BBC On The Record - Broadcast: 17.02.02

==================================================================================== NB. THIS TRANSCRIPT WAS TYPED FROM A TRANSCRIPTION UNIT RECORDING AND NOT COPIED FROM AN ORIGINAL SCRIPT; BECAUSE OF THE POSSIBILITY OF MIS-HEARING AND THE DIFFICULTY, IN SOME CASES, OF IDENTIFYING INDIVIDUAL SPEAKERS, THE BBC CANNOT VOUCH FOR ITS ACCURACY ==================================================================================== ON THE RECORD RECORDED FROM TRANSMISSION: BBC ONE DATE: 17.02.02 ==================================================================================== JOHN HUMPHRYS: Good afternoon. It's been a bad week for the Government with so many questions and accusations about Labour's links with big business. I'll be asking the Cabinet Office Minister Lord MacDonald about that letter Tony Blair signed and why he should want to help a foreign businessman. The European Union seems embarked on another step down the road towards greater integration. Can Britain hold it back? That's after the news read by MATTHEW AMROLIWALA. NEWS HUMPHRYS: Thanks Matthew. One of "new" Labour's great achievements was to break down the barrier of suspicion that had always existed between OLD Labour and big business. The old enemies have become close friends. Too close? Well that's what the Government's critics believe. They point to big donations made by people like Bernie Ecclestone and close ties to the Hinduja brothers and now (this past week) the strange tale of the Indian billionaire helped by Tony Blair to buy the state-owned steel industry in Romania. And there are more revelations in this morning's newspapers about how Britain helped the company to get a huge loan. Is there anything sinister in all this or is it - as Mr Blair said on Wednesday - a load of garbage? I'll be talking to the Cabinet Office Minister Lord MacDonald after this report from Iain Watson. TONY BLAIR: This is a complete load of nonsense from beginning to end. It's not Watergate, it's Garbagegate. IAIN WATSON: The Prime Minister wanted to rubbish allegations that he was giving support to the Indian billionaire Lakshmi Mittal just because he was a Labour donor; but with confirmation today of yet more indirect British help for his company, it won't be easy for the government to dispel the stench of sleaze. FAZ HAKIM: The system leads to a situation where you are raising money on the one hand, and making decisions about those companies on the other hand and the two just don't go together very well. HENRY DRUCKER: Those who want to buy influence are those who need to buy influence. Very often, they are companies who are primarily foreign companies, but who are beginning to do business in the United Kingdom and want access to British ministers. WATSON: To have one brouhaha over business links could be considered a misfortune. To have several begins to look careless. A pattern seems to be emerging - Labour is accused of impropriety, they mount a robust defence, then it emerges they haven't exactly been telling the whole story. Even when they've been doing absolutely nothing wrong, the perception can be as damaging as the reality. So now some supporters are saying it's time that Labour changed the whole system of party funding, while opponents say there are more immediate questions to be answered over the Mittal affair. so it seems Tony Blair still has some way to go before he consigns Garbagegate to the dustbin of history. Last July, the Prime Minister wrote a letter to his Romanian counterpart welcoming the imminent purchase of the country's Sidex steelworks by this man's company LNM. Lakshmi Mittal had given one-hundred-and-twenty-five thousand pounds to Labour just weeks before. Tony Blair said he was unaware of the donation, but the original defence - he was simply standing up for British business - unravelled when it was revealed that LNM was largely based overseas and employs fewer than zero-point-one per cent of their staff in the UK. TIM COLLINS MP: If the Prime Minister wants us to believe his version of events he should publish all the briefing papers he saw when he was invited to sign this letter. He should publish the full details of all conversations relating to his Chief of Staff, he should make it clear that he is agreeable now to a proper enquiry, to get to the root of all this, he should stop just assuming that all he has to do is say I'm a pretty straight forward kind of guy, and we'll take his word for it. WATSON: The political heat continues to be turned on Labour. Today it emerged that officials at the international development department supported an application for a seventy million pound loan for Lakshmi Mittal's company, LNM, to buy this Romanian steelworks. And late last week, it was revealed that Tony Blair had met Mr Mittal at a fundraiser's party just weeks before writing his letter to Romania. And that the financial link to Mr Mittal was forged back when Tony Blair's Chief of Staff, Jonathan Powell, had been the party's main fundraiser in opposition. COLLINS: I think the government now must make it clear - what did the Prime Minister know and when did he know it? What exactly was the role of his Chief of Staff? How is it defensible to have someone who used to raise money for the Labour Party, deciding what papers and what people see the Prime Minister? How can it possibly be right for a British ambassador to be acting as though he was almost an agent for an Indian businessman, whose British business interests are almost negligible? This is deeply worrying. WATSON: Labour's glitzy fundraising parties take place in the glare of publicity; but one of the party's former financial consultants believes aspects of the Mittal donation have yet to come to light. DRUCKER: Well I think one of the most interesting aspects of this affair and certainly if I were involved, questions I would want answers to is who asked Mittal for money? What did he ask him for and what did Mittal want in return? I haven't heard any of these things explored. WATSON: Bernie Ecclestone, the diminutive motor racing tycoon, was involved in one of the Labour government's earliest problems of perception. Only when Tony Blair backed exempting Formula One from a proposed European ban on tobacco advertising, did it emerge that he'd given a million pounds to the Labour Party; the cash had to be handed back HAKIM: We clearly should have, you know, just come clean about the whole thing straight away. You know, in, in retrospect there wasn't anything to hide, and, you know, once we did come clean it was end of story really. But we definitely needed to think through perceptions. WATSON: But it wasn't just the Ecclestone affair. In 1997, it was revealed that the trade minister, Lord Simon, still held BP shares worth two-million pounds. While this wasn't illegal, some rotten publicity persuaded him to dispose of them. More recently, the wealthy Hinduja family donated one-million pounds to the Millennium Dome. Quite coincidentally, SP Hinduja received a British passport in about a third of the usual time. The US energy corporation Enron donated thirty-six-thousand pounds to Labour, and the moratorium on gas-fired power stations was lifted; while no connection's been proven, the opposition have thrown plenty of dirt around. Last week, further embarrassment for the government when the former minister for Europe, Keith Vaz, was thrown out of the House of Commons for a month for trying to frustrate an investigation into his financial affairs. And now a former fundraising consultant for Labour believes 'cash for access' is at least the expectation of some who throw their spare dosh the government's way. DRUCKER: You don't have to pay money to get to see a politician, but there is the impression, which is so strong that there's got to be something in it, that your comments, your suggestions, your queries are paid more attention to, if you are a useful donor to either party, the party of government, than if not. WATSON: The question the government is pondering is how to avoid future accusations or insinuations over 'cash for access.' Downing Street say the Prime Minister is relaxed about a debate over state funding but doesn't yet believe there's a consensus amongst the public for it. That's code for saying it's politically risky. But some of his former advisers believe there's no other only realistic option. JAMES PURNELL MP: I think it was important in run up to the ninety-seven election that the party could raise money from business as well as from trade unions. It was one of the things which showed that the party had changed, but the situation has now arisen where the party gets criticised for raising money from the trade unions, the RMT, from Enron and from private individuals and, given all of that, it's quite difficult to see who we'll raise money from in the future without being criticised, and I think that's why the case for looking at state funding of political parties is now quite strong. HAKIM: I think there will be some problems in terms of getting the public to accept state funding and funding of political parties, but the alternative is to keep having these stories coming out again and again and again. WATSON: State funding may be some way off, but an influential Labour MP says the government can quickly and easily distance themselves from the perception that rich business people can buy access or influence. TONY WRIGHT MP: We should have decided there should be a cap on individual donations. We could discuss the amount, I think probably something like ten thousand pounds a year would do it. You could do that immediately. It would need the slightest amendment, to the party funding legislation that we already have brought in, and I think that would take care of any suggestion that you had donations of amount, of an amount that could possibly influence policy. WATSON: Tony Blair said he wouldn't shirk tough choices, but if he chooses to tough out the Mittal affair and casts aside a wider reform of political funding, he could find his troubles piling up in the future. HUMPHRYS: Iain Watson reporting there. JOHN HUMPHRYS: Lord MacDonald, we all know the basic details by now, LNM is a foreign company that has a tiny, tiny proportion of its staff working in this country. How is it in the national interest for the Prime Minister to help it to buy the state owned steel company, or industry, in another foreign country - how is that in the national interest? LORD MACDONALD: Because we believe that the modernisation of the economy of Romania and indeed of Eastern Europe is fundamental to the future of Europe. Our Ambassador in Bucharest was encouraging that process. That's why he wanted to deal at Prime Ministerial level with Adrian Nastase, the Romanian Prime Minister. The loan that's been referred to there is a loan from a bank backed by sixty countries... HUMPHRYS: ..we helped them to get that loan... MACDONALD: ..but a couple of dozen of countries in the board of that bank, that shows the wide spread international support for this modernisation process. Now if it's a bank loan but is going to back a comapny that does have British links, it does have an ownership by Mr Mittal, who is on the voters roll in the United Kingdom. But the most important thing is that we are in there helping the country modernise, to help shape the direction in Romania because that in the end, will be good, not just for Romania but for the European Union and indeed for the United Kingdom. HUMPHRYS: It helps the United Kingdom, though not a jot in terms of profits or jobs. MACDONALD: Well, it helps the future of Europe and you ask there about why businesses for instance should back the Labour Party. I think they should back the Labour Party for the same reason that the trade unions do, that we have delivered an economy that is good for business and for workers in those businesses and that economy we believe, in future, will be under-pinned even more by the accession of these European states that are going to fund the European Union. (sic). HUMPHRYS: Not an easy argument if you are talking to a group of steel workers, who feel that their interests - and I'm talking here about British steel workers with jobs in Britain, who feel that their interests have been damaged. Mittal has been damaging the interests of British steel companies and now we learn, this morning, again another revelation, that he has spent four hundred and twenty thousand pounds lobbying in the United States to keep out foreign steel which would of course include our foreign steel, our steel. So, what we are doing is helping a foreign businessman to damage the interests of this country's steel industry. MACDONALD: This country's steel industry is mainly Corus and Ian Goldsmith of Corus said earlier this week that the deal in Romania would only have a very marginal effect on their markets. Now if you've got a global company like this, trying to position itself in different markets then of course there may be contradictory elements to it. But what we are concerned about is backing a broad range of international opinion that says modernise Eastern Europe, modernise Romania, encourage that process and let Britain have an influence on it, because in future we want to see more British investment in Romania and that will be good for the British workers and the British economy. HUMPHRYS: You mention Corus, let me mention another steel company to you, Allied Steel, that's based in South Wales, its Chief Executive Graham Mackenzie says that what Tony Blair is doing, and I'm quoting "is backing a business that is already supplying to the United Kingdom and will import more as a result of this deal" he says "we are under enormous pressure, he has lost.." - or his people have lost "three hundred and fifty jobs in and around the Cardiff area because of dumping steel from Eastern Europe". Now, this is a British steel company that has been damaged by this company and will be damaged more by this company and the union, the GMB union says exactly the same "Romania is a major competitor". MACDONALD: Well I believe that obviously the steel companies have been damaged by the shifts in the global economy in respect to steel but this government... HUMPHRYS: ...why this specific company...this company that has already damaged our... MACDONALD: ...there was another statement this week from the Steel Workers Union which said people are playing politics with this issue. HUMPHRYS: Well, do you want me to read you what the GMB Union have said, which is exactly not: "this is another blow to the beleaguered workers at Corus. The company says this decision has come as a direct result of cheap competition from abroad. The time has come for ministers to stop doing this kind of thing". Well, now? MACDONALD: Well, to be attacked by the GMB comes as no surprise... HUMPHRYS: But they represent British workers, unlike this other company that employs foreign workers who we are helping. MACDONALD: What we have done for the economy has been the greatest possible help to British workers... HUMPHRYS: I'm not talking about what you have done for the economy, I'm talking about this very specific incident where the Prime Minister remarkably, remarkably, you've given us no other instances where he's done this, signs a letter to help a foreign company buy an industry in another foreign country - an extraordinary thing to do. MACDONALD: Not at all, what we are talking about is trying to create an economy in Europe, where Britain can play an increasingly active and we hope prosperous part in that. HUMPHRYS: How many times has the Prime Minister done this sort of thing in the past now? MACDONALD: Well Robin Cook said earlier this week that it had been done many times... HUMPHRYS: I'm not asking Robin Cook, I'm asking you - how many times has he done it? MACDONALD: Well, I'm not Foreign Secretary, when Robin Cook was Foreign Secretary, he'd done it many times. The Prime Minister..... HUMPHRYS: ....Well, has he given any details. I mean I'd be very interested in how many times he'd done it. How many times? MACDONALD: Well I don't know how many times... HUMPHRYS: Well, I'm sorry, will the best will in the world, you're here answering questions on the government's behalf, as a.... MACDONALD: ...oh, come on.... HUMPHRYS: No, not come on at all. This is... MACDONALD: Don't be facile. How many times... HUMPHRYS: Facile... MACDONALD: many times do ministers get involved in trying to help companies... HUMPHRYS: ...well I'm asking you to help... MACDONALD: ...dozens of times and... HUMPHRYS: ...I'm asking you to help me and the audience on this. The Prime Minister sits down and signs a letter to the Prime Minister of another country supporting a foreign company whose interests work against the interests of our own steel industry. I am asking you and it's a perfectly sensible question, I'm sure the audience of this programme would think anyway, I hope they would, how many times has that happened before? MACDONALD: You put it in a way that distorts what I was saying which is... HUMPHRYS: ...answer it the way you like... MACDONALD: ...what we have done, we have done is we have created an economy which has put one point two million extra jobs... HUMPHRYS:'re broadening the issue and that isn't the question that I'm asking you as you well know... MACDONALD: ...well broadening, well I'm broadening the issue... HUMPHRYS: ...I'm asking you about this specific question... MACDONALD; ...I'm broadening the issue because you broadened the issue there with a very generalised smear attack if I might say, by Iain Watson... HUMPHRYS: ...well let's deal with this, let's deal with this specific case. How many times has the Prime Minister done what he did on behalf of this foreign company? How many times has he done it? MACDONALD: The Prime Minister's spokesman earlier in the week said that the Prime Minister had on a number of occasions... HUMPHRYS: many? MACDONALD: a number of countries... HUMPHRYS: ...once, twice, ten times? MACDONALD: ...I do not know, well you would have to back through years of correspondence to establish that. HUMPHRYS: So are you suggesting to me that he often intervenes on behalf of foreign companies. Is this what you're telling me? MACDONALD: No what I'm saying is he's intervened in Romania, an important future market for us, an important country, a very important country in the Balkans, which is in desperate need of modernisation. We believe that's good for Eastern Europe, we believe it's good for the EU... HUMPHRYS: ...alright. MACDONALD: ...we believe it's good for Britain. That's why... HUMPHRYS: ...let's look at the other reasons that other people offer, as evidence for why Mr. Blair got involved in this particular case, may be right, may be wrong, but let's put to you a couple of points. He says, Tony Blair says he did not meet Mr Mittal. And yet, he went to a party at Lord Levy's house which was held specifically for fundraisers. A lot of people there admittedly, about a hundred people there. Only a few of them were Asians, point number two. Point number two, I doubt whether there were many there who had handed over one-hundred-and-twenty-five thousand pounds to the Labour Party. It is surely inconceivable and I use the word advisedly, that Mr Blair did not meet Mr Mittal on that occasion. MACDONALD: What's quite clear is that our Ambassador in Bucharest said that this was a priority as far as he saw... HUMPHRYS: ...I'm not asking you about the Ambassador of Bucharest... MACDONALD: ...for the modernisation... HUMPHRYS: ...I'm asking you why Mr Blair said he didn't meet Mr Mittal when it is most unlikely, inconceivable indeed many people would say, that he did meet him, that's what I'm asking you. MACDONALD: Well Prime Ministers meet many people... HUMPHRYS: why didn't he say I probably did meet him. I met him at that party. Why didn't he say that? MACDONALD: Because we are concentrating on the big issues John, and with respect... HUMPHRYS: ...well I'm sorry that is a straight-forward question that gets to the core of this, did Mr Blair... MACDONALD: ...what you're doing, what you're doing, what you're trying, what you're trying to get into is a pseudo-forensic examination of tiny detail which tries to find guilt... HUMPHRYS: ...I'm trying to get to the truth... MACDONALD: ...well let's get at the truth... HUMPHRYS: ...did Mr Blair meet Mr Mittal - straight forward question. MACDONALD: context... HUMPHRYS: ...straight forward question, did Mr Blair meet Mr Mittal? MACDONALD: What we are talking about here is trying to build a much more prosperous Britain and we're trying to do that by making sure that we're fully involved in Europe... HUMPHRYS: ...made that point and I've allowed you to make that point several times. I'm now trying to get into a little more detail. Let's look at what happened. The donation was made in May, Tony Blair meets Mr Mittal presumably, at this party in June. He signs the letter on his behalf in July. Yet we are told that he didn't know he had made the donation when he signed that letter. Again I put it to you that's inconceivable? MACDONALD: No, you're putting it exactly the wrong way round. What I'm saying is that many business people will back the Labour Party because we provided a very strong economy... HUMPHRYS: ...of course, I don't dispute that for a moment... MACDONALD: ...just as the trade unions do. And what I'm also saying is the priorities for backing this company evolved out of the situation in Romania, they came to us from the Ambassador, that's confirmed by the Foreign Office, so in those circumstances Prime Ministers yes, sign many letters of that kind... HUMPHRYS: ...but do they sign many letters of that kind... MACDONALD: ...and I'm sure that.... HUMPHRYS: ...well you've not given me any examples of when they had. But look, let's look at this other area, when the Foreign Office drafted the letter, the original letter that went to Number Ten Downing Street, it described Mr Mittal as a friend of Tony Blair. Now (a) why did they say that? And (b) why was it cut out of the letter when it went to Number Ten? This letter that Mr Blair apparently only gave thirty-seconds to. MACDONALD: John, this, I think this is fake forensics here. HUMPHRYS: what sense is it fake? MACDONALD: Well because I don't know what the first draft would be... HUMPHRYS: Well that doesn't make it fake... MACDONALD: ...the first draft might come up... HUMPHRYS: ...I might suggest that perhaps you ought to know. MACDONALD: ...your style of trying to conduct this is an inquisition... HUMPHRYS: ...I am asking you very straight-forward questions with the best will in the world. MACDONALD: official drafts a letter, another official amends it, that happens all the time... HUMPHRYS: ...I dare say, I dare say. MACDONALD: ...I don't know the details of what... HUMPHRYS: ...but I am asking you why in the original letter Mr Blair, Mr Mittal was described as a friend of Tony Blair and then that was excluded. You see, if what we're looking at here is allegations that Tony Blair knew about this and might have been, and I'm not suggesting he was, but I'm trying to get at the basis of this, at the root of this, might have been influenced by that donation, these become, I am sure you would accept this, you've been in this business of journalism yourself long enough, you would accept that those are perfectly legitimate questions, and if you want it all cleared up (a) why can we not have those answers? (b) why isn't, why aren't all the papers to do with this in the public domain? Why not simply publish them and have done with it and say, look, that's it, there's the picture, our hands are absolutely clean on this, go away with that, take it away, and now let's have no more of it? Fine. MACDONALD: Well, John, as you say, I've been in the media business for a long time, and one of the things I know is that there are papers there which are Tory papers, and they've run agendas against the Labour Party, always have, they've been doing it... HUMPHRYS: Oh, this isn't that it's all got up by the press one is it? Is that the defence? MACDONALD: Well, take the loan story this morning. I mean a loan is a loan, it's backed by twenty-odd countries. I won't go over it again as to why I think it's a good thing, but that's run in the front page of a Tory paper, that sets the agenda. Now sadly radio and television...... HUMPHRYS: I've made scarcely any reference to that. I'm asking you for other examples. I'm asking you what happened with the signing of the letter, I'm asking you about the inclusion of the word friend, I'm asking you about Tony Blair meeting Mr Mittal, all of which are legitimate you must agree, are legitimate questions, and you're sitting there either unable or unwilling to answer any of them. MACDONALD. I've told you I'm unable to answer some of the detailed forensics of it, and therefore I don't want to be put in a position of looking as though I'm being evasive. What I'm saying to you is, there is an agenda being run here which is to say, let's undermine the Labour Party, let's undermine its big picture agenda. HUMPHRYS .....that supported your election the last time around. Seems unlikely to me, but look, if Duncan Smith, Iain Duncan Smith wants an inquiry why not have one? MACDONALD: Well, if you take the form of their Select Committee, Donald Anderson their Chairman said it's not worth inquiring into, because he can see the politics in all of this, and what he is probably more concerned with is the kind of leadership demonstrated by Tony Blair on Kosovo and Sierra Leone and Afghanistan. Those are the big picture issues abroad, the big picture issues in Britain are health and education and transport and ...... HUMPHRYS: You mention one Labour MP there, Donald Anderson. That about Piara Khabra, one of your Asian MPs, Labour MP. What he says, or what he suggests very strongly this morning is Tony Blair has been - put aside any culpability and dodgy dealings and all the rest of it, but he says he has been extraordinarily na�ve in his relations with businessmen, particularly Asian businessmen. Maybe that's at the root of it is it, naivety? MACDONALD: No. I think what we're doing is trying to encourage the business community to have a productive relationship with government. We want to make it clear that we are prepared to work just as closely with business as we have in the past with the trade unions, and we're working...... HUMPHRYS: Everybody who is watching this programme I suspect would say pretty much what Mr Khabra said this morning in the newspaper. When a businessman, a tough Indian businessman, whether he happens to be Indian or not gives an awful lot of money to a party they want something for it. MACDONALD: Well, what business has got for its donations from Labour is the strongest economy in Europe, and that economy has produced over a million new jobs, the lowest unemployment for a very long time, the lowest interest rates, the lowest mortgage rates. Those are the big picture issues that clearly our opponents don't want to fight on, they want to fight on this kind of minutia. HUMPHRYS: Lord Macdonald, thank you very much indeed. HUMPHRYS: The European Union has moved a long way since Britain joined the common market. Too far for some tastes. Too far in the direction of a federal Europe. Now it may be on the brink of moving towards even closer integration. A new body chaired by a former president of France is about to convene to find ways to make the EU a more effective operation - particularly important since the numbers of members is about to increase from fifteen to twenty five. But the sceptics worry that it's really about developing a constitution that would turn the union of independent nations into something more like a federal state. The Europe Minister Peter Hain is the British Government's representative on that body and I'll be talking to him after this report from Paola Buonadonna. PAOLA BUONADONNA: France's Europe Minister, Pierre Moscovici is on a delicate mission. The people of his country, like elsewhere, are falling out of love with Europe and a crisis of confidence is engulfing the EU institutions. Even the countries of Central and Eastern Europe which are seeking admission have doubts. Moscovici travels to them constantly. Today's destination is Poland. Whilst Britain is still soul searching on the Euro, a different debate has taken off in the rest of Europe. The main issue is how the EU should reform to function in the Twenty-First Century and now could be the last chance to achieve fundamental changes before the Union becomes too big to agree on anything. Everybody accepts that the European Union must become more effective and more accountable to its citizens. But will this also mean another step in the development of an ever closer Union, with the European Union getting more powers at the expense of national governments? Finding their way through the maze of options for reform is a group of representatives from all EU countries, including Mr Moscovici and from the applicant countries too. They're known as the Convention. They will set the agenda for the next round of negotiations in 2004, just before Poland and the other new members join in. Mr Moscovici has come to meet the Polish representatives. PIERRE MOSCOVICI: Theoretically everything is possible. We could decide to go further in European integration which means to give more power to Europe. We need to have a political control. We need more legitimacy, we need transparency and this is why our institutions cannot be something felt as abstract, as outside of our decision, of the people's decision. PROFESSOR PETER GLOTZ: I'm not interested in a European Union and the Germans aren't be interested in a European Union which is nothing but an internal market. DAVID HEATHCOAT-AMORY: The worst case is if the solution to the acknowledged problems is perceived to be simply more Europe, more centralisation, more expenditure, more majority voting, more civil servants and more politicians. That is the danger, that is the whole thrust of the European Union over the past forty- five years. If they don't change direction, then I think the whole exercise will be a waste of time. BUONADONNA: It's not just the British who feel that Europe has swallowed up too many powers. People here in Poland as well as in other aspiring new member states, are also concerned about the loss of national sovereignty. But there are still significant pressures to have more decisions taken centrally, by the European Union through its institutions. Pierre Moscovici is here to reassure the Poles that they won't lose their identity. But once they and the others join in there are calls for the veto power of each country to be reduced, to avoid paralysis. And there's already a long list of suggestions on the Convention's table for areas in which European integration could be reinforced. They range from foreign and defence policy, to police and justice, economic and social policy and even taxation. GLOTZ: I personally believe that a Euro tax would make sense. That means money for which the European Parliament in the future would have a budget right. JEAN-LUC DEHAENE: If you want to come out of the present discussion on financial needs and move discussions from 'I want my money back' and so on, I think the best way to solve that is to have a European, and a real European source of income, like for instance the custom taxes are. You can have some internal taxes too, which should be real European income tax. MOSCOVICI: Prime Minister Jospin, is in favour of a social treaty in Europe in order to strengthen the cohesion of Europe on this field. I also think that Justice and home affairs have to be taken very seriously by Europe because we're just fighting terrorism right now and we see that nation states are very important but they are not sufficient for that. These are the two main areas - I also think about defence, about security, about foreign affairs policy - well, we've got to discuss that. BUONADONNA: A tete-a-tete with the Polish Prime Minister was one of the highlights of Mr Moscovici's trip. Britain has no problem with Europe co-operating more in foreign policy but it finds itself in a very uncomfortable position when there are calls for an economic government and when France and others put forward ideas for tax co-ordination. HEATHER GRABBE: Britain has long resisted the idea of tax co-ordination and certainly of tax harmonisation and Britain can do that because you have to have a unanimous vote in the EU in order to get that kind of agreement. The problem is that the Euro zone members are discussing these issues among themselves and Britain is not part of the debate. So they could come to a decision about perhaps coming towards more economic policy co-ordination in a way that Britain doesn't like and Britain cannot stop them from doing it, because we're not actually part of that debate. BUONADONNA: Once the applicant countries join the European Union club, decision-making could come to a standstill, weakening Europe's effectiveness and prestige. The French, the Germans and many other governments believe that in the future more decisions should be taken if the majority of the member states are in favour rather than all having to agree to everything. GLOTZ: I hope that we will find in a lot of fields to co-decision procedure with qualified majority and then indeed, Europe will be stronger than it is today. And I think after the 11th September in the attacks in New York, this is the only possibility that European states like the UK and Germany can play a sensitive role in this dangerous and complicated world. BUONADONNA: After the decision-makers, it's time to meet the Polish opinion-formers, at the offices of the influential national newspaper Gazeta Viborcha. Many countries believe that people would understand the EU better if it had a constitution, a basic text which sets out its role. Critics in Britain argue that a European constitution would undermine the national states. HEATHCOTE AMORY; It tends to be federations that have constitutions between countries so it would in a sense be sanctifying a federal structure for Europe, which is of course very much not what either I or indeed the British government or certainly the British people want. MOSCOVICI: I know that it's not in the British tradition to have a constitution but we must think about it together and I notice very positively that the target of constitutional treaty was written in the Laeken Declaration which was of course accepted by all the governments in Europe including the British Government. BUONADONNA; Tony Blair came to Warsaw two years ago to speak about the Europe he wanted. Now it's France's turn to set out its vision. With most other EU countries France is keen for the Charter of Fundamental Rights, which was drafted in 2000, to be made legally binding so that the EU could set new standards in areas like trade union rights. MOSCOVICI: The Charter is very important because it tells us what are the values that we share, what are the rights that have to be respected, dignity, solidarity, justice and freedom. And it's very important that it has to be legally binding in order that we can translate those values into acts that we can sanction people or countries who don't respect those values. GRABBE: Britain is having a debate within the government about this question. The Foreign Office has traditionally been much more wary of incorporating it into the EU's treaties whereas I probably think Number Ten, Downing Street is becoming much more relaxed about that issue. HEATHCOTE-AMORY: During the treaty of Nice negotiations the British Government gave an explicit assurance that the Charter of Fundamental Rights was not legally binding and would not be - it was only a political declaration or aspiration and I think it would be a betrayal of all the assurances we were given if they give in and allow that document now to become legally binding at the first opportunity. Those assurances were always suspect, they will be shown to be worthless if they give in on that one. BUONADONNA: The French ambassador's parties are of course always excellent. But the institutions of the EU are less popular. Another issue the Convention will look at is what to do to make the European Commission more accountable. Britain is against turning the Commission into a political entity. But many politicians in Europe believe the Commission President should be elected, rather than appointed by the heads of state. MOSCOVICI: What I propose is that the President of the convention - of the commission is appointed through the European election. Such as any election you need to have a fight between the Conservatives and the Social Democrats. And I think that the leader of the coalition who wins the election must also be the President of the Commission. DEHAENE: The Europe of tomorrow will be a much more political Europe who wants to play a role on world level to have a voice, to be one of the powers that is taken to account, at world level. Well, if you want that you need an executive level that is democratically elected and that level is the President of the Commission for instance. BUONADONNA: It would be easy to dismiss the Convention as just another European talking shop. In reality governments around Europe are taking it very seriously - it hasn't even been launched yet and already the national representatives travel around to meet each other to forge alliances and deals, eager for their own particular vision of Europe to prevail in the end. The British Foreign Secretary Jack Straw has good allies in Europe. Denmark, Italy and Spain are all keen to rein in the EU. But the traditional Franco-German alliance, the push for more integration has not run out of steam yet . MOSCOVICI: If we put our strength all together then we're stronger - then we have the real weight, then we can have also a shared leadership with the US and not be always following them. So this is why we need to make more Europe . HEATHCOTE-AMORY: There is a huge federalist momentum in Europe. A great many continental politicians and the technocratic class in Europe believes that the solution is always more powers at the centre and unless they can reverse that, then I think we're going to get ourselves deeper in the mud. BUONADONNA: The Warsaw visit draws to a close but the debate on the future of Europe is just beginning. The convention has a huge task on its hands if it is to increase people's respect for Europe. But if it goes down the route of more and stronger integration it will be very hard for the British Government to sell it back home. HUMPHRYS: Paola Buonadonna reporting there. JOHN HUMPHRYS: Peter Hain, it's a familiar story in a way this, isn't it? What we're seeing is our colleagues in Europe, our partners in Europe, many of them anyway, want to go further than we do, we argue against it. Perhaps we ought to be more co-operative, I mean just to take an example, Germany and the Belgians want a sort of Europe tax that would pay for the doings of the European Union. Might be quite sensible, stop a lot of squabbling and all that, wouldn't it? PETER HAIN: No I don't agree John but your report made very clear that we're not isolated on this matter. Germany and Belgium, Belgium in a way are isolated, in wanting ever more greater federalism and some kind of federal super state. Italy doesn't want it, the Prime Minister and I accompanied him, was talking to the Italian government, Prime Minister Berlusconi in Rome on Friday. They don't want that, Spain doesn't want it, many other countries including Sweden and Denmark don't want it. So there is a healthy debate about how we can have a Europe which has got twenty-five members, which it's likely to have after the enlargement of the European Union in a coupe of years, how we can manage that more efficiently and some things need to be done at the centre, such as the fight against terrorism. We agreed extra security measures, which you can't do on your own, there's no point Britain standing aside and saying, we can fight terrorism on our own, we can only do it by co-operating with other countries in Europe and we're doing that very very effectively and without the European Union we couldn't have put in place these extra security measures which defend our own livelihoods and our own freedoms. HUMPHRYS: But I mean, given the sorts of problems that inevitably this kind of expansion is going to bring with it, perhaps a Europe-wide tax of some sort might not be a bad idea, as I say, it would sort out all the squabbles there always are about who pays what for, how much for what, and all the rest of it. HAIN: I don't agree and I don't think there's majority support in the European Union for that, and since you take on my point about enlargement, I found travelling to Poland, to, rather to Czech Republic talking to the Polish ministers, to Slovakia, Slovenia, Hungary and so on, and talking to others recently, to the Latvian Foreign Minister and also to the Romanians, that I found that actually there's more interest in those countries like Britain, preserving their national identity and their nation states, after all they've just become independent, most of them, from the Soviet Bloc and they are very jealous of their nationality and their nationhood as we are. And I think there's now a debate, a healthy debate as there will be in the convention of Europe where I'm representing the government, which really says that we ought to put the nation state at the heart of Europe, inter governmentalism as being the driving force, rather than electing a commission president and having the European Commission and the European Parliament as the strategic driving force of Europe. That's the position of our government. HUMPHRYS: But what they do want, what our partners do want, I'd have thought what we wanted, was to make Europe more effective, to work better, given these various problems. So surely, in that sense removing the veto on...that we have at the moment on certain areas. Maybe that, but I mean imagine, twenty-five countries, each one of them able to veto certain things, be chaos won't it? HAIN: Well that's why we've agreed qualified majority voting as indeed the Tories did, David Heathcoat-Amory was a supporter of that government..... HUMPHRYS: ...but we still have veto on some things don't we? HAIN: .... Yes we do. Taxation's one, that's absolutely right. Social Security is another. So is committing our troops to an armed operation of some kind, so is Foreign Policy. These are all ultimately matters for national veto. But we can't agree common environmental standards to protect our air, to clean up our beaches, to ensure our water's purer without common majority voting, so we don't need a veto in those areas, but on some key issues, vital to our national rights and our national independence, including taxation policy, we have a veto and we intend to keep it. HUMPHRYS: And all the vetoes that we have will remain, is that what you're saying? HAIN: Well, on justice and home affairs, in response to September 11th for example, more qualified majority voting was brought in, because it was easier to deal with quickly, with security measures, a common arrest warrant for example, to arrest people wherever they are in Europe, rather than complicated extradition arrangements, to do it without having the veto remaining and stopping that. So where it's sensible we'll consider it on its merits, but there are some very strong red lines for us, taxation, social security, foreign policy, defence, these matters should be subject to that the veto should remain. So we should just approach this on a common sense basis, not on some kind of fanatical basis, pro-Europe, or anti-Europe. HUMPHRYS: Would it make common sense to have some sort of constitution for Europe. People like Mr Heathcoat-Amory say that it would sanctify a federal structure, which I imagine you would describe as a bit of yabooing, the sort of thing that you perhaps wouldn't want to get involved in, but it could be very popular, it could be very sensible, couldn't it, it might connect the people of Europe with the institution of Europe in a more effective way. HAIN: Well there is a need to make that connection more effectively and I agreed with what some of the points made in your report and if we were talking about a European constitution that enshrines certain values of the sort that Pierre Moscovici the French Europe Minister was talking about earlier, freedom, solidarity and so on... HUMPHRYS: ...fundamental rights then? HAIN: Well let's look at that in terms of enshrining basic principles and clarifying what is an enormously complicated set of Treaties that no ordinary member of the public frankly, no Europe minister can fully get to grips with. They run into millions of words. So if there's a desire as I think there may be, to have a set of principles enshrined, call it a constitution if you like, that lay out exactly what the European Union does, where our rights are, where the opportunities for advance are, that's one thing. If it's a blue-print for a federal super state centralising all power in Brussels, that's quite another, we wouldn't accept that. HUMPHRYS: So where would this Charter of Fundamental Rights fit in then? Again, Mr Amory says it would be a betrayal to make it legally binding. Our own Robin Cook, former Foreign Secretary of course, said it's a political declaration and that's the way it should stay. But Heather Grabbe, whom you say in that film, says you...there is a thinking in Downing Street now and in the Foreign Office that maybe there is something in it, maybe we ought to agree to it. What do you say to that? HAIN: Well it depends what it actually means... HUMPHRYS: How, what do you take it to mean? HAIN: Well, I'm about to tell you John. If it meant that we would have it as an alternative to the Convention on Human Rights and therefore, if it was some kind of rival to that, then you'd have to be very careful about that. If it could be enforceable in British courts, we would find that extremely difficult. If, on the other hand, it were a set of principles put in a new treaty or not, as the case may be, with very clear delimitations and restrictions around it, well I think we can have a common sense look at that, because it would be an advantage in basic values of rights and solidarity and dignity being stated so clearly in the treaty. Because I think there is, as we saw in the Irish Referendum, when they rejected ratification of the Treaty of Nice, allowing for enlargement, we saw the No campaign running on the slogan "if you don't know, vote no" and there is a gulf between the citizens of Europe, the led of Europe and the leaders and the institutions of Europe which must be closed in all our interests. HUMPHRYS: What Mr Moscovici would like, and many others of course, is to see the existing, the Charter, made legally binding. You're saying no to that are you? Or... HAIN: I'm saying let's find out what that means. If it means by legally binding that it runs right across the European convention on human rights and it runs right across the European Court, well, then that's not something that we would go down the road on. If it means that it would be able to be enforced in British Courts, that's something we would object to, so I think we need a common sense discussion as to exactly what peer means and what others mean and I think we should go into this debate, so I am representing the government with confidence, because if you look at what we've done under this Labour government, we've actually won argument after argument in Europe for no federal super state but a Europe based on Europe of nations for economic reform, an important agenda there, for having a peace-keeping capability so that we can take action in the Balkans and so on. These have been British agendas and I think the British agenda will win out in the convention about building our kind of Europe, a Europe that delivers better security for people, more jobs, better rights, a cleaner environment. HUMPHRYS: Peter Hain, thanks very much indeed. HUMPHRYS: And that's it for this week, don't forget about our web-site if you're on the Internet. Until the same time next week, good afternoon. 23 FoLdEd
NB. This transcript was typed from a transcription unit recording and not copied from an original script. Because of the possibility of mis-hearing and the difficulty, in some cases, of identifying individual speakers, the BBC cannot vouch for its accuracy.