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.