§ 41. Mr. Deakinsasked the Secretary of State for Foreign and Commonwealth Affairs what assessment he makes of the effect of current interest rates on the development problems facing the Third world and of the impact thereon of the United Kingdom's aid programme.
§ Mr. RaisonThe level of interest rates is an important and worrying influence on the prospects for those developing countries with major debt problems. The United Kingdom's aid programme cannot resolve major debt problems but supports development efforts in many countries, for example through balance of payments support.
§ Mr. DeakinsIs the Minister aware that a 1 per cent. increase in LIBOR rates means, for the 10 largest Third world debtors, an extra £3 billion a year in interest payments? Is it not time that someone in the Government—preferably the right hon. Gentleman—got to grips with the problem and tried to persuade the United States that its policies are working entirely against the Third world and all of its development plans?
§ Mr. RaisonOur views on the United States' budget deficit are well known. Our aid programme, with its strong emphasis on grant as opposed to loan, is much appreciated in the Third world, as it does not add to the debt burden of countries that receive our aid.
§ Mr. LathamShould not the adjectives that my right hon. Friend used have been "ruinous and catastrophic" rather than "worrying"? Is it not time that the Government made much stronger representations to the Americans that their interest rates should be reduced?
§ Mr. RaisonThe choice of adjectives is a matter for hon. Members. We have made it clear that we are deeply worried about the problem. I believe that our aid programme is doing everything possible to pick up some of the consequences of that.
§ Mr. Tom ClarkeGiven that the figures that the Government have released are, according to the Government's method of calculation, the lowest since 1980, when they were the lowest since 1973, how can they possibly meet the increase in interest rates, far less achieve the United Nations' target?
§ Mr. RaisonMay I say gently to Opposition Members that they should not believe all that they read in early-day motions. For example, early-day motion 955, which was recently tabled by Opposition Members, is frankly inaccurate in its statement of the amount of money that we are spending on the aid programme.
§ Mr. Stuart HollandIt is in the Minister's answer of 21 May.
§ Mr. SpeakerOrder.
§ Mr. ForthDoes my right hon. Friend agree that interest rates are no more and no less than the price of money which, even internationally, has competing uses? Must not those who borrow money be assumed to be aware of the conditions under which they borrow it?
§ Mr. RaisonI see my hon. Friend's point, but we must acknowledge that there have recently been fluctuations in the world economy which have caused severe problems for the developing world.
§ Mr. BennWhat proportion of the debts that are owed by the Third world to the developed world accrue from the purchase of arms? Are not American and other Western banks now carrying a heavy threat which derives from the fact that their Governments supply enormous quantities of arms, largely to repress the domestic population?
§ Mr. RaisonThat is not a matter for me. The Overseas Development Administration programme is concerned entirely with civilian aid.