HC Deb 19 July 1991 vol 195 cc662-81

11 am

The Prime Minister (Mr. John Major)

With permission, Mr. Speaker, I will make a statement on the economic summit held in London from 15 to 17 July, and the subsequent meeting with President Gorbachev. I was accompanied at the summit by my right hon. Friends the Foreign Secretary and the Chancellor of the Exchequer. The economic declaration and the separate political declarations issued at the summit have been placed in the Library of the House.

The themes of this summit were "Building World Partnership" and "Strengthening the International Order". Our common aim was to build on the movement towards freedom, democracy and the open economy which was the theme at last year's Houston summit. I believe that we achieved valuable and productive results. In the political discussion, there was full support for our proposal for a United Nations register of arms sales. We agreed to consult on the guidelines that apply to conventional arms sales, and we agreed on restraint in the transfer of advanced technology weapons. We agreed also that donor countries should take account of military expenditure when deciding on aid programmes. We also agreed a number of steps in preventing the proliferation of nuclear, biological and chemical weapons.

We agreed that we should make preventive diplomacy a top priority in the United Nations. We proposed the establishment of a United Nations disaster relief co-ordinator so that the United Nations can in future take the early action that has sometimes been missing in the past.

We agreed also on the need for confidence-building measures by both sides in the Arab-Israel dispute, including the suspension of the Arab boycott and of the Israeli policy of settlement in the occupied territories. We encouraged South Africa to pursue policies that will permit normal access to all sources of foreign borrowing. That is vital to enable the economic growth that will be necessary for a successful conclusion to the political negotiations.

In our debate on the world economy, we recognised increasing signs of economic recovery. These are welcome, but require us to maintain policies aimed at sustained recovery and price stability. This means prudent and vigilant fiscal and monetary policies, to bear down on inflation.

All the summit leaders recognised that the world cannot afford a failure in the Uruguay round of trade negotiations. We committed ourselves to completing the round by the end of this year. Crucially, we committed ourselves to remain personally involved to ensure that that happens to resolve any disputes. Action will be needed on services, intellectual property, trade access and agriculture.

We reaffirmed our commitment to support reform in the countries of central and eastern Europe. For them, trade access is vital. We cannot encourage them to build market economies and then deny them a marketplace in which to sell their goods. The European Community has led the way in offering access through the association agreements which are now being negotiated.

We devoted a lot of time to the problems of developing countries and secured agreement on the need for additional debt relief measures for the poorest, most indebted countries, going well beyond the Toronto terms agreed in 1988. I have been pressing for this since I launched the Trinidad initiative as Chancellor.

At the summit, we committed ourselves to work for a successful United Nations conference on environment and development in June next year. By the time of the conference, we aim to have achieved, in particular, a framework convention on climate change and agreement on principles for forest conservation. We also hope to negotiate by the end of next year a framework convention on bio-diversity. We agreed also to support financially the implementation of the preliminary steps of a pilot programme for the conservation of the Brazilian rain forests.

Earlier summits have stimulated effective action in tackling the trade in illicit drugs. This year, we asked the Customs Co-operation Council—on the basis of an initiative by the United Kingdom—to intensify its work and liaise with international traders and carriers to curb the spread of drugs.

These global issues require the involvement of all. Developing countries and east European nations are playing an increasingly active part. But one great country has been until now largely detached from the international economic system. That is the Soviet Union. We had a productive, substantial session with President Gorbachev. It was an historic occasion. The emphasis was on informal, frank and direct discussions.

We reached agreement on six specific points. The first was special association with the International Monetary Fund and the World bank. Both the fund and the bank have a wealth of experience in helping Governments to work out their own economic reform programmes, especially in the crucial areas of fiscal, monetary and structural policies.

Secondly, the international institutions—the Organisation for Economic Co-operation and Development and the European Bank for Reconstruction and Development—as well as the IMF and the World bank—are to be asked to work closely together in their support of the Soviet Union. They can provide the Soviet Union with practical advice, know-how and expertise to help create a market economy.

The third point was intensified technical assistance. We believe that there should be greater co-operation in the following sectors in particular: energy, defence conversion, food distribution, nuclear safety and transport. Yesterday, I announced an increase in Britain's know-how fund assistance from £20 million to £50 million.

The fourth point was improved trade access to markets for Soviet goods and services. This would also help to attract more inward private investment.

Fifthly, it was agreed that, as chairman of the summit, I should, on behalf of summit colleagues, follow up our meeting and visit Moscow before the end of the year to review progress. I look forward to doing so.

Sixthly, we agreed, in response to President Gorbachev's invitation, that Ministers of Finance and of Small Business should go to Moscow for discussions with their Soviet counterparts. My right hon. Friend the Chancellor hopes to do so soon.

This was a landmark meeting with President Gorbachev. It will, I believe, be seen as a first step towards helping the Soviet Union to become a full member of the world economic community. I believe that it was a successful summit, and I commend the outcome to the House.

Mr. Neil Kinnock (Islwyn)

May I first thank the right hon. Gentleman for his statement on the summit and on his meetings with President Gorbachev? I am sure that everyone agrees that it was good to see President Gorbachev in London again.

On the summit's political declaration on strengthening the international order, may I welcome both the Prime Minister's and the general commitment to developing and strengthening the United Nations in a variety of ways? May I also support the specific declarations dealing with the Gulf and the middle east, with Yugoslavia, with the drugs trade and with terrorism? May I especially welcome the general undertaking given to make more effective the means of providing international humanitarian aid? Can we take it from that that the Prime Minister will now change the policies that have cut Britain's aid budget in half in the past 12 years?

Mr. Terry Dicks (Hayes and Harlington)

You are a small-minded, silly little man.

Mr. Kinnock

The figure is £8 billion down on 1979 and people are starving because of that. We all know the view of the hon. Member for Hayes and Harlington (Mr. Dicks) of the third world.

May I tell the Prime Minister that I share his disappointment on the failure to get the full agreement that he was expected to achieve on debt relief under his Trinidad terms? Even though those terms would have affected only non-operational debt amounting to just over 1.5 per cent. of total third-world debt, the proposal was useful. Does the Prime Minister expect the United States and Japan to change their stance and support his proposal at a later stage?

The G7 commitments to achieve the effective banning of chemical and biological weapons and to maintain and reinforce the non-proliferation treaty are obviously welcome. The proposal to establish a register for arms sales and restrain the transfer of high technology weapons is also commendable. Does the Prime Minister also favour stronger measures to control arms sales, particularly in sensitive areas, such as the middle east and the Gulf, and to Governments with records of repression?

The whole House will congratulate President Bush, President Gorbachev and their negotiators on securing the historic strategic arms reduction treaty. Does the Prime Minister believe that it will be necessary to proceed, in due course, to a START 2 process with British participation in the negotiations?

Does the Prime Minister recall that, 11 days ago in a speech at Olympia, he solemnly said: The environment will feature strongly on the G7 summit agenda. He said that it was incumbent on the G7 to give a strong lead". As the host for the G7 meeting, can he tell us why the critical subject of the world environment was discussed for only 15 minutes? That was something of a global disappointment, to say the least.

We welcome the commitment to complete the GATT Uruguay round by the end of this year. Does the Prime Minister recognise that successful completion must involve a wide-ranging reform of the common agricultural policy leading to the elimination of CAP subsidies? Is that not essential in order to achieve a parallel elimination of the high United States subsidies to agriculture? Would not the consequence of reducing subsidies be a significant boost to the industrial competitiveness of the European Community? Does the commitment that the Prime Minister made at the summit to a substantial reduction of tariffs and parallel action against non-tariff barriers include the multi-fibre arrangement? Will he assure us now that he will agree to no change of policy that could tell to the disadvantage of the British clothing industry, which is already under severe pressure as a consequence of international conditions and the Government's domestic policies? [Interruption.]

Mr. Speaker


Mr. Kinnock

The fact that I do not engage in the wall-to-wall sycophancy practised by the press should not upset Conservative Members. I am sure that the Prime Minister will agree that these are important questions and that he will seek to answer them.

When the Prime Minister was discussing with the other G7 members the communiqué's reference to increasing signs of economic recovery", did he tell them exactly where those "signs" were in the British economy? Did he tell them about the biggest rise in British unemployment in any June in post-war history, or did he give comfort to our competitors with news of the fall in British output and investment which his policies have brought? Did he explain how, as former Chancellor, he managed to get Europe's only oil-rich economy to the bottom of the G7 league?

How do the increases in the Government's borrowings this year and those planned for next year fit into the G7 statement that continued progress in reducing budget deficits is essential"? In what ways do the continued extra Government borrowings, resulting from the slump caused by the Prime Minister's policies, constitute "continued" reductions?

I commend the provision of further technical assistance to the Soviet Union and the offer of special membership of the International Monetary Fund and the World bank. Why did the G7 not endorse the European Council recommendation that the lending capacity of the European Bank for Reconstruction and Development to the Soviet Union be increased? Why are the Government hostile to the provision of a stabilisation fund to facilitate the internal convertibility of the rouble, particularly when a similar fund has been such a success for Poland?

In view of the need to avoid doing anything to make the parlous condition of the Soviet economy even worse, will the Prime Minister urgently reverse his decision to send the Chancellor of the Exchequer to Russia?

The Prime Minister

It is surprising how the right hon. Gentleman always seeks, in one form or another, to try to sell the country short—[Interruption.] I shall repeat the point that the right hon. Gentleman always seeks, one way or another, to sell the country short. I am grateful to him, at least, for some of the welcomes that he gave at the outset of his remarks for policies—many of which were initiated by this country—to strengthen the United Nations and deal with other related matters.

The right hon. Gentleman may produce his own fantasy figures on aid, but there has been a significant increase in not only the value and nature of aid but the extent to which countries abroad appreciate the value of the aid, direct and indirect, that they receive from this country.

The right hon. Gentleman should be sufficiently well informed to know that the details of debt relief are agreed in the Paris Club and not in the G7. Had he known that—plainly, he did not—he would not have raised the points that he did. We have made the most substantive improvement in debt relief write-off for the third world—the very poorest countries—that has ever been agreed in an international forum. I should have thought that the right hon. Gentleman would welcome that warmly, at least.

I welcome the right hon. Gentleman's comments about the register of arms sales. As for other measures, it was the view of the G7 that peer pressure, through the changes in the United Nations, would have a material effect, both on whom arms were sold to and on a clear transparency of what arms were sold. Our purpose is clear: to ensure that, when a country builds up a level of armaments beyond what is needed for defensive purposes—its armaments are clearly, therefore, for offensive purposes—that becomes clear to the suppliers, who will then be subjected to the peer pressure of their colleagues in the United Nations not to increase their supplies to the country concerned.

The right hon. Gentleman's remarks on the environment were ill conceived. If he had listened to my statement a few moments ago, he would have recalled that I said that we agreed that, by the next conference, there would he a framework convention on climate change, agreement on the principles for forest conservation and a framework convention on biodiversity. There was also clear agreement among Heads of Government that, where possible, they would seek to attend the meetings in Rio next year. I certainly intend to attend the Rio conference next June as Prime Minister.

On the general agreement on tariffs and trade, there is a clear understanding within the United Kingdom and throughout the European Community that we require a reform of the common agricultural policy. It is unlikely to be achieved before the GATT agreement, but it is clear to our colleagues in GATT that an agreement is necessary and that it would require movement among member nations of the European Community. To achieve a GATT agreement requires movement among countries throughout the world—in the European Community, the Cairns Group and the United States—on agricultural and other matters. It was because of that clear understanding that the Heads of Government agreed to remain personally involved to ensure that the political impetus to reach that agreement is clearly there.

I note that the right hon. Gentleman wants to remove the common agricultural policy and keep the multi-fibre arrangement, as well as everybody else. His remarks about the world economy clearly show that he has no understanding whatsoever of how the economy works and no appreciation whatsoever that the necessary ingredients for growth are to bring down inflation and ensure that we have the right economic circumstances for sustained growth, not the sort of quick dash, leading to terminal unemployment, that the Labour party's policies would bring.

With regard to stabilisation funds for the rouble and such matters, in our discussions, we agreed with the Soviet Union to establish a continuing dialogue. Those are matters that lie—if at all—some way ahead. There is a great deal to be done on technical assistance and other matters in the short term. Those are under way, and we have announced a small increase—in fact, a doubling—in our assistance to the Soviet Union through the know-how fund.

We also addressed the prospect of much closer co-operation at all levels of government, to ensure that the Soviet Union has the proper assistance it needs to bring its economy back into the world economy. That was the most significant shift in relationships between the industrialised, western nations and the Soviet economy that we have ever seen. It will be noted that the Opposition are unable wholeheartedly to welcome it.

Several Hon. Members


Mr. Speaker

Order. I shall be able to call a great many right hon. and hon. Members provided that they ask brief questions, as we have not yet begun to hear the speeches from Back-Bench Members in the education debate. Therefore, I ask for brief questions, and will allow them to continue until noon, when we must return to the debate.

Sir Geoffrey Howe (Surrey, East)

Does the Prime Minister accept that the great majority of people will much admire the substance and style of the calm, competent and comprehensive conclusions arrived at by my right hon. Friends and their summit colleagues? Does he agree that people will attach a special value to the historically important agreements arrived at with President Gorbachev? They constitute an entirely appropriate achievement to build on the foundations so firmly and patiently laid by my right hon. Friend the Member for Finchley (Mrs. Thatcher). Finally, does he agree that the practical success of the 1991 London summit will most of all be judged by the seriousness of the commitment to bring the Uruguay round to a successful conclusion, which will crucially depend on the willingness of all Governments, particularly those in the European Community—notably Ministers of Agriculture—to accept conclusions that are tough as well as fair?

The Prime Minister

I am grateful to my right hon. and learned Friend for his opening remarks.

It was specifically recognised and repeatedly stated during our plenary sessions that, in order to reach a general agreement on tariffs and trade, decisions would have to be made in a number of member countries that would be uncomfortable domestically, but there was a great prize to be achieved in a successful GATT round. Therefore, those difficult decisions need to be made.

It was clear to everyone that dangers of protectionism would exist if a successful GATT round were not concluded, and that there was much in the GATT round, to all intents and purposes already agreed, which would be lost if the round were not completed during the balance of this year. Those facts were fully understood and may lead to difficult decisions having to be taken by a number of Heads of Government who put their names to that agreement.

I share my right hon. and learned Friend's view on the importance of the new relationship with the Soviet Union. I think that that view is also shared by President Gorbachev, and believe that it will lead to a substantial improvement in and thickening of relationships between both the Soviet Union and this country, and the Soviet Union and all the countries the G7 group.

Mr. Paddy Ashdown (Yeovil)

The Prime Minister is entitled to feel a good deal of personal satisfaction over a broadly successful and smoothly run summit. I have no doubt that he will have significantly enhanced his reputation abroad, which must be good for the country. I particularly welcome the establishment of the arms register, which I know was his initiative and about which Liberal Democrats have been enthusiastic for a number of years.

However, does the Prime Minister realise that many people will believe that the summit fell short in two crucial respects? First, its proposals to assist the developing world and the poor nations, welcome though they are, are still inadequate in the face of the massive human tragedy that is now developing. Secondly, in relation to the environment, the summit seems to have decided on promises tomorrow, when what is needed is action today.

Finally, does not the Prime Minister find an irony in the fact that, on the day after he announced a world recovery, Britain announced unemployment figures that are rising at record levels in the south, manufacturing output that is 6 per cent. lower than it was a year ago and manufacturing pay that is still rising? Does he not understand that the judgment on him will be based not on easy words about the world recovery but on the hard facts of Britain's slump, for which his actions, his Government and his policies are responsible?

The Prime Minister

I am grateful to the right hon. Gentleman for his generous opening remarks.

I think that the right hon. Gentleman may have understated what has been achieved in relation to the developing world, in which several factors are of critical importance. The first important move is the opening of free markets, so that countries in the developing world have a market for their goods. The heads of the G7 clearly recognise and acknowledge that, and demanded action.

Secondly, there is little of more importance to the developing world—the two things are related—than the successful completion of the GATT round, to which the Heads of Government also pledged themselves. Thirdly, although the details of the new debt relief must necessarily be determined in the Paris Club, nobody should understate the significance of the extent of debt relief that is to be written off for the very poorest countries in the world.

The Toronto terms of 1988, initiated by my right hon. Friend the Member for Blaby (Mr. Lawson), led the world at that time in providing assistance for the poorest countries. We have taken our current initiative to show that we take a real and direct interest in ensuring that the poorest countries are given the best possible help to lift their economies to a level of self-sufficiency. I believe that we have made real progress with that during our discussions of the past couple of days.

I share the concern of the right hon. Member for Yeovil (Mr. Ashdown) about unemployment levels in this country, but of most vital interest to the people currently employed and those not yet on the employment market—

Mr. Gerald Kaufman (Manchester, Gorton)

What does that mean?

The Prime Minister

Let me tell the right hon. Member that the phrase "not yet on the employment market" relates to people still at school. As the shadow Foreign Secretary sits jabbering on the Opposition Front Bench, I wonder what sort of figure he would have cut in the past few days.

We are setting the framework for the future to ensure that we have a sustainable, lasting recovery in this country, with jobs that will be sustained and living standards that will improve. There is no easy way to achieve that, and the way in which we are seeking to do so is the right way.

Mr. Nigel Lawson (Blaby)

I congratulate my right hon. Friend on his successful chairmanship of a successful summit. The whole nation will know what to make of the petty-minded carping of the Leader of the Opposition.

In deference to your injunction, Mr. Speaker, I shall confine myself to one point. In the massive, challenging and unprecedented task of assisting the countries of central and eastern Europe to transfer from a command socialist economy to a market economy, does not my right hon. Friend agree that the most important thing that the western world can do is to assist in demonstrating that that can be done? Therefore, we must do whatever we can to help those countries that are not merely talking about economic reform, but are engaged in the tough and difficult measures of bringing it about—in particular, Czechoslovakia, Hungary and Poland.

The Prime Minister

I entirely agree with my right hon. Friend. That matter played a significant part in our discussions during the past few days. It is not simply a question of providing words of comfort to the nations of central and eastern Europe. We wish to provide them with practical aid and assistance to help them recover. In terms of the European Community, that also includes the association agreements that we are seeking to negotiate. We made it perfectly clear in our declaration that we renew our firm commitment to support reform efforts in central and eastern Europe as well as in the Soviet Union.

We also underlined our commitment further to improve their access to our markets for areas such as steel, textiles and agriculture, which will be of importance to them. We also acknowledged a secondary point, with which It think my right hon. Friend the Member for Blaby (Mr. Lawson) will agree. It is that encouraging reform in the Soviet economy will also benefit the economies of central and eastern Europe, for which, traditionally, the Soviet economy has been an important market.

Mr. Peter Shore (Bethnal Green and Stepney)

I deeply welcome the meeting between President Gorbachev and the G7 leaders in London and hope that, before long, the G7 will become the G8 so that the Soviet Union can play its proper part in the global management of political and economic affairs.

The Prime Minister has not satisfied the House over the crucial area of aid to the third world. He produced the Trinidad terms, they were his proposals, and we have not been told how far those terms, which have been elaborated, have been accepted by our G7 partners. If they have not been accepted, will the Government make them available to debtor countries?

The Prime Minister

The proper role of discussion in the summit is to obtain agreement on the broad principles that will determine the detailed decisions of the Paris Club. That is what this summit has done, just as the 1988 summit did on the Toronto terms. It is the job of the Paris Club to finalise the details. On the Toronto terms, there was the same general agreement as the one we have obtained this week, and the Toronto terms were eventually agreed by the Paris Club. We agreed in principle on more generous treatment on debt for the poorest and most indebted countries, but, as I have said, the Paris Club is the proper mechanism to finalise that agreement. We shall still pursue the Trinidad terms without change in the Paris Club, and I hope that we shall achieve the desired outcome. However, the matter must be decided in that forum.

Mr. Andrew Mitchell (Gedling)

Will my right hon. Friend accept the genuine support and enthusiasm which greeted his announcement at G7 about the enhancement of the peace keeping role of the United Nations? Does he agree that that offers the opportunity to make progress on some of the fundamental aims and aspirations of the founding fathers of the United Nations, which for so long were thwarted by the realities of the cold war?

The Prime Minister

We certainly hope that that will be the outcome. That principle underpinned our proposals. We seek to ensure that the United Nations are in a position to prevent fires starting as well as helping to put them out at a later stage. If the United Nations can successfully undertake that role, it will be of significant advantage to the whole world.

Mr. Jim Sillars (Glasgow, Govan)

Is the Prime Minister aware that it is perfectly possible profoundly to disagree with his Government's policies and still acknowledge the skill, diplomacy and authority with which he chaired the G7 conference? He spoke about strengthening the movement for freedom and democracy. In his discussions with President Gorbachev, did he raise the question of freedom and democracy for the Baltic states and the right to self-determination and independence?

The Prime Minister

I am grateful to the hon. Gentleman. My discussions with President Gorbachev were wide ranging. We discussed the Baltic states and a range of other matters within the Soviet Union. I am sure that the hon. Gentleman would not expect me to respond for President Gorbachev, but I assure him that we discussed that matter.

Sir Bernard Braine (Castle Point)

I, too, warmly congratulate my right hon. Friend on the evident skill with which he presided at this historic conference. A major problem facing the G7 leaders was the difficulty in arriving at a proper world trading pattern. I hope that my right hon. Friend will not hesitate to invite the G7 leaders—say, at the end of the year—to come back to London to resolve the problems in GATT.

The Prime Minister

In the light of the commitment given by the Heads of Government, I very much expect that such a meeting would not be necessary. However, the option for such a meeting clearly exists, because everyone recognised the importance of concluding the round this year.

Ms. Diane Abbott (Hackney, North and Stoke Newington)

Did the summit discuss the very real link between the debt crisis and the drugs crisis? Those countries whose economies are most crippled by the repayment of debt, such as Colombia, are greatly involved in the drugs issue. The Prime Minister mentioned the poorest countries. What about the so-called middle-income debtors, such as south America, Nigeria and the Caribbean? Is there no question of debt reduction for them?

The Prime Minister

The hon. Lady's points are important, but it was not possible in the time available to discuss all the structuring of debt between middle-income, the lower-income and the very poorest countries. The matter has been discussed on previous occasions, and for that reason we concentrated our discussions on the very poorest countries, with the outcome that I have set out. The hon. Lady will know that these matters are subject to continuing discussion bilaterally, in the European Community and in the Paris Club of creditors. The hon. Lady asked about drugs and debt. We did not discuss any linkage between them, but, as I said in my statement, both were discussed.

Mr. David Howell (Guildford)

My right hon. Friend presided over and guided this highly constructive summit with skill, vision and patience, as is recognised in all responsible parts of the House. In the context of the question by my right hon. Friend the Member for Blaby (Mr. Lawson), does the Prime Minister agree that, while we all want to see the Soviet Union move without violence towards a more diffuse, decentralised new political structure, the first priority must be to see the new young democracies of eastern Europe brought to freedom and prosperity? As he rightly says, that requires not merely more open trade with Europe but the re-creation of a trading system within eastern Europe through a new payments clearing system, so that countries can trade with one another and begin to pick up the bits and advance towards prosperity.

The Prime Minister

Yes, I agree with my right hon. Friend. I set out earlier some of the practical measures that we think are necessary to help the countries of central and eastern Europe. I would not in any way underestimate the importance of the association agreements with the European Community and the prospect that at some stage these countries will feel inclined and be able to join the EC. That is clearly some way ahead, but it is a goal which we should leave open for them and one that I hope they will eventually reach.

Mr. Jack Ashley (Stoke-on-Trent, South)

Is it not ironic that those European countries that have been pressing President Gorbachev to adopt a market economy, notably France and Germany, are the very ones which are distorting the world market economy by their continuing support for the common agricultural policy, thereby damaging Britain and devastating developing countries? Does this not indicate the need for radical change, not only in the Soviet Union but in the EC? What sort of intervention does the Prime Minister propose, in view of the fact that we have had promises of action this year from European Governments and have had such promises before?

The Prime Minister

The right hon. Gentleman is entirely right about the need for reform of agriculture, particularly in the European Community. The Government have taken that position for some time, and we have been forward in the Community in consistently pushing the need for reform of the common agricultural policy. There have now been some proposals, and we welcome the fact that there is now acknowledgment throughout the Community of the necessity for reform of the common agricultural policy. We should not fool ourselves that that will be speedily or easily achieved. There are many distinct national interests, but a great advance has been made with the acceptance of the necessity for reform. We must now get down to examining the details and turn that objective into reality.

Mr. Nigel Forman (Carshalton and Wallington)

Does my right hon. Friend agree that, for many years, the Government have made a constructive contribution to measures intended to improve and protect the environment in this country and globally? Does he recognise that I and many of my hon. Friends very much look forward to his going to the Rio conference next year to lead the British delegation? Does he further realise that the contribution by the Leader of the Opposition on this matter, as on many others, shows that he would be wise to follow the adage that he should quit while he is behind?

The Prime Minister

It is striking how environmental factors now appear at every point of our economic discussions, on economic policy, trade, energy, relations with European partners, relations with eastern Europe and aid. That fits entirely with our environmental policy-making. It may have been the case some years ago that only a few far-sighted people realised the importance of the environment, but that is no longer the case. It is recognised as central to our futures, as something that needs careful consideration in every aspect of policy-making.

Mr. Tony Banks (Newham, North-West)

Why was not more done to assist Mr. Gorbachev in the changes that he is trying to bring about in the Soviet Union? It is all very well saying that financial resources will flow after the changes have been achieved, but some say that, unless the financial resources get there, the changes will not be achieved. If Mr. Gorbachev fails, we shall fail throughout the world. The Soviet Union breaking up into chaos will imperil all of us. Will the Prime Minister, rather than talking in general terms about moving from a command economy to a market economy, say specifically what changes Mr. Gorbachev will have to achieve before he gets the necessary economic resources, along the lines of a Marshall plan, so that he can go from success to success?

The Prime Minister

The hon. Gentleman might have had his tongue in his cheek for part of that question. The solution to the problems of the Soviet Union will essentially have to come from within the Soviet Union. That is recognised by President Gorbachev and other politicians in the Soviet Union, and acknowledged by the countries outside. What we can and should do is assist him in enabling economic reform to take place, and the sort of assistance that he needs is available in joint venture co-operatives—these were widely discussed in our meeting —technical assistance, and the trade and open market flows that I mentioned earlier.

We are at an early stage of this relationship. The expertise of the four financial institutions will now be available to Mr. Gorbachev, and the associate status relationship with the International Monetary Fund will be of critical importance. I believe that this was a significant advancement for the Soviet Union. On the basis of my conversations with Mr. Gorvachev, I can say that that is the President's view as well.

Sir Peter Blaker (Blackpool, South)

I pay tribute to the skill and authority with which my right hon. Friend conducted these meetings, and I heartily endorse what he said about the Soviet Union. While we all hope that the arrangements made with it will mark the start of a long and fruitful relationship with that country, is it not also clear that, in spite of the collapse of socialism there, it could do a great deal more to attract inward investment and aid from the west? For example, it could have real democracy, a real market economy and, not least, a framework of law within which western business men could operate.

The Prime Minister

My right hon. Friend is right in each of those remarks. It is my understanding that that point is now acknowledged and understood by those in the Soviet Government who are seeking to put in place the mechanisms to encourage inward investment, in terms both of direct ownership and joint co-operative ventures.

Mr. Alan Williams (Swansea, West)

I welcome the register of arms sales, although I am pessimistic about enforcement of it. Will that register extend to the technology that would enable countries to produce their own advances on mass destruction weapons?

The Prime Minister

That is not yet clear. I agree with the right hon. Gentleman that that is one of the matters that deserve careful study. It will have to have that careful study at the United Nations General Assembly this autumn.

Mr. Michael Knowles (Nottingham, East)

Will my right hon. Friend confirm that access to international financial institutions is absolutely vital to the future of South Africa and consequently to the future of Africa as a whole? What further progress will he be able to make with his colleagues on this front?

The Prime Minister

I share my hon. Friend's view that access to international financial institutions is vital to South africa. A particular problem is that, for some time, it has had nil economic growth and 3 per cent. population growth, so it needs assistance and access to international institutions and the inward investment that is the surest sign that it will be able to improve the living standards of its poorest citizens.

Mr. Norman Hogg (Cumbernauld and Kilsyth)

On the point made by my hon. Friend the Member for Newham, North-West (Mr. Banks), the Prime Minister will recall that, at the conclusion of the second world war, Marshall aid was made available to the Soviet Union, but was rejected by Stalin's Government. Does he not understand that, by failing to underpin the technical know-how and other resources that the G7 is proposing with the financial assistance that the Soviet Union believes is necessary, the G7 is hindering the pace of reforms that it is looking for inside the Soviet Union and which can only be for the good of that country?

The Prime Minister

With respect, I believe that the hon. Gentleman is wrong. We cannot impose or insist upon those reforms in the way that he is suggesting, externally. We can only encourage the Soviet Union and provide the information, the technical expertise, the access to markets and the advice that will enable it to do the work that only it can do for itself to bring its economy up to the standards that it would like and to the nature of western liberal democracy. It cannot be done externally.

Mr. Terence L. Higgins (Worthing)

Does not the Prime Minister's success reflect an extraordinary grasp of the entire range of political and economic issues? I particularly appreciate the new and enthusiastic support that he is giving the United Nations as an organisation. That should enable it increasingly to fulfil the good intentions of its founders.

Is not agriculture the central issue in trade negotiations? Is it not absurd, not only in Europe but in the United States and Japan, to go on giving way to the pressure of producer interests, rather than putting the interests of consumers and the countries as a whole in the forefront of the argument? Will my right hon. Friend make sure that the Heads of Government get to grips with Agriculture Ministers and sort them out?

The Prime Minister

I share my right hon. Friend's view of the primary importance of consumers. That means that there will have to be robust discussions and negotiations in the GATT round to achieve a settlement later this year. There must be a settlement, and that has been acknowledged. I am grateful for my right hon. Friend's remarks about the United Nations. It can be a great force for good. It has not always lived up to what its founders hoped for it. It is now in a better position to begin to live up to its founders' aspirations.

Mr. James Lamond (Oldham, Central and Royton)

Why is it that anything other than the most sycophantic praise for the Prime Minister's efforts gets him jumping to his feet bawling and shouting about selling the country short? Surely his position is not so insecure that we cannot ask probing questions?

I shall ask him about the negotiations on GATT and the related multi-fibre arrangement, which he dismissed in a rather off-hand way. This arrangement, which ends at the end of July, is essential to protect many tens of thousands, if not hundreds of thousands of jobs in textiles, including many in my constituency. Employers and employees alike have been writing to Members of Parliament, on both sides of the House, pointing out the danger that this agreement will run out with nothing to take its place. This is not a restrictive agreement. It allows expansion of exports into this country, but in a controlled way. It is essential if our textile industry is to survive.

The Prime Minister

Of course we have to look at the MFA, but that was not a subject of discussion among the G7 on this occasion. The GATT Uruguay round spreads across a whole range of trading matters and is a much bigger matter than the MFA, although I acknowledge the latter's importance. For that reason, we concentrated our discussions on the GATT round as a whole.

At these meetings, there is a limited amount of time and a vast range of matters to be discussed. On this occasion, we stretched the agenda to the maximum possible and reached constructive agreements. On that account, we can point to the substantive outcome of the summit. I have a question for the hon. Gentleman or anyone else. On what previous occasion were so many substantive agreements reached at a summit?

Sir Peter Tapsell (Lindsey, East)

Did not the exceptionally warm tributes that the other G7 leaders paid to the chairmanship of my right hon. Friend confirm what he has just said? Does my right hon. Friend accept that most people will think that the G7 leaders were right not to give large-scale financial assistance to the Soviet Union at this stage, although one hopes that the special relationship with the International Monetary Fund will help the Soviet Union to get into a position in which it can make good use of such assistance in due course? For instance, did the Prime Minister of Japan describe to my right hon. Friend the way in which the Export-Import bank of Japan gives help to Japanese companies that invest in Russia and the Soviet Union? Could consideration be given to the British Government backing British firms that will help in the regeneration of the Soviet economy?

The Prime Minister

I am grateful to my hon. Friend for his earlier remarks. We shall be examining in the discussions that will continue in future the extent to which we may be able to improve the trade and investment flow between the United Kingdom and the Soviet Union, so the matters to which my hon. Friend points, among others, will certainly be the subject of discussion within the Government.

Mr. Keith Vaz (Leicester, East)

Did the summit leaders express concern at the world banking order and the decision of the Bank of England, supported by the Prime Minister at his meeting with the governor on 28 June, to close the Bank of Credit and Commerce International? The Prime Minister says that it was a successful summit. Does he agree that the headlines in the newspapers were a deep embarrassment to him during the summit? Does he agree also that to help the reputation—

Mr. Speaker

Order. The hon. Gentleman's question is wide of the statement. Questions must be directed to the statement.

Mr. Vaz

Does the Prime Minister agree that the matter can best be sorted out by a public inquiry?

The Prime Minister

That question has no conceivable relevance to the summit.

Sir Nicholas Bonsor (Upminster)

There is no doubt that the G7 meeting will provide the framework for a safer and better world, especially because of the way in which the Soviet Union's leadership has been involved. Does my right hon. Friend agree, however, that it would be folly for the west to pour money into the Soviet Union while it is spending so much of its gross domestic produce on defence?

Is it not right that the Soviet Union has launched six Typhoon class submarines within the past six months and that it has hidden, although we have spotted them by means of our satellites, quite a lot of the machinery, weapons and equipment that it says that it has destroyed? Is it not right that the President of the Soviet Union has yet to control his military conservative colleagues in a way that will lead the west to feel secure under his leadership?

The Prime Minister

We discussed particularly the prospects for defence conversion, which I think bears directly upon the pertinent points that my hon. Friend makes. I think that he is correct to say that now is not the time for large-scale financial assistance.

Mr. Robert N. Wareing (Liverpool, West Derby)

Did the Prime Minister caution the Soviet leader against too mad a dash to an untrammelled market economy without any planning or controls? Did he warn him that that could lead a country to lose one third of its manufacturing industry in 10 years? Did he explain that it could lead to financial scandals such as the BCCI? Did he ask Mr. Gorbachev's advice on how Moscow, unlike London, has been able to avoid having a cardboard city?

The Prime Minister

President Gorbachev is very keen to move towards a market economy, but then these days the Soviet Union leadership is to the right of the Labour party.

Mr. Anthony Nelson (Chichester)

I congratulate my right hon. Friend on the great statesmanship that he displayed. Does he agree that a real test of whether the worthy declarations of G7 will be translated into solid achievements will be the international trade discussions? Does he agree also that it is essential that many of us—even those who represent agricultural constituencies—will have to face some difficult decisions if we are to get a tougher package of proposals on guaranteed price and compensation payment reductions to break the stalemate on the Uruguay round and bring about an essential revival of talks on the GATT?

The Prime Minister

My hon. Friend is absolutely right about that. We ought not to overlook, however, some of the difficulties there will be in reaching agreements on services and intellectual property and on other matters. There are a number of areas in which there are difficult decisions to be taken, both for this country and elsewhere. I believe that it is an accurate judgment to say that agricultural movement is the cornerstone of a successful GATT outcome.

Mr. Tam Dalyell (Linlithgow)

How can any British Prime Minister credibly go to Brazil to talk about the conservation of forests without doing something to save what remains of our own ancient Caledonian forest, and in particular rescuing Mar Lodge? In the light of the pleas of UNICEF—I gave notice—

Mr. Speaker

Order. We have heard a lot about Mar Lodge.

The Prime Minister

I am grateful to the hon. Member for Linlithgow (Mr. Dalyell) for giving notice that he would raise the issue of Mar Lodge and the estate. It was typically generous of the hon. Gentleman to do so, and I am most grateful to him. We have made it clear that we shall look to the conservation agencies in Scotland to work with the future owner of the estate, whoever he turns out to be, to ensure that the special qualities of the estate are preserved and enhanced for the benefit of this generation and future generations.

Sir Geoffrey Johnson Smith (Wealden)

Will my right hon. Friend tell us a little more about the support given to his initiative to set up a United Nations arms sales register? Has not the time come for the United Nations secretariat, to maintain the momentum of the initiative, to establish more effective verification procedures?

The Prime Minister

Yes, I share my hon. Friend's view on that. As to the depth of support, we have complete support from the European Community, which was obtained previously. Indeed, the European Community will join us in tabling a motion at the United Nations General Assembly later this year. I now know that that motion will have the support of all members of Group of Seven.

Mr. Kate Hoey (Vauxhall)

I welcome the moves to strengthen the United Nations. Can the Prime Minister say whether there was any discussion about hew the United Nations could work towards a solution for the Shia population in southern Iraq, which, as I said yesterday, is out of sight of the cameras and in respect of which the United Nations seems to be doing nothing? Was there any suggestion of an initiative of the sort that we organised for the Kurds?

The Prime Minister

That matter was not discussed at the G7 summit. The hon. Lady points accurately to the purpose behind one of the changes that we are suggesting to the United Nations, which is that the United Nations in future should look towards identifying problems and damping them down, rather than being an organisation that responds to problems after they have arisen and have achieved an international dimension. It is precisely to meet an attempt to prevent the sort of problem to which the hon. Lady referred that we are seeking the reforms that I have outlined within the United Nations.

Sir Peter Emery

I congratulate my right hon. Friend on his outstanding leadership, and ask him to accept the thanks of many hon. Members for the way that he brought President Gorbachev on to the Terrace of this place in a way that had never been done before, and introduced him to many hon. Members. I hope that that example will be taken up and followed in future.

Will my right hon. Friend stress the need for our industries, and western industries generally, to go outside Moscow into the regions, where, with the break-up of centralisation, there is much to be done on the technological side to deal with the vast problem of transportation across the whole of the USSR? Very few people understand the difficulties that now exist.

The Prime Minister

I think that my hon. Friend is entirely right in his remarks about the Soviet Union, and entirely correct to point out that many business and other opportunities will be found far outside Moscow arid the other main cities that will none the less be well worth examining. I am grateful to him for welcoming the fact that President Gorbachev was able to meet a number of hon. Members on the Terrace last evening. I thought it would be appropriate for President Gorbachev to do that. I was particularly pleased that I was able to introduce him to the hon. Member for Bolsover (Mr. Skinner). I thought that it was nice for President Gorbachev to meet one of the few socialists in Britain who has not let his membership lapse.

Mr. Dennis Skinner (Bolsover)

In between discussing sending the Chancellor of the Exchequer to Russia to save its small businesses—while small businesses in Britain are going down the pan—and discussing the budget deficits of other countries—while our public sector borrowing requirement in the first three months of this year reached £6.9 billion—did the Prime Minister have a word with George Bush about drug-dealing banks? Did he discuss —I would find it unbelievable if he did not—the BCCI and the need for a public inquiry to expose the Government's squalid cover-up of their involvement in the bank and the fact that they have been passing letters to one another—[Interruption.]

Mr. Speaker


The Prime Minister

If there is a top, we can rely on the hon. Member for Bolsover to go well over it. It is odd of the hon. Gentleman to raise the question of borrowing, when his party has £35 billion-worth of pledges that will raise borrowing to massive heights.

Several hon. Members


Mr. Speaker

Order. I heard one hon. Member say "penalty". I intend, exceptionally, to extend questions by five minutes, but then we must move on.

Mr. Phillip Oppenheim (Amber Valley)

With the world moving towards freer markets and more open economies, how much respect would the British leader have received if he had gone to the summit with policies for increasing interference in the British economy, renationalisation, lax monetary arrangements, and letting public spending rip, and with policies that were so contradictory that, while asking for reform of the common agricultural policy, he was not asking for reform of the multi-fibre arrangement, despite the enormous damage that that does to developing countries?

The Prime Minister

None, Sir.

Mr. David Winnick (Walsall, North)

Despite all the lavish praise that the Prime Minister has received from his supporters, including the Tory press, is he aware that, when we return to our constituencies later today—where there are Tory as well as Labour supporters—we will be asked when the recession and the misery will end? If the Prime Minister is as confident of his position as apparently he was last night—

Mr. Speaker

Order. Those points have nothing to do with the statement.

Mr. Winnick

They are as relevant as the points of the hon. Member for Amber Valley(Mr.Oppenheim).

The Prime Minister

With your agreement, Mr. Speaker, I will tell the hon. Gentleman what I have already told the House many times—that I am confident that, in the second half of this year, the economy will begin to take off again. There is clear evidence from around the world that the world is coming out of recession. The United States of America is coming out of recession, the slowdown in France has begun to stop, Germany is still helping to pull the European Community out of recession, and Japan is still booming. There are far too many signs for anyone to doubt that, in the second half of this year, there will be a great improvement and we will be moving out of recession.

Mr. Ivan Lawrence (Burton)

Is my right hon. Friend aware that more significant than the congratulations that he has received from his supporters in the House are the plaudits that he has received from his fellow world leaders and the world's press? Do they not fully justify the 25-point lead that he has over the small and mean-minded Leader of the Opposition in the opinion polls?

Is my right hon. Friend aware that, quite apart from the economic ramifications of the splendid conference, the most important single long-term benefit has been the boost that it has given to the strengthening of the United Nations, with its powers to prevent wars, to stop wars and to deal with the misery that follows wars and national disasters?

The Prime Minister

I agree with my hon. and learned Friend. It is important that the United Nations retains the enhanced authority that it rightly earned during the Gulf conflict. Our proposals, together with those suggested by others, which have been enshrined in the G7 declarations, will go a long way towards ensuring that the United Nations becomes a much more potent force for good than it has sometimes been in the past.

Mr. D. N. Campbell-Savours (Workington)

On the question of preventive measures by the United Nations, to which the Prime Minister alluded, was there any discussion of the implementation of United Nations resolution 688 on the repression in Iraq? In view of the clear breaches of that resolution on Wednesday in Arbil when four people were killed, and the use of tanks against the civilian population in Salumaniya, was it the general view of the leaders at the summit that some action should be taken either by the rapid deployment force in southern Turkey or by American marine deployments in the eastern Mediterranean?

The Prime Minister

As the hon. Gentleman knows, those are matters for the United Nations. We made it clear in our discussions during the past few days that we stand by United Nations resolutions 687 and 688. They are very important, not only in the aspect to which the hon. Gentleman referred, but in view of the information that has lately come into our hands that Iraq still retains the capability to produce nuclear weapons—

Mr. Dalyell

Is the right hon. Gentleman sure of that?

The Prime Minister

Yes, we are sure of that, and it is a matter of great importance. We have made it clear to Iraq, as have our partners, that Iraq must remove those capabilities or we will take action to remove them.

Mr. Tim Rathbone (Lewes)

I wish to add greater accent to the question asked by my right hon. Friends the Members for Blaby (Mr. Lawson) and for Guildford (Mr. Howell) about the help being given to developing nations in eastern and central Europe. Many still worry about the level of aid in both know-how assistance and funding. I hope that the G7 summit will lead to increases, where those are necessary.

The Prime Minister

I am not sure that I can add to my earlier answer to my right hon. Friend the Member for Blaby (Mr. Lawson), but it was acknowledged at the G7 summit that, in our concern about the Soviet Union, there must be no question of overlooking the imminent and urgent concerns of other central and eastern European nations. That was the view of the G7 summit and, by our actions within the European Community, it is clear that it is also the view of the European Community.

Several hon. Members


Mr. Speaker

Order. I am sorry that I have been unable to call all hon. Members, but I give an undertaking that, on the next occasion that the Prime Minister is at the Dispatch Box to make a statement, even though it may be on another subject, I shall give some precedence to those hon. Members.

Mr. Max Madden (Bradford, West)

On a point of order, Mr. Speaker.

Mr. Speaker

What possible point of order could arise from that?

Mr. Madden

When colleagues sought to raise the matter of BCCI, Mr. Speaker, you rightly said that it was a little wide of the statement. Have you had any indications from the Prime Minister that he intends to make a statement about BCCI on Monday? It is clear that the longer that the Government and the Prime Minister maintain silence on that very serious matter, the more suspicion will mount that the Government's failure to act was dictated by political expediency rather than by any other matter.

Mr. Speaker

I have not had any such indication, but I do not underestimate the importance of what the hon. Gentleman has said. I am sure that it will have been heard.

Mr. Stuart Bell (Middlesbrough)

Further to that point of order, Mr. Speaker. It is a genuine point of order, which also follows upon an earlier point of order by my hon. Friend the Member for Bolsover (Mr. Skinner). We are aware that the Secretary of State for Employment received a letter stating that BCCI had lost $600 million of loans and $150 million across the exchanges, and that there had been a charge that the bank was corrupt and another charge of nepotism, and that a doubt was cast upon the bank's auditors. The Secretary of State simply passed that letter on to the right hon. Member for Cirencester and Tewkesbury (Mr. Ridley), who at the time—

Mr. Speaker

Order. Those are matters that could rightly be exposed, if there is any substance to them, in the debate to be held on Monday.

Mr. Bell

Further to that—

Mr. Speaker

Order. These are matters not for me, but for the Government. They are matters for Monday, not today.

Mr. Bell

With respect, Mr. Speaker, this is a position we face time and again in the House. This legislature is here to hold the Executive to account—

Mr. Speaker

Order. The hon. Member is taking debating time from his own colleagues, which is not fair. There will be other opportunities to raise that matter. What is the point of order for me?

Mr. Bell

Has the Secretary of State for Employment, who received the letter and sent it on to the Department of Trade and Industry, made a request to make a statement at 2.30 pm? Earlier this week, the Leader of the House said that Opposition requests for statements would be taken on account—

Mr. Speaker

Order. I have not heard that there is to be a statement at 2.30 pm, but it is an important matter and I am sure that the hon. Member's remarks were heard by those on the Government Front Bench.

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