EU Development Aid (EUC Report)

HL Deb 20 January 2005 vol 668 cc965-94

4.42 p.m.

Lord Bowness rose to move, That this House takes note of the report of the European Union Committee on EU Development Aid in Transition (12th Report, Session 2003-04, HL Paper 75).

The noble Lord said: My Lords, I speak to the two Motions standing in my name on the Order Paper.

The report European Union Development Aid in Transition was commenced in October 2003, initially under the chairmanship of my noble friend Lord Jopling, whom I succeeded in November 2003 as chairman of Sub-Committee C. The inquiry was completed in April 2004, since when it has been on the Minute waiting to be debated. This lengthy wait is a very good example of the problem which the noble Lord, Lord Grenfell, has been seeking to address. Debating reports eight months after their publication does nothing for their relevance and immediacy. It was an attempt of our own to make a positive contribution towards solving the problem that it was proposed the report on the European security strategy be debated with the first report. Although different topics, there are real connections to be made.

Both reports under consideration this evening were completed by the sub-committee as constituted in the previous parliamentary Session. I thank all members, both those who ceased to be members in November and those who continue in membership, for their work in the production of the reports.

For the preparation of the development aid report, the sub-committee was fortunate to have the advice and assistance of Sir Tim Lankaster as our special adviser, and we place on record our thanks to him for his help. For both the development aid report and the European strategy report, the committee had the assistance of our then-clerk, Miss Audrey Nelson, who produced the draft security strategy report during the summer Recess, which enabled it to be published soon after our return. Miss Nelson has now left the committee for the Judicial Office, and members past and present have wished her well. I thank her for all her help, guidance and courtesy during the past two years.

In speaking to these reports, particularly the development aid report, I will endeavour not only to refer to the committee's findings at the time the report was published but, because so much has occurred since then, I will also try to put it in the context of today.

At the time of our inquiry, the European Union, together with the member states—then 15—provided over 50 per cent of official development aid worldwide. It is now some 55 per cent. It is therefore important that it is both efficient and effective. In recent years, both the Government and Opposition had voiced severe criticism of the standard of European development aid. A number of calls were made for the aid to be repatriated to national budgets, a call still heard in some quarters today despite the considerable improvements which we found in the course of our inquiry.

Our inquiry analysed the impact of the then recent European Union reforms and made recommendations for better aid management in the future. We found that both quality and speed of European development aid had noticeably improved. EU officials to whom we talked accepted criticism and weaknesses of the past and were keen to continue the improvements. Many of those followed the establishment of EuroAid as an independent implementing agency, the introduction of country strategy papers with a focus on governance and human rights, the de-concentration and decentralisation of EU tasks to its overseas delegations and an improved accounting, monitoring and evaluation capacity.

We found that further efforts would be necessary to sustain and complete the reform process—in particular to improve co-ordination between national aid programmes and those of the EU, greater coherence between the aims of EU development policy and the effects of other EU policies, particularly trade and agriculture. The geographical scope of EU aid was considered controversial. At the time of our report, the percentage share of official development aid, focused on low income countries, was considered too low at 42 per cent. We expressed fears that political pressures from an enlarged EU to focus development aid on the new neighbourhood would come at a time when more aid was needed for the poorest countries.

That view was shared by the Government in their response. However, it is difficult to be too rigid about priorities. The Government's very new publication, Why we need to work more effectively in fragile states, which, surprisingly, manages only three or four references to the EU—and then only in the context of working with others, such as the UN and G8—makes the case for aid for failing states, which could, at least, include Georgia as a new near neighbour.

EU development programmes are still funded from two sources—first through the budget, which is subject to the same parliamentary and other procedures as other budget items, and from the European Development Fund (EDF), which goes to the African, Caribbean and Pacific countries under the Cotonou agreement, which is managed directly by the member states, and the total of which is a result of negotiation between the member states and the ACP.

In the medium term, we considered that the EU should work towards developing an objective of global criteria to help assess the need for aid, rather than the regional allocations which form the current basis. This may not mean that the countries of the ACP would receive less aid—some may receive more. But, at present, the aid is highly skewed in favour of the ACP as a whole, to the detriment of other low income areas, particularly in Asia.

Bringing the EDF into the principal EU budget lines would represent an important step towards achieving a more coherent system of financial allocations. It was disappointing that development was not given a stronger and more independent focus in the draft constitutional treaty. We hope that this will not result in the reduction of development interests in the name solely of the EU's common foreign and security policy.

In line with our report, the new European Commission has retained an independent development commissioner, Louis Michel. EuroAid has been retained as an independent implementing agency, although the new Development Commissioner does not have a direct role in the agency. Further consideration will need to be given to the internal organisation to avoid problems between the two directorates, External Relations and Development, although that may be difficult with the present size of the College of Commissioners.

It became apparent during the inquiry that repatriating EU aid was both counterproductive and politically unachievable and that EU development aid had some advantages over national aid. It is seen as politically neutral, it enables the smaller states to contribute more effectively and it can be directed to fill the gaps left by disparate national aid policies. It can also reduce the administrative burden on the recipients who would otherwise have to work with even more donors, each with different procedures and requirements. The committee regretted that despite attempts we were unsuccessful in obtaining much evidence directly from representatives of the recipient member states.

Against a backdrop in the past decade of declining overall global overseas aid, a substantial contribution via the EU budget helps to keep development aid high on the political agenda and encourages each member state to make a determined effort to sustain or increase development spending with a goal of attaining the UN target for the EU by 2015.

Since our report was published, there has been a further annual report from the European Commission up to the year 2004. The report confirms that the commission has pursued its reforms of how it prioritises, organises and implements its programmes. This has begun to deliver concrete results. Commitments and payments both from the budget and the EDF reached record levels in 2003. Devolution of day-to-day decisions to delegations has made the programme more responsive to partner countries and donors report improved co-ordination. The quality of strategy documents which serve to analyse the situation in each partner country has also improved.

Commissioner Michel has also outlined his plan of action for the next five years to the European Parliament's Development Committee. He has signalled his intention to set up a specific initiative on Africa by the autumn of this year worked out in collaboration with the African Union. He has emphasised that this would not just be another project from the community of fund providers but a decisive boost to the African Union's agenda and NePAD. He has said that, given adequate resources, the AU is doubtless the instrument best suited to establish the principle of ownership for Africa.

Money however is not all and effective monitoring will be necessary. Although making progress, the overwhelming majority of member states have yet to raise their contributions above 0.39 per cent of GDP. Only four member states—Luxembourg, Denmark, Sweden and the Netherlands—have reached the target. The United Kingdom's contribution is 0.34 per cent and that will rise to 0.47 per cent by 2008. Louis Michel indicated that the EU will need a further 6 billion dollars a year to meet this target.

The committee was pleased to receive the Government's largely favourable response to our report. The exception was our support for the bringing of EDF moneys into the budget. There is also a proposal in the current financial perspectives to merge certain budget lines. We intend to look at this proposal in more detail.

As for budgetisation, perhaps the Minister will explain in rather more detail why the Government are resisting the step and advise the House whether it is a matter of principle or the fact that it would cost the UK more, which is the foundation of the opposition.

Although this debate is about the committee's report, there has to be a brief comment on the tsunami disaster which may well have a long-term effect on the pattern of aid. The need for greater attention to be given to Asia now has an added importance. It is perhaps surprising that there has been so little reference to the European Union's efforts. At the Jakarta conference, the Commission president pledged 450 million euros from the budget. The Commission had already committed 23 million euros and the additional 450 million includes 100 million euros for humanitarian aid and up to 350 million towards longer-term reconstruction. A one billion euro Indian Ocean tsunami lending facility is to be managed by the European Investment Bank.

The total EU support from the community and member states amounts to some 1.5 billion euros, with Germany alone contributing 500 million. The civil protection mechanism was triggered when Sri Lanka requested international assistance. Experts from Sweden, France, Italy and Britain were deployed to Sri Lanka and Thailand. Greece, Hungary, Slovakia, Malta and the Czech Republic contributed relief supplies through the mechanism.

By these pledges, the European Union becomes by far the world's leading donor. However, the EU's engagement remained almost invisible to television viewers. Member states appeared more interested in advertising their own particular contribution than emphasising co-operative efforts.

The importance of linking development aid and foreign and security policy is made in both reports. Development aid should be an element of foreign policy and not merely an instrument. Aid delivered effectively can be a contribution to stability and therefore security, and security for the recipients is security for all.

Your Lordships will be relieved to hear that this brings me to the European Security Strategy. This is the subject of our second report and the second Motion. It was prepared by Mr Javier Solana and published December 2003. The committee considered the strategy to be a useful initial document but we are aware that much more needs to be done in order to make the EU's security strategy aspirations a reality. That the report is aspirational is unavoidable, as it states. It is a first step towards developing and expressing common foreign policy objectives. It identifies the key threats to security; namely, terrorism, regional conflicts, state failure, organised crime and the proliferation of weapons of mass destruction.

We took evidence from the Foreign and Commonwealth Office and the Ministry of Defence. We met Mr Solana in Brussels, who gave very willingly of his time and answered questions of the Members of the committee very fully.

The aspirations of the strategy cannot be realised without appropriate resources. The report calls for more information on the EU's priorities as well as how and where the strategy will be applied. As a start, the EU has now produced a strategy for the non-proliferation of weapons of mass destruction, which is currently the subject of an inquiry by the sub-committee. More of that on another occasion but I believe that that report will echo the need for resources if the strategy is to become a reality.

Words are not sufficient when it comes to the issues of security and therefore the report called for urgent action on an EU policy for addressing global security; the co-ordination of policies that influence this area— development aid, trade, the environment and foreign and security policy—appropriate resources, including funding for CFSP; and further work to restore relations with the United States, which deteriorated over Iraq, Kyoto and other matters, and which deterioration is not the fault of any one side. All these are matters for the member states acting in the European Council. The responsibility for no action cannot be passed off to the Commission.

The Government were kind in their response and I hope that the Minister will not find me churlish in one or two observations in the context of that response. We felt that the issue of establishing priorities had largely been ignored. The principle was accepted but there is little evidence of any action being taken. For example, the statement: The priority for 2005 and beyond will be ensuring that implementation continues and is widened focusing on the areas where the EU can add most value", does not really enlighten us about priorities. What are the areas the United Kingdom believes deserve that focus?

The response also highlighted another potential difficulty for Parliament's involvement and scrutiny of CFSP and ESDP matters with the references to rapid reaction battle groups. We read in the newspapers that the Secretary of State for Defence had agreed the setting up of those groups at a meeting of EU defence Ministers. I believe that, subject to being satisfied that we have the necessary resources to contribute, no one will take issue with that development. However, we are inquiring exactly how that decision was taken since although much of the Ministry of Defence's work will not be within the scope of the European Union scrutiny, we believe that if decisions are to be taken within the framework of the European Union, Parliament should have prior warning. If it is purely governmental, let it be so and not be portrayed as an EU matter but nevertheless none of our business. We are pursuing that further.

The committee feels very strongly that if European Union proposals are to have credibility, they must be capable of implementation, and this means the resources have to be available.

So many documents come before us with comprehensive plans quite properly put forward by the Commission—and we generally have no quarrel with the objective, and, presumably, neither do the Government—but once the decision is taken, where are the resources then coming from? This way of proceeding without that being made clear can only add to cynicism about the EU.

Mr Grevi of the European Policy Centre writing in European Voice called for a political debate in national parliaments on the security strategy. He suggests that the performance of the Union in foreign security and defence policy should be assessed and that the interaction with other EU external policies such as trade and development should be examined by national parliaments. Such debates would inform at national level and help give a reality to the whole concept of European Union foreign policy in the widest possible sense. I believe that the two reports before the House this evening are a contribution to this important debate. I beg to move.

Moved, That this House takes note of the report of the European Union Committee on EU Development Aid in Transition (12th Report, Session 2003–04, HL Paper 75).—(Lord Bowness. )

5 p.m.

Baroness Northover

My Lords, I thank the noble Lord, Lord Bowness, for securing this debate and for introducing it in such a comprehensive fashion. I would also like to thank him very much for his careful, courteous and diplomatic chairmanship of a committee where views of the EU can come, shall we say, from rather diametrically opposed positions. It was a privilege to serve on his committee.

The noble Lord referred to having to wait quite a time for this debate—such that we are already facing a different set of circumstances from when the report on EU development aid, on which I will focus, was written. Given the delay, perhaps we should have waited a few more days so that the noble Lord, Lord Patten of Barnes, who was introduced yesterday, could have taken part in this debate. He would surely have been best placed to comment on EU aid and its future direction, given that he was until very recently the Commissioner overseeing this, and driving forward its reform.

What we learned as we researched our report showed quite how far Commissioner Patten was trying to push things, but also how far the EU had to go— and the risks that were coming down the track as far as those reforms were concerned. The EU, as the biggest population bloc in the wealthy western world, ought to be a major player in providing aid for the poorest nations in the world. It currently ranks third.

The problems of EU aid are familiar. There is a complicated EU aid structure, to which the noble Lord, Lord Bowness, has referred—and there has long been confusion between political objectives, especially in providing aid to the neighbouring region, and humanitarian objectives in reducing world poverty.

It is quite understandable that the EU should have as a foreign policy aim the promotion of stability on its borders, especially in the post-Communist era, and ensuring that potential new members economies could flourish. Of course there is also overlap between humanitarian relief and foreign policy objectives, in that societies that are prospering are likely to be more stable than those in abject poverty. But this can and has confused overt foreign policy objectives with meeting the MDGs—and we felt that it was important that development policy was not made subservient to the EU's common foreign and security policy.

Then there are the historical links at work, to which the noble Lord, Lord Bowness, has also referred. Former colonies have benefited from special agreements, and the EU's emphasis on Latin America has had more to do with history than addressing poverty. In addition, there was the bureaucracy—the slow moving way in which EU aid worked, with recipients possibly being past benefiting by the time it arrived.

However, from the late 1990s a number of reforms have been implemented, as the noble Lord, Lord Bowness, has also pointed out. In November 2001 the European Council adopted for the first time a general statement on development policy, which emphasised the primacy of poverty reduction, and in 2001 Europe Aid was established to implement this. Programming has been strengthened with the introduction of country strategy papers which then provide a systematic framework for EU aid. Responsibility for project management has now been substantially devolved to EU delegations overseas— and staff are being recruited there for their knowledge of aid delivery in these countries. Monitoring and evaluation has been improved. The noble Lord, Lord Patten, is surely to be congratulated on moving what has often been seen as a slow-moving juggernaut in the right direction.

Our report therefore concluded that although EU development aid had a long way to go, it was certainly moving in the right direction. We did not think that it was right, as some have suggested, to pull back UK contributions, but rather to engage with our EU partners to try to continue the momentum for reform. However, we were worried that with changes to the EU, there were threats coming down the track. The expansion of the EU to include member states with little history of giving aid, the increase in the number of commissioners and the reorganisation required by the larger EU could be an opportunity or a threat to the provision of aid. It is, therefore, a welcome sign to see that whereas the old established member of the EU, Italy, contributes only 0.17 per cent of GNI to aid, already the Czech Republic was at 0.1 per cent by 2003 after a threefold increase in as many years, and Poland plans to reach the same figure by 2006 and is in the process of adopting a law that would guarantee aid levels to allow for multi-year planning. Let us hope that that trend continues now that those countries are in the EU.

As we were completing our report, the Commission announced in February 2004 that it was proposing to create a development instrument, focused on poverty reduction, separate from the peace and security instrument. This was very welcome as it should have made it easier to clarify the different objectives, decision-making processes and means of support for those two areas.

However, in July 2004, the Commission published a second proposal outlining its intentions in more detail. The umbrella organisation BOND, which brings together various NGOs working in the development field, describes this proposal as, a huge step back from the February Communication". Its conclusion is that the Commission has essentially shifted from a policy-based approach, focused on poverty eradication, to, a thematic and geographical/regional model based on the prospect of EU membership in the medium and longer terms". They conclude that once again, All external relations policies have been diluted and confused, rendering it impossible to identify a clear political … commitment to development". They feel that crisis management, security and the fight against terrorism have been placed at the core of all development-related instruments. I know that BOND has been in communication over this with both the Foreign Secretary and the Chancellor of the Exchequer—I have seen the letters—and I would be grateful if the Minister could tell the House what has been the result of their discussions.

In the development co-operation regulation, the Commission seems to have excluded the European Parliament from the consultation process on defining geographic and thematic programmes. This is surely a significant loss of democratic oversight over development spending. Furthermore, the Commission envisages consulting partner governments and civil society on those programmes only when possible. That, too, is surely far from adequate. I would like the Minister to respond to that.

There is a new commissioner in charge of development, Louis Michel, and he is due to launch a major consultation on the direction of EU aid in March. If the wheel is to be reinvented, this becomes a key time, and the Government, poised as they are to hold the EU presidency this year, are surely very well placed to try to ensure that reforms to the EU aid system continue and speed up. They can feed into this process the conclusions of the Africa Commission, which marks 20 years since Live Aid. And of course in September of this year, the UN will be assessing how far we are from reaching the millennium development goals.

The Government pride themselves on joined-up thinking. Could I urge that they use joined-up thinking when chairing the EU presidency this year? The EU is a major, if flawed, aid giver, and immensely protectionist in a way that damages those whom, with the other hand, they are trying to help. Could the noble Lord tell us what reforms they will urge on their EU partners in this regard? The WTO has already ruled that the EU sugar market should be opened up; the EU has been urged to reform the CAP so that subsidised food does not undercut markets in poorer countries; and, of course, bilateral trade agreements with poor countries may not be in their best interests, as the WTO has pointed out.

There are reforms to be promoted here which would have a major effect on the economies of poorer countries. EU aid has the potential to make a huge contribution to the reduction of world poverty. Reform measures introduced in recent years have given it greater coherence and direction which, as our report said, is to be welcomed. There are some worrying signs of a significant wobble in this.

However the UK Government, taking over the EU presidency, is well placed to try to ensure that this is no more than a wobble, that addressing the MDGs is the focus of aid from the EU, and that other contradictory areas of policy, such as CAP reform, are also addressed. The Government have put Africa, poverty and international development at the top of the agenda for this year. That is extremely welcome. This is their opportunity to translate those words into actions.

5.10 p.m.

Lord Hannay of Chiswick

My Lords, there is a greater degree of overlap and coherence between these two reports than one might at first expect from their titles. That is one among a number of reasons for welcoming this debate. Another is that, as an incoming member of the sub-committee which produced these reports, and having had nothing to do with their production, I have an opportunity to salute the quality of its work before that becomes simply self-congratulatory.

The overlap and interconnection between development policy and security policy is a common feature of many recent analyses, most recently that of the United Nations Secretary General's High-Level Panel for Threats, Challenges and Change, on which I have the privilege to serve. What is still lacking are policies which effectively address that interconnection.

Not least is that so on the many recent statements about the needs of Africa and the needs of the areas hit by the tsunami. No doubt massive quantities of aid are needed in both cases, but aid alone will not be sufficient. Across much of Africa civil strife, instability and bad governance make the provision of effective aid virtually impossible. It will be necessary to face up to the security problems in both Sri Lanka and in the Aceh province of Indonesia if reconstruction aid is to be effective.

What all this illustrates is the need for the G8 and the United Nations in their up-coming summit meetings to address both sides of the coin: the peace and security side and the developmental side. The EU, as one of the world's largest aid donors and as the world's largest purveyor of what is called "soft power", will need to find a greater degree of coherence in its external policies. That is a challenge for the new Commission, which has just taken office, and an even greater challenge for the new institutional arrangements set out in the constitutional treaty which will, I hope, enter into force before too long. It is one of the many tasks facing those who oppose ratification of the treaty to explain how they plan to achieve the greater coherence for which these reports call on the basis of the existing institutions.

It would be unwise to believe, however, that there are no tensions at all between development and security objectives. Here the development report we are discussing today has a slight tendency to try to be all things to all men when it calls both for a greater focus of EU aid on the poorest developing countries and at the same time endorses the policy of support for the European Union's neighbourhood policy. It then says that too many funds should not go to the neighbourhood policy because that might take them away from the poorest developing countries. At some point hard choices will have to be made. Events in the Ukraine will lead to increased demands for assistance to that country to which I believe the EU will need to give a positive response. But the money will not come out of thin air.

What I do endorse is the proposal that in the new EU financial perspectives for 2007–13, separate funds should be earmarked for foreign policy, peace and security, and for development. The demand for spending on objectives which do not normally fall within the criteria for development aid—for example, for assisting disarmament and demobilisation in post-conflict countries—is on the rise and it is in the EU's security interest that it should be ready to meet them.

It is hard to read the admirable document on the EU's security strategy and the recent UN panel report without being struck by the identity of the analyses and indeed by the identity of many of the prescriptions in the two documents. The EU calls for effective multilateralism and the UN panel report sets out to deliver it, at least in so far as the UN and its agencies are concerned. That identity of view bodes well for the forthcoming discussions and negotiations at the UN on the follow-up to the panel's report, and Members of your Lordships' House will of course have an opportunity to debate all this on 2 February. It will be good to hear how the Government intend to ensure that there will be a firm, supportive and united European Union input into the process at the UN in considering the high-level panel's report.

The committee's report on the EU security strategy is implicitly, if not explicitly, critical of the rather high level of generality in which most of its language is couched. I suspect that to call such a document "aspirational" is rather like Sir Humphrey Appleby telling his Minister that a certain course of action would be "courageous". I would not regard being aspirational as a defect. Both the Government's White Paper on British foreign policy last year and President Bush's national security directive, which has provoked a great deal of debate, were indeed aspirational and very general.

The hard fact is that you cannot draw up blueprints for foreign policy the way you can for reforming the health service. All those foreigners, over whom you have no control, and all those unexpected events, over which you have even less control, have a nasty habit of making nonsense out of any approach that tries to be too detailed and too prescriptive. What I do agree with is the view that everything remains to be done to turn these generalities into prescriptions and decisions for handling the individual policy changes as they come along. Hence the need for more effective machinery for sifting and presenting policy options to EU Ministers for decision and for implementing those decisions once they are taken. And that brings us back to the constitutional treaty about which I have already spoken.

In fact, 2004 was something of a vintage year in the development of the European Union's common foreign and security policy, although you might not guess it from listening to its detractors, who seem to believe that it does not exist and certainly should not be invented. Like the character in a Moliere play who discovered that prose was what he had been speaking all these years, they could be surprised by the way in which it is developing on the ground.

The European Union has taken over from NATO important responsibilities in Macedonia and Bosnia; its enlargement to include central and eastern European countries has been completed, with Bulgaria and Romania also now decided; the decision to open accession negotiations with Turkey has been taken; the positive influence it has brought to bear on the crisis over the elections in the Ukraine has surprised everybody. All these have demonstrated the quite remarkable transformational capacity which the EU, and the EU alone, possesses in its immediate neighbourhood.

At the end of the 19th century, European governments struggled in vain to bring about fundamental reforms in Turkey. They would be astonished to see what has been achieved in the past few years as Turkey has given absolute priority to its objective of joining the European Union.

Ahead lies the challenge of reviving the Middle East peace process and the continuation of the tricky and sensitive dialogue with Iran, which has been another success story of 2004. CFSP may be a work in progress, but it is also a work that is making progress.

The final recommendation of the report on development aid was to reject categorically the policy of "repatriating" EU aid, which is that of the Official Opposition. I would add to the reasons for rejecting that policy the following—the noble Lord, Lord Bowness, referred to these too. More than half the member states of the enlarged European Union do not have bilateral national aid programmes to which to repatriate EU aid. Many do not have a tradition of giving substantial sums to development aid. So a policy of repatriation—and please do not let us delude ourselves that one country can opt out of EU aid and everyone else will just carry on as before—would inevitably result in a sharp drop in the sums reaching developing countries from Europe, and a great deal of confusion in the management of ongoing programmes. I doubt whether many bouquets from the developing world would be coming the way of a British government who sought to push through such a policy. Faced with the all-party unanimity of your Lordships' committee, I hope that we will hear before the end of this debate that some rethinking of that policy is under way.

I have one final point. I strongly concur with the view expressed in the report on the strategy that one of the fundamental objectives of a European security strategy must be to strengthen the transatlantic alliance. It will not be easy to achieve the unity of view and purpose in this matter which has eluded us so spectacularly and so damagingly in the past two years, but it is a necessity. When President Bush visits Europe at the beginning of his new mandate, it is surely crucial that he meets an EU capable of speaking with a single voice and ready to work in partnership with the United States on the huge agenda which faces all of us.

We need to put behind us the differences that we had over Iraq and ensure that they do not recur in future. I have long believed that we need to establish some new institutional links between the European Union and the United States to handle the mass of foreign policy business on which we are both involved on a day-to-day basis. There would surely be no better way to demonstrate that we really are making a fresh start than to set that as our joint objective for the coming year. If it were ready to be launched by the time the British Prime Minister, as president of the European Union, meets President Bush towards the end of the year, what would be wrong with that?

5.20 p.m.

Lord Truscott

My Lords, first, I congratulate the noble Lord, Lord Bowness, and the European Union Sub-Committee C on the excellent report laid before your Lordships' House today. I agree with all the sub-committee's conclusions.

While the Solana doctrine outlined in the EU's 2003 security strategy is a fine starting point, it remains largely aspirational. On the one hand, there are, as the committee argues, issues with implementation, application, resources and capabilities and the transatlantic relationship itself.

On the other hand, EU institutions have seen a dramatic upsurge in constructive developments in security and defence in the past five years; namely, European security and defence policy institutions, supported by all EU member states; a comprehensive framework for close co-operation between the EU and NATO, in particular Berlin Plus; EU operations in the Democratic Republic of Congo, Macedonia and Bosnia; pooling of intelligence in support of EU policies; and a framework for capability-building for military and non-military peace operations.

The new European Defence Agency will lead to regular meetings of EU defence Ministers, while the recently announced European battlegroups will provide the wherewithal to engage in further peace-keeping/peace enforcement operations. That will at least give some operational teeth to the EUs headline goal to provide a European rapid reaction capability, albeit at a modest level.

Other co-operative security measures include the European arrest warrant, border and law enforcement co-operation and a commitment to act jointly against terrorist threats. All that activity is designed to counter the identified security threats of terrorism, proliferation of weapons of mass destruction, regional conflicts, state failure and organised crime.

None of those developments threaten NATO or the transatlantic relationship—rather, they complement and provide a security alternative where the United States, for whatever reason, decides that it does not wish to take part in an operation. In many cases, the EU can supplement or reduce the burden placed on the Atlantic Alliance, as we have recently seen with the deployment of Eurofor to Bosnia.

Nor are those security enhancements coming too soon. As the security strategy notes, the EU is now a union of 25 states with more than 450 million people producing a quarter of the worlds gross national product. 11 is the largest single market in the world. The EU cannot afford to sit inside fortress Europe oblivious to the planets problems. As the strategy says: Europe should be ready to share in the responsibility for global security and in building a better world". That is surely in everyones interests, including the United States. The issue of appropriate burden-sharing between the US and Europe has been an issue since the 1950s. Yet even today it is said that the EU remains an economic giant but a political and military pygmy. Despite having almost twice the population, the EU spends just over half the United States budget on defence; that is, 160 billion euros versus 306 billion euros. Europeans also lag behind on research and development. In Kosovo, 85 per cent of the munitions delivered by NATO were American, while the Europeans struggled to provide 40,000 combat-ready peacekeepers—one-fiftieth of its paper strength.

As my right honourable friend Geoff Hoon, the Secretary of Defence, said at the time: We were forced to rely heavily on American military power to give credibility to the diplomatic campaign. We were stretched to put together a contribution to KFOR. We were not pulling our weight". My noble friend Lord Robertson of Port Ellen was right when he argued that diplomacy can achieve a lot in international relations, but sometimes diplomacy backed with the real threat of force can achieve a lot more. Capability and resources remain a weakness at the heart of the EU's security strategy. Of course, it is right that none of the new threats is purely military and that a military response is often not the correct or optimum option. A mixture of other instruments can effectively be used, including export controls, sanctions, intelligence, police, judicial and civilian crisis management tools.

But as deployments in the DRC, East Timor and Afghanistan have shown, the military option is increasingly important, especially in peace-keeping/peace-enforcement roles. This requires real and effective military capabilities.

I am not convinced that all EU member states have yet absorbed all the implications of the post-9/11 security environment. Although systematic use of pooled and shared assets will reduce overheads and duplications, there is no substitute for boosting military capabilities, deployability, mobility, interoperability, both among EU member states and the US, and combat readiness.

The other issue dodged by the EUs security strategy is the thorny one of pre-emptive military action. The document refers to pre-emptive engagement and, early, rapid and where necessary, robust intervention". The sub-committee's report rightly asks for clarification on whether this would include pre-emptive action.

Pre-emption is a thorny issue, recently grappled with by the UNs high-level panel. While everyone agrees that international law continues to evolve, the high-level panels decision not to rewrite or reinterpret Article 51, reform Chapter 7 and allow the retention of the P5 veto will mean that international consensus can still be blocked by an individual member of the Security Council.

I look forward to the debate on the UN led by the noble Lord, Lord Hannay of Chiswick, and I do not wish to pre-empt that debate here, but my understanding is that under these proposals there would still have been no consensus on pre-emption in the case of Iraq, which would have been opposed by two veto-wielding members.

Exhortations for UN members to use their veto only where vital issues are at stake—and not at all in cases of genocide and large-scale human rights abuses—still leaves obvious areas of dispute. The international community, including the European Union, will have to give further thought to acceptable humanitarian intervention, even when that is opposed by the state concerned. The Sudan and Darfur may well become a case in point.

I hope that the European Defence Agency becomes a genuine instrument for fostering effective capabilities in the European Union. The EDAs brief is to improve capabilities, collaboration, research and strengthen the European defence industrial and technological base. Although it will not be a joint procurement agency along the lines of the four-nation OCCAR, it will collaborate closely with NATOs force planning process. The EDA should be the driver for improving real capabilities and so avoid becoming a fig-leaf to cover the EU member states security weaknesses.

Finally, I commend the Government for supporting a new arms trade treaty and a tightening of the EU code of conduct for the arms trade, which was initially introduced by the United Kingdom. The new code will include provisions on arms brokering and technology transfers. In a more dangerous world, the fewer arms which fall into the hands of terrorists and violent and aggressive regimes, the better.

5.28 p.m.

Lord Garden

My Lords, I, too, congratulate, the European Union Sub-Committee C on its work in putting together the excellent report on the EU security strategy.

The strategy itself has received almost no publicity in the United Kingdom, and that is a great pity. I doubt that many of our citizens are aware that all the member states of the EU signed up in December 2003 to a statement of the common view of the future security challenges. The debate today, late on a Thursday in your Lordships' House—a shared debate—over a year after the signature on the EU document is, I fear, unlikely to galvanise the nation tomorrow. This is a great shame. The EU document itself is, for once, short, well written and understandable.

I watched the development of this EU strategy paper throughout the whole of 2003 with close attention. I was delighted that the final agreed version was not watered down very much from the original Solana draft. In the academic world we have tended to compare and contrast it with the United States national security strategy, to which the noble Lord, Lord Hannay of Chiswick, referred. The EU strategy paper is shorter and more schematic, but it identifies most of the same key challenges. Indeed, in one respect, that of drawing attention to the threat from organised crime, the EU paper goes further than the United States document.

The committee's report, in its content and in the evidence session, shows an entirely reasonable concern about the implications of the transatlantic relationship. Given the commonality of threat assessment between the EU and the US, we should to be able to do better. The difference arises not in the analysis of where the threats are, but in the strategy to meet those threats. The events leading to the unfortunate intervention in Iraq highlighted, and gave a vivid example of, the difference of those approaches. The noble Lord, Lord Truscott, mentioned the fact that paragraph 16 of the report asks for clarification of whether the EU strategy includes pre-emptive action. Having watched the development of the strategy, I think that it is clear that it does not and will not. While the US strategy advocates pre-emptive action to forestall possible hostile acts, the EU strategy looks to preventive engagement. I welcome that.

The differences are more than semantics. They lead to some of the inhibitions on NATO and EU co-operation, which is also an area of concern in the sub-committee's report. I must report to your Lordships that my recent visits to a number of fora for NATO and for European security and defence policy suggest that there is a real problem of communication between NATO and the EU. Indeed, all the exciting policy development has now moved across town in Brussels, away from NATO, and the EU is enthusiastically looking at ways to develop its security capabilities.

Since the evidence was taken in March and July of last year for the sub-committee's report, there have been developments in NATO and the EU. In NATO, we have seen the difficulties in obtaining practical support from member nations for the agreed force levels in Afghanistan. We have seen also the relatively undemanding agreement on providing training for Iraqi security forces which NATO reached at the Istanbul summit. That has been moving very slowly. The much-trumpeted NATO Response Force seems to be taking on a role as the stop-gap reserve rather than a leading-edge deployment.

I contrast that with the moves in the EU in this timescale. We have seen the takeover of the Bosnia task; the development of the battle groups; and the establishment and building-up of the European Defence Agency under the leadership of the UK's Nick Whitney. There is an air of things happening in European defence after a period of not much happening during the tetchy days of the dispute over I raq. I trust, however, that the UK Government in general, and the MoD in particular, have rediscovered their early enthusiasm for moves on European defence, which seem to have waned in recent times. The security strategy is a good starting point, as the committee states.

The Centre for Strategic and International Studies in Washington brought together 13 retired senior military officers from NATO nations last year in an initiative to look at how we could establish a renewed transatlantic partnership. I agree with the noble Lord, Lord Hannay, that that really is key to future security considerations. Those officers included General Ralston, a former vice-chairman of the US joint chiefs, and General Naumann, the former chairman of the NATO Military Committee. Two members of your Lordships House signed the final joint declaration: the noble and gallant Lord, Lord Boyce. and me.

We all concluded that European countries must move quickly to acquire the military capabilities, which the noble Lord, Lord Truscott, was talking about, that will enable them to share responsibility for global security. However, in order to do that, we must move forward with greater defence integration in Europe. In the implementation of the EU security strategy, this difficult political issue will have to be addressed.

I was particularly pleased to see that Sub-Committee C had highlighted in its recommendations at Chapter 5 the need to develop and commit funding for these policies. It is only with common funding that we will be able to share the tasks appropriately and make progress in rationalising and developing common capabilities. I do not believe that the Government, in their response to the report, have shown sufficient imagination in this area. Equating the provision of bits of military capability with common funding misses the point. So long as we have voluntary force contributions, there will be no development of high-end enabling capabilities for Europe, and the problem of the free-rider nation will continue.

The Government response to the report also addresses some of the non-military aspects of EU security policy, which is an important area where the EU has a comparative advantage over NATO and even over the United States. I am encouraged by that and trust that the UK will play a full part in extending the EU's ability to provide civil support for conflict prevention and the building of civil society in fragile states.

2005 may not have been with us long, but it has been a good year so far for the EU. The European A380 Airbus shows what Europe can do on its own. The extraordinary landing on Titan by the European Space Agency's Huygens probe showed what we can do in a transatlantic partnership. The committee rightly concluded that we need to work with the United States, but that does not mean that we have to tackle the global security problem in the American way.

The EU strategy says, As a union of 25 states with over 450 million people producing a quarter of the world's Gross National Product …the European Union is inevitably a global player … Europe should be ready to share in the responsibility for global security and in building a better world". From these Benches we commend the Government for signing up to that policy on behalf of the United Kingdom and congratulate the committee on its work in monitoring the delivery behind those promises.

5.35 p.m.

Lord Maclennan of Rogart

My Lords, I begin by expressing the great debt that Sub-Committee C owes to its chairman, the noble Lord, Lord Bowness, who opened the debate today. He has shown great skill and tenacity in coming to the conclusions that the committee did, which have been so widely commended in the debate. It is true, as my noble friend Lady Northover said, that many members of the committee start from different points of view on European matters, but a strong consensus was reached in both reports, which is highly significant to their effectiveness.

The report on the development committee has come to the Chamber very late and to some extent it has been overtaken by events, not least by the changes that have occurred in the Commission. However, it is not necessary for me to linger on the report's details since they have been so comprehensively and properly described by our chairman and by my noble friend Lady Northover. I simply make one point to the Government about their response.

The committee was positive about the way that the EU institutions have tackled some of the deficiencies in administration and direction of the development programmes. It stated that it was impressed by the comprehensiveness of the latest annual report: that it saw significant improvements in aid management and organisational effectiveness. It stated that the simplification of the external actions part of the budget in the future financial perspective was to be welcomed. It also helpfully repudiated the suggestion that there were advantages in repatriating aid effort to the national aid budgets.

The Government's response to those general propositions has been surprisingly tame and muted. Throughout their response there is a defensive spreading out of their position and how they believe that they have influenced these events. While the committee saw much to commend in the Government's approach to these issues, the committee also thought it was worth giving some laurels to the Union. It would be good to hear from the Front Bench that they share the view of the committee. It is too often the case that the Government adopt an adversarial approach and emphasise the differences between them and the Union, and not the shared achievements.

The main thrust of the debate has been about what the committee saw as the important and urgent matter of implementing the security strategy. The committee sought to emphasise the need for further progress on implementation. It is true that we have seen remarkable developments, even in the period since the committee reported. For example, the EU's Bosnian military mission was implemented on 2 December, which was the first time a treaty arrangement of that kind has been engaged on so successfully by the European Union. There has been progress in other areas where priorities have been identified; for example, in the counter-terrorism field, with the appointment of Mr Gijs de Vries as the co-ordinator; and in the work on weapons of mass destruction, at which the committee is currently looking.

The priorities identified only need to be listed to show how much progress is still required. On the wider Middle East, we are a long way from seeing the implementation of the aspirations of the European Union. In restoring effective multilateralism, the heat may have gone out of the Iraq divisions to some extent. I share the view of the noble Lord, Lord Hannay, that the European Union's position on the recommendations of the high-level panel will not be too far removed from those of the panel itself. However, it is unlikely that the European Union will get its act together in a sufficiently strong and coherent way to be able to speak clearly with one voice in the autumn unless considerable steps are taken by the heads of government to ensure that that comes about, notwithstanding the differences that exist between, for example, the nuclear and non-nuclear countries in the European Union and the different positions struck on terrorism and Iraq. It is urgent that the Government seek to promote a common voice on this issue.

On the issue of co-ordination, which was also identified as a priority, the importance of the provisions of the treaty on the reformed constitution, setting up a new EU foreign secretary, and an EU external action service, are critical to effective co-ordination in the medium term. If anyone doubts that, they should simply chart the difficulties that Mr Solana has had in beefing up his force of civil servants to carry out the many tasks that he has been set. It is still the case that candle-end savings are sought from Union programmes to finance major missions, which is totally unsatisfactory. On the issue of resources, the committee was clear that there was a need for greater commitments.

The Government's position on this is evidently approving in principle of increasing the expenditure on the CFSP. But the Government's response to the report is strangely lacking in detail and in prioritisation. It is very hard to determine what in actuality the Government would be prepared to see put behind the different priorities which have been identified. They would seek to cap expenditure, of course, at 1 per cent of the EUs GNI. The opportunity provided by the report might have been used to spell out with much greater clarity what the Governments response is to that point.

As regards restoring relations with the United States as a key EU objective, which the committee wished to emphasise, progress has to be regarded as rather limited. It is obvious that the EU cannot act without regard to its relations with the United States, but it is capable of acting independently where it is in the interests of global security to do so. In the past year the most significant example has been in respect of the Iran talks, which Britain, France and Germany undertook, without the evident approval of the United States. Nonetheless, this is a very important initiative in furthering both wider Middle East security and tackling the problem of the spread of weapons of mass destruction.

I conclude by saying that the work of the committee seems to be of immense value. It is of considerable value because it provides a locus for people who are seeking to follow what is going on in the European Union. One of the greatest difficulties at the moment is the absence of publicity, coverage and the lack of awareness of what the EU is doing. That has been referred to by a number of speakers during the debate, particularly by the chairman of the committee as regards the efforts of the Union concerning the tsunami disaster and also in seeking to support democracy in Ukraine.

Can the Government do more to seek to ensure that these matters are not always presented simply in a national framework and that where the Union is operating co-operatively it can be seen by our own public? Will they lend support to those who recognise that the effectiveness of the European Union depends on the support of the British people and the citizens of other countries?

5.48 p.m.

Baroness Rawlings

My Lords, first of all, I would like to thank my noble friends Lord Bowness and Lord Jopling and their committee for all the hard work they have done to produce these reports. I defer to the detailed knowledge that many of the committee members have shared with us in todays debate.

As always, we on these Benches welcome the opportunity to discuss the reports of a committee of this House. As I have said before about such discussions, I also regret that we often do not get the chance to consider reports closer to their publication dates, which as I understand were April last year for the report on development aid and more recently in October 2004 for the security strategy report.

I would like to start with some comments regarding security and the EU embargo on arms exports to China. Both the reports we have been discussing aim at creating global security and the development of poorer countries so that they can become more secure.

Security and development, we hope, will eventually put an end to human rights abuses, corruption and the neglect of the poor. We cannot separate security from development when one country in eight in the world is embroiled in a civil war which has had more than 1,000 violent deaths. A century ago most conflicts were between nations and 90 per cent of the casualties were soldiers. Today almost all wars are civil and 90 per cent of the victims are civilians.

The arms embargo to China was initially implemented as a response to the Tiananmen Square massacre. According to the FCO annual report, Chinas human rights record has hardly improved since then. Organisations such as Falun Gong are suppressed, while China continues its repressive policy in Tibet. The EU has sent a positive signal that the embargo is to be lifted and Her Majestys Government refuse to rule it out. We on these Benches believe that the embargo should stay. A disconnection of arms sales from human rights would be seen as accepting that principle, and would make it harder to sustain other embargoes against governments who abused human rights. China is known to sell arms to countries such as Sudan and Zimbabwe. That undermines the European Union arms sanctions against such countries, let alone that those arms turned out to be the same ones as we had sold to China in the first place. Will the Minister change his line and join me in supporting the continuation of the ban?

I am glad to say that, on the whole, we support the recommendations of the European Union Committee in both reports, and have been encouraged by some of the Governments responses to the report that we have been able to read so far. There is no doubt that, despite improvements, many questions still hang over the European Union's head about the effectiveness of its aid, the coverage of need and the 1.5 billion euros reportedly lost from its international aid project in the past year. I reiterate what many noble Lords have said when I say that we welcome the changes so far, but that a great deal more remains to do.

I strongly believe in the principle of practising what you preach. If we are supporting development projects that aim to encourage transparency, good governance and anti-corruption, we must ensure that the EU itself sticks to those principles. It is essential that any hint of irregularity in the organisation is investigated. We should work to make the best use of the European Union aid budget. It should be as cost-effective and efficient as possible. In light of that, we welcome the agreement last April to set up a special group of development experts, to agree a set of detailed measures to be introduced in time for this Mays OECD-DAC high-level forum on aid harmonisation. Can the Minister update us on the progress of those measures? Are they still in line to meet the target date?

In terms of the cost-effectiveness of aid, although we believe that as much as possible should be targeted at the poorer countries, we cannot neglect our responsibilities to other countries which, due to aid so far, are in more stable situations than before. We must remember that it is the privilege of our own security that enables us to help other countries in the way we are discussing. It is always worth making sure that our stability enables the European Union to continue providing development aid in that vein.

The Governments response to the report stated that the Chancellors 2000 development policy statement would be reviewed this year. Will the Minister tell us when?

I know that we are running short of time, but there is one important issue that I would particularly like to highlight. We should make all efforts to make certain that our fellow EU members do not allow other policies, such as the reform of the CAP as part of the Doha trade round, to conflict with the aims of the EU development aid programme. The Geneva agreement still leaves much of the detail to further negotiations, and we are by no means there yet. Although we commend the growing membership of the WTO, 147 powers of veto from different countries, all with their own agendas and pressures, can guarantee only slow progress.

In terms of aid allocation, I was interested to see that Her Majestys Government did not respond directly to recommendation 12 regarding a common criterion for allocating aid across the globe. I have said before that one of the main stumbling blocks on this issue is the lack of openness of Her Majesty's Government on exactly what criteria are used to make decisions on our involvement with a country. It is as simple as rewarding success and penalising failure in terms of meeting set conditions, such as economic growth policies, trade liberalisation, political freedoms and good governance. Do DflD and the Foreign and Commonwealth Office use the same criteria? Can they make them available to this House? It is no good insisting that there is transparency and accountability in developing countries and their governments unless we are transparent and accountable ourselves.

This afternoon's debate has by no means been long enough to cover the details merely touched on in this broad debate. I agree with the noble Lord, Lord Hannay of Chiswick, and the noble Lord, Lord Garden, regarding the importance of the transatlantic relationship. I have only been able to highlight a few issues. Needless to say, I am sure many of them will be developed and overlap with the debate of the noble Baroness, Lady Whitaker, next Wednesday.

5.55 p.m.

Lord Triesman

My Lords, I start, as other noble Lords have, by congratulating the noble Lord, Lord Bowness, on this debate and all other Peers who have made constructive contributions in all cases. I join the noble Lord, Lord Bowness, in thanking Sir Tim Lankaster and others for the background work which he quite rightly acknowledged. It has been a thought-provoking exchange of views, and I will try to reflect on them here. Whether the media choose to reflect on them, whether they would have done so even if the debate had taken place on the day that the report was published, is quite another matter. Had we had straight sausages to discuss today, no doubt they would have paid close attention. How we can get a really sensible debate on so many European issues remains something of a mystery.

I start by thanking all members of the EU Scrutiny Committees Sub-Committee C for their insightful and detailed reports on the European Unions development aid and the European security strategy. I am pleased to say that we do agree on many of the main elements in both reports, and welcome the opportunity to debate the development of EU policies in these important areas.

It is certainly true, as the noble Lord, Lord Hannay, has said, that the two reports are linked. Poverty focus development assistance addresses the underlying causes of many forms of insecurity. As we have said elsewhere, development is a prerequisite for a safer and more secure world. Security is needed for development, particularly in conflict areas. The United Kingdom Government, through DflD, will be publishing a strategy on security and development in March of this year, which will set out our approach in more detail. The EU is in a unique position here, as many noble Lords have said, to promote a more coherent and holistic approach to security and development. That must be its responsibility.

I want to comment on one other point which was made very early in what the noble Lord, Lord Hannay, said. Of course, he was the Governments representative on the UN high-level panel report on reform. The big debate on that, as has just been mentioned, will take place on 2 February in your Lordships House. That debate must deal with how to ensure a unified EU input into the UNs high-level panel. The noble Lord is, of course, aware that the EU already has an agreed approach on the high-level panel. The EU's submission to the panel, representing the views of all 25 member states, was a powerful endorsement of multilateral action. The Government will ensure that they use their presidency to build on this shared EU view, and to maintain the EU's commitment to high-level panel processes. We will certainly, as I can confirm to the noble Baroness, Lady Rawlings, be looking to make sure that the target dates are all met.

Right at the outset, I also want to agree with the noble Lord, Lord Maclennan, who asked whether we could be open and enthusiastic about the shared ground that we have with the EU. I believe that that is the case on the burden of all of the issues that we are discussing today, and it certainly does no harm to say so in a straightforward manner.

Let me turn first to the report on the EUs development aid. The European Union is a key player in the field of international development co-operation, as I have said, representing 25 nations, half a billion people and also being the world's largest single market. It is bound to play an important role on the international scene and will do so in future.

Alone, the EU distributes about 10 per cent of world development assistance, providing assistance to 140 countries and eight regions. Together with its member states, the Union stands for more than half of this. The EC is also the world's largest provider of humanitarian assistance. Looking back at recent events, one or two of which I shall mention shortly, we have become acutely aware of the importance of such assistance, both in terms of volumes and quality. We are all at one on that and I cannot believe that repatriation of funds could possibly help in such a process.

I also welcome Sub-Committee C undertaking this inquiry at this point in time. Several years have passed since the Commission launched its ambitious reform programme of external actions back in 2000. Now is a good time to take stock. Also, the arrival of a new Commission and European Parliament in Brussels last year, the adoption of a new long-term financial framework for the Union and, possibly, a new constitutional treaty over the next 18 months will shape the direction of EC aid and the ECs relations with developing countries for decades to come. I am pleased to see the extent of agreement between the Government and the committee's assessment of EC aid. The report provides a positive assessment of the reform efforts. It recognises the Governments role in that process and is generally supportive of our reform agenda for EC aid policy and programmes.

We share the committees views that recent years reform efforts are now starting to bear fruit, with evidence of the EC becoming more effective in its delivery of aid. The Government believe that that should be acknowledged. I also acknowledge, as did the noble Baroness, Lady Northover, the central contribution of the noble Lord, Lord Patten of Barnes, to all of that. But, like many of our partners, the Government believe that there is more to be done and that is why we are asking the EC to continue on the path of reform. The noble Baroness, Lady Rawlings, called for that and I strongly agree with her. We are right in setting high demands for the worlds second largest grant donor. We set high standards for ourselves and should set them for others.

Current reforms in the EC have focused on speed of delivery and we are now seeing signs of more effective disbursements and quicker response in the field. Time to implement projects has reduced from an average of 4.5 to 3.5 years in recent years. The noble Lord, Lord Bowness, commented on the speed of response. 2003 was a record year in terms of disbursements. There are many examples: Kenya has a fully decentralised office and average time to process payments has decreased from 50 to eight days for delivering aid in that country.

As the committee noted, further reforms should not only reinforce this but also look into options for improving the quality and the impact of development actions. But it is not just about the ECs own aid efforts. The committee has rightly highlighted the importance of also fostering better co-ordination across all EU donors to cut out bureaucracy and improve our collective impact. The impact of aid in developing countries can be multiplied or diminished, depending on the effect of other policies put in operation by the Union, not least in its trading policies.

As the committee noted, working towards better co-ordination and harmonisation among donors and more coherent policies advocated out of Brussels must be essential elements of our future development agenda. It is for that reason, if no other, that the committees report covers such a large area. The Government share the committees views that continued reforms of EC aid must prioritise the need for: a simplified budget structure, with separate instruments dealing with development and security issues—an appeal also made by the noble Lord, Lord Hannay—and clear boundaries between the two; and more aid to the poorest countries and a better differentiation between aid instruments (loans and grants) between low income and middle income countries. We continue to want 70 per cent of EC ODA to go to the poorest countries. The current figure is 56 per cent.

We want more effective structures for managing aid in Brussels. We advocate a clear role for the Development Commissioner in the management of the aid portfolio, as we have in this country. We want to see an EC development policy with a clear focus on poverty reduction and the poorest countries. I understand the competing demands to deal with security issues among the neighbours and I can understand why the enlarged community is focused on that, to some extent. But the noble Baroness, Lady Northover, was right to remind us of the history. The fundamental priority is to deal with poverty reduction and the very poorest.

We note the committees views on the merits of integrating the European Development Fund into the EC's normal budget. The Government are of the opinion that these must be carefully assessed. We fear that important principles embedded in the EU-ACP Agreement—notably its high focus on the poorest nations and the use of best development practice—would be lost if the EDF were to be budgetised. The proposals on the table for future budget structures do not at present offer guarantees against such a risk. That is our concern. The Governments position against EDF budgetisation can therefore be justified on grounds quite other than those that they may increase costs to the United Kingdom.

I have commented very briefly on the issue of trade. The noble Baroness, Lady Northover, asked several questions. Our priorities remain around the millennium development goals. We want to integrate trade and development agendas in the WTO-Doha round so that trade rules work better for the poor. We want to ensure that budgets are focused on the millennium development goals and poverty reduction.

We want improved budget capacity and flexibility to respond to international events. We want effective and targeted support in the neighbourhood policy, the point raised by the noble Lord, Lord Hannay. We want more effective delivery of assistance through loans or grants but no overall increase in external spending, at least until there is considerable evidence of improved aid effectiveness and poverty focus.

In all of these issues we need good co-ordination. The noble Lord, Lord Bowness, made this point very effectively. It is very important that Commissioner Michel, a distinguished former Belgian foreign minister, should have a fundamental role in the management of EuropeAid. It is clear that there is a case for co-ordination between that role and others. The Commission President Barroso has established an external relations working group which he will personally chair.

It is also true that in other EC-budget operated programmes like the EDF, budgetisation would be at risk of losing some of that co-ordination. As I said, that is not about costs to the United Kingdom.

It is good to see the extent of agreement between the Government and Sub-Committee C on the European security strategy. We all agree that it is a welcome first step in developing a more pro-active, capable and coherent European Union effort on global security issues but much work remains to be done to articulate that vision. The Government are strongly in favour of a less declaratory, more effective EU foreign policy capability. The strategy is not the answer to this in itself but it gives us a platform to achieve this vision and develop CFSP more closely in line with UK strategic and foreign policy priorities. As the committee noted, articulating the vision in the strategy is the key for the EU. Expectations were raised— across Europe and with our key partners such as the US—and the EU now needs to deliver.

I do not think anyone could say that the EU has finished implementing the strategy or developed fully fledged policies in all the areas identified in it. That is surely a long term project. It covers the whole spectrum of EU external action. We should not underestimate the great strides the EU has made in tackling the new security threats. My noble friend Lord Truscott is quite right to say it needs to make sure that it does so by grasping these new realities in a clear way. We particularly applaud the way the committee has identified the issues of tackling terrorism and the proliferation of WMD where the EU has mainstreamed these key security issues in its political dialogue.

In the past two years we have also seen the launch of civilian and military peacekeeping missions under the European Security and Defence Policy which gives the EU the capacity to back up its foreign policy with action. In 2003 the speed with which the EU responded to the call for help from Kofi Annan in the Democratic Republic of Congo showed that the EU can have a practical response that is as swift and robust as its diplomatic response. In that case 1,200 troops—with France as the framework nation—took part, including troops from the United Kingdom and from several other EU member states as well as from Brazil, Canada and South Africa. It was not just a European operation. The EU has now taken on its biggest military mission to date in Bosnia where it is engaged with all its instruments including a civilian police training mission, the stabilisation and association process, reconstruction and development programmes and border security.

The EU's response to the political crisis in the Ukraine—where High Representative Solana and the Presidents of Poland and Lithuania played a key role—is another example of the EU working closely with the OSCE and the United States, and is an excellent example of the Union's growing ability to respond in a more coherent and pro-active way. The committee highlighted all those matters, including the importance of the transatlantic relationship on which I shall comment in just a moment.

I note the committee's concern about the resources available to implement the European security strategy. As our response made clear, this is a concern for the Government too, and one which we are working to address, but one which we are addressing. I hope that we shall be successful in that. The debate on the future financial structure of the EU's budgets has given us the opportunity to ensure that there will be resources available to tackle key security threats in a much more systematic way from 2007. We support the proposal to bring together funding for all the Community's work on peace and security under one umbrella—the proposed new stability instrument. We are determined to use the opportunity to ensure that the Union has sufficient budgetary flexibility to respond more quickly and effectively to crises.

Noble Lords raised a number of vital issues. I shall try to cover some in the time that is available to me. Where I fail to do so, I shall do my best to identify them and write to noble Lords.

The noble Lord, Lord Bowness, referred to the tsunami and mentioned the remarkable fact that the TV and media took so little interest in the EU's response. In fact, the EC responded quickly and positively. President Barrosso and Development Commissioner Louis Michel visited the region in early January. There have been discussions about strengthening the EU's response. The EC was among the first donors to provide humanitarian assistance and plans to provide at least 123 million euros for this purpose this year have already been made. The EC is working closely with the UN and the World Bank and foresees providing up to 350 million euros of additional aid for reconstruction in 2005–06 and a 1 billion euro lending facility via the European Investment Bank. All of those pledges and all of the practical steps have attracted almost no notice but they are very important and well worth recording.

The noble Lord, Lord Bowness, asked a couple of other questions that I shall try to deal with briefly. He asked for the Government's view on the committee's comment that there is an urgent need to prioritise policies for implementation. The EU did prioritise areas for implementation in the December 2003 European Council. It identified four priority areas for immediate implementation: counter-terrorism; the wider Middle East; Bosnia; and effective multilateralism. All of those are now resulting in work in progress. This Government will be working with their partners to focus beyond these initial priorities to other UK objective areas which are also priorities. I know that too long a list of priorities end up not being priorities, but it must be important to consider also organised crime, the proliferation of WMD, and enhancing crisis management capabilities.

The noble Lord, Lord Bowness, also asked why the EU committee had not received any information on the "battlegroups" initiative. I shall probably need to write to the noble Lord in more detail on that matter. I do not propose to go through the whole of the initiative but I was particularly asked where the decisions were taken. The decisions have been taken by Ministers in the General Affairs and External Relations Council, and they were unanimous in doing so. Details of the initiative will be available when it is launched. If noble Lords want further details on the "battlegroups" initiative, I shall be happy to write to them.

The noble Lord, Lord Bowness, asked about reducing the number of budget lines. We support the thematic policies such as basic education, tropical forests and so on, which many budget lines represent, but they make little impact and are not sustainable on their own—evaluations have shown that. Best practice suggests that the issues should be mainstreamed into country strategies. Some exceptions to that exist—the global fund, the AIDS fund, and so on—but in general we think that the objective of mainstreaming is right.

The noble Baroness, Lady Northover, and the noble Lord, Lord Bowness, asked about emphasis on development in the constitutional treaty. The introduction of a European Foreign Minister and external actions service provides an opportunity to promote greater institutional coherence in itself—and a clearer international profile for the EU, which is where the immediate work needs to be done. It should establish a structure able to deliver a coherent approach to address both state collapse and longer-term prevention and development, including issues of conflict prevention, crisis management and security. That is how that work should proceed.

There is a risk of stability concerns dominating the next financial perspective—the noble Baroness, Lady Northover, shares our concern about this. The proposed budget share, however, reflects that it is necessary that we should behave consistently with the stability instruments if we are to achieve the objectives. That must unquestionably be the way in which the development instrument focuses on poverty reduction—and the millennium development goals—and it will contribute to conflict prevention and global stability in the long term.

The noble Lords, Lord Hannay, Lord Maclennan and Lord Garden, have referred to the relationship with the United States and to transatlantic links with NATO— big subjects, yet a brief answer is all that can be achieved now. The Government see President Bush's visit as an opportunity to reinforce EU engagement with the United States on a range of issues, and to ensure progress on specific ones, most notably in the Middle East peace process. On Iraq it is important the Union looks forward and tries to overcome the old divisions. The Union should demonstrate support for democratisation in Iraq—and commit to continuing to provide financial resources and technical assistance. The EU-US relationship remains as important as ever.

The committee rightly points out in its report that the EU can only genuinely tackle global security threats in a strong transatlantic relationship. That is recognised in the strategy that has been endorsed by all the member states, which states: Together, the EU and US can be a formidable force for good in the world". We welcome President Bush's intention to visit the EU as one occasion on which we can build on that general assessment.

We have discussed many other issues and I have said I will have to deal with some of them in writing, because I would not do them justice in a sentence. But the committee reports and the responses we have made—indeed, I hope, the response I have given this evening—are responses which are active, enthusiastic and in no sense complacent. We do not underestimate any of the problems that have been raised. We believe that the Union has already made good progress in putting much strategy into practice in the key policy areas.

We all acknowledge there is much still to be done, particularly in relation to the coherence of external policies and in providing sufficient resources—those points well made around this House and well taken at the Dispatch Box this evening. Both these are areas the committee has identified and we as a government share both assessments.

It just falls to me to thank the noble Lord, Lord Bowness, the members of the committee and all noble Lords who have taken part in this evening's debate. More than anything else, it has been a debate about a programme for the future.

6.19 p.m.

Lord Bowness

My Lords, I thank all noble Lords who have taken part in this debate, and for the thanks they have expressed to the sub-committee—and indeed the noble Baroness, Lady Northover, and the noble Lord, Lord Maclennan, for their kind remarks to the chairman.

The debate has shown how quickly matters move on. No doubt had either report been written today rather than in April or October 2004, it would have been different. I thank the Minister for his detailed reply to the debate.

In connection with the development report, I was pleased to hear the achievements of the European Union acknowledged and the Government's commitment to them. I am disappointed, of course, by the response on budgetising. I wish that the Minister had had time to refer to the new publication on failing states, which was published by the department in January. It would be interesting to discuss how to resolve different priorities in connection with the delivery of aid.

My noble friend Lady Rawlings emphasised the connection between aid and foreign policy, something with which the committee concurred. She also referred to fraud. It is worth noting that much goes astray, not internally within the EU, but within the third parties with which the EU deals. One point that was made in evidence to the sub-committee was that many of the financial procedures of the EU are sometimes blamed for the delay in spending because they are so cumbersome as they are designed to prevent fraud.

On the security strategy, I am delighted to hear from the Minister that priorities are being established and thought is being given to how the resources will be provided. Those resources are badly needed to ensure that it all becomes a reality. I am grateful to him for confirming that the decision about battlegroups was taken at the General Affairs Council. No doubt correspondence on that will continue.

On the description of the security strategy being aspirational, I say to the noble Lord, Lord Hannay, that during the course of the debate, I have dwelt on that and I stand by it. I might have questioned the matter if I had said, "It is inspirational", but I think I stand by "aspirational". If CFSP is to become a reality we have to achieve as much agreement as possible. While the report acknowledged that it left many questions unanswered, nevertheless, it was a welcome start towards that common policy, to which I believe we all aspire.

I thank all Members for their participation in this debate.

On Question, Motion agreed to.