues. The failure of the Belarusian Government to initiate genuine investigations into the fate of disappeared members of the opposition is also a very worrying aspect of what is going on in that country.

The EU policy towards Belarus—and it is a policy which we all pursue together—is, however, based on a very clear proposition; namely, that the Government of Belarus improve the quality of democracy and respect for human rights and in return the EU will build close and mutually profitable relations. We have an agreed step-by-step approach towards Belarus, so it really is not a question of a complete block on relations in the way that the noble Lord, Lord Selsdon, perhaps implied. There is a way forward, but bilateral relations are restricted at the moment. They could be lifted if the clear political benchmarks for EU co-operation with the Belarusian authorities were moved forward.

I hope that that gives a more rounded picture of the relationship with Belarus and shows that there is a way forward for that country to improve its relationship with the EU. I do however have to report to your Lordships that sadly President Lukashenka has so far ignored this offer. Instead, we believe that he is moving Belarus back towards its totalitarian past.

The UK and the EU would prefer a better relationship with Belarus. We shall continue to offer opportunities for dialogue and to make every effort we can to encourage the re-establishment of democracy and the rule of law there.

Perhaps I should just say that the EU does cover Belarus, but not from Belarus itself. It covers Belarus from Kiev. We maintain our assistance to civil society, deliver aid on humanitarian grounds and of course, as many of your Lordships will know, we try our best to alleviate the suffering still felt after the Chernobyl disaster.

A number of noble Lords raised the question of the new neighbourhood policy in relation to EU/Russia relations. I agree with much of what my noble friend Lord Ponsonby has said—and of course the noble Lord, Lord Astor of Hever, asked questions on this point. The EU is determined to build a genuine strategic partnership with Russia based on equal rights and obligations, mutual trust and open and frank dialogue. The European neighbourhood policy should not be seen as competing with Russia for newly independent former Soviet states. Russia understands that its neighbours to the West are also the EU neighbours. We believe that we have a common neighbourhood and that we ought to be working together on those issues. The EU will seek to develop relations with Ukraine, Belarus and Moldova but will do so in co-operation with Russia, transparently, stressing the benefits that the economic development of the region will bring to all.

The noble Lord, Lord Wallace of Saltaire, also asked about the OSCE's role in Moldova, Ukraine and Belarus. The EU introduced a visa ban on President Lukashenka and seven other senior officials in January 2003 in response to the forced closure of the OSCE office in Minsk. The ban was removed when the new office was allowed to open in April 2003.

The OSCE can help to supplement the EU's policy towards all three countries through the work of its field missions and through project work by other institutions, for example, the Office of Democratic Institutions and Human Rights. The OSCE mission mandate in Belarus includes assisting the Government in further promoting institution building, consolidating the rule of law and developing relations with civil society, obviously in congruence, in accordance with the OSCE principles. The continuing presence and functioning of the OSCE presence in Belarus is of enormous importance to the EU.

I hope that I have been able to indicate to your Lordships the overall span across all three countries, all at very different stages in their relationship with the EU. As we clearly recognise, Belarus is at a greater distance from us. The fact is that EU relations with Ukraine, Belarus and Moldova will continue to be of enormous importance over the coming decades. For our part, we shall strive to achieve a relationship that delivers real benefits to both sides: to the people of the European Union and to our new neighbours in eastern Europe.

Lord Wallace of Saltaire

My Lords, before the Minister sits down, as we do have a little time, can she be more specific, if possible, about whether there is any movement on Transnistria and the withdrawal of Russian troops? It seems to us to be important. We have heard a certain amount about whether the EU would play a larger role, including perhaps sending peacekeeping monitors, if that conflict did move towards resolution.

Baroness Symons of Vernham Dean

My Lords, reinforcements have arrived from the Box, fully justifying the number of civil servants who are with us this evening. I can tell your Lordships that the UK continues to raise with the Russian leadership the need for Russia to remove its troops from Moldova. The UK will not ratify the adapted CSE treaty until Russia removes its troops. Many thanks to officials for running to the aid of their Minister. I hope that that satisfies the noble Lord on that question.