Argentina (Hansard, 22 July 1998)

§ Mr. Tom Cox (Tooting)
I begin by saying that I chair the all-party parliamentary group on Argentina. It is a long time since the House debated the relationship between the United Kingdom and Argentina. Whatever problems may have existed between us in the past, I am delighted to say that the relationship is now excellent, and a wide range of activities takes place between our countries. I have no doubt that that relationship will be further enhanced by President Menem's official visit to the United Kingdom in October.
Contact between our two countries started long ago, and today many families living in Argentina can trace their roots back to the United Kingdom. Argentina is a large country. Its population is nearly 36 million. It is the second largest country in Latin America, and 10 times larger than the United Kingdom. In 1997, its economic growth was 8.4 per cent. For a number of years, it has followed policies of major economic reform, and its people and ours are pleased that it now has a thriving democracy, due to the policies of its Government and its President.
The normalisation of diplomatic and consular relations between our countries occurred in 1989–90. Since then, there have been many high-level visits. Argentina's Minister of Justice visited the United Kingdom and met the Lord Chancellor. Its Foreign Minister has met my right hon. Friend the Secretary of State for Foreign and Commonwealth Affairs, and its Minister of Defence attended in London the first seminar on defence policy between our two countries.
The Lord Mayor of London has visited Argentina, as have the Minister of State, Department for Education and Employment, my noble Friend Baroness Blackstone, and my hon. Friend the Minister for Sport. Although there have been important exchange visits, those of us who take an interest in the economic developments in that country feel that real progress has been made in that respect.
Argentina is now the second most important Latin American market for the United Kingdom. In 1997, British exports to Argentina were worth more than $800 million, and it is one of the fastest growing markets for the United Kingdom. I pay the warmest tribute to the many major British companies that, by sheer hard work, have developed a market for a wide range of products. Without doubt, they have used their experience and know-how to develop trade with Argentina.
In addition, United Kingdom direct investment in the country has been most impressive. More than $2.13 billion was invested between 1990 and 1996. I am also delighted that, as British trade and investment in Argentina have developed enormously, equally, trade and investment from Argentina are increasing here. The range of British companies investing there is most impressive, and includes all our major industries. They all praise the helpfulness of both Governments in developing the range of investment opportunities.
It is also pleasing to note that, although Argentina is a long way from Europe, it continues to develop links with the European Union. It also fully supports and works for the liberalisation of internal trade, a matter which both Governments pursue and seek to develop. All those developments closely build on the existing links between us, to the benefit of the people of both countries.
1095 I mentioned the families who live in Argentina and can trace their links back over many years—in some cases, centuries—to the United Kingdom. I look to cultural and personal exchanges for further developments in culture, music, film, theatre and education. I hope that, in future, more young people will travel between our countries, and that the tourist trade will develop. Like the United Kingdom, Argentina is a beautiful country, with much to offer visitors. We all know that distance means very little these days. People visit countries throughout the world. I look to my hon. Friend, in his reply, to confirm that it is a future avenue of development between our countries.
I have already mentioned the problems between our countries in the past. Although there are differences concerning the Falkland Islands, they should be resolved by the two Governments and the people of the islands. In no way should they restrict the developments that I have already outlined.
I also mentioned President Menem's forthcoming visit to the United Kingdom in October. Bearing in mind Argentina's troubled past, he deserves enormous praise. He has led his country to the democracy that it now enjoys and protects, and he deserves great credit for that. He now travels to many countries throughout the world, and is always warmly received. I have no doubt that, when he makes his official Government visit to the United Kingdom, he will be warmly received here. His will be the first visit to the United Kingdom by an Argentine President since 1961, and he will be the official guest of the British Government. He will meet the Queen, the Prime Minister and other senior Ministers. He will address Members of both Houses of Parliament and meet a wide range of business people, undoubtedly seeking to develop trade and investment between our countries. His visit will build on the relationship that our two countries jealously seek to protect and develop.
Many hon. Members on both sides will join me in paying a warm tribute to His Excellency the Argentine ambassador—who, I am pleased to say, is in the House today—for all the work that he and his colleagues at the embassy do. He is a true friend of the United Kingdom, and has done a great deal to develop relations between our countries. I am sure that he will play a major role in the visit of President Menem in October.

§ Mr. Tam Dalyell (Linlithgow)
May I endorse what my hon. Friend has said about Rogelio Pfirter?

§ Mr. Cox
I welcome that endorsement. My hon. Friend has been in the House longer than I have and is held in the highest esteem by hon. Members on both sides. It is good that he has come to listen to the debate. I pay tribute to the role that he played when relations were different. He helped to build a relationship that our countries and our respective Parliaments welcome.
I am grateful for the opportunity to initiate this short debate. I have tried to outline the enormous improvements in relations between our two countries, and explain why they are so important. I should like to pay a final, well deserved tribute to His Excellency the ambassador and all his colleagues at the embassy.

§ The Minister of State, Foreign and Commonwealth Office (Mr. Tony Lloyd)
I thank and congratulate my hon. Friend the Member for Tooting (Mr. Cox) on securing parliamentary time for this important debate on relations between the United Kingdom and Argentina, and the role of President Menem and his forthcoming visit.
It is appropriate that we are debating the subject today. I shall be visiting Buenos Aires in the next fortnight. However, the visit to Britain of President Menem later this year will be more important for our bilateral relations. As my hon. Friend has said, it is the first visit by an Argentine president for more than 30 years. That makes it an important landmark in relations between our countries.
The visit of President Menem sets the seal on the process, begun in 1989, of restoring the relationship between our two countries—a relationship that was broken by the Falklands war. The task of rebuilding the relationship has been made easier by our special ties of friendship, stretching back over two centuries, and the shared interests of the two countries. My hon. Friend mentioned Anglo-Argentine families who are proud of their British roots and of their Argentine status. We all applaud their role as the cement between our two countries. The warmth of our historical friendship emphasises how tragic the events of 1982 were.
It is appropriate that President Menem should be making his historic visit later this year. He began the process of reconciliation when he took power in 1989. One of his first acts as president was to lift the restrictions on trade with the United Kingdom. He deserves credit for recognising that our two countries have more to gain from working together than from maintaining the animosity that had been created by the war of 1982. He had to justify that brave decision to Argentine public opinion.
The president's decision led to the negotiations that created the so-called sovereignty umbrella—an arrangement by which we agreed to pursue issues of mutual interest without prejudicing either side's position on the sovereignty of the Falkland islands. In February 1990, less than a year after President Menem came to power, we reopened our embassies in our respective capitals. The relationship has gone from strength to strength ever since. I pay tribute to Ambassador Pfirter for his work on consolidating the relationship. He is well known to many hon. Members.
I shall talk in more detail later about the strength of our relationship, but first I must acknowledge the serious disagreement that remains in our relations with Argentina—over sovereignty over the Falklands. Argentina still disputes our claim. When we invited President Menem, we made it clear that the visit would not be an occasion to negotiate our sovereignty of the Falklands. Our position remains that we have no doubt about our sovereignty over the islands, and we remain fully committed to protecting the right of the Falkland islanders to determine their future.
There is no inconsistency between that and our real commitment to continue working with the Argentines on all other aspects of our relationship. There is no better example of that process than the progress on the sustainability of resources in the south Atlantic. We all gain from mutual co-operation. Co-operation in the south Atlantic fisheries commission has helped to conserve and manage important fish stocks.
1097 We have an agreement for co-operation on hydrocarbon exploration and exploitation that benefits all. parties. The meeting of the South-west Atlantic Hydrocarbons Commission in Buenos Aires next week will be an important opportunity for both sides to continue our work on the preparation of a licensing round on the special co-operation area, which would have been unimaginable not many years ago. However, we shall also register our concerns about the draft legislation before the Argentine Congress, which threatens our interests in the exploration for and possible exploitation of oil in the south Atlantic.
When I visited the Falkland islands earlier this year, I told members of the Legislative Council that everyone applauded their maturity and decency in allowing the next of kin of Argentines who died in the Falklands to visit the Argentine graves on the island. I visited the Argentine cemetery. I also took the opportunity to encourage the council and other islanders to consider broadening their range of contacts with Argentina. That process of reconciliation and the development of mutual understanding would be helped by more interaction between the two communities. That would not compromise the sovereignty of the Falklands.
There is much that is positive in Britain's relations with Argentina. The Argentine and British Governments intend to ensure that the president's visit is a celebration of all that is good in our relationship—and there is much to celebrate. Had my hon. Friend the Member for Tooting not mentioned democracy in Argentina, I would not have mentioned it—but not because democracy is not precious either in this country or in Argentina. Although I would never say that we take democracy for granted—anywhere—I would take for granted the fact that democracy in Argentina is well rooted and no longer subject to the questions of 15 years ago.
Argentina is committed to the achievement of genuine global free trade. A mark of its economic standing is its application to join the Organisation for Economic Co-operation and Development, which Britain fully supports. Reform has been just as evident in the political sphere. The anti-western, non-aligned rhetoric of the past has disappeared, and, for some years, Argentina has been playing an important role on the world stage.
I hope that hon. Members will have noticed that, when the Group of Eight Foreign Ministers recently invited a small group of other countries to join them to discuss efforts to co-ordinate the response to nuclear testing in India and Pakistan, Argentina was one of them. That was not an accident; it was recognition of the part that Argentina has played in helping to restrain the proliferation of nuclear weapons. Indeed, the rapprochement between Argentina and Brazil led the way to the abandonment of nuclear development on the Latin American continent, and made South America a genuine nuclear-free part of the world.
In British eyes, Argentina is now firmly established as a close and trusted ally in many of the global issues of importance today, including on Iraq. Argentina is a major contributor to United Nations peacekeeping operations. British troops and Argentine troops serve side by side in several locations. In fact, in Cyprus, British troops serve under an Argentine general, whose appointment we gladly supported. That speaks volumes for the distance that we have travelled together.
1098 I turn to trade and investment. My hon. Friend paid tribute to the efforts of business people of both countries in improving relationships, which I mirror. From virtually nothing in 1989, Argentina has become our second largest market in Latin America—ahead of Mexico and Chile. In 1997, it was one of our fastest growing markets anywhere in the world, taking £500 million-worth of British goods.
Along with Brazil, Uruguay and Paraguay, Argentina is a member of MERCOSUR, the common market of the southern cone, which is now the fourth largest trading bloc in the world. The export forum has identified it as one of the target areas for the UK. We have also been active in the European Union in promoting greater co-operation between our two regions.
British investment in financial and other services, as well as in manufacturing, has also been making impressive headway in Argentina. There is a long history of British companies investing in Argentina. People of my generation grew up with stories not only of British-led railway investment, but of the future of football being a product of it. Perhaps this year we have some cause to regret such investment. The long history of investment has recently been matched by spectacular change, and some significant newcomers.
It is difficult to give absolutely accurate figures for investment, but we estimate that, between 1990 and 1996, British investment in Argentina was worth between US$2 billion and US$3 billion, and that a further US$3 billion will be invested by the turn of the century.
The list of active players in the market reads like a "Who's Who" of British industry. My hon. Friend mentioned some significant names, and I shall mention some others. They include British Gas, the National Grid Company, Glaxo Wellcome, Reckitt and Colman, Cadbury Schweppes, Lloyds bank, which has invested in Argentina without a break since 1862, P and O, Pilkington, Imperial Chemical Industries, HSBC, Shell, United Utilities, Sun Alliance, Zeneca, Johnson Matthey, Rolls-Royce/Mersey Docks and Harbour Board. All those, and many others which have perhaps not had the same exposure, have seen the potential of the Argentine market and have moved in.
The climate for such impressive investment is an Argentine economy that, under the present Government, has conquered hyper-inflation and achieved significant levels of stability and growth in recent years. The House became aware of the tequila crisis of 1995, which moved south in Latin America, hitting the Argentine and other economies in the region very hard.
The speed of the recovery was impressive; the fact that mattered was not that the crisis had an impact, but that the economy was robust enough to withstand such a shock. Perhaps more significant, the lessons of that event have enabled the country so far to weather the storm of the Asian crisis with something to spare. That shows the strength of Argentina. It is worth noting that, since 1991, the Argentine economy has averaged growth of 6.1 per cent. against average inflation of under 1 per cent. since 1995, which must be some world record.
My hon. Friend mentioned the long list of official visitors we have received—and, indeed, those who have gone from Britain to Argentina. The list is impressive in its own right, and is significant testimony to the increasingly strong and vibrant relationship between our two nations and Governments. The Government hope— 1099 we speak for the House and the country—that the visit of President Menem will be a chance for us to take a major step forward in promoting the important relationship. We and the Argentine Government are hoping to agree on a range of specific areas in which we can work together to our mutual advantage. That is one of the great advantages of a presidential visit.
I turn, as my hon. Friend did, to the future. He is right to say that our relationship with Argentina is based strongly in the past; it has been strong for hundreds of years, but since the late 1980s, it has become increasingly powerful. The figures that he and I have cited show just how powerful that relationship is—in economic terms as well as in international co-operation and bilateral exchange. I echo several of my hon. Friend's points.
I may sound a little like the Argentine tourist board, but Argentina is a spectacularly beautiful country. I look forward to going there in a couple of weeks. Its natural resources are enormous. My hon. Friend is absolutely right to stress that, as a location for tourists, it offers great potential. In our ever smaller world, it is almost inconceivable that Europeans will not join the many north Americans who already travel there. I should say in passing, firmly putting my British hat on again, that we would welcome a significant increase in the number of Argentines who choose to visit Britain, which has many advantages too.

§ Mr. Andrew Mackinlay (Thurrock)
The flights are very expensive.

§ Mr. Lloyd
Although what my hon. Friend says is true, there has been significant progress on the issue of air routes. Frequency of air services, which encourages the necessary competition, and economies of scale will bring the prices down. We ought to see the benefit of cheaper air services as exchanges increase.
1100 Perhaps the most important comment that my hon. Friend the Member for Tooting made concerned young people. The relationship between the two countries is based not only on trade but on a firm commitment to shared values and culture.

§ Mr. Richard Allan (Sheffield, Hallam)
I am certainly very interested in the interaction between universities of both countries. Young people who study in another country gain a love for it that stays with them throughout their lives. I hope that the Minister confirms that the link between universities will be a significant item on the agenda for discussion with President Menem and his advisers later in the year.

§ Mr. Lloyd
The hon. Gentleman raises an important point. Given that Argentina's Foreign Minister has a distinguished academic record in the British university system, and continues to play an active role in that sphere, the exchange of students must be high on the agenda of us all. It is through such exchange that we embrace each other's values. We need to work together—country to country, people to people—to increase trade as well as understanding.
The Government believe very firmly that Britain and Argentina have, over the past nine years, found a way to build on the positive part of our relationship without letting our obvious differences intrude unnecessarily. We hope to continue that process; we will both work hard in that direction. We both have much to gain from it. The visit of President Menem in October will significantly enhance that process. As the architect of the reconciliation process that allowed us to embark on the revitalisation of our relationship, he will be a most welcome visitor.