§ 2. Mr. Win Griffiths (Bridgend)If she will make a statement about the development of anti-poverty programmes in poor countries arising from the availability of resources from international debt relief. [73830]
§ The Secretary of State for International Development (Clare Short)Debt relief provided under the heavily indebted poor countries initiative has substantially reduced the debt owed by poor countries. However, because only a small proportion of the debt was being serviced previously, there has been comparatively little effect on Government budgets—particularly on the ability to spend on anti-poverty programmes.
Faster and deeper debt relief is required to tackle poverty effectively. The Chancellor of the Exchequer and I have proposed increasing the level of debt cancellation to $50 billion by 2000 and ensuring that the money released from debt service payments is used for poverty reduction purposes. We will seek support for those proposals at the International Monetary Fund-World bank meeting in April and at the G8 summit in June.
§ Mr. GriffithsI thank my right hon. Friend for that very positive reply. In that connection, will it be possible to take on programmes such as the Uganda poverty action programme and give further concessions to heavily indebted countries that can show that 85 per cent. or more of their debt relief will be used for poverty reduction programmes? That would allow other targets, such as reducing absolute poverty by half and infant mortality by two-thirds, to be accomplished by 2015.
§ Clare ShortI absolutely share my hon. Friend's objective. Uganda was the first country to receive debt relief under the HIPC initiative and had a considerable write-down of debt, but because the formula is based on the ratio of export earnings to debt and because coffee prices fell, the country is no better off. Although the debt relief helps Uganda's commercial reputation, it has not helped the Government to spend on poverty. The review that we agreed with the IMF and the World bank will try to sharpen the connection to poverty programmes and provide deeper debt relief if there will be a benefit to those programmes, which is what my hon. Friend is asking.
§ Sir Sydney Chapman (Chipping Barnet)I very much commend and support the Government's initiatives, which follow those of the previous Government, in trying to tackle debt in the poorest countries. Will the right hon. Lady confirm that one problem is that much of the debt is serviced by financial institutions which, in turn, have creditors, and that that must be sorted out? Even if that problem is solved, it would, to a certain degree, dissuade creditors from supporting anti-poverty programmes in future.
§ Clare ShortThere are some 40 countries in the HIPC initiative for the very poorest countries. Their present debt is not commercial: if they ever had commercial debt, it has been written off because banks do not want to carry non-performing debt for a long time. Their debt includes debt to export credit agencies of Governments, and in countries other than our own, aid debt—we have already 349 written off all ours—and debt to the World bank and the IMF. In the past, the World bank and the IMF never wrote off debt; this is the first time, which is why they are determined—and we agree—that it should be done responsibly so that Governments do not take on new wasteful contracts and get into a mess again.
The Paris Club deals with the export credit debt, and has in the past agreed to write off up to 67 per cent. of that, often for commercial reasons so that new contracts can be made. Under HIPC, that write-off increases to 80 per cent. The hon. Gentleman's point is important because sometimes the aim of debt relief is to get new contracts. That will not help the poor. We want to manage debt relief so that it is conditional on Governments spending the proceeds on better programmes for the poor.
§ 3. Mr. Denis MacShane (Rotherham)If she will take steps to require that debt relief for developing countries is conditional on (a) respect for human rights, (b) promotion of democracy and (c) a reduction of expenditure on weapons. [73831]
§ The Secretary of State for International Development (Clare Short)Debt relief under the heavily indebted poor countries initiative is conditional on the countries adhering to a reform programme agreed with the International Monetary Fund. We have been working since May 1997 to ensure that IMF programmes in developing countries focus more clearly on poverty reduction and defence expenditure at an appropriate scale. The current review of HIPC, which we got agreed at the previous World bank and IMF meeting, encourages more respect for the human rights of the poor. Democratic and accountable government is essential for the promotion of development.
§ Mr. MacShaneI am grateful to the Secretary of State. She answered my question to my complete satisfaction, so with your permission, Madam Speaker, I shall sit down.
§ Mr. Gary Streeter (South-West Devon)Sadly, I cannot do the same, but I support the Secretary of State's recent comments on debt relief and congratulate her on those. Does she agree that Nigeria, which is home to one fifth of all black Africans, has a crippling debt burden of roughly $30 billion and has taken huge strides towards democracy in the past six months, is now a high priority for urgent and substantial debt relief by the donor community?
§ Clare ShortI agree with the hon. Gentleman that the changes in Nigeria are fantastically good news and will allow it to re-enter the democratic community. It faces very great problems. The growth of poverty means that Nigeria—which should, with all its oil wealth, be a wealthy country—probably has a GDP of only $200 a head, so it is a very poor country. It is massively indebted and does not even know at present how much its debt is. We are providing support to help Nigeria to work out how much debt it has. The whole international community will then have to try to help Nigeria to have good-quality Government and to squeeze corruption, which is terribly bad, out of the system. I agree with the hon. Gentleman that we have to help Nigeria, but we cannot provide unconditional debt relief. That must be part of the reform process that helps the poor and deals with corruption.
§ Mr. StreeterI agree with much of what the Secretary of State said, but may I urge her to go further? 350 If President-elect Obasanjo does commit himself to anti-corruption measures and good governance, does the Secretary of State agree that because of our historic links with Nigeria, we have a vital role to play in pressing the case for multilateral debt relief in the international community? Will she undertake to play a leadership role, so that when the new Government take over in May, 120 million Nigerians can be given a fresh start and a new chance?
§ Clare ShortI said that I agreed with the hon. Gentleman that we must help Nigeria, but it would not help the people of Nigeria if debt relief were given too easily, without the proper reforms and without dealing with corruption. The problem of corruption in Nigeria is very bad. It is entrenched throughout the system. We must help the best forces in Nigeria to reform the country so that it gets efficient governance. Debt relief will be part of that, but it must be conditional on progress in dealing with corruption.
§ Mr. Dennis Skinner (Bolsover)Has my right hon. Friend considered the problem that arose during the period of the Tory Government, when debt relief resulted in the top four clearing banks—NatWest, Lloyds, Barclays and the Midland—getting about £5 billion to set off against so-called irrecoverable debts? We all support the idea of debt relief. Can she do it without lining the pockets of those at the top four clearing banks?
§ Clare ShortMy hon. Friend makes his own point. I know that in the past he has spoken expertly on debt relief in the context of the commercial banks. The World bank and the IMF are public institutions, not private ones. Export credit guarantees are Government insurance for private sector contracts. Sometimes the private sector unwisely pushes contracts on Governments which they cannot afford, and the public sector ends up bailing out. When we deal with debt relief to get countries going again, we should look at what kind of projects are getting export credit guarantees, and make sure that things are done more sensibly.
§ Mr. Cynog Dafis (Ceredigion)The conditions that have been mentioned are important, but is it not also important that there should not be double standards? For example, is it not the case that the United Kingdom exports significant quantities of arms to Turkey, and that a large part of those arms are used in the terrible repression of the Kurds? Does not Turkey have an appalling record on human rights? Should not the standards that the Secretary of State mentioned apply equally everywhere, in developing as well as in developed countries?
§ Clare ShortWe do not have a development programme in Turkey, so I have no part in objecting to arms licences for Turkey. The hon. Gentleman may be right; he may be wrong. I do not know whether Britain is selling large-scale arms to Turkey. We need to get international agreement to more stringent rules for arms sales, and be much tougher on sales to developing countries that cannot afford large-scale arms purchases. I agree with the hon. Gentleman on that, but I am sorry, I have no detailed knowledge of Turkey.