HC Deb 13 November 2003 vol 413 cc405-7
8. Stephen Hesford (Wirral, West)

To ask the Chancellor of the Exchequer if he will make a statement on progress the G7 Finance Ministers are making in tackling world debt. [138331]

The Chancellor of the Exchequer (Mr. Gordon Brown)

Twenty-seven countries are receiving debt relief that will be worth $70 billion. Of the other 10 and more that are eligible, most are in conflict.

Stephen Hesford

Given the relative success of the debt relief talks, and the relative failure of the World Trade Organisation negotiations at Cancun, can my right hon. Friend see any possibility of convergence of the twin-track talks in order to benefit post-Cancun negotiations?

Mr. Brown

I am grateful to my hon. Friend, who I know takes an interest in these matters. He is absolutely right: the prospects of the developing countries depend not only on debt relief and adequate aid but on their ability to participate in the global economy. What comes out of the world trade talks is therefore crucial to their future. When we met at the International Monetary Fund and World Bank meetings in Dubai a few weeks ago, it was agreed that we should try to do everything that we could to remove the barriers to the resumption of trade talks. That will require Europe to make a move forward on the competition and investment clauses that were preventing agreement and progress. It will also require countries to look very carefully at their proposals on agriculture. I hope to meet the head of the WTO, Dr. Supachai, very soon to discuss what other things can be done by Governments in Europe and elsewhere to help to progress the talks forward, but I agree with my hon. Friend that we must ensure that they resume.

Rev. Martin Smyth (Belfast, South)

I welcome the Chancellor's response. Could he tell us to what extent some of the debt has not been dealt with because of the recalcitrance of the Governments in certain countries about coming up to standard? Does he agree that, at a time when many people live in poverty even in the developed countries, we should not forget that those in the developing countries are much worse off?

Mr. Brown

I am grateful to the hon. Gentleman, and I know how much he does in Africa, working with the churches to help countries there to solve some of the problems that are preventing them from delivering decent health and education services to their people. The main reason debt relief has not progressed beyond the 27 countries is that most of the countries that would be eligible are in conflict, about to come out of conflict, or have made a decision to come out of conflict but not yet achieved it. I would bring debt relief up to $100 billion, which was our target, but we cannot sustainably give debt relief at a time when we have no clue as to how those resources would be used.

If countries come out of conflict, we are prepared to work with them on a restructuring plan so that they can rebuild their infrastructure and, at the same time, get rid of their debts. Conflict is the major barrier to debt relief. Of course we require transparency, and corruption in countries that are eligible for debt relief is a major issue. That is why, at all the recent meetings of the World Bank and the IMF, the emphasis has been on developing countries pursuing an anti-corruption, pro-stability policy to enable them properly to participate in the world economy.

Mr. Kelvin Hopkins (Luton, North)

One way in which the developed world causes debt in the third world is by exporting heavily subsidised agricultural products, which devastates farming in those countries. Would it not be a good idea to stop exporting surpluses, start buying more of those countries' food, and begin to seek the abolition of the common agricultural policy?

Mr. Brown

Agricultural issues are complex, but the basic problem is that agricultural protectionism cannot continue if the countries of which my hon. Friend speaks are to develop. That is why it is incumbent on the European Union and the American Government to make progress by liberalising agriculture and removing what are, in effect, subsidies worth $350 billion—seven times the amount given to the poorest countries in development aid.

My hon. Friend is absolutely right. We need to push further in the agriculture talks. Agricultural protectionism serves the poorest countries badly, as well as being bad for the environment and bad in other ways. We also need to press on with the international finance facility plan to meet the millennium development goals. In return for countries' opening up to investment and pursuing stability policies, we must help them to deal with major health and education problems.