Mr President, Hong Kong went to the polls in September, for the second time since the former British colony was returned to Chinese rule. Analysis of the results reveals disturbing trends which demonstrate that all is not well. Voter turn-out dropped to 43% compared to 53% in 1998 and support for the region's pro-Beijing parties increased in marked contrast to the decline in support for the pro-democracy parties. I believe there are a number of reasons why Hong Kong voters have opted for apathy instead of exercising their newly established right to vote. The main problem is that while the election procedure itself is free and transparent it can hardly be described as truly democratic. Twenty-four of the 60 seats are directly elected on the basis of universal suffrage, where three million Hong Kong citizens have the right to vote. The remaining 36 seats are returned by a mere 179 000 electors drawn from Hong Kong's powerful business and professional interests as well as pro-Beijing groups. Furthermore the legislature has little real power. The real power rests with the Chief Executive, Tung Chee-hwa and his government which, in effect, is appointed by Beijing. The executive is totally separate from the legislature, which is left to operate more like a watchdog rather than a real decision-making body. The legislature's lack of real power has made voters unenthusiastic about participating in elections which, in their view, are not truly democratic. Although the Basic Law – which is Hong Kong's mini-constitution – lays down specific criteria for the holding of the 2004 election, it does nonetheless provide for the possible introduction of universal suffrage for the election of all 60 seats for the 2008 election. However, such a step is resisted by some who clearly wish to protect the power of big business. Even if universal suffrage were to be introduced – preferably sooner rather than later – it would not solve all the current problems. It would need to be accompanied by a reform to the Special Administrative Region's political institutions. The executive has no party base in the legislature, which means that these two institutions are effectively completely separate from one another. Furthermore, because the executive is not really accountable to the elected representatives and because the latter lack real power, they are also not held accountable for their own political pronouncements and actions. Consideration must be given to changing the respective rules of the executive and the legislature to ensure an operational inter-relationship. Other matters need to be examined. They could include the method of appointment of principal officials: should they be political appointments or civil servants, and how they should be held accountable by elected representatives? As well as problems in this area there is also growing concern regarding increasing Chinese interference in Hong Kong's affairs. The rule of law is the cornerstone of the 'one country, two systems' policy. Three recent, controversial legal cases have far-reaching implications for the integrity of the rule of law and ultimately for the autonomy of Hong Kong itself. Two of these resulted in the execution of individuals for crimes they had committed in Hong Kong, where capital punishment is banned. The third case related to a judgment handed down by Hong Kong's Court of Final Appeal on a controversial immigration law concerning residency rights in Hong Kong for children of Chinese parents who themselves had resident status in Hong Kong. The Hong Kong Government was displeased with the liberal judgment and invited the Chinese authorities to reinterpret the Basic Law. Many observers consider that this has created a worrying precedent, which appears to enable China to issue interpretations of the Basic Law whenever local courts make decisions of which either the Hong Kong Government or mainland politicians disapprove. This situation was further compounded by mainland officials trying to interfere in press freedom and Hong Kong's trading relationship with Taiwan, following the recent Taiwanese election. As regards my comments on the dominance of the Li Ka-shing family – which was the subject of much media interest in Hong Kong today – in some sectors of Hong Kong's economy, I should like to point out that the reason I have raised this matter is that it has been raised with me by leading figures in Hong Kong and indeed was the subject of major media debate during a recent visit there by myself. I should also like to raise the question of visa-free access. I am very unhappy that this has been blocked by some governments. If we really believe in the 'one country, two systems' approach then this is the one way of underpinning it. Visa-free access should be given to Hong Kong's passport-holders without any preconditions. So far I have concentrated on the negative aspects. While these events give cause for concern I would not be unduly pessimistic regarding Hong Kong's future. The 'one country, two systems' remains reasonably intact, but, the real problem is that if the 'one country, two systems' is seen to fail then the China-Taiwan problem will be even more difficult to resolve. In conclusion I should like to thank all those who were involved in the deliberations on this report: my colleagues in the Committee on Foreign Affairs, Human Rights, Common Security and Defence Policy, and members of the Foreign Affairs Secretariat, especially Mrs Opacic, and the Commissioner.

Political group: PPE-DE