European Union (Accessions) Bill

– in the House of Lords at 2:46 pm on 20th December 2005.

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Photo of Lord Triesman Lord Triesman Parliamentary Under-Secretary, Foreign & Commonwealth Office, Parliamentary Under-Secretary (Foreign and Commonwealth Office) 2:46 pm, 20th December 2005

My Lords, I beg to move that this Bill be now read a second time.

This momentous Bill is very brief. It will do two things. First, Clause 1 will implement Bulgaria and Romania's accession treaty in United Kingdom law. In other words, it will facilitate their accession to the European Union. Secondly, Clause 2 will allow the Government to set the terms on which Bulgarian and Romanian workers will be granted access to the United Kingdom's labour market for a maximum seven-year transitional period.

I shall begin with Clause 1, and Bulgaria and Romania's accession to the EU. European Union enlargement has become a critical part of the process that has transformed Europe from being the,

"breeding ground of pestilence and hate", described by Winston Churchill to a strong union of nation states, secure in their borders, sharing the same democratic and humane values, and enjoying peace, prosperity and stability. Enlargement has helped democratic governments of developing countries that have been dominated by fascism and communism, thereby enabling millions of people to have a voice in how they are ruled. It has reinforced the rule of law and respect for human rights, and has given us new partners in tackling the challenges of cross-border crime and terrorism.

Enlargement has also provided new consumers for United Kingdom goods and services, and new markets for our firms. High street names such as Next, Mothercare, Marks & Spencer and Tesco are just examples of the companies now operating through the 10 new member states. Tesco has 33 stores in Slovakia and over 40 in Hungary. Hundreds more British firms are benefiting from the enlarged EU—Vodafone, HSBC, BP, Shell and GlaxoSmithKline, to name just a few. It is therefore not surprising that enlargement has become an issue on which this House has been united, and I am delighted to be able to say that cross-party consensus remains just as strong as was clearly evident in 2003, when there was universal support for the EU accessions Bill for the 10 countries of eastern and central Europe. As the noble Lord, Lord Howell, said on Second Reading on that occasion,

"we are . . . thankful that at last the moment has arrived when these vigorous and independent states, many of which have been through terrible trials and experiences, join the enlarged European Union".—[Hansard, 3/7/03; col. 1070.]

This Bill is intended to do the same for two more eastern European countries that have emerged from similar trials and experiences. Bulgaria and Romania are also vigorous, independent states that have made similarly impressive advances in the space of a few years. Bulgaria's economy has consistently grown at double the EU average during the last five years; unemployment has been halved in that same period. Romania has performed strongly as well; inflation is down from over 100 per cent in the late 1990s to around 8 per cent today. It has also successfully attracted more direct foreign investment than any other state in south-east Europe.

The prospect of EU membership has also spurred both countries to make real progress in political and economic reform. The European Council acknowledged that progress in December 2004 when it formally closed accession negotiations with both countries, agreeing that they should be ready for membership in January 2007. Four months later, in April 2005, the 25 member states of the EU signed a joint accession treaty with both countries which envisages their accession on 1 January 2007. However, unlike in previous accessions, the timing is not guaranteed. Both countries need to continue to make progress in their EU-related reforms. If they do not and either Bulgaria or Romania is deemed to be "manifestly unprepared" for membership, EU member states can decide to delay that country's entry by a year. That new approach is designed to ensure that countries joining the EU sustain their reforms right up to accession and indeed beyond. That is in the EU's interests, and in those of the countries which want to join.

The European Commission is responsible for monitoring both countries' preparations. On 25 October it produced detailed and rigorous reports on their performance against EU commitments. In presenting these reports, Commissioner for Enlargement Olli Rehn said:

"Bulgaria and Romania have achieved significant progress so far in the preparations for accession. But, the jury is still out".

The reports highlight a range of areas in which Bulgaria and Romania need to make urgent progress to be ready for accession in 2007. That includes addressing the problem of corruption which, in both countries, remains a corrosive agent, undermining public and business confidence. Part of the problem lies with their justice systems, which need further reform. Bulgaria must also tackle head-on the problem of organised crime. The daylight assassination of a high-ranking financier in October demonstrated starkly the scale of the challenge in that area.

However, there were also a range of more specific technical concerns. For example, both countries need to do more to bring their agricultural and food safety standards up to those of the EU member states. They need to improve their capacity to absorb EU funding streams, to enhance their protection of intellectual property rights and—particularly in Romania's case—to do more to tackle environmental pollution. In the coming months, the Commission will continue monitoring the progress of both countries, targeting in particular areas of serious concern identified in the reports. It will then produce further reports next April or May.

If the Commission has then judged there to be a serious risk of either or both of Bulgaria and Romania being "manifestly unprepared", as the words were, for membership in January 2007, the European Council can then decide to delay their entry. In addition, the Commission can impose more targeted safeguards and measures to tackle problems in specific areas. Those were considered for previous enlargements but, happily, in the event did not prove necessary.

We are content that the EU has the right mechanisms in place to protect our interests, and remain confident that both countries can be ready to join the EU on schedule in January 2007. Yet they cannot afford to be complacent. They need to take vigorous actions now to address the concerns identified by the Commission. Of course, we will continue to provide bilateral and other assistance targeted in the areas which matter most. We already have three advisers working in Romania on corruption issues, and embassy liaison officers in both countries working with their counterparts on drugs and people trafficking. We are funding various projects in both countries focusing on human rights, judicial training and institutional capacity building.

I am sure that your Lordships will be interested to know exactly how much Bulgarian and Romanian membership will cost, since their accession coincides with the discussions which have taken place over the next financial perspective of the EU, from 2007 to 2013. Those costs have been the matter of recent negotiation. That said, most EU expenditure on Bulgaria and Romania has been previously agreed for 2007–10, assuming that accession takes place in January 2007. Spending will total approximately €15 billion over the three years and will not be altered by our recent proposals for the financial perspective or the agreements made on it. Of that total, roughly €5.5 billion will be devoted to agriculture-related spending and approximately €8 billion to structural funds. I stress that those figures are from recent negotiations and had, up until then, been indicative.

Of course there is a significant amount of money in the package, by any standards. But, as your Lordships will be more than aware, most of the accession costs are being borne by the new member states themselves—the objective being, over time, to ensure that net recipients start to contribute to the EU budget. Spain and Ireland are good examples of that and, indeed, Slovenia and Cyprus are performing strongly in that regard among the newcomers.

I turn briefly to Clause 2. Under the terms of the accession treaty, the UK has the ability to decide what level of access it offers Bulgarian and Romanian workers, up to a maximum period of seven years after accession, before Community rules on the free movement of workers come in. Clause 2 gives the Government a wide degree of flexibility in deciding these terms.

With accession still over a year away—and possibly two—it is too early to decide now what the level of access should be, and right to keep our options open. We may want to continue the current work permit scheme. Conversely, we may decide to offer more lightly regulated access along similar lines to that given to the workers of the eight central and eastern European countries who joined in the 2004 enlargement.

As we have seen, that policy has proved a real success. Over 293,000 nationals from the A8 registered with the worker registration scheme between May 2004 and September 2005. Most workers registering are young and have taken on jobs throughout the country. Less than one in five is based in London. They are employed in a broad range of industries from administration to healthcare and farming, industries where there are serious gaps in our own labour market. They are contributing to the UK's economic growth and to our tax revenues without being a burden on the state.

Of course, we must recognise that the situation could change. That is why we intend to take a decision on the level of access we grant to Bulgarian and Romanian workers nearer the time of their accession. In reaching any decision we will want to consider the requirements of the labour market and other member states' decisions. The Home Office, the Cabinet Office, the Department for Work and Pensions and the Office of the Deputy Prime Minister will all be involved in that process and I should stress that any future regulations will be subject to parliamentary approval through the affirmative procedure.

In conclusion, the United Kingdom's strong support for enlargement is well recognised throughout the world, across Europe and not least by Bulgaria and Romania themselves. Many of your Lordships on both sides of this House have played an extremely important part in bringing us to that point. We should be in no doubt that this enlargement is a real success for United Kingdom policy. It is a success both for this Government and for the country as a whole. I am certain that all of us here today will want, in the clearest possible terms, to welcome Bulgaria and Romania to the club. I commend this Bill to the House.

Moved, That the Bill be now read a second time.—(Lord Triesman.)

Photo of Lord Howell of Guildford Lord Howell of Guildford Shadow Minister, Foreign Affairs, Deputy Leader, Parliament, Shadow Minister (Foreign and Commonwealth Affairs), Shadow Deputy Leader of the House of Lords 2:59 pm, 20th December 2005

My Lords, I apologise to your Lordships and to the Minister for missing the first few minutes of his opening comments. I can assure the House that by an extraordinary manifestation of cross-party support and consensus, I have been able to ascertain the general drift of what the Minister said—indeed, the precise words. I hope he will forgive me. The timing caught me short.

I want to make it clear to the Minister—it is probably evident to him—that there is broad and strong support from this side of the House for the Bill and for the aims and purposes behind it, notably the treaty that the Bill seeks to bring into British law. However, the Bill raises a number of acute questions about the enlargement and the whole future direction and character of the European Union to which the answers are far from clear. Indeed, in recent times, they have become even less clear. I shall return to them in a moment.

First, I turn to the precise purpose and detail of the Bill, which is to give effect in UK law to the accession treaty opening the way, as the Minister has explained, for Bulgarian and Romanian membership of the EU. That treaty is an extremely bulky document, which I have here—I can hardly pick it up. It was laid before Parliament last August and contains four sections. One of those sections is redundant as it concerns the interaction of the treaty with the proposed European Union constitution, which has, of course, capsized and sunk to the bottom of the sea where, in my view, it deservedly lies. The section dealing with the relationship between the treaty and the constitution no longer is of any particular use.

That is slightly odd because we were assured at the time of the debate on the constitution that our doubts about it were destructive and that the constitution was necessary—I believe those were the words of the Prime Minister—for enlargement to proceed. At the time we questioned whether the Prime Minister and the Government had that right. It turns out that our questioning was right and the Government were wrong. It is, of course, nonsense that the constitution was necessary for enlargement. Certain improvements and changes are necessary but the ill judged, ill constructed and ill directed constitution was not one of them.

However, the episode reminds us of an important aspect of all these enlargement negotiations, and this will not be the last. There is no doubt that there is more to come with Macedonia, Croatia, Turkey, Serbia, Ukraine, Belarus—who knows?—and others. Each time there is an accession process the newcomers are stepping on to a moving platform. The EU is, to put it bluntly, in flux. The rules by which it is to be governed are unsettled; the powers and competences of the central EU institutions are in dispute—although the constitution tackled them, it failed to solve the problems and without the constitution they remain unsolved—the social policy dictates, as people increasingly recognise on all sides, paralysing economic growth in the union; and the future budget, to which I shall return in a moment and on which there has been in the words of the Minister "recent agreement", rests on vague undertakings about agricultural support which may or may not materialise. They seem to be hanging in the air.

In a sense there is a sort of time warp at work. These new entrants believe, or are being led to believe and no doubt want to believe, that they are joining a European Union or a European Community of the kind that existed some years ago; namely, a mighty oasis of free-market vigour and democratic freedoms and values which some years ago seemed to be a bastion against Soviet communist tyranny and corporatist socialism, and an engine for expanding free markets and open markets and doing away with protection in world trade. That was the EU—before it was called a union it was called a community—that many of us admired and thought was definitely an entity that all countries in this region of the world should seek to join and join quickly. Of course, today things are not like that at all. Today the EU has lost its free-market vigour. The Soviet Union is no more and today Europe is trapped in a dense network of centralist regulations and restrictions and, as the Financial Times said this morning in its editorial, Brussels is no longer the motor or driver that it once was.

In a way it is a pity that we cannot offer these new arrivals a better welcome and a better ambiance to join. It seems to me quite wrong, for example, that they should be required to sign up to the whole of the acquis communautaire—that is the massive book of EU powers of at least 88,000 pages and some say it is nearly 98,000, many of which are completely out of date and belong to an institutional structure and process which is not relevant in this century. Indeed, they belong to the age before the information revolution which has made the dispersal of power so much more desirable and practicable, and centralism so much more inefficient and unnecessary. In my view, a really vigorous assault on redundant acquis powers is one more thing that should have happened and one more missed opportunity under the dismal British presidency.

Clause 1 makes the accession treaty part of UK law and deals with increased powers for the European Parliament. It does not say anything about the safeguard and postponement clauses that the Minister rightly explained, which would allow negotiations to be delayed if certain criteria in the two countries were not met. I would like to ask the Minister a couple of questions about these, since safeguard measures can be triggered by old member states—the United Kingdom, among others—as well as by the newcomers.

Who makes the key judgments as to whether the negotiations should be suspended for one year, as they can be under the treaty, or whether commitments are being met, either on the internal market front or in justice and home affairs? Who is the judge in all this? Is it the Enlargement Commissioner's say-so, or is there an open procedure? Or is there an appeal avenue? These are serious judgments, with serious effects. The Commission apparently has to pronounce whether good governance and accountability are up to standard, but is it really the body that we feel is absolutely the best to do that? One has to note that it is a bit strange that these sorts of judgments come from a body whose own standards leave much to be desired, which is not free itself of corruption taints and whose accounts the auditors regularly refuse, year after year, to sign off.

It is undeniable that both these new accession countries have had difficulties in cleaning up corruption and curbing organised crime. However, having had the privilege of a pleasant visit to Sofia just a few months ago, it was clear to me that under the extremely well balanced and wise management and leadership of ex-King Simeon, enormous progress has been achieved. That is gratifying indeed. However, it seems to me that those of us who want to see these two new entrants fairly treated in the coming negotiations ought to be much more inquisitive about the powers of judgment and how they are going to be exercised than perhaps we have been in the past. I would like to hear more from the Minister on all this.

Clause 2 deals with the freedom of movement of workers and one thing must be said at the outset. There can be absolutely no confidence at all in Home Office or Foreign and Commonwealth Office predictions about future patterns and flows in this area. Laughably, at the time of the last big accession to the EU, the Home Office predicted between 5,000 and 13,000 immigrants net a year from the new member states into the UK. In fact, Ministers explained that between May 2004 and September 2005 293,000—not 5,000 or 13,000—workers from these countries were accepted on to the worker registration scheme. As I have calculated it, the departments here were out by about 2,200 per cent which is, frankly, not a brilliant forecast.

As the Minister reminds us, many of those immigrants bring welcome skills and seem to be well spread out across the country and have contributed to economic growth, although there are inevitably one or two less desirable groups and practices that have crept in. But when the Minister says the policy has proved "a huge success", surely what he really means is that the success has come despite the Government's initial and frankly idiotic policy assumptions, and not because of them.

It is therefore no surprise that this time with this smaller, but equally important, accession phase, the Government are adopting a much less cavalier and a more hands-on attitude and are reserving the power to restrict the right to work of Bulgarians and Romanians, as the treaty allows. We are told that the actual level will not be decided for another year or so. I just hope, as we all do, that the Government have better information on which to decide than they did last time. We will have to see.

Will the Government be proposing the same restrictions on benefit entitlements as those which they had to bring in last time, when it was realised that no other member state was being as silly as we were in initially eschewing all transitional arrangements permitted under those accession treaties at the time?

Finally, I turn to the costs and the budget. It says in the Bill, and the Explanatory Notes confirm, that there will be,

"no significant additional public expenditure".

The Minister has explained that there will be a cost of £10 billion, or €15 billion, over three years and this obviously has to fall on somebody. We are told that most of these costs will be borne by the new member states themselves. Is that really right? My own researches suggest that the UK contribution invariably increases every time new enlargement proposals go forward. I accept that these sums are contained within overall existing capped budget limits—or the recent agreement, as the Minister calls it. A more accurate wording in the Explanatory Notes to the Bill would have been "no further additional public expenditure". That would have been nearer to the position and would have been more accurate. I still wonder who makes room for these new outlays within the existing budget.

Of course we must pay, and we have paid, our fair share. These are brave and spirited nations who treasure their independence and share our view here in London of how Europe should develop. But what is hard to bear is that these extra resources are being found not by cuts in the wasteful and destructive subsidies to French farmers, but from the hard-pressed budgets of the rest of us. And it is even harder to bear being told that this is a wonderful bargain for the UK.

The truth is that the proposed further enlargement, which we welcome, must inevitably put the whole CAP structure under even more strain. Justice and fairness cry out that the system should be radically revised now if Europe is to become the more flexible and fairer network of more equal states which most of us—alas, not all of us—want to see.

We must face the fact that there has been an utter failure to go that way, with only vague and unbankable assertions that things will be reviewed in due course. Instead, some shameful but luckily unsuccessful proposals emanated from Whitehall and the Foreign Office some weeks ago, which alienated our friends in central and eastern Europe and left wounds which will be remembered, despite the subsequent attempts to patch things up and the assurances given in the final agreement.

Enlargement is far from popular in many member states of the EU, but here in the UK we on all sides take a positive view—which is what the Minister said, and I agree with him—and we have remembered that in the best parts of our history we have been on the side of the smaller states of Europe against the bigger bully-boy countries. That is the position as I have understood it, but in recent weeks our foreign policy makers—wherever they are in Whitehall—who are obsessed by fashionable notions about "being at the heart of Europe" and the "post-modern state" and all that nonsense, have lost sight of our true friends and interests.

Let us hope that with this Bill, and with the accession process bringing these two nations into the European family, we remember again who our best allies are, that we remember what kind of Europe we really want to see, and that we work for it much harder and more skilfully than we have in recent times.

Photo of Lord Hannay of Chiswick Lord Hannay of Chiswick Crossbench 3:17 pm, 20th December 2005

The Bill relates only to the accession of Romania and Bulgaria and it is right that we should address directly the case for those two countries to join the European Union. I will try to bring a little more seasonal good cheer than the noble Lord, Lord Howell of Guildford, did.

In recent months the issue of further enlargement has become contentious in Europe, as has not been the case since Britain was twice vetoed by General de Gaulle in the 1960s. It makes sense to look more widely at the issue of further enlargement and try to draw some preliminary conclusions about the way ahead in what remains one of the most critical policy areas with which the European Union has to deal. This is all the more necessary now that the leaders of the Union have agreed that there must be a full discussion of that before any further accession negotiations begin.

The accession of Romania and Bulgaria is a subset of the major round of enlargement that has already taken place in May 2004. The two countries applied for membership at much the same time as the other central and eastern European countries which have already joined. It has taken longer to reach this point as a result of the greater complexity and intractability of the problems they faced in accepting the constraints and responsibilities of membership, and because, particularly in the case of Romania, they were slower to respond effectively to those challenges.

The institutional adjustments that were needed to accommodate them have already been taken in the Nice treaty and were approved by this Parliament in that context. Only one really important issue remains outstanding and that is whether they are to join on 1 January 2007 or 1 January 2008. That decision is not pre-judged in the treaties of accession we are considering today. My own view is that this decision should not be too heavily politicised, although I have no doubt that it will be seen, particularly in the acceding countries themselves, as highly political. I suggest that it should be considered objectively, with the greatest weight given to the assessment that the Commission will have to provide. If that assessment points towards 2008 it should be understood that it will be as much in the interests of the acceding country—or countries—to take more time in preparation and join one year later, as it will be in the interests of the Union. I would also hope that if a different balance of assessment is reached with respect to each one of the two countries, it will be accepted and not brushed aside in favour of arguments relating either to bureaucratic tidiness or amour propre.

Turning to the wider issue of further enlargement, the picture is a good deal less clear and the decisions are not for today or tomorrow, but for a more distant future. Negotiations with Turkey and Croatia have already begun, but actual accession, particularly for Turkey, is not foreseen before the middle of the next decade. All the other countries of the western Balkans—and there could well, in due course, be two more than exist now: Montenegro and Kosovo—are seeking membership. Macedonia has now been accepted as a formal candidate. Beyond them are a number of countries in the former Soviet Union, whose European identity can hardly be denied, and which also aspire to membership. We should never forget the remaining members of EFTA, who, if their electorates should ever so decide, would rapidly qualify to join and, I suggest, should rapidly be welcomed.

It is all too easy to throw up one's hands at this list, say "enough is enough" and call for a line on the map beyond which countries will not qualify for membership. That is what many politicians across Europe have been saying in recent months, using arguments ranging from respectable ones about the coherence of such a large body to far less respectable ones, based on ethnic and religious prejudice. It is easy to call for that line on the map, but, I would argue, highly irresponsible. A restrictive decision by the European Union, amounting to the pre-emptive exclusion of a number of countries, could have extremely far-reaching and damaging foreign policy and security implications, ranging from an upsurge of instability in the Balkans, to a drift back by former members of the Soviet Union into the embrace of a far from democratic or human rights respecting Russia.

What right does the Union have to take such a decision? The founding treaty, never changed, says clearly that membership is open to any European country. Since then the European Union has established the Copenhagen criteria for judging any application from such a country. The treaty already establishes the limits and trying to vary them would require treaty change by unanimity—an unlikely prospect, given the views of many member states. It is sometimes suggested that further enlargement, indeed, even the existing scale of enlargement, would have shocked and horrified the founding fathers of Europe, Monnet, Adenauer, De Gaspari and Schuman. I am sure they would have been surprised by it; they were, after all, operating in a Cold War dominated world. However, to suggest that they would have approved of the rejection of the candidature of free, democratic east European countries is, quite frankly, a travesty.

It follows from this reasoning that I very much welcome the support that the Government continue to give to further enlargement, but it is not sufficient to support that cause and simply assume that it will carry the day. We surely need to try to convince those who call for a restrictive policy that this is the wrong road for the European Union to take. If we cannot persuade people of that, we will drift towards that most dangerous of all scenarios, in which a country negotiates its terms of accession, is accepted by all the governments of the European Union and is then rejected by the votes of one or more of them in a referendum. That would surely be a disaster for all concerned. To avoid it we and the other supporters of further enlargement will need to explain much more clearly and cogently than has been done in the past, the advantages, both intangible and material, which have flowed from previous enlargement and which can reasonably be expected from further ones. I do not believe that we have anything to fear from such a debate; but we certainly need to have one if we are to avoid a shipwreck. I would welcome a response from the Minister about how the Government intend to carry forward their advocacy of this aspect of their European policies.

The transformation qualities of enlargement are really not in doubt. They have been demonstrated again and again, first in Greece, Spain and Portugal, then in central and eastern Europe. Countries freed from dictatorship and external domination have been helped to establish stable democracies and flourishing market economies. That is surely "soft" power in action and is achieving admirable and noble objectives in countries whose capacity to achieve those objectives on their own had not previously been too obvious, to put it politely. Of course, at the same time, there are costs which have to be borne by the existing members and we should not flinch from that. Listening to reasoned debates over the budgetary costs of the new member states in your Lordships' House yesterday and this afternoon, hearing phrases such as, "Why should we help to build the Warsaw Underground?", I detect distant echoes of that most deplorable of statements by a British Prime Minister, when he described Czechoslovakia as a,

"faraway country of which we know little".

I hope that we are not going to head back in that direction again.

To conclude, the Bill that we are discussing today deserves our wholehearted support. Romania and Bulgaria will be welcome new members so long as they keep up and intensify their struggle against their own internal demons, among them corruption and organised crime. I confess that I was startled by the suggestion of the noble Lord, Lord Howell of Guildford, that they should not be asked to accept the whole acquis communautaire. I am not sure that it is well appreciated that in such countries the acceptance of the acquis communautaire actually liberates them from the structures that they had before. The acquis communautaire contains legislation infinitely more liberal than what they had before. I am afraid to say that, even if it were not likely to take the whole of the noble Lord's Christmas holiday to work out which bits of the acquis communautaire they should and should not be let off, it would not be a good idea.

In any case, I hope that we can also from this debate send out a clear signal of our support for the further enlargement of the European Union beyond those two countries. This wider issue should surely be debated on the Floor of the House before too long, perhaps on the basis of a report from your Lordships' European Union Select Committee.

Photo of Lord Anderson of Swansea Lord Anderson of Swansea Labour 3:27 pm, 20th December 2005

My Lords, I join in the general chorus of approval, however qualified it was in the case of the noble Lord, Lord Howell of Guildford, and join wholeheartedly with what the noble Lord, Lord Hannay, has said about the need for the Government to be an advocate in terms of enlargement and indeed of the success of the European Union generally. I follow the Minister in saying that the Bill is relatively narrow in scope: first, it implements the treaty of accession of Bulgaria and Romania and, secondly, it provides for freedom of movement for workers from those two countries.

After the fall of communism, those two countries enjoyed public support in their principal aim fully to join in the Euro-Atlantic structures. They joined NATO last year and will become full members of the European Union on 1 January 2007 or in 2008. That has been decided. It should be welcomed in spite of renewed questions about their readiness, particularly in the case of the lack of movement for part of this year in respect of Bulgaria. Their accession is in the context of greater questions about the enlargement potential of the Union as a whole. I join in the remarks of the noble Lord, Lord Hannay, who is always worth listening to on this and other subjects.

Logically, if there is a Europe, there is a non-Europe. Even the word "Europe" in the treaty has to be defined, but it cannot be defined too largely. The former French Commissioner Claude Cheyson once told me, on returning from a visit to Mongolia, that it was enquiring about EU membership.

What defines our Europe? It is partly values, but that would include Norway and Switzerland. It is partly geography, and partly history, but that history might also include parts of north Africa if we consider the Roman empire. If there is a case for a privileged relationship at the borders, it will have to be considered as part of the debate that will take place over the next year.

It is clear that enlargement will make the European Union very different from the vision of the founding fathers. All the new countries in prospect carry greater risks than the core Europe and the Europe of the earlier accessions in terms of their adherence to the rule of law, internal stability, corruption, organised crime and free markets. Yet clearly, our Europe has an interest in stability at our borders, wherever they are drawn. It is true that the prospect of membership and the gravitational pull of core Europe has had a wholly beneficial effect on those countries at its borders, including Bulgaria and Romania. Yet some of those doubts on enlargement clearly led to the referenda results in France and the Netherlands in the summer. The effects of enlargement played a key role in the debate and provoked debates about a two-tier Europe, which led, for example, to the contribution to the current debate of the Belgian premier, Mr Verhofstadt, suggesting that the euro-zone should take on a more political dimension, which would have interesting consequences for us and other countries—also incidentally for the prospects of countries such as Turkey.

There is a debate. Indeed, the Financial Times on 16 December reported that a specific part of the communiqué would be to have a freeze on further enlargement. The only reference that I can see is in the context of the decision on the candidacy status of Macedonia. Paragraph 25 of the report says that,

"further steps will have to be considered in the light of the debate on the enlargement strategy, as provided by the Council conclusions of 12 December 2005".

That paragraph continues:

"The absorption capacity of the Union also has to be taken into account".

In any event, it would be wrong to talk about a freeze. There will be no movement in respect of Macedonia over the next year. Croatia will proceed in any event. It therefore seems appropriate to have time for reflection during either the Austrian or Finnish presidency. Clearly there is a group within the Union, including France, Spain, Germany, Portugal and Ireland, that is asking fundamental questions about not so much borders but future enlargement generally.

How do Bulgaria and Romania measure up? It is convenient to deal with them together, yet they have different problems. Until earlier this year Bulgaria was in the lead, but Romania had been moving steadily. It would probably be realistic to talk of differentiation if the Commission were to conclude in April or May of next year that one or other had not moved substantially. But I have some doubts about whether that would be politically possible. It is clear that the jolt to Bulgaria given by the Commission's opinions and conclusions in October has had a salutary effect in moving Bulgaria from, if not a complacent attitude, at least a belief that it can coast along.

The working assumption must be that, by the time the Commission comes to make its reports in the spring of next year, the two countries will have moved along sufficiently substantially. In any event, there are fallback provisions, not only in the unique proposal by the Finnish delegation for a possible one-year delay but also in the continuing possibility of exempting from full membership certain areas of policy. For example, in terms of food safety, we could say that we would not accept agricultural exports from those countries if we were not convinced about their procedures for ensuring food safety. But there should be a sufficient jolt or stimulus to ensure, as should be the case, that those countries will be full members of the Union at the appropriate time.

Clearly, they are historically part of a European dimension. Bulgaria has Greek and Slavic roots and Romania was a province of Dacia in the Roman empire. I understand that Romanian is the closest of the Romance languages to Latin. Indeed, I understand that there was even a Dacian regiment on parade holding Hadrian's Wall, and no doubt that has had an effect on part of the current population in Cumbria.

Both countries have had the awful experience of dictatorship. Zhivkov was a slavish follower of the Soviet Union and Ceausescu was a Stalinist oriental despot of the worst type. Both countries are poor. Their GDP is one-third of that of the existing members of the EU, including the A10, and a quarter of that of the UK. It is difficult to see where either country would go if not to the Union. Both have made major strides since they moved from communism, and the spring report for Eurobarometer and the latest New Europe Barometer (NEB) survey have been quite favourable.

In respect of Clause 2 of the Bill, the Eurobarometer report showed that for 60 per cent of Romanians the European Union is, first and foremost, about free movement of persons. That clearly has some relevance to the view of free movement which our Government will come to, including for the 1 million Moldovans of Romanian nationality. But, contrary to what the Opposition were saying at the time, it is clear that the accession of the 10 has been extremely beneficial, allowing our labour market to be more flexible in key areas where we were not providing, such as bus drivers and seasonal agricultural labour. In my judgment, it is right for the Government to leave the options for the Home Office and other relevant departments to decide in the light of all the circumstances, including the date of accession and the policies adopted by other governments.

I come to my final point. The prospect of membership has already been a great dynamic for positive change, and we can reasonably assume that that is likely to continue. Major failings exist. They were set out in the Commission's October document and in the commentary by Commissioner Rehn, which was hard-hitting and rigorous. In response to the noble Lord, Lord Howell of Guildford, that gives me confidence that the Commission will be equally rigorous and objective when it comes to make its report in April or May next year.

But still something is left on trust. The process cannot now be stopped, but we cannot reverse the Kosovo formula and give status without standards. My understanding is that both countries have made substantial moves and that the Commission has struck the right balance. Accession will be of benefit to the European Union. There will be a form of probation until the spring of next year, but every indication is that the countries will succeed. It will be good for them and, indeed, it will be good for Europe. However, I hope that the current period of reflection envisaged in paragraph 25 of the European Council's report does not lead to an undue delay for the western Balkans, which, in my judgment, should properly be included as soon as practicable within our Union.

Photo of Lord Biffen Lord Biffen Conservative 3:40 pm, 20th December 2005

My Lords, the conventions of the House are that there is no vote on Second Reading, and I acknowledge that. If there were, it would certainly have my support, although I would wish to argue that the extension of the European Union cries aloud for major reforms to its institutions.

My noble friend Lord Howell of Guildford mentioned that he had recently been in Sofia. I heard that with great envy. Fifty years ago I paid my only ever visit to Bulgaria, to be a member of an international youth camp organised by the World Federation of Democratic Youth, which the Minister will realise at once was a communist front organisation. Had I been a member of the Labour Party, I would have been proscribed for such initiative. That I bare, but will take no further, as this is not the occasion for personal reminiscence.

I want to make three points. I want to consider the geography of Europe in the light of the legislation. Secondly, I want to talk about the economics, particularly the problem of financing, as has been demonstrated vividly over recent days with the settling of the budget. Finally, I want to revert to the problem of the constitution.

First of all, on the geography, as has been demonstrated, this is not a question of drawing the line. Charles Stewart Parnell once said that no man can halt the march of a nation, and we are rather in that mood as far as the European Union is concerned. I accept at once that this is not the end of the expansion of Europe.

The treaty on the prospective accession of Romania and Bulgaria invites the immediate consideration of the expansion of the European Union to the south-west, to incorporate the Balkan territories whose prospective accession was discussed quite recently in the context of Croatia. I will go no further on that. This afternoon at least we can reflect that the whole question of Ukrainian membership becomes that much more live. My noble friend Lord Howell mentioned it, and I note that it is also the view of the noble Lord, Lord Anderson. It is a great temptation. I share much of the cultural instincts of the noble Lord, Lord Anderson, about seeing Europe not merely in economic and political terms, but also in cultural terms. I cannot see the Uniate church without feeling a strong sense of rapport.

On the other hand, there is no doubt that that expansion will raise delicate issues with our immediate neighbourhood, with Russia. That is not an expansion that we can undertake without making full judgment of what will be the wider consequences. I leave it in those rather elliptical terms, which are none the less very real.

I now turn for a moment to the question of finance. I am not going to join the general chorus of applause and doom that has attended the recent budget negotiations. I think that the Prime Minister had a difficult hand to play, and I am not among his foremost critics. Are we really to suppose that the common agricultural policy will be that much easier to dismantle on account of the accession of these two countries? I rather doubt it. They both have strong agricultural interests, which they will be determined to protect. That is as I understand it. Can the Minister indicate what are the kinds of reform that the Government have in mind in respect of the common agricultural policy that can then encompass the interests of Romania and Bulgaria? Does he foresee the single payments, which will be at the heart of agricultural expenditure over the period we are surveying, being subject to a reduction? That course is advised by an academic writing in the Times today; it is over the brow of the future, but it will become part of the immediate consequences when we discuss the implied accession of Romania and Bulgaria.

Secondly, and probably of equal challenge to the prudent financing of the European Union, is the question of accession payments. I quite understand that every eastern European country which is joining the European Union needs some kind of Marshall aid. But it should be kept as modest as possible; above all, it should be seen as a transitional payment. I say this because I believe that those countries will make their way in the European family largely by virtue of their own exertions. They have the basic advantage that whatever may have been the misfortunes of communist rule, education was not a casualty. Therefore, their sheer nationhood and population are formidable weapons in adjusting to the economic patterns of western Europe.

There is a certain paradox here: the more we welcome the movement of labour—and I do—the more we realise that quite often the people who will come to the West from eastern Europe could do a tremendous task in raising standards in their own country. Very often, those who come to the West are among the most enterprising and achieving. I do not wish to establish any barrier against that free movement of labour, but we would find ourselves caught in the most dreadful problem if we had to make substantial budgetary payments to eastern Europe on account of the migration of their best westwards.

I do not wish to be confrontational, but I see, hidden in the situation, the prospect of trying to resolve all the difficulties by having recourse to higher spending. We understand that the deal was eventually brokered last week by a modest addition to the Community budget. I promise that when the Prime Minister goes before the European Parliament this afternoon he will be confronted by cries for a much more ambitious budget. Of course the European Parliament will call for a more ambitious budget because those are not the politicians who will have to confront the taxpayer with the consequences. The split between the institutions of the Community and the long-standing institutions of nation states will become much more sensitive as we approach the situation of greater and greater spending on accession assistance.

The Commission, helpfully at this stage of the argument—I quote from today's Evening Standard—is proposing a European tax, which would be levied by the institutions of the European Union and collected direct from the taxpayers of individual countries. That is like advising someone with a common cold to seek the cure for bubonic plague. I cannot think of anything that would give rise to more antagonism and disillusionment towards the idea of a European partnership.

That takes me to my third point—the constitution. My noble friend Lord Howell said that it had sunk and settled on the seabed. Well, I have news for him. Angela Merkel, replete in a Mae West suit, is floating, and now swimming hard for the shore. I quote from the grand coalition's reform programme:

"We pledge to continue the ratification of the European constitutional treaty after the first half of 2006 and to give new impulses to [the ratification] under the German presidency in the first half of 2007".

We have been given appropriate notice.

I think we are all agreed that the present institutional arrangements are not appropriate for a Europe expanding way beyond what was ever within the conception of the founding fathers. The noble Lord, Lord Hannay of Chiswick, wants a good debate on the Floor of this Chamber. That is fine, but it is inevitable that that debate will be carried to the British public. That pattern has already been accepted. If we have any vision for Europe, it must be a performance that will appeal as much to the man in the street as the man in the London club.

Photo of Lord Thomas of Swynnerton Lord Thomas of Swynnerton Crossbench 3:51 pm, 20th December 2005

My Lords, it is a pleasure to follow the noble Lord, Lord Biffen, with whom I had my first disagreement on Europe well over 50 years ago.

It is fitting that a historian like myself should be among those who rejoice—to use the word of the noble Baroness, Lady Thatcher, in another connection—at the prospect of welcoming Bulgaria and Romania into the European Union. The noble Baroness, Lady Thatcher, may be remembered as having said in a neglected passage in her speech at Bruges in 1988 that it was essential for us in western Europe to keep a candle burning to light the way of such countries as these we are talking about towards liberty. I think we can say that, after 1988, that candle burned very well.

These two countries have much in common. As the noble Lord, Lord Anderson of Swansea, said, the territories of both were in the Roman Empire in the days of Trajan. It is fair to say that the recovery of those Roman borders has some relevance to what we are trying to do in Europe today. Both countries were, from the middle of the Middle Ages to about the middle of the nineteenth century, dependent on or subject to the Ottoman Empire in one way or another, while the Muslim armies of the Sultan swept on—not just once, but several times—towards Vienna, in a threat to Europe which must have seemed more alarming than Muslim fundamentalism does today.

Both countries emerged from the night of Ottoman control in the late nineteenth century after the Congress of Berlin in 1878, in which two Members of this House, Lord Salisbury and Lord Beaconsfield, played a major part. That congress led to the formation of two small states, initially directed by German monarchs; one, a minor member of the Hohenzollern family; the other a Saxe-Coburg, a member of that extraordinary family which gave kings to Portugal, Belgium, even Britain, as well as Bulgaria. Both these states found it hard to survive from the time of their creation through the whirlwind of war and diplomatic struggles of the First and Second World Wars. Poor Romania was caused to fight against both Germany and Russia in the Second World War. Both states, it is important for those in this House to recall, were let down badly in 1945 by the western Allies, despite the Yalta conference's declaration on liberated Europe.

One friend of mine, a member of the British military mission to Bulgaria in 1945, found that his first duty was to attend the execution of 68 parliamentarians. That assignment helped to make Malcolm Macintosh an especially acute observer of the Soviet military machine in subsequent years.

No doubt because of Soviet brutality later on, both Bulgaria and Romania have shown astonishing lack of bitterness at the western failure of the immediate post-war years, a failure which resulted in the imprisonment or death of hundreds of admirable people who expected support from us. I mention only the name of the ex-Romanian Prime Minister Maniu.

Though they have much in common, these two states also have many differences. For example, Romania maintained her contacts with the West—particularly France—through her Latin-based language. The noble Lord, Lord Anderson, mentioned that point.

Bulgaria's position should not be neglected. In the Middle Ages she constituted a major empire, a threat for a long time to Byzantium, and also preserved her orthodox Christianity during the long era of Ottoman control. Both Bulgaria and Romania have had close relations with Russia from the 16th century onwards for obvious geographical reasons, though Romania's were basically destructive. Bulgaria's—at least until the communist era—were usually benign.

Modern Romania has constituted four territories: Moldavia and Wallachia which constituted the heart of the country after 1878; Bessarabia which after several improbable changes is now the independent state of Moldova; and Transylvania which was wrested from Hungary in 1919 under the Treaty of St Germain. Bulgaria has experienced fewer territorial changes, though she did lose a priceless outlet to the Aegean in 1919.

Romania had oil, hence the German occupation of the 1940s. She also had both a fascist movement and a substantial Jewish minority which was later largely massacred. The cleverness of King Boris of Bulgaria should not be forgotten since he did much to save the admittedly smaller Jewish population of that country. However, Bulgaria did have the dubious honour of enduring the longest reign of any communist satrap, that of Zhivkov who was in power for 35 years in Sofia—just before the noble Lord, Lord Biffen, went there for the first time.

In rejoicing at the likely entry of these two tragic but resilient countries into the European Union, there is one further thing that I should say. Throughout their history, both have been affected by their associations with larger enterprises, whether the Hapsburg, the Ottoman or even the Soviet empires. Thus they are not like the great nation states of western Europe such as ourselves, France, Spain, perhaps the Netherlands and Sweden which have enjoyed five centuries of untrammelled sovereignty and naturally find it more difficult to forget or neglect the attitudes so formed. Thus though Romania or Bulgaria could throw up European statesmen of importance—ex-King Simeon might turn out to be one—it is unlikely that they will aspire to lead Europe as France has or as Britain could have done.

That brings me to comment—this may seem irrelevant but it is, all the same, important—that, like others, I have pondered on the reasons for the astonishing transformation of British politics over the past 20 years which has caused the party of Europe—which the Conservative Party was from about 1960 until 1988—to change places with the Labour Party, which until 1988 seemed, to say the least, unenthusiastic about associations with the European Union.

The noble Lord, Lord Howell, touched on why he personally had moved from an old enthusiasm to a modern scepticism. But I think this change occurred for a different reason. I think that in about 1988 Conservative leaders realised that Britain had lost the chance to lead Europe—a chance which could have been theirs. Those who led this country into Europe—Lord Stockton, Sir Edward Heath, Lord Duncan-Sandys, for example—

Photo of Lord Thomas of Swynnerton Lord Thomas of Swynnerton Crossbench

My Lords, if I can finish my sentence I will sit down. Those leaders thought it would have been ours for the asking.

Photo of Lord Howell of Guildford Lord Howell of Guildford Shadow Minister, Foreign Affairs, Deputy Leader, Parliament, Shadow Minister (Foreign and Commonwealth Affairs), Shadow Deputy Leader of the House of Lords

My Lords, I am enjoying—as I do always—the speech of the noble Lord, Lord Thomas. But he suggested that I had moved. No. The European Union moved and those of us who believed in free markets and were against corporate socialism stayed where we were.

Photo of Lord Thomas of Swynnerton Lord Thomas of Swynnerton Crossbench

My Lords, the noble Lord has made a very clear explanation and I understand what he is saying. At all events, I regret that we did not bid to lead Europe in the era of the noble Baroness, Lady Thatcher, and I believe that many continental Europeans regret it too.

Photo of Lord Dubs Lord Dubs Labour 4:02 pm, 20th December 2005

My Lords, if the noble Lord, Lord Thomas, will forgive me, I shall not follow him down the path of historical analysis. I should like to come a little more up to date.

I think it was on 1 May last year that the 10 countries joined the EU. I remember watching it on television—the ceremony took place in Dublin—and I found it a very moving occasion. It symbolised to me the way in which Europe was moving and how European enlargement was taking in, in that case, eight countries that had been under communism for 50 years.

Of course there are people in eastern Europe who have said to me, "Don't we lose our national identity by joining the EU?" and I have said, "Not a bit of it. Look at Ireland". Ireland has become, if anything, more Irish since it joined the EU than it ever was before, with not a trace of loss of national identity. But I recall the plea of the then Slovenian Minister for European Integration at a meeting in the Palace. He said, "Look, 10 countries are about to join. Please do not treat us all as if we were the same. We are not identical countries; we each have our individual histories, our traditions and our present attitudes. Please treat us as individual members". It is in that spirit that I approach the accession of Bulgaria and Romania.

I had the opportunity to visit Romania a few months ago, although I have not been in Bulgaria for about 12 or 14 years. Given that corruption is probably the number one problem facing Romania in its bid to join the EU, I found the Romanian Government's policy impressive and clear. I was particularly impressed by the Minister of Justice in Bucharest, who was very clear about what she was seeking to do to tackle corruption. But, as she admitted, corruption at the top level can be tackled and the Romanian Government can have clear policies, but it is a lot more difficult making sure that the anti-corruption drive works further down. I think the Romanian Government are determined to deal with it but it may not be as easy on the ground as it is at governmental level.

I have had it said to me in more than one of the accession countries that joining the EU is making them introduce changes that they wanted to make anyway, but which have been given more of a political imperative, making things happen faster. The same applies to Romania. Of course the Romanians are very keen to join. They have said to me that it would be a disaster if their bid to join was delayed by one year. None of us wants that to be delayed, but, although undesirable, I would not have thought it would be the end of the world.

My noble friend Lord Triesman spoke about the opportunities for British investment in these countries. I agree that the opportunities exist, but on my visits to Romania and to some of the countries which joined the EU last year, it was disappointing to find that British investment is a bit thin on the ground. For example, I was told that there was not a single British bank in Budapest, yet we lead the world in financial services. We are missing opportunities there. I hope that we will not miss so many in Romania and Bulgaria, although I fear that we do not have much on the ground there at present.

I accept the view that Romania has to improve its marketing, particularly of its agricultural produce. It has simply not got to grips with the needs of modern supermarkets and modern countries. Indeed, Romania has to import some products from other countries even though it has perfectly excellent products of its own.

My one serious criticism of Romania concerns the Roma minority there. Some months ago, our parliamentary delegation had the chance to visit a Roma village and a Roma school in that village. We spoke to both Roma people and Romanians. Romania will have to move forward if it is to give the Roma community a chance to lead a proper life in that country. The Roma still seem to suffer quite a lot of discrimination, not from the Government but at lower levels.

I hope that Romania and Bulgaria will join in January next year. I also hope that we will deal with the rights of people from those countries to work in Britain as we have dealt with the right to work in Britain of the people of the 10 countries that joined us. It did us a great deal of good in the eyes of the countries in eastern Europe that joined that we allowed their people to come and work here, provided that there were jobs for them and that they were not coming for social security. I hope that a similar arrangement will apply for the people of Romania and Bulgaria.

I am concerned that visa requirements still apply for Romania and Bulgaria. Will the Government drop those visa requirements in the process of those countries moving towards accession?

Moldova's position is rather unusual because of its close relationship with Romania in both economic and social terms. It is my understanding that when Romania joins the EU, Moldova will be affected more adversely than has been any other country through its neighbour becoming a member of the EU. That is because the ties will be cut, with serious economic and social damage to Moldova. I hope that Brussels realises this and that it will look to provide some special support for Moldova to tide it over the difficult situation that it will be in when Romania joins.

I understand that about one million Moldovans have a Romanian passport. Will my noble friend confirm that? If it is true, what will be the position of those people who live outside the EU, but who have a passport or citizenship of an EU country?

I turn to the wider issues that stem from the Bill. It is good news that Croatia's difficulties with General Gotovina have been resolved with his arrest and that Croatia is now on the way to joining the EU. I was told that long delays in countries joining the EU have adverse effects on public opinion there. The Croatians were quite concerned that public opinion might turn against EU membership. I hope that, with the resolution of the difficulties pending the way to negotiations with Croatia, that problem has been dealt with. I am delighted that Macedonia has been mentioned as a candidate country just recently.

I shall say a brief word about Turkey. I am a strong supporter of Turkish membership of the EU. I was delighted when the Government secured with our European partners the opening of the doors to Turkey, even though it will take some years before that happens. I am therefore disappointed, as a friend of Turkey, about the Orhan Pamuk case, where, just a few days ago, a world-famous novelist has been up in court on charges that, frankly, could not stand up in any EU country. I was surprised that they were not thrown out by the Turkish court. He allegedly insulted his country by making statements about Turkey as regards, I believe, Armenia. Friends of Turkey—of whom there are many in Britain, although not quite so many in other EU countries—are disappointed by this, and of course it is ammunition for Turkey's opponents. I hope the Turkish authorities will drop this case very quickly.

The question that has been asked, in particular by the noble Lord, Lord Hannay, is: what about further enlargement? How do we move forward? The governance issue will certainly have to be tackled sooner or later, as more countries join. We are managing at the moment, although not as well as we might had we had the new constitution, but we will have to revisit that. I hope my noble friend on the Front Bench will give some encouragement.

There is no need at this stage to decide specifically how much further Europe should go. It is perfectly sensible to deal with that pragmatically. A number of countries are in the pipeline, and we do not have to decide how much further Europe will go. It becomes a philosophical question, rather than a practical political one. Of course, other countries are interested: Georgia, Ukraine, Armenia and others. At some point Europe will have to decide whether those countries are on the path to full membership or to a closer association with Europe.

These countries on the borders of Europe clearly wish to adopt our values of freedom, human rights and democracy. If Europe does not welcome them, we are giving them no choice but to associate more closely with countries to their east that are not democratic. I believe such an outcome would pose a much greater threat to Europe than our being welcoming to Bulgaria, Romania, Turkey, Croatia and Macedonia, as well as to other countries on the borders of Europe that wish to espouse our values.

Photo of Lord Bowness Lord Bowness Conservative 4:12 pm, 20th December 2005

My Lords, I support this Bill, although I must say to the Minister that the one argument I felt was not dreadfully compelling was that it enabled Tesco to go marching across the Continent. Although the treaty of accession has been signed by Romania, Bulgaria and the other member states, I know those two countries will be anxious to hear that the treaty has in effect been ratified by the Parliament of the United Kingdom by the passing of this Bill.

I must declare an interest, in that earlier this year I was a guest at the Romanian senate for three days. The people who were kind enough to see me when I was in Romania emphasised just how important membership is for the process of reform. Those with whom I spoke, including their former negotiator in Brussels, did not view the European Union in quite such depressing terms as my noble friend Lord Howell—who unfortunately is not here—described it this afternoon.

As has been said, the treaty envisages the possibility of the accession date being delayed until 2008. Everyone I spoke to said that such a delay would have a profound effect on the work that was being done to bring the country to the standard required by membership. Indeed, the noble Lord, Lord Dubs, referred to the problem Croatia had with General Gotovina. When their accession process stalled briefly, public support plummeted, although, happily, I believe it has come back. I found in Romania that there were worries that the decisions on accession might be more political than objective, as the noble Lord, Lord Hannay, said, and that the European Council might not be looking closely at how far Romania had been able to meet its obligations.

We were told when we were there, and people we spoke to accepted, that there were problems with administration and judicial reform, competition and environmental issues. However, they all emphasised that the reform had been accelerated through the prospect of joining the European Union. At that time, in the summer, the government's efforts were focused on judicial reform and competition policy. There were still problems with the judiciary. The relevant Bills on competition had gone through parliament but there was a need to ensure that they were enforced.

Others to whom we spoke referred to the large rural population, who hoped that the European Union could offer advantages since, they believed, Romania was more competitive than many CAP countries. Apparently Romania does not subsidise agriculture at present, although it imports subsidised goods. Accession would help to create a fairer playing field. There was a need to change the agricultural pattern from one of subsistence farming to a market economy. Interestingly, they foresaw farms getting bigger yet remaining organic. Everyone agreed that Romania clearly needed to implement all its commitments to join the EU, but that the actions taken have been costly in some areas. It was therefore important that it proceeded. Others whom I met said that the economics of accession were less important than the message that integration would send to the public and to investors, and that the process of change was quicker if you were inside an institution, where certain objectives had to be met.

It is critical that the problems of the constitutional treaty, whether it sits on the bottom of the sea or not—and we should recall that there are often successful expeditions to salvage the best of what has been sunk—are not allowed to stand in the way of enlargement, particularly in the case of the western Balkans. It is, as other noble Lords have said, a driver for peace and stability in all countries. Macedonia's acceptance as a candidate country at last weekend's European Council was important. I hope that the enlargement strategy paper, which has changed the rules since the last enlargement round, will not be used as a political weapon to delay and restrict enlargement. Dashed hopes in the western Balkans could have disastrous results.

I suspect that the presidency conclusions of 15 and 16 December to which the noble Lord, Lord Anderson, referred could be used to delay all future enlargements—especially, the sentence which refers to:

"The absorption capacity of the Union", which,

"has to be taken into account".

If the European Union, and in particular its large member states, were to play with the hopes of the countries in the western Balkans—never mind those that are the subject of the European neighbourhood policy—it would be not only unfair but, in my view, also potentially dangerous for Europe.

Photo of Lord Tomlinson Lord Tomlinson Labour 4:18 pm, 20th December 2005

My Lords, it is a great pleasure to support the Motion so ably moved by my noble friend Lord Triesman. Since we joined the European Union, there has been a stream of new and successful enlargements. We had, successively, Greece, Spain and Portugal moving us up to a community of 12 members; then Sweden, Austria and Finland moving us up to 15; then, last year, the 10 new countries acceded, taking us up to 25. Now we have Romania and Bulgaria and, waiting in a line, Turkey, Macedonia and, possibly, Croatia.

Everybody seems to want to join the European Union. No politicians are seriously griping anywhere across the Union, other than here in the United Kingdom—where we seem to have more than our fair share. In welcoming the proposed enlargement the noble Lord, Lord Howell, sounded about as enthusiastic as Scrooge welcoming Christmas. I think he was having one of his bad days today; I much preferred the tone of the noble Lord, Lord Hannay, who seemed enthusiastic indeed about what he was supporting.

Yesterday saw parts of the United Kingdom at their worst; mainly, those parts represented on the Conservative Benches in both Houses. They profess to want to be in Europe, to want to support enlargement and to want policies that support economic reform in eastern Europe. They want to do everything but pay their fair share of the bill for that process.

Perhaps the worst service ever done to serious discussion of Europe was that performed by a former prime ministerial demand that we want our money back. That demand reduced Europe in so many people's minds to a balance-sheet exercise and yet most of the real benefits have been seen in the political and security consequences of many of the successive enlargements to which I have referred.

In Greece, we saw the return to democracy following the overthrow of a military junta and the membership of the European Union underpinned that democracy. In Spain and Portugal we saw the replacement of General Franco and Salazar by newly emergent, political democracies, again fully underpinned by their membership of the European Union. Even when we saw successful, economically prosperous, net-contributor countries joining—countries such as Sweden, Austria and Finland—we saw them all face up to very real political problems about their different sorts of neutrality and decided, despite the views that at one time they had thought were obstacles to them joining the European Union, that their global political and economic influence should be expressed by membership of the European Union.

The more recently liberated-from-the-shackles-of-communism applicants all sought to re-establish their sovereignty and democracy within the framework of that same European Union. They are our natural allies, sharing our view of Europe. They did not reject the centralisation of the former Soviet Union by seeking to join a European Union that would then be one in which they surrendered their new-found freedom and their new-found independence to the centre at Brussels—no more will Bulgaria or Romania. Like us, they want to remain members of a Union of sovereign nation states.

My noble friend Lord Triesman was correct and proper to emphasise that what we have before us in this Bill is not a fully done deal, based on the assumption that both countries will automatically join the European Union on 1 January 2007. There is the possibility for either or both to be delayed for a year. Our obligation is to ensure that the serious work is continued. We must ensure that the process of economic liberalisation, the necessary judicial reforms, the tackling of the environmental problems, and dealing with the problems of corruption and organised crime are continued. In that role both we and the European Commission must assist in those and other problems. It is correct that it is far more important to get the accession right than to get it quickly.

The noble Lord, Lord Biffen, in a fascinating and very interesting speech, sounded an important warning to his friends on his Front Bench on the views of Angela Merkel. She sounded some very interesting views as well. I was fascinated to see the letter she has reportedly sent to Mr David Cameron, looking forward to close co-operation with him within the framework of the European People's Party. I am not sure whether it was that letter that led to the appearance in today's Independent of a full-page article, which, I noticed at the bottom, in small print, said it was co-financed by Conservative MEPs and the European People's Party, which they are supposed to be about to leave. Or is that just another view that is about to be jettisoned under the kind of pressure from Mrs Merkel? However, the noble Lord, Lord Biffen, was right to emphasise that institutional questions have to be tackled. They needed to be tackled after the enlargement to 25, and they are as imperative as ever, if not more so.

I remain an unapologetic supporter of the outcome of the Convention on the Future of Europe. The institutional proposals in that convention are infinitely preferable to those that we have in the Treaty of Nice. We have to face up clearly to what we are going to do in relation to the institutional proposals that came from the Convention on the Future of Europe which suit an enlargement much more satisfactorily than those that we have had to revert to in the Treaty of Nice.

We used to hear a great deal about fortress Europe, about Europe being a rich man's club, about Europe being introspective. Enlargements have given the lie to those allegations and so does this Bill, which, I believe deserves our full support and shows Europe as being the preferred way of all these newly democratic European countries to be able to express their own aspirations within the framework of the economic and political stability that the European Union gives them. I support the Bill.

Photo of Lord Wallace of Saltaire Lord Wallace of Saltaire Deputy Leader, House of Lords, Spokesperson in the Lords, Foreign & Commonwealth Affairs 4:25 pm, 20th December 2005

My Lords, we on these Benches welcome the Bill. Looking at the Bill in its full length and complexity reminds me of the benefits of being mainly concerned with foreign affairs in this House. I took part in a Second Reading debate of one of the Home Office Bills the other week and I did my best, as I looked through it—through Article 60 and Article 80 and further—to appreciate how much harder, in legislative terms, my colleagues on other policy teams have to work. When I picked up the Company Law Reform Bill the other day, that was an entirely different matter.

The careful balance of the European Union's approach to enlargement, particularly with reference to Bulgaria and Romania, seems to me entirely the right approach: that we should welcome the European states which move successfully through the painful transition from authoritarian regimes and state-run economies to open economies and democratic government into membership. However, we should, at the same time, insist that they meet the necessary political, economic and administrative conditions required for membership.

Enlargement has been the most successful foreign policy that the European Union has conducted over the past 25 to 30 years. I can remember visiting Portugal, Greece and Spain in the mid-1970s as they began to move away from authoritarianism and it is astonishing how far—Portugal in particular—they have moved. The quality of Greek administration today and so on and so forth all owe a lot to their membership of the European Union, which helped a great deal. We have seen the same with the eight east European countries that have already joined and we are following the same path with Romania and Turkey. We need to do the same with the rest of south-eastern Europe: with Croatia and with the other countries of the western Balkans. We are attempting to do the same with Turkey.

This is not a distant part of Europe. I was happy to hear the noble Lord, Lord Tomlinson, reminding us of the Bruges speech made by the noble Baroness, Lady Thatcher, in which she spoke of eastern Europe being very much part of our Europe and which we had to look forward to coming into our Europe. That is what we are now very much working on. As he went through his historical dimensions, I was thinking about how much the history and population of eastern Europe is tied in to our own country. Every time I visit my father-in-law's grave in Bradford with my wife, I see the Polish section and the Ukrainian section of the same graveyard, carefully tended.

I used to have many enjoyable conversations with Lord Roll, long-since departed, about Ruthenia and his time growing up there. This is not a distant area about which we know so little, although I am not entirely sure about Dacian regiments and whether or not those of us whose ancestors come from southern Scotland should count Dacia as part of our blood. Furthermore, one does have to remember, as we play around with where we think Europe stops, that the Emperor Charles IV settled all those Saxons in those towns in Transylvania to defend the boundaries of Europe, as he saw them, against the barbarians coming in from the east again.

We have to be very careful about further enlargement beyond this. I disagree with some noble Lords who have spoken. We have some difficulty with populations in other western European countries—I spent some time in the Netherlands during and after their referendum—where there is some resistance to enlargement. If we are to hold to the line on the western Balkans and on Turkey we must discuss how much enlargement carries on thereafter. There are those who talk not only about the Ukraine but the southern Caucasus. The Government and their partners in Europe need to talk about how we make the ineffective neighbourhood policy that the European Union is now pursuing more valuable—about how a broader European economic area and political consultation is put into effect.

Various noble Lords have mentioned costs. The costs are relatively modest. They, and certainly the noble Lord, Lord Howell, did not talk much about the benefits and the investment in stability and security which assisting these countries to move towards open market economies and effective and non-corrupt administrations provide for us. We now spend half as much on defence as we did 20 years ago. This is investment in our security in a different sense.

The budget deal that we have just achieved was not too bad. I have two criticisms of it; first, that the British Government should have avoided offending our natural allies in eastern Europe—the Poles, the Czechs and the Slovaks—with our proposals before the final stages to cut what was transferred to those countries; and, secondly, that the Government should have used the occasion to argue not only for sharper changes in structural funds towards the new members, but that more money needs to be spent from the common budget on foreign policy regarding countries outside and around Europe with which we share common interests.

I was sorry to hear the noble Lord, Lord Howell, following what seemed to be the Daily Mail's "misery agenda", as it is now called. The noble Lord, Lord Turner, said the other day that the difference between the free market in Europe and the free market in the United States was that in Europe we regulate, but in the United States they litigate. The costs of litigation in the US are absurdly high, so there is something to be said for our level of regulation.

Clause 2 refers to the free movement of labour, which is a delicate issue that we must all be concerned with. It is difficult to extrapolate long-term migration flows from short-term migration flows. In the past year there has been a significant surge of people into the United Kingdom, but the net figures for the previous year were negative and it is not clear whether last year's surge will be maintained for the next 10 to 20 years. I note that in Spain, Greece and Portugal, the flows of migration that accompanied their moves towards the European Union were reversed as they became more prosperous. All three are now countries of net immigration, rather than net emigration. Most of those who came to the European Union in the process of accession have since gone home. I anticipate that the same will happen in Poland, the Czech Republic and others. Yet again, that is a reason for us to invest in helping them towards greater prosperity.

The noble Lord, Lord Howell, should be careful about following the MigrationWatch agenda in this respect, which provides us with the worst possible extrapolations of current trends. After all, the principles of the free market rest on the four fundamental freedoms of trade, services, capital and labour. I hope that liberals—and I understand that the Conservative Party is moving in their direction—interfere with those freedoms as little as possible. The conditions are important. I note that in the other place the Minister for Europe said that accession was not yet a fait accompli. I now understand that to mean that it is not simply a question of whether there will be a delay of one year, but that accession itself is not yet absolutely guaranteed.

The European Union rests on the quality of national regulation, national courts, national policing and national and local administration. That is what holds together the single market and our shared political and social space in Europe. It is important to maintain that, which is what the Copenhagen conditions do. The Commission's comprehensive monitoring report in October 2005 expressed serious concerns about corruption and organised crime in both Bulgaria and Romania. From visits to both countries I am aware that there is a degree of overlap between organised crime and corrupt administration. People talk about the "deep state" with reference to Turkey; certainly, people in Sofia have talked to me about the deep state in terms of the links between some aspects of the administration and organised crime. I read the report on the problems of Bulgarian court procedures and the case of Michael Shields, which Louise Ellman has raised in the other place.

The noble Lord, Lord Howell, asked what would happen next and how would we know what was to happen next. Here it is in the Commission's comprehensive monitoring report: the Commission will present to the Council and Parliament in April/ May 2006 and may recommend that the Council postpone the accession if there is a serious risk of any of those states being manifestly unprepared to meet the requirements of membership by January 2007. The Commission will make a proposal and the Council will reach a decision; this is the normal way things operate. The two states will be treated separately. I should like to say in passing that I note that the British Government have given high compliment to the quality of the Commission's work on enlargement. This is and remains one of the best areas of Commission work. I think we may all have particular confidence in Olli Rehn, who has a British PhD and I can recommend to the noble Lord, Lord Howell, his thesis on the political economy of small states in a globalised open market. It is the sort of thing I am sure he would enjoy reading; I speak as a former supervisor.

Conditionality standards and the current member states are something that we might wish to touch upon. Some of us have some concerns about whether Italy fully meets current standards in terms of the quality and diversity of its free media, the problems of its financial corruption and even, perhaps, the independence of the judiciary from the government. I touch on that only in passing. We on these Benches welcome this Bill. British interests are clearly served by further enlargement to the eastern and western Balkans. This is about our stability and our security. For that the Government have strong support from these Benches.

Photo of Baroness Rawlings Baroness Rawlings Shadow Minister, Foreign Affairs, Shadow Minister, International Development 4:38 pm, 20th December 2005

My Lords, I, like my noble friend Lord Howell of Guildford warmly welcome this Bill and am grateful to the Minister for moving the Second Reading. It has been a fascinating debate; we have heard the history of Bulgaria and Romania, slightly potted, from the noble Lord, Lord Thomas of Swynnerton, personal experiences from my noble friend Lord Biffen, and other noble Lords' experiences. With your Lordships' tolerance, I will concentrate mainly on Bulgaria. I go back to the start of its European Union aspirations, because I took the Bulgarian Europe agreements through the European Parliament in the 1990s, when Margaret Thatcher was Prime Minister, as the noble Lord, Lord Thomas of Swynnerton, reminded us. I declare an added interest in Bulgaria as a governor of the American University in Blagoevgrad. The degree of consensus on these Benches and in the other place is extremely pleasing and, I hope, represents the widespread appreciation both of what the European Union can do for Bulgaria and Romania, and what they can do for us.

A Bulgarian friend of mine pointed out with great pride the enormous achievements of young Bulgarians worldwide. Their international achievements include world-class opera singers, mathematicians, chess players, computer programmers and so forth. There is no doubt that, once accepted, both Bulgaria and Romania will play a significant and constructive role in the European Union on our populations, economies and cultural wealth. They will also have significant power within the European Union institutions, with Bulgaria wielding the same number of votes as Austria—10—in the Council, and of seats—12—in the Economic and Social Committee and the Committee of the Regions, and the European Parliament—17. Romania, because of its larger population, will have even more.

The experience of the last round of accessions, where not just two but 10 countries were accepted with similar potential for success and failure, has been very positive. I see few reasons to believe that this round of accessions will not go equally as successfully. However, there are areas that are worrying. Despite Bulgaria and Romania having GDP growth rates significantly above the EU average, both have GDPs of around a third of the EU average. Both countries have done a commendable job in squeezing in all the acquis communautaire laws in order to comply with the EU deadlines. But the laws now need to be implemented. Specifically, the Bulgarians must revise their judicial system and make certain that at long last criminals are sentenced and accordingly sent to gaol. It is unacceptable that so far not a single boss of the criminal world is sitting behind bars.

The European Parliament has already demanded greater effort in stamping out such crimes. The European Union, too, still has to make the necessary institutional reforms as mentioned by my noble friend Lord Biffen to cope with the present and future enlargements. The sheer enormity of the task facing the European Union and the tasks facing these two countries make their preparations for 2007 seem a Herculean task. Ten years ago this month, the European Council took the decision to let Bulgaria become a European Union member when it met the political and economic criteria, regardless of its place in the queue, up to 2007. That was a huge spur and encouragement. It also presented a steep hill to climb. We should congratulate the Bulgarian people on having strived so diligently, despite having suffered great hardship along the way, to meet the requirements. They are nearly there.

We must use every method possible in the time left to us to encourage these countries to fulfil the requirements and prepare themselves effectively for their accession. The alternative, so rightly stressed by the noble Lord, Lord Dubs, and mentioned by the noble Lord, Lord Wallace of Saltaire, is unthinkable. I wish them both the best of luck and I end by returning to Clause 1. We on these Benches urge that the ratification of the treaty and that of the Bill go through Parliament as quickly and as smoothly as possible.

Photo of Lord Triesman Lord Triesman Parliamentary Under-Secretary, Foreign & Commonwealth Office, Parliamentary Under-Secretary (Foreign and Commonwealth Office) 4:44 pm, 20th December 2005

My Lords, I start by welcoming the spirit in which this debate has been conducted—irrefutable evidence were it ever to have been needed that Bulgaria and Romania will be welcomed, for the most part certainly, into the European Union by the United Kingdom as friends and equal partners. I am grateful to all noble Lords who have taken part. The noble Lord, Lord Howell of Guildford, the noble Baroness, Lady Rawlings, and the noble Lord, Lord Wallace, spoke very clearly on behalf of their respective parties and I am grateful to the noble Lord, Lord Wallace, for pointing out that this is a brief Bill—small but, I think, perfectly formed.

As I said earlier, the United Kingdom has always been a strong supporter of enlargement, and it is not difficult to see why. Successive UK governments have supported enlargement because it has brought security, stability, and prosperity to our Continent.

The noble Lord, Lord Hannay, made the vital point about the passage of history and the general state of development. That is reflected in Article 49 of the treaty of the European Union. It offers the prospect of membership to any European state. There may be feelings on all sides about how far Europe has stretched, but I feel that the discussion needs to go a little beyond generalisations into real-life issues, as my noble friend Lord Dubs urged.

Enlargement works, as it has done for all the accession countries. It has worked for us, and restrictive policies have not been a credible approach to the issues of security and prosperity. It is vital to carry it forward. We need regular reports and discussions on the west Balkans, Turkey and Croatia, as well as Bulgaria and Romania. It should not be a small discussion in a private garden. The noble Lords, Lord Hannay and Lord Wallace, reflected the scope of this joint project of discussion. The enlargement agenda is packed. Bulgaria and Romania are making preparations for membership. Turkey and Croatia are in negotiation. Further integration and discussion is taking place on the western Balkans. All recognise the importance of the work, but it is also important to communicate the benefits of enlargement and to ensure that public opinion understands what those processes are about.

Let us take, for example, last year's accession of the 10 eastern and central European states—those to which the noble Lord, Lord Dubs, drew particular attention. My noble friend was quite right. The prospect of membership unquestionably helped to boost their economies in the run-up to accession. Membership has been achieved, and we can see the advantages. Growth rates are as high as 8.3 per cent in Latvia and 5.3 per cent in Poland. It is a virtuous circle. High growth provides job opportunities and helps to raise living standards in the new member states, and provides new trade and investment opportunities for the United Kingdom. Since May 2004 British businesses have had access to a market with 70 million more consumers. I am sure that Tesco is taking some advantage of that, and I guess a good many others are, too. The accession of Bulgaria and Romania will add a further 30 million to that growing market.

My noble friend Lord Tomlinson identified the value of seeing the benefits and putting them into the picture. How appropriate it is to lead through those advantages to a discussion on security. In particular, I welcome the way in which my noble friend introduced the security issue by focusing on how the fall of dictators and the recovery from decades of dictatorship have enhanced our security. Greece, Spain and Portugal saw that extreme Right dictatorships could have that legacy eradicated by understanding how Germany had developed inside the EU. I have little doubt that communist dictatorships came to have to face their people's understanding of the nature of those dictatorships because they, too, could see from those examples the value of living in a totally different way.

Enlargement also means that we can live in a more secure Europe with closer co-operation on border control and on tackling organised crime. New member states have brought experience and knowledge to specific regional problems. Their expertise has enabled us to get one step ahead of the drug and human trafficking gangs working through eastern Europe. A good example was the arrest of sex traffickers in Sheffield in October, which came about through specific co-operation with new member state police forces.

Enlargement also means the accelerated adoption of human rights and democratic standards that we have established in Europe right across the Continent. Let us not forget that only 15 years ago people had to take to the streets in many countries across central and eastern Europe to demand those changes. Since then, the prospect of European Union membership has driven and supported political developments of the kind that we have discussed this afternoon. For many eastern Europeans, EU membership represents the final step in their country's transformation from dictatorship to democracy.

Thankfully, Romania and Bulgaria are coming to what may be the end of their journeys. We will judge it but that is what I hope. Their paths have not been easy. The noble Lord, Lord Thomas of Swynnerton, reminded us of the depth of their historical struggle and, not least, of the obligation that we owe for the failure to recognise what was needed in 1945—a point made with great force. More work still needs to be done. But the significant changes that have already taken place are a credit to the vision, energy and determination of the peoples and Governments of Romania and Bulgaria, and, as the noble Lord, Lord Bowness, said, the dynamics of change are bound up in all those things. That is a powerful point on which to reflect when the discussion on the western Balkans becomes significant. In my judgment, the noble Lord is 100 per cent right to say that, as we go forward, we must not play with people's aspirations; we must be serious about them. I welcome that point.

Perhaps I may address some of the questions asked by noble Lords. The noble Lord, Lord Howell, was kind enough to give me some indication of his speech, and I appreciate that. I was asked who will make the key judgments on whether the negotiations should be suspended for one year. The Commission will produce another monitoring report. I take comfort from the quality of its reports thus far, and it will report in April or May 2006 on the preparedness of Bulgaria and Romania for accession. On the basis of those findings, the negotiations on one or both countries will be delayed if there are outstanding areas of concern. It will then be for the Council to make the decision on whether to defer the accession of the offending state or states. In practice, the Commission is unlikely to recommend delay if there is no political support or cause for such a recommendation.

The key judgments will be made in the way that I have described. The single market and JHA safeguard clauses allow the Commission to impose protective measures to correct difficulties in the initial three years after accession. Member states can request that the Commission takes appropriate measures to address a particular concern, or the Commission can act on its own initiative, as the noble Lord, Lord Howell, rightly pointed out.

I was asked whether there would be an open procedure. I believe that there will be. The reports will all be published and they will be very visible. I have no doubt that we will debate them in your Lordships' House on every occasion that noble Lords feel it is appropriate to do so.

I was asked whether the countries can appeal against the safeguards. There is no appeal procedure but I believe that the conditions set out are well understood. They have been signed by Bulgaria and Romania and I think that they understand the procedures involved.

I say to the noble Lord, Lord Howell, that there is no significant additional public expenditure. The EU expenditure is capped over each financial perspective and there will be budgetary limits. The enlargement of Bulgaria and Romania will therefore not involve additional costs above those agreed by the United Kingdom. But of course the redistribution of structural and cohesion funds to the A10 states and to Bulgaria and Romania over the course of the next financial perspective will see the EU 15 states accessing less than they would have done in previous years.

A question was raised about the Home Office's predictions of the number of workers moving across Europe. I should say that the figures came from a paper and research from University College, London. I have no doubt that that was carried out in the best way possible. As we enter the next phase, I think I can say that the research methodology has probably improved—one always hopes that that is the case with research methodology in general.

I welcome the comment of the noble Lord, Lord Wallace, that the flow of people in Europe has moved backward and forward and has reflected market conditions. That is because it is a market economy and this is a market. That is what happens in markets, and that is what we always wanted of the European Union. As I said, at the moment no decision has been taken on possible restrictions or subsequent access to public funds in the light of the decisions because obviously we will need to know more about numbers.

The noble Lord, Lord Biffen, raised the issue of the impact on common agricultural policy arrangements. Enlargement does not destroy the prospects of CAP reform, difficult as those prospects have been shown to be in recent weeks. The accession treaty makes provision to adapt the parts that relate to CAP where that is required by further enlargement before accession.

The Bulgarians have stated that they would like to go through our ideas on CAP reform, and that they want to work with us on moving towards a more rural development approach than the current CAP arrangements. The radical reforms of 2003 and 2004 mean that the CAP is now less trade-distorting and less environmentally damaging, but I would be the first to say that there is still a great deal of work to be done. I acknowledge that.

The noble Lord, Lord Biffen, also described the financial arrangements as a kind of Marshall aid and as more desirable if they were transitional payments. Let me say that the negotiations—your Lordships will have seen that the figures are important—have come about because, as the noble Baroness, Lady Rawlings, has just reminded us, the economic circumstances of those catching up are important. They are still very much poorer. They still need to come to a position where they can compete on a level basis. Their people are half as wealthy as the rest of Europe. That is a big gap to make up. It may be difficult. All negotiations are, but the accession countries have welcomed the outcome in the last few days.

I say to the noble Lord, Lord Wallace, that of course it was a sharp discussion—it was a negotiation. I seem to have spent quite a lot of my life doing negotiations. One of the things that I have learned about them is that for much of the process there is very little cuddling involved. Actually, as you get a little beyond that, post-agreement, recovery is usually pretty rapid, because everyone understands that strong positions are taken during that process.

The noble Lord, Lord Dubs, in the context of saying that delay would not be a disaster if problems were still to be overcome, asked a bit more about the corruption issue. I am afraid that both countries, given their poor rankings in the Transparency International 2005 corruption index, have to face big challenges. The goal of accession will, I think, drive the changes. The simple fact is that it will have to drive the changes. Not least, constant inspection will be needed to ensure that EU funds themselves are not lost to corruption. That would be a double travesty. The Commission is to pay the closest attention to this, and our embassy liaison staff are working with others on the anti-crime issues, including money laundering and other sorts of crime. It may well be that money laundering is one of the reasons that the banking system has been difficult to encourage on the ground.

Certainly more work is also needed on discrimination against the Roma. We discussed it recently in the House, so I will not say anything in huge detail, but the Commission is bound to take that issue into account. A proper platform of human rights is invaluable and cannot be ignored.

The number of applications for Romanian citizenship from Moldovan nationals is low. Since 2002, I can tell the noble Lord, Lord Dubs, 2,355 Moldavians citizens have been granted Romanian citizenship, based on figures provided by the Ministry of the Interior.

The points I made about banking investment do not, I am happy to say, apply to other kinds of investment. Vodafone has acquired the Romanian mobile phone company earlier this year, for €2.5 billion. UK exports to Romania in 2004 were up 19 per cent on the previous year, to a value of about £606 million, which is well worth having. That involvement is one we want to see going forward.

The noble Lord, Lord Wallace, asked whether we were giving attention to what I think was a point about the Michael Shields case. He asked it in a slightly oblique way, but I understand the point that was being made. Michael Shields, who is in prison in Bulgaria, is receiving strong consular attention, and I give my assurance that he will continue to get that attention, as will his family.

I am delighted that the noble Baroness, Lady Rawlings, was very positive about this development, because of her important knowledge of Bulgaria. She is quite right: in the midst of everything, the Bulgarians must revise their judicial system. The new judicial procedure code, passed to improve the efficiency and transparency of the pre-trial phases, is now on the books. There are 12,000 new police investigators—and my word, that is necessary—and the Ministry of Interior Act has been introduced to modernise law enforcement structures. These are all vital measures.

In my concluding comments, I want to turn to the fundamental part of the exchange—the exchange between many Members of your Lordships' House and the noble Lord, Lord Howell. It is the exchange that I want to have with the noble Lord as well, because it lies at the heart of how we look forward. I admire the depth of the noble Lord's thinking; I have seen it many times in the House and have heard it elsewhere as well. But I wonder whether it has led him to the wrong balance of conclusions. Obviously, I do not accept his argument that this has been a dismal presidency—I could go through a long list of the presidency's achievements, but I will not—but I want to come to the heart of what he said.

The noble Lord is right that there are significant ambiguities about the direction and character of the EU. These are big debates, as we are all aware. He is quite right to press the arguments about the protection of industries, particularly agriculture, in a way which may have helped their post-war recovery but it does not make much sense in a modern economic setting. I, too, am uncomfortable about the extent and complexity of regulation. I have no differences with him on those points. These characteristics can impede vigour and renewal in European Union markets and in civil society itself. But my overall conclusion is different.

We live in a continent which was historically renowned for the length, extent and violence of its conflicts. Some great peoples, despite the extraordinary sophistication of their culture, proved in recent history capable of acts of extraordinary barbarism that have come to scar all recorded history. We traded blows with many of them more readily than we traded goods. Even in the past decade and a half we have seen a resurgence of ethnic violence and mass murder in the former Yugoslavia. Yet we have not only created a community that is growing to, and will, I hope, grow well beyond the 25, in which intransigent enemies of world wars and the Cold War now co-operate; we are also a fountainhead of decent values, the spread of democracy and the rule of law. People who saw Europe bathed in its own blood and capable of industrial-scale murder in its gas chambers now look to us as being nations which can give them examples that they can follow in their own finest aspirations. My noble friend Lord Tomlinson also made that point. Those aspiring to join this peaceful and prosperous market strive against the legacies of dictatorship, corruption and lawlessness to gain their place in much better societies and a much better community. That has been the greatest spur to change.

Has the transition been flawless? Does it provoke occasional heart-searching? Do all the nations of the 25 and beyond approach these questions in exactly the same frame of mind? In this huge market, and among this diversity, of course they do not. But overall, however bumpy that ride, it is one of the most progressive and genuinely entrenched progressive developments that could possibly have been seen against that stark history and background. Who could deny that? New arrangements will be needed—they will be debated hotly, but that fundamental trend is there. It is an achievement of global proportions in my view; it is no cause, if I may say so to the noble Lord, Lord Howell, for deep pessimism.

I know the noble Lord to be a strategic thinker. I invite him to re-evaluate the flow of Europe's history. That is what we are debating in this House, and if we get it wrong, we are more likely to lapse back to what we have tragically experienced than go forward in the ways that have been so encouraging.

On Question, Bill read a second time, and committed to a Committee of the Whole House.