Remission of Third World Debt (Jubilee 2000) (Hansard, 21 July 1998)

§ Mr. William Cash (Stone)

I beg to move, That leave be given to bring in a Bill to provide for the remission of debt owed by the poorest developing countries by the year 2000. On 16 May, 70,000 people formed a human chain around the venue for the G8 summit of leading nations in Birmingham, calling for the substantial remission of the unpayable debts of many third-world countries by the end of the year 2000. I was among them, and I spoke as chairman of the all-party group for the Jubilee 2000 coalition, which has 110 members and is almost certainly the largest all-party group in the House.

Also present were other hon. Members from both sides of the House, and many of our noble colleagues in the other place. Members of these Houses were not the focus of attention that day; we simply took our place among the people. There was one exception, when a parliamentarian was mistaken for someone of somewhat exalted status. As the noble Lord Redesdale accompanied Baroness Shirley Williams to the event, he was asked whether he was a member of special branch.

Progress was made on the debt issue at the Birmingham summit. It is thanks to this Government, building on the approach of the previous Government, that such progress was made. There was a new commitment to help post-conflict countries. There was also, for the first time, a declaration of the year 2000 as a target for action on debt. However, we understand that the less enthusiastic members of the G8 successfully blocked more substantial progress. Although we welcome the steps that were taken, there was inevitable disappointment that more was not achieved. The Prime Minister acknowledged to the House the following week that he would have wished to go further.

However, the impact of the human chain was enormous, with coverage in the world's media from The Washington Post to The Nation in Thailand. As Newsweek observed, this moral cause has proved itself the people's policy". The Daily Telegraph commented: The approaching millennium does offer the group of leading industrialised countries, all but one of which has a long Christian tradition, the chance of making a dramatic and generous move toward lifting the burden of debt. At Birmingham that opportunity was sadly missed. Meeting Jubilee 2000's challenge would be generous. However, what those 70,000 people demonstrated was not just the compassion that many of us share for less fortunate individuals in the poorest parts of the world, but the innate common sense that ordinary people show in matters that politicians and officials like to imagine are terribly difficult to understand.

Ordinary people understand debt. They are familiar with mortgages, student loans, credit card limits and negative equity. They realise that, if an individual gets into debt, it is primarily his responsibility to get himself out of it. However, they also know that lenders must share the responsibility for over-lending and over-borrowing. Most of all, they see that, unless the burden of debt is removed from the world's poorest countries, those nations will never be able to enter the virtuous circle of relative prosperity that the rest of the world enjoys.

930 Keeping those countries poor is not in our interests, any more than it is in theirs. All hon. Members have in their constituencies exporters who wish to find new markets overseas for their goods and services. An open and fair trading relationship between a newly prosperous Africa and the west would be good for us all. Moreover, as long as high debt contributes to deep poverty in the developing world, many of the by-products of that poverty will remain. Whether in the form of civic and ethnic unrest, environmental damage or the movement of refugees across borders, those by-products are problems for our countries to deal with, too.

The Government clearly understand the solid economic argument for debt remission. Last month in the House, the Prime Minister said: Our view is that the most persuasive case for more debt relief is that it is only when those countries can escape the burden of their debt that they are able to develop economically. That is not a zero-sum game in which they gain and we lose; on the contrary, it is a game in which we can both win."—[Official Report, 20 May 1998; Vol. 312, c. 962.] We must also ensure that, if we cancel much of the debt of the world's poorest countries, we do not leave in place a system that allows that debt to build up in the same way again. That is why, just as we must be tough on those third-world leaders who saddle their people with debt that will have to be paid long after they themselves have gone, so we must ensure that there is no protection for lenders who behave irresponsibly.

That matter is of particular concern to my hon. Friend the Member for Hertford and Stortford (Mr. Wells). I pay tribute to the excellent report recently published by the Select Committee on International Development under his chairmanship, and I am grateful for his support as a co-sponsor of the Bill. The other co-sponsors include four other Select Committee Chairmen: the hon. Member for Ochil (Mr. O'Neill), Chairman of the Trade and Industry Committee; the hon. Member for North Durham (Mr. Radice), Chairman of the Treasury Committee; the hon. Member for Swansea, East (Mr. Anderson), Chairman of the Foreign Affairs Committee; and my hon. Friend the Member for Mid-Worcestershire (Mr. Luff), Chairman of the Agriculture Committee.

We must find a way to impose the disciplines of the market on international lending and borrowing. In this country, if a bank makes a loan that cannot be repaid, the bank knows that it will suffer a loss. That imposes some self-control on the lender. In lending to developing countries, whether by private institutions, G8 Governments or multilateral lenders like the International Monetary Fund and the World bank, there is hardly any such in-built discipline, and it is badly needed. That view was expressed in recent months by George Soros and Milton Friedman, neither of whom could be considered anything but a staunch advocate of the capitalist system.

Another powerful message articulated by the Jubilee 2000 coalition concerns the treatment of Germany in 1953. Germany was granted massive debt relief by the allied powers, who had learnt lessons from the aftermath of the first world war. The allies recognised that Europe would not break out of the cycle of conflict and insecurity unless Germany was to have a fresh economic start.

In 1953, the allies expected their old enemy to spend no more than 5 per cent. of export revenues on debt service. Forty-five years later, under the terms of the heavily indebted poor countries initiative, industrial countries are 931 insisting that the poorest should spend some 20 per cent. of their revenues on servicing debts, and often much more. Unfortunately, the German Government do not yet take such an enlightened approach to their creditors, and interpret the HIPC initiative in its narrowest and most restrictive sense.

The Bill, which I shall publish in full, speaks for itself. Clause 1 calls on the Government to cancel the unpayable debts of the world's poorest countries by the end of 2000. It defines "unpayable debts" as those that are inconsistent with the OECD poverty reduction targets, to which the Government are firmly committed, and those incurred by clearly corrupt regimes and later inherited by constitutional Governments. It requires the Secretary of State to take reasonable steps to ensure that the new resources released by debt remission are directed towards meeting those poverty reduction targets.

Clause 2 requires the Government, through meetings of the Paris Club creditors and through their representatives on the boards of the International Monetary Fund and the World bank, to urge similar action by other creditors. Clauses 3 and 4 require the Government to be more transparent and open in the information that they release about their own lending, through periodic reports to Parliament, and to seek international agreement for new discipline in lending and borrowing between developing countries and their creditors.

It is vital that pressure for such action is applied in other lending countries, especially strategically important ones and those that act as a block to progress. Jubilee 2000 is active in Germany, where plans for a public event even larger than the Birmingham human chain have been advanced for the G8 summit in Cologne next June. In the United States, too, Jubilee 2000 is strong, and it has gained a foothold in Japan. Signatures for the Jubilee 2000 petition number about 2 million, and are coming in from 40 countries. That number will greatly increase.

Britain must continue to act as a catalyst and a persuader for debt remission by 2000, and it must lead by example. The Bill will ensure that the next millennium begins on the basis of a generous, just and economically rational gesture.