29 March 1999
With your permission, Madam Speaker, I shall make a statement about the European Council in Berlin (24 and 25 March) which I attended, together with my Rt Hon Friends the Foreign Secretary and the Chancellor of the Exchequer.
This European Council had two principal tasks: to reach agreement on the Agenda 2000 package of negotiations for enlargement of the European Union, including changes to agriculture spending and to the structural and cohesion funds; and to prepare for the appointment of a new European Commission. I should like to pay tribute to the immense skill shown by Chancellor Schroeder in bringing the negotiations to a successful conclusion. The conclusions of the Council have been placed in the Library of the House.
The European Council was, however, overshadowed by events in Kosovo, which were constantly in the minds of European Council members during this meeting and I shall begin with this.
European Heads of State and Government were unanimous in condemning Milosevic’s barbarity and intransigence and in supporting NATO’s action. Air strikes are continuing and intensifying in the wake of the renewed repression in Kosovo. Thirteen additional RAF planes are being committed to the NATO operation this week. I know members of this House will join me in giving their continued full support to the British forces engaged. Thirteen different countries have aircraft committed to this operation.
Even as we speak, there are continuing atrocities perpetrated by Milosevic against defenceless Kosovan civilians. But one thing should be made very clear. The idea that this barbarity, this renewed ethnic cleansing, started last Wednesday when NATO began its campaign is simply absurd.
The massacres we are witnessing now were planned by Milosevic over the last two months when he built up an army and special police presence in the Kosovo region totalling 40,000 troops and 300 tanks - a deployment far greater than at the height of last year’s fighting and savage repression. In the two days prior to the NATO campaign, 20,000 people were driven from their homes. 65,000 in the last month. That is added to the 300,000 last summer. It is now clear that Serb participation in the Paris peace talks was a cover for Milosevic’s offensive preparations. On 20 March, the day after the talks were suspended, we now know armed Serbs started summary executions and ethnic cleansing. They have continued ever since.
In my view, our response to these appalling acts, far from halting or slowing the Allied action, must be to intensify it and see it through to a successful conclusion. For every act of barbarity, every slaughter of the innocent, Milosevic must be made to pay a higher and higher price. I hope no one who has seen the utter, callous brutality with which the Kosovo Albanian people have been treated is under any remaining illusions about the nature of the Serb regime. The proper answer to it is not weakness but strength.
We are also addressing the growing refugee problem created by Milosevic’s brutality. I have today set up a cross-departmental group to respond rapidly to this crisis. A joint military and civilian team will visit Macedonia and Albania later this week. The Department for International Development have allocated an extra £10 million as our initial contribution to this international effort, in addition to the help we had already committed.
Madam Speaker, I will now turn to Agenda 2000.
On agriculture, the European Council agreed to phased price cuts of 15% for milk and cereals, and 20% for beef. It also set limits on agricultural spending, bringing the CAP under tighter control than before. Agricultural spending by 2006 is planned to be less than 2 per cent in real terms above its level next year, and falling: of course, some of us wanted more but it is worth contrasting this outcome with the increase of 9 per cent agreed at the Edinburgh European Council in 1992. And UK consumers will, when these reforms have been implemented, benefit by about £1 billion a year - £65 for a family of four.
On the Structural and Cohesion funds, the European Council agreed that spending in the existing Union should total 213 billion euros in the period 2000 to 2006, an 11% reduction in the Commission’s proposal. Within that total full and proper account will be taken of the interests of the UK.
- Cornwall, West Wales and the Valleys and South Yorkshire will qualify for assistance under Objective 1 of the Structural Funds for the first time;
- Merseyside will retain its Objective 1 status;
- A safety net will safeguard the position of regions of the UK qualifying for assistance under Objective 2 of the Structural Funds. This will cover 14 million British people;
- There will be a special package for Northern Ireland assuring assistance at a level equivalent to Objective 1 status;
- A special transitional programme of assistance totalling 300 million euros for the Highlands and Islands of Scotland, which no longer qualifies for Objective 1 status. This sum is double the amount available for other areas losing Objective 1 status and is comparable to the amount the Highlands and Islands would have received as an Objective 1 area. This is a tremendous deal for Scotland.
The negotiation also covered the revenue side of the Union’s finances. It was agreed that more revenue would be raised from contributions linked to GNP and less from VAT receipts and customs payments. There is also to be a change in the way in which payment for the UK abatement is divided among the other member states. But no change was made to the Own Resources ceiling, the limit on revenue available for the Community budget. This is significant and welcome. In the last two major negotiations on European finance, in 1988 and 1992, the European Union, when it made changes, agreed an increase in the revenue ceiling: that is an increase in the share of the European Union’s wealth which taxpayers can be required to contribute towards EU spending. For the first time there has been a major Community financial settlement without an increase in the potential burden on taxpayers. In 1988 the settlement envisaged spending rising by 17 per cent and in 1992 it foresaw spending rising by 22 per cent. This time spending within the EU 15 will fall in real terms over the period covered by the agreement.
On the abatement, I am delighted to report that the Presidency conclusions say in terms that the UK abatement will remain. In line with the 1988 and 1992 European Council conclusions, the United Kingdom accepted that we should not make a windfall gain out of changes to the method of EU financing; that is the gains from a switch from VAT to GNP contributions and from an increase in the collection costs for traditional Own Resources. On the same principle, I agreed that the abatement will not apply, after enlargement, on an amount of expenditure in the new Member States equal to the pre-accession aid in those Member States which is itself now unabated. So any expenditure unabated now will remain unabated after enlargement. But the vast bulk of expenditure in the New Members after enlargement will qualify for the abatement, because it is abated now.
The result is that there will be no reduction in the United Kingdom’s rebate. Our objective was secured. I said that the Government would maintain the abatement. We have done so.
Heads of State and Government also agreed to invite Mr Romano Prodi, former Prime Minister of Italy, to be the next President of the European Commission. I warmly welcome this appointment. Mr Prodi has a strong record of economic and political reform.
The European Council’s intention is that the new Commission should be appointed and start work as soon as possible after the European Parliamentary elections, and remain in office for the remainder of this year and the five years starting from January 2000.
There was unanimous agreement among Heads of State and Government that the new Commission will need to give urgent priority to a programme of far-reaching modernisation and reform in which Community funds, programmes and projects are properly managed, the Commission’s services are correctly organised and the highest standards of management, integrity and efficiency are ensured.
The Middle East Peace Process was also discussed at the European Council and we urged that the transitional period established under the Oslo Agreement be extended beyond 4 May 1999 with the aim of reaching agreement on final status issues within one year.
Madam Speaker, I am pleased to say that agreement was also reached on the Trade and Development Agreement with South Africa - a historic step in consolidating prosperity and democracy in South Africa and developing the European Union’s relationship with that country.
To sum up Madam Speaker, the outcome of Agenda 2000 is an agreement which:
- makes significant reforms to the CAP;
- puts the Union’s financial house in order in preparation for enlargement;
- brings spending under control and reduces Community spending as a proportion of Community GNP even after allowing for the costs of enlargement;
- gives a fair deal to UK regions which receive support from the structural funds;
- and maintains the abatement.
It is a good result for Britain and has been achieved by a new government which has rejected the sterile confrontations and isolationism of the recent past; which engages constructively with Europe to get a better deal for Britain. I commend it to the House.
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