LATIN AMERICA AND THE UNITED KINGDOM

HL Deb 26 January 1972 vol 327 cc333-407

3.6 p.m.

EARL COWLEY rose to call attention to the opportunities for closer ties between the United Kingdom and the countries of Central and South America; and to move for Papers. The noble Earl said: My Lords, I should like first to thank my noble friend the Government Chief Whip for giving us the time to debate this subject, which I gather has not been debated in this House for a long time, if at all. It is a very important subject concerning 8 per cent. of the world's population and an area of the world nearly twice the size of Eastern and Western Europe. I am also pleased at the number of noble Lords who intend to speak this afternoon and that my noble friend Lady Northchurch and my noble friend Lord Vestey should have decided to make their maiden speeches on this subject.

When one looks at this country's interest in Latin America to-day it is difficult to conceive of the role Britain played in Central and South American countries a hundred years ago. In fact, Britain played a prominent part in the development of this area during the nineteenth century. This country was industrialising and needed primary products. Latin America could supply them—wheat and maize from Argentina, minerals from Chile and Mexico, rubber from Brazil and cotton from Peru. Following Britain's involvement in these countries' independence at the beginning of the last century, British technocrats and industrialists helped to set up their communications systems with the outside world; to construct railways, tramways, port and harbour facilities, and to expand their agriculture, especially in those countries from which we were drawing our primary products; namely, Argentina, Brazil, Chile, Mexico and Peru. So, by 1913, British investment in Central and South America formed about 20 per cent. of this country's total foreign investments abroad and about two-thirds of the total foreign investments in Latin American countries. But by the beginning of 1969 British investment in Latin America had fallen to about 3 per cent. of this country's total foreign investments abroad and about 4 per cent. of the total foreign investments in Latin American countries. Also our trade with Latin America accounted for some 10 per cent. of our total world trade; whereas to-day the figure is about 3½ per cent.

But between 1914 and 1950 the picture changed completely. The United States and Germany began to supplant Britain in Latin America as that area's main source of trade and investment. The two world wars and the economic crisis of the 1930s all played their part in destroying this country's position in Latin America. Our enthusiasm for that area of the world was further reduced by three factors. First, many investments had come to nothing; secondly, endless devaluations had meant that what had looked like profits had become very meagre when they had finally been valued; and, lastly, during the 1940s many investments that had clone well were negated by nationalism on poor or nil terms. It must be remembered that similar concerns were also being nationalised in this country; for example, the railways after the last war.

In some cases compensation was paid. Argentina, for example, paid £150 million from sterling credits in compensation for the British-owned railways, which is fortunate considering the lease was due to run out two years after nationalisation, when Argentina would have got the railways for nothing. By the 1950s, compared with what had had 50 years before, Britain had very little left in Latin America, except immense good will.

Although in the mid-'fifties Britain slowly began to look once again at the countries of Central and South America to see what financial opportunities existed, to date comparatively little has been done. The Latin America of to-day is not the same as 30 years ago. It is more developed, more intricate and subject to perpetual change. It is an area of the world where European concepts and ideas do not really apply. It is an area full of opportunities, provided that one studies the countries carefully and individually and is not taken in by superficial similarities. If one hopes to understand these countries, and to appreciate the full potential inherent in them, it is their differences that are important. The opportunities for this country have improved with the growing disillusionment in Latin America with the United States. It is said, my Lords, that Latin America is the graveyard of American foreign policy, a fact which the United States finally recognised after Nixon's disastrous tour of that area in 1958. President Kennedy tried to improve America's relationship with Latin America; for example, by the formation of the Alliance for Progress. But even this proved a failure, because it fell short of the aims of the Declaration to the Peoples of America, and the Charter of Punte del Este of 1961.

Latin American countries seem to resent the presence of the United States because they feel dominated and exploited by their Northern neighbour. The obvious preference that the United States has shown for Brazil over the other Latin American countries recently has not only further reduced the acceptance of the United States in the rest of Latin America, but also has increased the suspicion felt by the Spanish-speaking countries, especially Argentina, of their Portuguese-speaking neighbour. From Cuba to the Dominican crisis, to nationalisation of Standard Oil in Peru and the copper mines in Chile, America has become pre-occupied with the idea of possible Communist encroachment in her own private backyard. At this stage, my Lords, I should like to ask my noble friend Lord Eccles: to what extent do political considerations and the so-called Communist threat play a part in the formation of the Government's policy towards the countries of Central and South America? The net result of American foreign policy and President Nixon's recent economic measures towards Latin America is a group of countries looking to other areas of the world, including Britain, Japan and Western Europe. While trying to understand events in Latin America, the United States seems to have forgotten its own revolutionary heritage.

Despite the American Government's lack of success in this area of the world, Britain still has to compete with the 13,000 million dollars of American investment and the probability that within a few years Japan will be the second largest investor in these countries after the United States. As the countries of Latin America develop—for example, Brazil with its Proterra and Sudene schemes—so will their demand for British technology and machinery; the latter accounting for some 55 per cent. of Britain's exports to Latin America. But in order to take advantage of the opportunities open in Latin America, one must understand the recent developments in these countries as both their politics and also their economics are high key.

My Lords, it is necessary to look at each country from every aspect if this country and the country concerned are to benefit from each other. Brazil and Argentina are cases in point. Not long ago the City would not consider Brazil, but now they continually talk about the economic boom in that country. It is being acclaimed as the Latin American country of the future. Brazil is doing well and Britain can play a large part in the development of that country to each country's advantage. But, according to the Bazilian stock markets, the boom is settling down to a more realistic pace. Both West Germany and also Japan have invested large amounts in Brazil with reasonable success over the long term. It is a pity that Britain has arrived so late on the scene. But the question which has never been satisfactorily answered is, will the economic success continue when Brazil's technocratic Government relaxes its very tight control over the country and allows the whole population to take part in the running of the State?

On the other hand, not long ago Argentina was considered by the City to be a country for sound investment; but now it is being held up as an example of a country suffering from economic and political upheavals. At the moment Argentina is suffering from adverse balance of payments, inflation of 50 per cent., a former dictator living in Madrid doing his best to wreck any political solution and a President desperately trying to find an answer to what seems to be insoluble. I sincerely hope that President Lanusse finds a solution that will unite Argentina politically, and will include the 30 per cent. of the population which has been excluded for so long from political activities for historical reasons. However, there is a glimmer of hope, and one should not forget the country's basic inherent wealth in minerals and primary products.

Over the last few years Britain's balance of trade with Argentina has improved in our favour mainly because of that country's falling exports, especially of beef. This has been caused by falling beef production and rising domestic consumption. President Lanusse has tried to solve the country's economic problems by suspending imports for 90 days, banning the domestic sale of beef, devaluations, requesting a 1,000 million dollar loan and tax changes, but with little success. Perhaps the appointment of Carlos Brignone as President of the Central Bank might provide the answer, if only he is allowed to remain in office long enough, because the maxim "Too many cooks" et cetera seems to be rather applicable in Argentina at the present time.

If one hopes to understand the countries of Latin America of to-day, my Lords, one has to take account of the spread of economic nationalism in these countries; because if one does not then innumerable mistakes could be made. This nationalism has been felt mainly by foreign investments in key industries: the copper mines and banks in Chile, the meat packing business in Argentina and the oil companies in Venezuela, where the oil reversion law of last July, the raising of the oil prices and increased Governmental interference have all had the effect of reducing the enthusiasm which the oil companies feel for Venezuela. Every so often there are verbal outbursts against foreign companies and restrictive legislation is imposed; for example, the "Buy Argentine" law of January last year. At the moment Mexico feels protected against ideas current in South America by the countries in between, but there are signs that this may change.

It is said that Mexico's main problem is that it is so far from God and so close to the United States. But America's recent economic measures have encouraged Mexico to look elsewhere for its trade and investment to break its restrictive economic relations with the United States. Economic nationalism has, however, encouraged some countries to lay down guidelines for the treatment of foreign investment. Decision 24 of the Andean Pact in December, 1970, was the first attempt at formulating a comprehensive policy to rationalise foreign investment so that it can best be harnessed to the regional development policies of the countries concerned. These guidelines of the Andean Pact countries not only announced the time limits for foreign investment but also the percentages that must be owned by nationals of the member State. The effect of Decision 24 depends on its implementation by each member country which as yet has not been completed.

Because of past experience and the recent economic situation in this country, British investors have classified Latin America as a high risk area, demanding short-term investment with large returns. This attitude is causing mistrust and ill-will on both sides. In fact, my Lords, if these countries are studied carefully and properly, and the investment rules are followed, then Latin America is no more a high risk area than the majority of other parts of the world. It would be better to concentrate on joint ventures and long-term low-key investment.

After the Declaration of Buenos Aires in 1970, providing the institutional backing for a united position on the part of the Latin American countries in relation to the European Common Market, Argentina recently signed a non-preferential trade agreement with the E.E.C. Also Brazil, Uruguay and the Andean Pact have opened negotiations with the Community. Britain's trade and investments with Central and South America look rather small when compared with those of West Germany, France and Italy. However, it is likely that our trade and investments will increase after we have joined the E.E.C. The trade and investment structure set up by the West Germans—for example, the D.E.G. and the D.H.G.—show that private enthusiasm is no longer enough on its own, and can play a useful role only if it is solidly guided and encouraged by the State.

I should like to ask my noble friend Lord Drumalbyn whether the Government have studied the Community's and West Germany's trade and investment structures, and what parts, if any, do they feel are applicable in this country. On December 8 last year, at Canning House, Mr. Godber announced his trip to South America next month and the seminar on Britain and Latin America next May. I sincerely hope that these two events do not turn out like our trade exihibitions in Latin America—a big splash at the time and then no follow-up. I hope that the Government can assure your Lordships' House that Mr. Godber's obvious personal enthusiasm for Latin America is shared in full by the Government. Enthusiasm is a very good beginning, but what do the Government hope to gain from Mr. Godber's trip and the seminar? Furthermore, what are the Government's policies towards the countries of Central and South America, especially Argentina, the Andean countries, Brazil and Mexico? How do the Government review the spread of economic nationalism and the treatment of foreign investment in these countries? What improvements in Anglo Latin American trade do the Government think will be produced by the new British Export Board which the old B.N.E.C. could not produce? Lastly, and probably most important of all, what part do the Government think that Britain can play in the development, both economic and cultural, of the Latin-American countries?

Provided that Britain fully understands these countries and that there is mutual appreciation and respect for each other's aims and desires, then I fervently believe that the opportunities for closer links—economic, political and cultural—between this country and the Latin American countries of Central and South America are boundless. These countries are looking to Britain and Western Europe for increased trade and technical know-how so that their development may be speeded up. The opportunities are there. It would be regrettable for this country and Latin America if we passed these opportunities by. Due to the activities of the British Council, and the fact that in many of the countries English is taught as a second language, there is a better understanding of this country in Latin America, especially in Argentina, than there is of Latin America in this country. I believe that this is to our disadvantage and should be rectified. I am sorry, my Lords, for speaking for such a long time, but I feel that these countries will play an increasingly important role in world affairs and should not just be written off as an area of the world suffering from revolutions, guerrillas and inflation. I beg to move for Papers.

3.12 p.m.

LORD CHALFONT

My Lords, I am sure that I shall reflect the sentiments of your Lordships' House when I express thanks to the noble Earl for giving us the opportunity of this short debate this afternoon. He has talked—and I am sure we shall all talk a great deal this afternoon—about exports to Latin America. So far as the Argentine is concerned, at any rate, I think we can regard the noble Earl as a net importer, and he is to be congratulated on arranging for one of the most delightful imports in the long history of relations between Britain and Latin America. As I am speaking before the two maiden speakers, I can do no more than wish them well and congratulate them on choosing this most important debate in which to make their maiden speeches in your Lordships' House.

This is, I believe, a debate of great importance. When I had the good fortune to be the Minister of State in the Foreign and Commonwealth Office I was, ministerially speaking, responsible for our relations with Latin America, and one of the first things that I had to read when I took over those responsibilities was a report made by my right honourable friend Mr. Michael Stewart following a long tour which he had made of Latin America. In its tone and content it was notably like the kind of things that the noble Earl was saying in his opening speech this afternoon. He pointed out, in that report, made only a few months after the Labour Government came into office in 1964, the enormous importance of strengthening our political, economic and cultural links with Latin America.

I was fortunate enough to go as Minister in attendance with Her Majesty the Queen on the State Visit to Brazil and Chile; and some noble Lords may remember that I then went on by way of Montevideo and Argentina to the Falkland Islands. I recall while I was in Buenos Aires the immense courtesy with which I was received by the Foreign Minister of Argentina, even though at that time we were having some difficulty with them about the Falkland Islands. Their courtesy was such that while I was there they solved the problem of what to call those islands. We of course call them the Falkland Islands, and they call them the Malvinas. So that my feelings should not be hurt, and to preserve the proprieties, throughout my visit they were referred to consistently as the Falklinas, which seemed to me to be a very happy diplomatic touch. While I was in the Falkland Islands, however, an Argentine aircraft, piloted by some journalist, crash-landed on the island, creating a great stir: the Home Guard turned out, I think for the first time in 25 years, believing that the Falkland Islands were about to be bombed into submission. However, all that happened when a rather dazed pilot crawled out of the cockpit and was faced with a number of people with extremely old but fierce-looking rifles, was that they asked him what he had come for, and he said he had come for an interview with Lord Chalfont. He was duly given one, and went back in one of Her Majesty's ships to his own country.

This gives me an opportunity to do something which I should have liked to do before, and that is to pay a tribute to the crew of the naval vessel, H.M.S. "Endurance", which took me from Argentina to the Falkland Islands and back to the mainland again. As your Lordships will know, "Endurance" was the name of the ship in which that great explorer, the father of my noble friend Lord Shackleton, sailed—the original ship that was crushed in the ice. The present H.M.S. "Endurance", which is the Antarctic ice ship of the Royal Navy—and which was, incidentally, named by my noble friend's daughter—was in all respects a marvellous home for me and my team of advisers in the short time that we were travelling from Argentina to the Falkland Islands and back. I should like to pay this tribute—a belated one, but nevertheless a sincere one—to the efficiency, patience and courtesy of the officers and ratings of H.M.S. "Endurance".

I wonder if, before I move on from the Falkland Islands, I may ask the noble Lord, when he comes to reply to the debate, to confirm that the discussions and arrangements between this country and Argentina with regard to the long-term future of the Falkland Islands are progressing satisfactorily. I make no deeper request than that. I am aware that some of these matters are confidential, but it would be interesting to know whether things are progressing satisfactorily.

Later on in my time at the Foreign Office I was able to pay official visits to other countries in Central and South America—Mexico, Costa Rica, Nicaragua and Salvador—and one of the main impressions that I brought back (it was new to me, and I think may be new to a great number of people) is of the extraordinary diversity and variety of the countries of Latin America. There is a tendency sometimes, especially if one has not been able to visit Latin America, to think of it as one country. It is of course a sub-continent of enormous diversity in culture, political systems, language, scenery and the appearance and attitudes of its people: from the relics of the Inca civilisation in Peru, which until the sudden arrival of the Conquistadores was, I believe, one of the truly great civilisations of history, to the Aztec civilisation which is side by side now, in Mexico—one of the most dynamic countries in the world—with the kind of modern vista that one gets, for example, in a town like Guadalajara, which could teach us some lessons in urban planning. They are now beginning to build in Guadalajara an underground system not designed to serve the Guadalajarans of to-day but designed to serve the Guadalajarans of the 21st century, when they calculate that Guadalajara will be a city bigger than Greater London. That seems to me to be the sort of imaginative and vivid town planning that we in this country could well imitate.

Political systems of course vary from one side of the continent to the other. Brazil, as the noble Earl has reminded us, thinks it well to have, for the present at any rate, a military regime to manage the details and strategy of the great industrial and technical revolution through which it is passing, while on the other side of the continent, in Chile, there is the great experiment of the only democratically elected Marxist Government in the world—an experiment as to which one can only express the fervent hope that it will work out well for Chile. I recall when I was in Santiago attending a dinner at which Signor Allende, who is now the Marxist President in Chile, was present. His political beliefs did not allow him to wear a black tie, but he was seen after dinner to smoke quite the largest cigar that I have ever seen in my life. He was asked by an illustrious guest at the dinner how he reconciled smoking this plutocratic weed with his Communist ideals and he said, "It's quite simple, Sir: its a Cuban cigar."

It is difficult to say what lingers most in the memory of someone who has been fortunate enough. as I have, to tour most of the countries of Latin America: whether it is the breathtaking architecture of Brasilia, which is one of the greatest architectural experiments certainly that I have seen; whether it is the wilderness of the Mato Grosso, over which one can fly for hour after hour after hour and see nothing but a jungle canopy; the snow-covered volcanoes in the South of Chile; the incredible Museum of Modern Art in Mexico City, or the extraordinary grandeur and barranness of the Punta Arenas or the Tierra del Fuego. I think that for me, though perhaps not in itself a grand experience, the most memorable experience was to find on the coast of Argentina a community of Welsh people who were entirely bilingual, but curiously bilingual to a Welshman, because they spoke only Welsh and Spanish. I should have thought that here was a fruitful field for the Welsh Language Society to explore, and I offer it to them as a suggestion.

LORD DAVIES OF LEEK

My Lords, may I interrupt my noble friend? I should like to assure him that the Patagonian Welsh is some of the most beautiful Welsh that is spoken in the world, and when last year or the year before they had a celebration at Bangor University the beauty of the philology of the Welsh language was noted. I am glad that my noble friend has brought this to the notice of the House.

LORD CHALFONT

My Lords, I am grateful to my noble friend for his not unexpected intervention. I was not of course referring to the purity of the Welsh that is spoken by the Patagonians, but simply to the fact that I imagined the Welsh Language Society would object to their speaking Spanish.

One characteristic that I found throughout the whole of Latin America was the enormous courtesy and kindness of the people of every country that I visited and the immense fund of goodwill that exists towards this country. It was really memorable that in every country to which one went there seemed to be a special regard, warmth and affection for the British. Even during the times when we were having our difficulties with Argentina over the Falkland Islands and later over meat exports, there was a fund of warmth and goodwill towards the people of this country that had to be experienced to be believed. This is reflected, I think, in the diplomatic representation of the Latin American countries in London. I believe that as a whole the Diplomatic Corps in London is one of great distinction, and in my experience few are more distinguished or more able than the diplomats who represent the countries of Latin America. Perhaps it might be appropriate at this moment to express—and I am sure I do so on behalf of your Lordships' House—our sympathy towards the Corps on the recent sad and untimely death of the Colombian Ambassador.

This friendship, as the noble Earl has told us, dates back to the days when British trade with Latin America was extensive and our links close. One can still see relics of this in visiting South America in the railways of Argentina, for example; but perhaps for me, at any rate, this is even more vividly illustrated by the Chilean Navy, which I visited in Valparaiso, and found it very difficult to believe that I was not in Greenwich. The naval officers and ratings looked far more like those of the Royal Navy than the Royal Navy looks like itself. This, of course, is a relic of the days when we trained the Chilean Navy; and it is still noticeable that in their naval colleges, messes and wardrooms they still follow the customs and habits and carry out the drills they were originally taught by the Royal Navy. Unfortunately, as the noble Earl has said, they are now to a very great extent the only relics of our links with Latin America to be seen. As he also pointed out, there are various reasons for this—some good, some bad. The pattern of our trade and political influence in the world has changed. There was a move away from Latin America, for various reasons, towards Africa and South-East Asia, and our trade and political links with the countries of South and Central America stretched and snapped. In our place, as the noble Earl said, have come others who are only too willing to exploit the rich and growing economic potential of the sub-continent. The Americans, the Japanese and the Germans are there in strength, exploiting this enormously rich subcontinent, with all its vast potential for international growth.

I believe, and I think the noble Earl would agree with me, that trade is the important aspect of our relations with Latin America. There is no need, nor would it be appropriate, to have any kind of political initiative there. It is not by any stretch of imagination our sphere of influence and, as the noble Earl has pointed out, the United States of America, which believed that it was within its sphere of influence, has suffered some humiliating reverses in its relations with the Latin American countries. What we need is not so much to improve our political attitudes towards the countries of Latin America—our friendship with most of them is strong—but to realise this enormous potential for economic growth. It really is necessary to study the economic potentials of countries like Brazil and Argentina to realise that at any time now they are going to take off, provided things go well for them, into an area of growth and prosperity which I believe will astonish the rest of the world. It is an area of enormous vigour, enterprise and imagination. It is, of course, the Latin American Free Trade Area that has set the pattern for free trade associations throughout the world. It is the only area in the world which has been able to get anywhere near signing a nuclear-free zone agreement. This is thanks largely to the tireless work of that distinguished Mexican diplomat, Ambassador Garcia Robles. They have come nearer than anyone else in the world to banishing from their lives the threat of nuclear weapons, and I believe that this is another example which the rest of us might follow and study with some profit.

These are not the volatile, politically unstable countries of common legend and myth. Many of them have a political stability which could serve as a model for some countries much nearer home. These are not the professional revolutionaries of the cinema and television films. These are countries with, for the most part, stable Governments, with imaginative plans for the future, and with this enormous potential—and I come back to it again and again—for growth, a potential which I believe we shall ignore at our peril. I know that the Foreign and Commonwealth Office is well aware of this, and indeed the American department in the Office is staffed by some of its ablest and most distinguished diplomats. But I do not think that it is enough for either Foreign Offices or for Governments to act in this matter, although without the impetus given by Governments and ambassadors nothing will succeed as easily. What is really needed is for the businessmen, exporters and industrialists of this country to begin to realise—some of them have, but more need to do so—the enormous potential and wealth that lies in Latin America ready to be exploited by people of vision and imagination.

It is, as the noble Earl said, the question of follow-up that is so important. I have seen, as he has, trade exhibitions and State visits which have taken place in an atmosphere of enormous excitement and good will, to be followed six months or a year later by apathy and disillusionment on the part of the countries of Latin America because the trade exhibitions and State visits have not been followed up in the vigorous way for which they had reason to hope. I hope that when the noble Lord comes to reply he can confirm that it is still the policy of Her Majesty's Government to encourage, so far as it lies in their power, trade with the countries of Latin America. I should also like to put a specific question to him about the policy of the B.B.C. towards Latin America. I believe that I am right in saying that in the retrenchment that took place recently the B.B.C. cut very severely—if it did not discontinue altogether—certain parts of its Latin American service. I believe that there is a great deal to be said for having another look at that question in the new circumstances; and I wonder whether the noble Lord can say that the Government will bear this in mind.

A great deal has happened not only since we were last in Latin America in a trade and political sense, but since we moved out to South-East Asia and Africa. We have now started, for good or ill, to move back again. We have come away from many of our commitments East of Suez; we have dismantled an Empire and lost a good deal of the trade that went with it. This may be an opportunity to re-examine our trade and foreign policy towards the countries of South America and Central America. There is a great opportunity here, and that is why I am particularly grateful to the noble Earl for giving us the opportunity to have this short debate. I do not believe that there is much difference between us on this side of the House and those on the Benches opposite. I believe that we all want to see our friends in Latin America brought closer to us with closer trade ties and, if possible, closer cultural ties and ties of friendship. When we move into the Common Market it will be an opportunity for us to persuade our partners there also—some of them do not need much persuading—to make Latin America a target for European trade as well as for British trade. The Germans, as I have said, are already there in strength.

This is a great opportunity; it needs boldness and imagination on the part of Governments, on the part of diplomats and on the part of businessmen and industrialists. I believe that the people of Latin America and the Governments of the countries of Latin America are waiting for some sign from us. I believe that they are slightly disenchanted at our failure to follow up recent initiatives, and I hope that what is said in your Lordship's House this afternoon will come to the notice of enough people to mount the kind of initiative that I believe is needed in the policy of this country towards the countries of Latin. America.

3.44 p.m.

THE PAYMASTER-GENERAL (VISCOUNT ECCLES)

My Lords, in the absence of my noble friend Lord Lothian, I have been asked to reply. I think I carry the House with me when I say that all of us—Hcr Majesty's Government in particular—have every reason to thank my noble friend for his initiative in introducing this debate on Latin America. The timing is most important. I would congratulate him warmly on the well informed and well chosen speech which he has made. I should also like to thank, on behalf of the Government, the noble Lord, Lord Chalfont. The speech he made will do an immense amount of good to Anglo Latin American relations and I hope it will be widely noted outside this House.

When I heard that my noble friend was going to raise this subject I remembered an article in The Times when, in 1962, we were setting up the Parry Committee on Latin American studies. The Times commentator then wrote: Latin America offers everything that should be a challenge to keen-minded young men and women. It would be reasonable to expect that this complex of developing nations would act as a magnet on British youth. But it cannot do so until facilities for understanding what is involved are much improved. Here we are, ten years later, and my noble friend has described afresh the magnet and the need to understand what is happening in this great and various group of countries. The Government are fully in agreement on both these points. We are convinced that the time is right to revive and strengthen our traditional ties with the 22 Spanish and Portuguese speaking nations of Latin America. My noble friend, in his admirable speech, showed the House that there is nothing staid or stagnant throughout the vast area that we are considering this afternoon. Everything is on the move: unexpected, exciting, puzzling things are always likely to happen in these countries where, perhaps more than anywhere else in the world, personalities make history and strong men overshadow statistics and measurable trends.

This recurring element of drama in South America is easily accounted for: most of the Spanish conquistadores went to America to make their fortunes. These brave and often ruthless men were in a hurry, and the tradition which they established of taking an opportunity whenever it occurred has never been lost. I was always told that after the colonies gained their independence, if you wanted to take a leading part in the government of your country you had either to be a doctor of law or a colonel—either a cap-and-gown man or a cape-and-sword man. In 1972 we find many colourful figures of outstanding ability in control of affairs in these various countries. There can be no substitute for getting to know them personally, going to visit them and inviting them to come and see us here. In the past 18 months five of Her Majesty's Ministers have been to Latin America. My right honourable friend, Mr. Godber, as my noble friend remarked, will leave next month for an extended tour of Peru. Chile, Argentina and Brazil. He intends to discuss all matters of common interest, and naturally the trade between us and the countries which the Minister of State is going to visit will be high on his agenda. Trade in both directions has been growing and, given suitable assurances, the opportunities for investment in long-term projects are many and very attractive to us. I am going to leave the questions of commerce and finance to my noble friend Lord Drumalbyn, who is speaking later in the debate.

May I return to the opening speech. My noble friend gave us an account of the marked fluctuations in the interest taken by Britain in the fortunes of Latin America. I agree with him and with the noble Lord, Lord Chalfont, that there is no denying the prolonged and depressing decline in our influence during the last fifty years, but I would remind them that, in spite of all the damage which preoccupation with Asia and Africa and two world wars did to our connections with the countries of Latin America, the foundations of our friendships with them are still firm and, in a remarkable way, which I will try to explain, are being brought to life again by contemporary events.

We are at this moment in the middle of a short span of years during which the Spanish-speaking nations and Brazil are celebrating their independence, gained in the same span of years 150 years ago. The events of those long-drawn-out, desperate civil wars are therefore very much in the news, and much is being said and written about the part which our ancestors played in securing the final victories of the patriot forces. When the colonists rose in arms against their European masters they were incredibly weak in organisation and equipment. They had very few experienced staff officers to plan the campaigns against the regular Spanish troops; they had no Navy, no cannon to mount on any ships which they could lay their hands on; they had no means of manufacturing any but the simplest of weapons of war for their land forces; they had no money to buy munitions from abroad, and if they had had any money it would have been useless unless the sea routes had been kept open for ships entering the few ports under their control.

The British supplied the officers to stiffen the patriot commands: thousands of British soldiers and sailors crossed the Atlantic and fought, and many of them died, for the cause of independence. British merchants financed the supply of arms, and the Royal Navy not only kept the seas open but in one way or another rendered invaluable assistance to Bolivar, San Martin and the other insurgent leaders. I am sorry that my noble friend Lord Dundonald is not taking part in this debate, because it was his ancestor who changed the whole course of the war on the West coast of Chile and Peru. The Royal Navy also played a crucial part in the history of Brazil. One stormy day in November, 1807, the wind, which had been blowing a gale through the Atlantic, suddenly dropped and enabled Admiral Sir Sidney Smith, under the eyes of Napoleon's Army as they entered Lisbon, to set sail up the Tagus with the Portuguese royal family in his care and to carry them safely to Brazil. Thus, the continuity of the history of Brazil under Portuguese influence was assured. It is noteworthy that the Royal Navy not only took an Emperor to Rio; it took a printing press, the first printing press—

LORD DAVIES OF LEEK

That was dangerous!

VISCOUNT ECCLES

—and then it became a natural development. In 1822 Brazil declared her indepenedenece of Europe and I do not think it could have happened as it did without Admiral Smith's squadron and their successful mission in carrying the royal family and the printing press to the largest and wealthiest country in South America.

Brazil has given the world a succession of painters, musicians and, above all, architects of which any country could be proud. It may be that the ever-bubbling vitality of the Brazilians is due in part to the multiracial policies which they have so happily pursued. I have dwelt on these old ties because those whom we helped to win their freedom 150 years ago are again anxious about their independence, and this time from the financial, technological and cultural pressures exerted upon them by the great Powers to the North and the East of South America. These pressures, whether they come from the United States, Soviet Russia, Japan, and perhaps in the future China, provoke, as one would expect, a counter-blast of nationalism. But they are also creating a mood in which the minds of many Latin Americans are turning to their oldest and best friend.

I must digress for just one moment to give your Lordships a piece of good news. In the heroic struggle for independence the greatest leader to appear on the battle field or in the council chamber was Simon Bolivar. At the age of 27, this extraordinary man came to London and asked for our help, and in the long years before his victory was complete he received it in many invaluable ways. Bolivar never failed to pay public tribute to the British who advised him and fought alongside his own troops. It is surely time that we should pay our tribute to him. We have had an offer from the Bavarian group of countries to erect a statue to the Liberator in London; and I am very happy to say that my noble friend the Duke of Westminster has generously made available a most suitable site in Belgrave Square.

My noble friend Lord Cowley and also the noble Lord, Lord Chalfont, warned us against lumping all the Latin American countries together. Indeed, it is true that they all have their distinct and important differences. I was glad that my noble friend spoke so warmly of Argentina, a great country with which the British connection has been very close; and he has done all he can to make it closer. But still I feel that if we are to fire the imagination of our own young people, who until recently have had so little encouragement to learn about Latin America, we must give them a few basic facts about the whole area from Mexico to Tierra del Fuego. In size, Latin America is two and a half times Europe, but it is population and resources that count. In population the comparison between Latin America and the whole Continent of Africa is interesting. The population of Africa to-day is 345 million and the number is expected to grow to a little over 500 million by the year 2000. But in Latin America, while there are only 260 million to-day, the population is expected to reach 425 million by the year 1985 —only 13 years from now—and by the end of this century to have out-distanced the whole of Africa by some 200 million: the current estimate is 800 million. It is the rate of increase in the population of Latin America which is so astonishing. Already, if we take all the 22 countries together, we find that half the population is aged under 20, and in Brazil half the population is under 15. I ask your Lordships to imagine what our situation would be if every other person in this country were a child who had, by law, to go to school to-morrow morning. This is the situation in Brazil.

Fortunately, in Latin America the rate of increase in manufactures and in basic services such as roads and electricity is also exceptionally high. In 1970 it was between 8 per cent. and 9 per cent., and it is now well established that the untapped natural resources of the 8½ million square miles are prodigious and could support a very large population. But then comes the problem: how to absorb into satisfying jobs the millions upon millions of young people who in a very few years will themselves be greatly increasing the population. How are these countries to make sufficiently spectacular advances in both the economic and the social fields without impairing their national independence or risking violent revolutionary experiments that, on the evidence of history, are more likely to dislocate than to strengthen the fragile structure on which their economic development depends? This is the background against which we are trying to improve our relations with Latin America.

When I was there recently I found that many of the leaders in politics, business and the Roman Catholic Church were profoundly anxious about the enormous preponderance of young people, combined with the vast capital requirements to keep the standard of life moving ahead of the increase in population. I admired very much the frankness with which these men spoke of the explosive situations in their various countries. None of them wanted to contract out; none of them wanted to back away from the technological revolution. But they did want co-operation with friends who could help them, not only with money and goods but also with ideas and expert advice. Some of them were for going ahead at any cost—any cost, in blood and so on. Others preferred a much more cautious attitude, and it was this clash of views that leads me to say a word about the influence of the Roman Catholic Church, which has always been of the greatest importance in the countries whose future we are considering this afternoon.

We too easily believe that the influence of the Church is conspicuously and consistently against reform. It is of course true that for long periods in many of these countries the hierarchy—but never all the priests—have been doggedly behind the status quo. But from the very earliest days of the Spanish Conquest individual bishops, like Bartolomé de las Casas, priests and missionaries have been found taking a stand against the civil authorities and demanding a better life for the underprivileged. Today there are divisive, agonising issues, like birth control and whether or not violence is justified to secure social change. In countries such as Brazil and Argentina the hierarchy, as well as the priests, are now openly split. In Chile the Church has for many years been in favour of change. It has pioneered agrarian reforms, and only recently the Archbishop of Santiago has come out in support of the policies of President Allende.

Therefore when my noble friend asks me about the attitude of Her Majesty's Government towards the threat of revolution in South America I have first to say that the political development of these various States is entirely their own concern: we are not a foreign country that goes there with political ideas, as the noble Lord, Lord Chalfont, has said very well. But secondly I say to my noble friend who introduced the debate that there are strong forces in the Roman Catholic Church which are both in favour of reform and against the use of violence, and we must hope that those forces will prevail.

When I was in Venezuela last summer I was struck by the emphasis which Ministers laid on collaboration with us in cultural and educational development. It appeared to me that the problems they had to deal with were not unlike our own, except in scale. How could they provide worthwhile employment and a satisfactory life for millions of school-leavers when machines are replacing men at an ever increasing rate? One solves nothing by taking the means of production into public ownership, as Castro has demonstrated. If all one can do is to put a nominee in charge of a sugar plantation, how many more jobs are created? I was often asked by South Americans how we were tackling the same problems and to what extent we thought better cultural opportunities should be part of an employment policy. I said that I should welcome a dialogue on these questions, but that first we in Britain must learn much more about the actual situation in the various countries of Latin America.

We have already made quite a good beginning. The Parry Report on Latin American studies was published in 1964 and as a result five centres for these studies were established: in Cambridge, Glasgow, Liverpool, London and Oxford. Their work is mainly postgraduate and all five centres are flourishing. My noble friend Lord Redcliffe-Maud had hoped to take part in this debate, when he would have called attention to the widespread interest in the centre at St. Anthony's House, at Oxford. He told me that he would have asked for enough money to be made available for a vigorous expansion in all the five centres in the next quinquennium. The money so far granted has been well spent, and I should like to pay my own tribute to the work of Professor Robin Humphreys at the London centre. Other universities have also extended their courses in Latin American studies, notably Essex, St. Andrew's and Sussex. In my experience one of the most serious deficiencies has been the unsatisfactory level of our collections of books and printed material relating to the part of the world that we are discussing. Even the British Museum Library is no exception. Recently, with the help of Professor Livermore, steps have been taken to remedy these defects, but there remain many gaps and some awkward difficulties in getting hold of new publications, even if the money is available. But, my Lords, this is not an occasion on which to ride one of my hobbyhorses.

Your Lordships will wish me to pay a special tribute to the work of Canning House, where the Library has been admirably reconstructed and enlarged. Canning House owes a great debt to the late Lord Davidson and to my noble friend Lady Northchurch, who we are so glad to hear is to make her maiden speech this afternoon. Lord and Lady Davidson together nursed it through its early stages until it has become now, under the vigorous and jovial chairmanship of my noble friend Lord Erroll, a splendid meeting place for British and Latin American friends to talk over their mutual problems.

May I turn now to the British Council? I have seen for myself, in Mexico, Brazil and Venezuela, the excellent work which the Council does, and no doubt that is matched in the other Latin American countries. In all this area the Council's budgets are very small in relation to the scope of its activities, which are in ever-increasing demand. The Council often supports institutions or other locally sponsored organisations in order to extend the opportunities for reading, learning and teaching English. As your Lordships would expect, all the up-and-coming young Latin Americans want to learn English because it is the world language of science, trade and holidays abroad; and for reasons which your Lordships will readily understand, the people in Latin America much prefer to learn our English to any other brand of the language.

Today, helped by us in various ways, 64,000 Latin Americans are learning our English in 65 institutes or societies. You might think that a large figure, but in fact it is tiny when measured against the demand. If we could do more it would be very widely appreciated. We are already collaborating with the education authorities in several countries. We have sent them expert advisers in education and science: 128 British teachers are in posts in Latin American universities, schools and similar institutions. Here at home we give grants for Latin American postgraduates to continue their studies or undertake research, and I am informed that the number of those who want to come very greatly exceeds the number of places available. The noble Lord, Lord Chalfont, mentioned the B.B.C., and I am sure that it is a very important service. I understand that the Latin American Overseas Service has been substantially maintained. I will convey to my right honourable friend what the noble Lord said.

Next May Her Majesty's Government are sponsoring a major seminar at Lancaster House on Britain and Latin America. This project will enable our businessmen and bankers to discuss with distinguished guests from Latin America the many far-reaching programmes of development that are already in contemplation. We shall have the great advantage of the presence at the seminar of Senor Galo Plaza, the Secretary-General of the Organisation of American States, and Senor Ortiz Mena, President of the Inter-American Development Bank, and of other leading personalities. My right honourable friends Mr. Godber and Mr. Noble are taking a close personal interest in this exercise, which we believe will strengthen greater understanding between Latin America and the United Kingdom. If any of your Lordships can help us at this time, you would be very welcome to take part in some of the meetings.

Your Lordships will be glad to know that our political relations with the countries of Latin America are generally most cordial and there are remarkably few points of difference. I must, however, refer briefly to the Guyana-Venezuela frontier dispute, and as the noble Lord, Lord Chalfont, raised it, also to the Falkland Islands. Happily, the frontier dispute was set aside by mutual agreement, and in reaching that very welcome result the United Kingdom participated as the former administering Power. We can now look forward to Guyana playing a full part in American institutions and Venezuela doing the same in those of the Caribbean.

Our differences with Argentina on the sovereignty of the Falkland Islands remain. In whatever way the differences may one day be resolved, our first concern is that it must be done in accordance with the wishes of the Islanders. Meanwhile, in full consultation with the Islanders, and without prejudice to the question of sovereignty, the Argentine Government and ourselves have made arrangements for modern communications between the Islands, Argentina and the world beyond, both by air and sea. These arrangements when completed will make a material contribution to the welfare of the Island community. The talks about the air and sea communications have been conducted in London and Buenos Aires in the best tradition of Anglo-Argentine friendship, and I am sure that Lord Chalfont's visit to Buenos Aires did a lot to pave the way. Now we are looking forward to a third round to be held in Stanley and we very much hope that holding the talks there will contribute to the process of greater mutual understanding between the inhabitants of the Islands and their Argentine neighbours.

Finally, the Latin American countries are watching what we are doing in Europe. They cut their political ties with the old Continent 150 years ago, and since then they have made immense progress in wealth and population. But they are still politically as fragmented as it suited the Spanish monarchy to fragment them for the purpose of colonial rule. Whether the resulting jig-saw puzzle we see on the map is a good or bad thing is entirely for them to say. But we do know that to-day they are following with interest the construction of the European Community. Those of their leaders with whom I had talks last year were emphatic in their desire to see Britain become a member of the Community. As a matter of fact, if I had not already been a dyed-in-the-wool Marketeer they would have converted me, and this for three reasons. First, they want the Continent from which they came to take its place in the front rank of the world Super-Powers. Secondly, and very genuinely, they want the friend who helped them to secure their independence to have a voice in the Councils of Europe. And thirdly, they feel the need themselves to draw closer together in their immense developing Continent, which presents such a tempting area for the infiltration of ideas and systems incompatible with their historic traditions. They are wondering whether, with us as a member, the European Community will give them the example they are looking for.

My Lords, I hope I have said enough both to show that we have very special reasons to get better acquainted with the countries of Latin America, and also to secure your Lordship's approval for Her Majesty's Government's firm intention to open a new chapter in our relations with the fastest growing area in the world.

4.18 p.m.

BARONESS NORTHCHURCH

My Lords, may I claim your Lordships' specially kind indulgence, for I have to admit that although I was a Member of the other place for 22 years and have sat in your Lordships' House for a considerable period I have not spoken here before. As I think many of your Lordships know, my husband was ill for a long time. I did not often leave him, and therefore I was unable to take part in many of the activities in this House. His interests were many, as your Lordships know, but I do not think I am exaggerating when I claim that the interests and problems of the countries of South America were in his opinion of immense importance, and I know that he would have wished me to speak in this debate. We owe our gratitude to the noble Earl, Lord Cowley, for instigating it, and for his speech, to which we have listened with very great interest and with which I am sure most of us are in complete agreement. I understand, and am glad to hear, that in May a seminar will be held at Lancaster House and it is vital that real efforts should be made to follow this up.

May I for a few moments strike a personal note? We were married in 1919 and it was as long ago as 1920 that I was taken out by my husband for my first visit to the Argentine. His grandfather was one of those stalwart Scotsmen who have played so great a part on behalf of our country in different parts of the world. He went out to the Argentine as early as 1827 and, although he returned home on visits and sent his three sons back to school and college, he made his home there. I shall never forget that first visit, and how impressed I was by the welcome we received from the Spanish and English-speaking communities, and the friends that we made on that occasion are still, I am glad to say, our friends to-day. Nothing ever gave my husband greater happiness and pleasure than attending the Scottish Church and being invited to present the prizes at the great Scottish School, knowing that his grandfather had been one of the very first to help to start both the church and the school in Buenos Aires.

Later we both visited on more than one occasion most of the countries of South America. But it was in 1942, at the very worst period of the war, that the Government asked my husband to go out to South America on their behalf and to visit as many of the countries as he could. There was great need of encouragement in those places. The people—our own people and those who were there —were being influenced by enemy propaganda, and it was felt that if my husband could tour those places and wave the flag it would help. He had a most fascinating and interesting tour. I do not mind saying that I was extraordinarily thankful to see him home again because it was not a very pleasant voyage across the South Atlantic in 1942. I remember well that when he got back he said to me, "One thing I must do as soon as possible is to build up some centre in London where representatives of Latin American countries and we can meet and discuss our mutual problems and build up again our trade and good relations."

The creation of the Hispanic and Luso Brazilian Councils at Canning House dates back to 1943. With no Government help, but thanks to the enthusiasm of his friends and those who were really interested in South America, after the end of the war a house was taken in Upper Berkeley Street, and later the centre moved to 2 Belgrave Square, where it still carries on. How well I remember one of the first dinners that we held there just after 1945, to which we invited the then new Foreign Secretary, Ernest Bevin, and Mrs. Bevin, as she then was. Mr. Bevin sat next to me and he was fascinated to hear all about South America. He asked me all sorts of questions, and in reply I told him as much as I could. He said to me, "You know, I am very new to all this. I don't know much about South America. I don't know much about the export trade at present. In fact, I have got a lot to learn". Then he turned and looked at me and said, But if your John thinks I can help him, I will help him". I always remember him saying that. He was a great man, and he did help in every way possible while he was Foreign Secretary.

During the long period of reconstruction of British industry after 1945, export markets in the Commonwealth and in the U.S.A. were given priority, as I think has already been said this afternoon. Interest in Latin America was really only maintained by a small but dedicated group of people, who could see that this fast-developing continent would become of increasing interest and importance in the world. The part played by Canning House as a meeting place for interests in Latin America—social, educational and economic—was vital in maintaining interest and knowledge of that part of the world at a time when Government interest was at its lowest. The valuable work done by the Latin American Committee of the British Export Council—particularly since the first major trade exhibition which it mounted in Mexico in 1966—has resulted in steadily climbing graphs of British exports to many of the countries of Latin America. Export figures for the first nine months of 1971, compared with the same period of 1970, show increases in Argentina, Brazil, Chile, Colombia, Peru, Uruguay and Venezuela. Overall exports to the LAFTA countries in this period rose from £211.8 million to £249.5 million, roughly 18 per cent.

While export promotion to the Latin American area will now be taken on by the British Export Board, there is a very real need to recognise that two-way trade is essential if export growth is to be maintained, and an even greater need to improve real understanding and communication between the United Kingdom and the Spanish and Portuguese-speaking countries of Latin America. The contribution of centres such as Canning House is improving this understanding and is vitally important, and we are glad to see that machinery has been set up in the Economic Affairs Committee at Canning House to take over and develop many of the personal contacts and the goodwill built up by members of the former British National Export Council/Latin American Committee. Details of this were given in the Press at the end of December, and the Department of Trade and Industry Journal also published an article recently. It is essential, as has already been stressed this afternoon, that the Government should continue to improve the close working relationship between Government Departments and private section organisations, so that the follow-up is both publicly and privately supported.

May I thank the noble Lord, Lord Chalfont, for so very kindly giving me his good wishes before I spoke and giving me so much encouragement. May I also thank the noble Viscount, Lord Eccles, for his kind reference to my husband and to Canning House.

4.27 p.m.

LORD GORE-BOOTH

My Lords, it is a very great pleasure and privilege to rise in this debate immediately after the noble Baroness, Lady Northchurch. I think that all your Lordships will feel that her affectionate and admiring tribute to her husband was entirely appropriate. We have admired both Lord and Lady Davidson for so many years as representing all that is best in the handling of relations between Britain and Latin America. We welcome her most warmly, and even if we do not often have debates on Latin America, we hope that we shall hear from her both when we do and on many other occasions as well. May I also give a welcome to the noble Lord who will speak after me in a maiden speech, and say, with an allusion to his identity which I hope he will not feel to be ill-phrased, that it is a great privilege for me to be in this sandwich position.

I should also like to thank the noble Earl, Lord Cowley, very warmly for introducing this debate. If I may say so, it seemed to me that he said in an extremely short time almost all that is essential about Latin America. I congratulate him on a most remarkable performance in that respect.

I have been bold enough to rise in this debate not because I am an expert in this matter, but I did have the interesting experience of a tour for a month in Latin America in 1968, when I was still in the Foreign Office. In that period I was able to make a visit at least in a little depth to ten countries, and to meet the British representatives from all the other Republics in the hemisphere. That impels me at once to say that, as the noble Earl, Lord Cowley, and the noble Lord, Lord Chalfont, have said, the important thing is to start right away by recognising the diversity in unity of the sub-continent. Every time one got out of the aeroplane the polite and hospitable protocol officer would say, "Where have you come from?" One said "Argentina", or "Peru" or wherever it was, and he would say, "Ah! we are different". This is something quite real, and something we must always remember. I think your Lordships will also have welcomed very much the speeches of the noble Lord, Lord Chalfont, and the noble Viscount, Lord Eccles. I would only add to the list of talents which the noble Viscount mentioned as coming particularly from Brazil, "footballers".

I am in a slightly difficult position, because in this debate, this "think-in", rather than controversy, which we are having in your Lordships' House, many of the things that needed to be said have already been extremely well said. If what I have to say is somewhat "a thing of shreds and patches", I hope that your Lordships will forgive me. But I should like to try to underline a few of the points that have been made, and perhaps try to emphasise some of the things that we as a country need to do, it seems to me, in order to provide all this resurgence of understanding and good will which we hope to see developed between Latin America and ourselves. I shall try to divide what I say into the past, our assets and the challenge.

Before I go too far back, may I suggest that we must not be too mournful about the immediate past. After all, there have been some great leaps forward. We had the visit of the President of Chile, and we then had something which had never happened before in history—the visit of a reigning Monarch to two Latin American countries. We have also had some very valuable trade successes, but of course the record has been somewhat irregular and disappointing.

We have asked ourselves already this afternoon: what has happened? Why have we slipped in Latin America? If I may put it a little more starkly than other noble Lords have done, we did, after all, have something like ten years out of thirty with hostile submarines between Latin America and ourselves. This puts in a graphic way how physical links were bound to be cut for that time, and how very difficult it is to re-establish them, particularly given the kind of links that they were. I think also that there was added to the situation an unhappy stereotype of Latin America. For some reason, people depreciated Latin America in public esteem, and by not understanding the sub-Continent and not understanding its variety, they tended to depict it as something not worth troubling very much about. This was a very unfortunate and backward-looking notion.

But, really, the underlying problem has been one of priority for British Governments. When one works inside Government, whether at the Ministerial or official level, one realises what an enormous burden has fallen on Administrations of this country, particularly since 1945. And with withdrawal from Empire, problems with Eastern Europe, relations with Western Europe and all those other problems crowding in on Ministers, week after week, year after year, it has been very difficult for British Governments to give to Latin America the priority which many people would have wished. I think it has been, to some extent, a purely physical problem which we must now seek to reverse.

If I may go on to the assets which we possess, many noble Lords have spoken of the British volunteers who worked with Bolivar, San Martin and others. We must not live in the days of 150 years ago but I can assure your Lordships, from the countries that I visited, that those heroic people might just as well have been living 50 years ago, or even less than 50 years ago, for the reality of their memory in the minds of so many people in Latin America. We can regard this not as a nostalgic thought, but as a real item of good will towards this country which certainly endures to the present day and which one hopes will continue. But certainly we should show that we appreciate this memory on their part.

I thought that the noble Earl, Lord Cowley, was a little hard on the United States. It seems to me that the United States have tended, in respect of Latin America, to do alternately too little and too much. There has also been the most ferocious propaganda against the Colossus of the North for many years. No doubt the United States are quite right now to adopt what President Nixon called a "low profile". In a sense it imposes on this country an obligation, not to take the place of the Americans—because we cannot do that—but, as an English-speaking Power in good standing in. Latin America, to show that we realise there is opportunity for us there and also, in a sense, an obligation.

I now come down to our more precise assets. There has been—and again I bow towards the noble Baroness, Lady Northchurch—much talk of the service of Canning House. I should like to underline a very special aspect of that service. It is that in London there is both an attractive and an efficient focus of contact with Latin America. This is immensely important, because otherwise the connection with Latin America would be divided and inefficient; whereas thanks so much to the work of the late Viscount Davidson and his lady, something has been built there which we hope will endure for ever.

Then there is the work of the British Council and, again, I can tell your Lordships from personal experience how exciting it is to see the British Council's work actually in progress in Latin America. I have vivid memories of the tremendous coming and going, which is a sign of health, which one saw in British Council houses or institutes in Rio de Janeiro, in Santiago, in Caracas and elsewhere. It is very exciting and has the advantage that in Latin America it is preferable for the British Council to work separately from Government. In other words, it is working apolitically, in a Continent highly charged with political and social problems, so that this non-controversial work of communication between cultures is appreciated by everybody. All one can say is that the figures and numbers that the Council work in are quite miraculous. One can but express the hope that at some stage something will happen to enable them to have a little more, because if ever there was cost-effective work of that kind it is the work of the Council in Latin America. I have just one figure, which is that the Council here helped 300 students from Latin America to come to this country at this time. Your Lordships have just been hearing some population figures, so you can see what a small fraction that is, but I hope that in years to come we shall be able to do a little more.

The noble Lord, Lord Chalfont, was kind enough to mention the interest taken by my former Department in Latin America. I am sure that that will be gratifying to the Department, because over the years when economic prospects and economic retrospects in Latin America have been sober to the point of the really bearish, that Department has at least done its best to keep the consciousness of our relationship with Latin America alive. I hope that it will become more alive throughout the country as time goes on.

That brings me to my final section, which is about the challenge. The first point I should like to make is a psychological one. Anyone who has anything to do with Latin America has to realise and accept that there is a style of human contact with Latin Americans which is not like the style of contact with anybody else. It is very unlike the style of contact of British people with each other. It contains much more eloquence, much more splendid language and much more outgoingness than the phlegm that has become known as a British characteristic. One has to accept this, while realising that there is hard realism underneath. So we have to learn that the outgoing personality is very much what is needed in our Latin American contacts, be they cultural or business.

Then we need to take a sober view of the great handicaps—distance, language and expense. It is a long way to Argentina, so it costs a great deal to get there. There is no background of the English language, such as there is in the former Commonwealth countries, though in some countries there are important English, Welsh and Scottish communities. All this combines to mean that commercial and other contact with Latin America is expensive. This means two things. The first is that silence and stinginess are just no use. It also means that, for business firms of small size, Latin America is an immensely difficult market. How to cover it with the smaller resources of the smaller firms is a great problem which, certainly when I went to Latin America, had not been solved at all. I can only hope that there is some progress towards that solution, because otherwise it will be difficult for small firms to get the kind of orders in Latin America that they might otherwise, on merit, expect.

May I say a word on trade and investment? I think that, with the growing nationalism, the old style of investment is out; but, as I believe the noble Earl, Lord Cowley, said, joint ventures might he something that could be entered into. But it will all have to be managed with great care and with due regard to the differing political conditions and tensions in the different countries. There are, of course, small things which could be done to make investment a little easier, particularly if some difference could be made in the treatment as regards the surcharge, the premium, on direct as opposed to portfolio investment; but it may be that these things are not practical. On the other hand, as regards trade there is very much less impediment—and here I come to my final point. There has been talk of the efforts being made to bring together those people in this country who are interested in export to Latin America and in trade with Latin America. I should like to take this further and to express the hope that the noble Lord, Lord Drumalbyn, will make some comment on it. There has been a great deal of talk about lack of follow-up, which I noticed myself as I went round.

I think one of the things which has been lacking on the British side in recent years is organisation. There have been committees, there have been bodies and there have been fairs; but, because of the complexity of the problems of the subcontinent, do we not need some kind of standing, continuous strategy body, to comprise the interests, not only of Government but also of industry and trade, to keep an eye on the long-term prospects in Latin America and the ways in which we can best take our opportunities instead of missing them? We have people who think in big terms about Latin America, and at the risk of upsetting anybody else may I mention, for instance. Sir George Bolton, who was until recently chairman of the Bank of London and South America, and Sir Raymond Smith, who has done so much for our exports to Venezuela; but there are many others. If, somehow, arising out of the seminar, which is very welcome, and out of Mr. Godber's tour in Latin America, we could have some point where matters could be considered in their long-term political, strategic, economic and cultural way, I think it would fill a gap which I feel has hitherto existed.

Once again I beg your Lordships' indulgence for the shreds and patches I have offered. I should like to end with those two words which I used to hear with such delight in United Nations' debates. When a Latin American delegate had made a long and impassioned speech he would suddenly stop and say, "Nada mas" which means, "That is all".

4.43 p.m.

LORD VESTEY

My Lords, in the ten years since I first took my seat in your Lordships' House I have listened with interest to debates which have been extremely far-ranging, and one of the things that has been most apparent to me is that, whatever the subject under debate, there was at least one expert in your Lordships' House who spoke on it with great knowledge. I ask your Lordships' indulgence as I speak to you this afternoon. This is the first time that I have spoken in your Lordships' House, but I felt that I should not speak unless I had some experience of the subject under discussion. I must begin by declaring an interest. For the last 60 years my family has been operating meat works in South America. We also have interests in ranching activities in Brazil and Venezuela, and we have interests in various shipping companies which run services to South America. I have spent a total of nearly three years in South America, including a period when I lived for one year in the Argentine and for a similar period in Brazil. With these interests, it is obvious that I should welcome closer ties between the United Kingdom and the countries of Central and Southern America.

I should like to confine my remarks to-day to South America, and in particular to Argentina and Brazil. There is no need for me to remind anyone in this House of the need for reciprocal trade. That is the basis of our economy to-day, and the reason for the interest in and the importance which is attached to balance-of-payments figures. Even if, or when, the United Kingdom joins the European Economic Community we shall never be able to provide all the food that we in this country require. We cannot produce the quantity, nor can we produce it as cheaply as other countries can. In particular, South America has been in the past a large exporter of beef, both frozen and chilled, and of canned meat products, although the figures have been reduced considerably in the last few years. The approximate figures for beef shipped to the United Kingdom from the Argentine, Uruguay and Brazil are 72,000 tons in 1970 and 40.000 tons in 1971; and exports of canned goods from South America to the United Kingdom were 37,000 tons in 1970 and 22,000 tons in 1971. These figures show that, although we are relying to a much lesser extent on imports from South America, they still play a reasonably important part in our overall totals. But I must stress that the figures I have mentioned represent under 5 per cent. of our total beef consumption in the United Kingdom to-day.

At the same time, the South American countries are expanding at a rate which we in this country find difficult to envisage. For example, Brazil's population has increased in twenty years from 50 million to nearly 95 million. Other South American countries, while not having such startling increases, have also expanded at a very high rate. By 1975, the population of South America will have increased to 300 million, and in thirty years' time the population in South America will be above 600 million.

There has always been, as has been said, substantial British investment in South America, but our trading influence has declined rapidly since the war. This reduction has occurred for many reasons, but mainly because the patterns of trade are changing; and although British skills and industry are still required to provide a service in South America, many of the things that we have exported in the past can now be produced there from within. Other countries, too, have stepped into the breach, and have encouraged their nationals to invest in South America. With such a huge population there, I feel that we as a country cannot afford to ignore South America. Apart from the enormous benefits which are to be gained from reciprocal trade, I do not believe that the United Kingdom can afford to lose the opportunity to take part in this growth. We should combine export drives with encouragement to British firms to invest overseas. I do not want this to be taken as any sort of criticism of the help which successive British Governments have given British firms abroad. But I am saying that this help should be increased and fresh drives encouraged, as I believe that not only shall we have the increased benefits of joining the Common Market, but we must also look towards the rapidly expanding markets of South America.

There are many ways in which we can learn from South America. Nearly all the countries in South America have a basis of very different racial groups, yet in the past, in the vast majority of cases, there has been no racialism, and all the people living under one flag consider themselves as very much belonging to the country in which they live. We in this country have been plagued in the last five or six years with the rising cost of living. The Argentine, after extreme inflation and the rising cost of living, was able to control this until the last two years, and managed to reduce the increase in the cost of living from something over 100 per cent. down to a much more manageable 20 per cent., or even 15 per cent. Brazil, in particular, has been able to reduce inflation from approximately 80 per cent. in 1963, and 85 per cent. in 1964, to well under 20 per cent. for 1970 and for last year.

Although these figures are startling, the power of recovery has been even more so, and this shows, I feel, the recuperative powers of these countries. The countries we are discussing are still poor by Western European standards, but their poverty is only in the standard of living, which is in any case improving year by year. Most of these countries are rich in natural resources, and they are making good economic progress. The benefits to be had in this country by increased trade with South America are enormous. I know that most South American countries are keenly looking forward to the opportunities that will arise in trade with an enlarged European Economic Community. The chance of further trade with such an increased market is being seized upon in South America. I hope very much that this feeling is passed on to companies in this country which are being given such a great chance.

I am grateful to the noble Earl, Lord Cowley, for initiating this debate. I should like to say, in conclusion, that although people in this country may still regard South America as a high risk area, and may be steering away from further British investment there, there is no doubt that the United States, Japan and European countries other than Britain are seeing opportunities arise in South America and are establishing themselves in a very large way. As we stand now on the brink of economic recovery we cannot afford to let opportunities of trade with South America slip from our grasp.

5.1 p.m.

LORD NELSON OF STAFFORD

My Lords, I am most privileged to rise after two maiden speakers have spoken to us this afternoon. I think it is a unique occasion that we should have two maiden speakers who are both real experts on the subject under debate. I very much congratulate my noble friend Lord Vestey on his maiden speech. I am sorry that it has taken him so long to get around to it, but I am sure that I express the wishes of the House that we shall hear him often on future occasions.

I should like to add my thanks to those of others to the noble Earl who introduced this debate. It is an opportunity to emphasise the importance of a large area of the world which has a great growth potential and one which has, as we have already heard, both excitement and interest. I would emphasise that I do not speak as an expert on the area like both our maiden speakers to-day, but from a considerable experience of trading in these areas; and in the context of this debate what better basis is there for increasing ties than by increasing trade and commerce?

We have already heard from noble Lords of the great historical ties which associate us with this area. I support very much my noble friend Lord Eccles in drawing attention to the great pioneering which has been done in these countries by so many from this country in the years gone by. In fact one of my own companies was closely associated with the vast railway buildings programme which took place there at the end of the last century. But it is an enormous area, and this is one of our difficulties—8½ million square miles, two and a half times the size of Europe. It is difficult to embrace such an enormous area on any occasion, and it is certainly difficult in an afternoon's debate. It comprises so many individual countries with their own characteristics, from Brazil, which has been touched on, with its 95 million people, though Mexico with 50 million people down to Guyana with, I think, the smallest population of 700,000. It comprises different climates, different conditions, different backgrounds and different national resources.

From a commercial point of view I must emphasise that each one must be treated individually and they cannot be treated as a whole. I think this a mistake which is often made. I would also emphasise the danger of generalisation. We are talking about 18 different and separate republics, seven in Central America, 11 in South America. My noble friend Lord Eccles has already referred to the population: 260 million people—25 per cent. greater than that of the U.S.A. Its growth of population is one of the highest in the world and, fascinatingly, 50 per cent. are under the age of 20. It is a market with many different standards, many different requirements, very many different needs. It is also an area in which in the larger countries, the more developed countries, there are very rapidly developing and competent industries, and these have to be taken very much into account.

Having said that, one must emphasise what the noble Lord, Lord Chalfont, said earlier: it is a country of great potential and about to "take off". Throughout my commercial life I can remember the saying that South America was about to "take off". The great difficulty is to ascertain its timing—when it is going to take place. But there is without doubt a great potential. Its gross national product at the moment is about one-seventh, I think, of that of the U.S.A. Yet North American standards are the sort of standards it sets for its better, more developed populations, and that is the way it is going with a 5 per cent. annual increase in gross national product at the present time. Without doubt there are great opportunities for developing primary products, and for the sale of capital and consumer goods, and for commerce and banking. But from a commercial point of view I must emphasise that it imposes many difficult problems.

I would agree with what has already been said: that it has been in many respects a commercially disappointing area for this country. Neither trade nor investment from the United Kingdom has increased in proportion to the economic growth of the countries concerned. These early prospects in which we pioneered have, without doubt, been hampered by the effects of two world wars. I would emphasise that most of us, speaking from industry's point of view, have time after time worked up a great enthusiasm for increasing trade with these areas. Missions have been sent out, trade fairs have been organised, individuals have stumped the countries, resident staffs have been built up and investments have been made. Undoubtedly there have been some successes, but there have also been many disappointments. I think that too many of our efforts, for one reason or another, seem to run into the ground. The sheer size of the problem has something to do with it. But one thing is clear: enthusiasm, per se, is not enough.

Stimulated by this debate, I have tried to analyse my own commercial experience of this area with a view to suggesting ways of improving and strengthening ties for the future. That is what we want to try to achieve this afternoon. I think that we must start from the point of view that there is much goodwill from past associations. This has already been emphasised and I agree with it. There is also considerable expertise in this country of the countries concerned, and also many opportunities for reciprocal trade. There is a good base; on that we can all agree. But, looking at it from the industrial point of view, industry must have its priorities; it is important that we get our priorities right. Resources are not unlimited. We must compare the attractiveness of one area with another. South and Central America include countries in which successful trading has proved to be very difficult. Why is this? There are political ties which have to be taken account of.

Reference has been made to the United States being not perhaps politically always successful in its efforts, but I think I must add that commercially it has been pretty successful, and those countries' ties with the U.S. are pretty strong. I mention two aspects: first, defence; second, major infrastructure development—in both of which the United States have played a very big part and as a result have established for themselves a very strong base for future supplies, local servicing, local investment and local manufacture. In addition there are associations with Europe. There are old traditional ties with Spain. As Spain develops industrially, so its trade with South America is naturally developing. Other European countries made a direct attack on this area immediately after the War when we were preoccupied elsewhere, and have made a substantial impact. Then, added to this is the problem, which has been emphasised already but I must say it again, that there are a number of countries where political and financial stabilities have not always been as strong as those in countries elsewhere.

Central and South America also poses a number of other problems specific to industry. I would mention technical standards, for instance. In my industry, the electrical industry, most of the standards are set accounting to the North American pattern, starting at 60-cycle electrical supply and working through from there. It is also very much influenced by American style of design and performance. This makes it rather difficult to sell; either you have to convince a client that he should have things of a European or British standard or you have to make something special for that particular market, which is difficult. I would mention local manufacture which is becoming equally important, and again the question of standards is important. If one manufactures overseas one wants to manufacture the things which are manufactured in this country and not something to a different design and specification.

There are also the questions of language and training. Language was referred to by the noble Lord, Lord Gore-Booth, and I agree with what he said. Many students from South American countries go to North America for their training and are very much influenced by this. Finally, may I emphasise what has been said before: that this is a very competitive area. Everybody is there and everybody is selling, and they all look on it as a country with opportunities. This makes representation very difficult. There is great competition for satisfactory representatives in the territory. One might add that politics play an important part. Where you have a lot of people after your business, politics can play a major part. These, my Lords, seem to me to be some of the reasons why industry finds this a difficult area.

Turning to the future, may I say that I do not look at this from the negative point of view, from the point of view of why it is difficult. I analyse why it is difficult only to see where and in what way we can improve for the future and therefore take a positive line. It is clear from what has been said that from the aspect of goodwill, prospects and interest there is no problem. From the point of view of standards, distance, the size of the area and representation there is a problem, and primarily it is a problem of communication. We must recognise this and overcome it. I am encouraged by what my noble friend Lord Eccles said about the work of the universities and the education authorities which have made a real contribution.

In tackling these problems what are we to do and in what way can we do it? May I take this opportunity to pay tribute to those who are helping us. The Embassies and staffs throughout the South American and Central American countries are the greatest possible help to us in industry. I would pay tribute to that and also to the very considerable improvement which has taken place in the commercial activities of our Embassies and staffs in the last few years. I should also like to emphasise the importance of the Overseas Development administration. Funds which they have placed in these areas have been valuable and helpful, and I hope that they will continue to be active, particularly in respect of selective and important projects. The work of the British Council is also very valuable and I hope that this will not be cut back. I was glad to hear Lord Eccles refer to this.

Industry has helped itself also through the C.B.I. scholarship scheme which has brought over 500 students to this country in the last six years. That has been a very valuable contribution, because all those people will have positions of influence in the countries from which they came. Over the last eight years the Institute of Directors has organised visits for over 3,000 students of various groups and this again has been a great help. British consultants have pioneered in this territory and are playing a very valuable part. So on the positive side there is a great deal being done, and I think that we should take note of that.

This is an area where success breeds success. It enables us to strengthen the representation, build up local manufacture, give better service and train engineers and local personnel. So what have we to do to achieve more successes, which is really what it is all about? Perhaps I may put forward the thought that we should have greater selection. It is such a large area, with such a large number of different countries and with so many different opportunities, that we should perhaps be more selective by country, by project and by product. Our efforts have to be more co-ordinated. There must be a co-ordinated attack by industry, Government and the banks. Instead of going after too many "red herrings", or objectives, at the same time, perhaps we should select more key schemes which will prove important for future success; and we should be prepared to make exceptions. I know that it is difficult for industry and Government to make exceptions. There is always the person who says, "Why not me too?". But this is done by our competitors, and if we want more successes, I think that we must be prepared to make exceptions to achieve those successes.

In the end it must boil down to the fact that we must be competitive in price, delivery and performance. In a rapidly inflating economy, one is always in difficulty about price and, if any emphasis were needed, this emphasises the need to keep inflation under control. On delivery and performance one needs capacity, which we have in British industry now, and so this should not prove difficult. Regarding product and performance, I think that our designers have to go out more into the territory and be more in touch with the needs of the market. In other words, our marketing must be improved. This, of course, is expensive, particularly in an area of this size; and the question of how such expense is to be covered until the activity in the market is big enough to support it is indeed a problem.

My Lords, probably the most important thing for industry in this area is to have competitive financial terms. These area important in three specific areas which I will touch on. First, it is essential to be able to offer suppliers credit, and this must be on competitive terms. We must be able to get proper cover from the Export Credits Guarantee Department for the projects we want to go after and the terms must be on a competitive basis. In this respect, perhaps Government policy regarding export credits should, in certain cases, be more closely geared to commercial objectives rather than solely guided by financial factors. I think this touches somewhat on the point to which the noble Lord, Lord Gore-Booth, referred. We must have a strategy, and all aspects have to play into the same common strategy. I do not for a moment suggest that we should start a credit war or that this is in any way desirable, but, on the other hand, we must be realistic and realise that our terms must match those available from elsewhere if we wish to be successful.

In this respect, I was recently told by an important customer for heavy electrical equipment that 6½ per cent. interest offered on suppliers' credit just was not good enough. Whether to believe him or not is, of course, a matter of commercial judgment. But I think the Government must take note that interest rates must be competitive if we are to be success-full. Your Lordships will no doubt realise that when one is dealing with large major projects, the question of one half of 1 per cent. interest on the loans associated with that project are indeed very large sums of money and can represent the difference between success and failure. Speaking with a certain amount of experience, I would say that it is most disappointing when one works on a major project for, say, two or three years to bring it to fruition and one finds that one loses it because of one half of 1 per cent. on the suppliers' credit.

The second area which I think should be emphasised is that fixed and known costs are important to customers even in countries which are used to living with inflation; they still want to know what it is they are going to pay. Inflation makes it difficult, if not impossible, and certainly hazardous from the suppliers' point of view. Unless we can get inflation under control, there will be a need for some insurance against inflation on contracts spread over a long period of time. Thirdly, we have seen the problems and dangers of instability of exchange rates. These again are important on long-term capital projects, and this is where the big opportunities are in these countries, because so many of the consumer goods they are now making themselves. I hope that the difficulties of changing exchange rates over the last few months are now over, but may be there is a need for a system of some protection to suppliers for risks such as these which are outside their control.

These are some of the problems that must be looked at if we are to establish a firm and growing position in what we all recognise is an important market. It is essentially a matter for industry, commerce and Government to tackle together. But I would say to the Government that if this is regarded as a special situation—and I think it is—then it will require some special action along these lines, particularly in the areas of export credit and insurance cover, against inflation, investment risks and exchange risks, taking fully into account what is being done by our competitors. I hope that these matters will receive the Government's special consideration, and that what I have said will emphasise, at least from one aspect of industry, that British industry is not uninterested in this area, is alive to the opportunities and is most anxious to participate more and more in the great opportunities which lie in La tin America.

5.14 p.m.

LORD THOMAS

My Lords, I rise with a deep sense of good fortune and privilege. To have been here this afternoon to hear two such admirable maiden speeches is a lasting and memorable pleasure. I hope that we shall hear more in the future from the noble Baroness, Lady Northchurch, and the noble Lord, Lord Vestey, both of whom were a joy to listen to. I am grateful, too, to the noble Earl, Lord Cowley, for initiating this debate on Central and South America. There is a familiar ring about the words "Latin America", because when I worked at a factory at a place which bore the illustrious name of the noble Earl, we got so fond of it that we used to regard Oxford as our Latin Quarter. We shall hear a good deal more to-day about Latin America.

I would make the point that in the olden days it used to be said that "trade follows the flag". To-day, I suggest, the flag follows trade. Once upon a time, most of South American railroads, harbour works and civil contracting was done by Britain. To-day that balance has shifted. Yet, my experience in travelling up and down South America over the years has been that the countries there want to trade with the British. Admittedly, I was mainly in the airline business, but that covers a very wide spectrum. I found Brazilian, Argentinian, Peruvian and Mexican business executives extremely pleasant, keen, co-operative and anxious to work with the British.

Of course, we have had our ups and downs. One of the difficulties that we had to face was in the monetary field. For several years when the pound sterling was trying to keep its head above water there were obvious difficulties in trading. Some South American countries would not allow profit from foreign capital to be taken out of their countries. They were very ingenious traders. I have sad memories of B.O.A.C. airline tickets for Paris and Rome being bought for pesos in Buenos Aires and being resold in America for U.S. dollars to provide a cut-rate onward flight to Europe. That was one of the sort of problems with which we had to deal. But, thanks to the keen eyes of people like the noble Baroness, Lady Burton of Coventry, and of course to good airline staff work, things like that do not happen nowadays and there are improvements. But, as the noble Lord, Lord Nelson of Stafford, has so cogently said, monetary considerations still present obstacles. Comparatively recently in Mexico there was a demand for a nuclear-powered electricity generating station. The British basic quote was well placed on a short list; but the credit terms (and this is a point the noble Lord, Lord Nelson of Stafford, mentioned) both in percentage interest rates and duration, were not sufficiently attractive, anyway at that time. The terms, as distinct from the total price, offered by North America and other countries were overwhelmingly better. With the noble Lord, Lord Nelson of Stafford, I hope that we shall have some easement in these restrictions on finance for industry and shall be able more easily to make progress.

Of course, customers like the South Americans put forward the usual excuses —unreliable delivery dates, shortcomings in quality and in detailed work: they throw these excuses in the face of British and other salesmen. Such disparagements can and must be corrected, as well as refuted. I think that we should have in our industrial set-up a better feed-back from the sales front for corrective action on the factory floor. But my personal experience proves that our record and our heritage in Latin America is still a sure foundation on which to build in these days of sophisticated technology and higher engineering advances. All is far from being lost. Historical reputation is playing back into our hands.

Mark you, my Lords, it also dealt us some very hard knocks. When the Comet fell out of the sky in the mid-'fifties we had to give up the South American route and thus hand profitable traffic on a plate to other European airlines, who naturally tended to by-pass London. But now, what a wonderful chance we have ahead with the Anglo-French Concorde! Most people seem to relate this medium-range supersonic project solely to the Europe to North American route: London or Paris to New York or Montreal. Most people outside Britain, and indeed some in these Islands, seem to regard Concorde as predominantly a French project, which of course it is not. I think it is fair to say that without the unique British engines that were specifically designed and built for this particular application there never would have been a Concorde. Let us remind ourselves that Concorde has already visited South America. I believe it can play a very considerable part in bringing the two continents together both philosophically and materially.

I observe with some abraided reaction that the modern advertising jargon for high-speed travel is "earth-shrinking". I prefer to look upon it as "time saving". However, "speed" spelt by any other name can always be spelt as "fleet" Let us take a key international city in Latin America, such as Rio de Janeiro. By today's subsonic four-jet airliner it takes 12 hours and 5 minutes to get from London to Rio. A Concorde flying via Dakar in West Africa takes only six hours and 35 minutes. Or let us look at Buenos Aires in the Argentine. A conventional jet now takes 14 hours 5 minutes flying from London. A Concorde via Dakar and Rio takes only 8 hours 35 minutes. I think that one of the best indications of how effectively Concorde can operate in South America was the demonstration tour there by 001 in September 1971, when it operated like any other commercial airline in all weather conditions, fitting into the traffic patterns and departing on schedule during the whole tour. Thus, in this supersonic age we have a new tool to help build even better relationships of all kinds between Britain and the countries of Central and South America.

My Lords, let us not think in terms of passengers alone but also have regard to mail, urgent freight and medicinal and pharmaceutical interchange. It may well be that we shall now see the beginning of a new era of relationships in international trade and communications. Equally, let us avoid the pitfalls of the past when Britain tried to establish little or sometimes even large enclaves of exclusively British people—little Englanders—in a foreign land. I believe that the new philosophy is that the incomer, be he a long- or short-term visitor to a foreign land, should integrate with the culture and the social structure of the residents and not try to do it the other way round. From my own experience I know that to do that in South and Central America is by no means a hard task. I welcome and support the cause of the noble Earl, Lord Cowley.

5.23 p.m.

THE EARL OF ONSLOW

My Lords, whether the fact that the noble Lord, Lord Vestey, and I were educated together clouds my judgment I do not know, but I should like to congratulate him on an excellent maiden speech. Obviously I was not educated with the noble Baroness, Lady Northchurch, but I should also like to say how much I enjoyed listening to her speech.

As has already been said, in 1914 Britain dominated, among other international markets, that of Latin America. Most of the railways and the meat trade had been developed by Great Britain. The Chilean nitrate trade was shared between Britain and Germany, who was at that time our main competitor in the rest of Latin America. Since then, partly through having to sell assets to fight two wars and partly through mismanagement and ill-feeling by all concerned which arose after this war, much of the built-in advantage which Britain had as the inheritor and supporter of the Latin American revolution and of Canning's call to bring into existence the New World to redress the balance of the Old seems to have been dissipated. The British public, however, appear on the whole to be more ignorant of what happens in Latin America than in any other continent. Perhaps this is due to hostile or, at best, apathetic Press coverage. There is no denying that in some cases this bad Press is partly due to the political instability and lack of a sense of purpose that is found in some Latin American countries. The impression obtained from newspapers in this country is that Latin America has nothing but coups, earthquakes and starving Incas. This picture is perhaps not completely true for Chile, for the obvious reason that an elected Marxist trying to rule constitutionally must be newsworthy. As an instance of this, all the Latin American Ambassadors, I believe, were united in their agreement that the Sunday Times Colour Supplement article of September 26 was tendentious, to say the least. This disillusionment must not prevent British businessmen from attacking hard in the most hopeful area for development, which is Brazil. The Brazilian economy is booming at the moment in a manner which can be paralleled only by that of the United States in the late 19th century.

In 1966, Brazil imported 1,500 million dollars worth of goods. In 1968, it imported goods worth 2,130 million dollars. Britain's share rose from 44 million dollars to 96 million dollars. The latest figure (which I am afraid is in pounds and not dollars) that for 1971, is £84 million per year, which is a very impressive performance. However, in 1968 Germany sold the Brazilians 235 million dollars worth of goods: in 1968, our share of the Brazilian import bill was 4½ per cent. Perhaps I can illustrate the situation by giving the picture of the insurance market, in which I work. The total inflow of funds to Lloyds and the British Insurance Association companies last year was, according to the best informed "guestimate" (there are no completely accurate figures available) in the region of £6 million. This £6 million does not represent 4½ per cent. of the Latin American insurance import bill, but 60 per cent. I should perhaps also explain that this is a gross figure. The total net banking and insurance earnings from Latin America were £3½ million per annum out of a total of £38 million. For the businessman or the trader who wants to go for this Brazilian market, the Brazilian Ambassador to this country, the Brazilian Trade Centre and the newly formed Brazilian European Bank are all excellent sources of information and assistance to any British businessman who cares to take the trouble to approach this mammoth consumer market. The population of Brazil is rising towards 100 million, as we have already heard. The Department of Trade and Industry also produces a very helpful little booklet.

The Brazilian solution is a unique one, and so is the Brazilian mentality; and whoever seeks to further trade in that country, with the necessary mixture of hardheadedness and humility, would be well advised first to ensure that he is represented by someone who knows Brazil's history and language. The problem of communication cannot be overstressed, and the sad lack of knowledge of Portuguese by most businessmen in this country who deal with Brazil accounts for far more misunderstandings than is usually realised.

In Brazil, the personal contact aspect of business is of paramount importance, and joint ventures seem to be the most practical way of getting in. But let us not make the same fatal mistake of which the Brazilians so often accuse the North Americans, who think that because they are putting up at least 50 per cent. of the money, or possibly more, their Brazilian partners must learn to think and behave as they do. Such an attitude of mind will end in disillusionment for the British businessman. We must always steer a middle course between gullibility and any tendency to domineer. British firms would be well advised to send their young men to Brazil for a year to learn the language and absorb the mentality of the country before embarking on any projects which they envisage. It would not be time wasted.

Brazil has been accused by respectable and unrespectable sources alike of practising a military dictatorship, and all the other unpleasantnesses that go with one. But let us not forget that we encourage trade with other countries whose internal systems of government are such that they are probably a lot worse than those which arise in Brazil. Finally, perhaps we should be thinking of all this not in the context of British trade to Latin America but, with the unified monetary system of the E.E.C. coming in the next few years, in the context of a united European assault on these markets so that we can bring the Old World back into existence to redress the balance in the New.

5.30 p.m.

BARONESS EMMET OF AMBERLEY

My Lords, I am sure that we all welcome my noble friend Lord Cowley's Motion on this very important subject at this particular moment when we are in the process of joining the E.E.C. Here I should like to echo the words of my noble friend Lord Onslow, and the remarks he made at the conclusion of his speech. I will speak for only a few minutes, but I should like to enlarge on that point. South America is the fourth largest continent, and its population, as has been said, is increasing at the rate of 6 per cent. per year. This is larger than North America or Africa and will soon outstrip them by many millions. Its inhabitants are as to 90 per cent. European, with European historic and religious traditions. Such coloured races as there are have been integrated, and the difficulties which beset so many countries in respect of this matter are really unknown in that continent. They have a great advantage over us. As my noble friend Lord Eccles said, we played a prominent part there at the time of the Napoleonic wars; we not only made a military contribution, we also left behind a great many British whose names are familiar in those countries—and that is quite a surprise when one visits there.

Up to the 'thirties we had large investments in South America. However, the Monroe doctrine of 1823 had a certain amount to do with the change of influence from us to North America. By the end of the Second World War we had pretty well opted out. Now things have changed again. The South American Republics have become very nationally conscious and, as somebody said, woe betide you if you lump them together, because they are so different in character. All of them are struggling to free themselves from the hegemony of "Big Brother" in the North, and from this particular financial control. Further, the attention of the U.S.A., shocked by the Cuban episode, has been attracted to the East and the Far-East. In these circumstances the South American States have tried to diversify their exports and exploit their natural resources. Copper, oil, bauxite, silver and tin—to mention only a few of their minerals—have a great international value with which we are familiar. We are also familiar with their normal agricultural exports, about which we have heard very interesting comments in the maiden speech of my noble friend Lord Vestey. They have also diversified agriculturally in some rather original ways: fresh strawberries from Mexico, flowers from Colombia, pickled cucumbers from Dominica, mushrooms from Costa Rica, ground nuts and kenaf from Nicaragua. It makes one feel quite hungry reading out this list!

Some European countries, notably Germany and Italy (and we are going to be their partners in the E.E.C.) have for some time had an eye to the industrial developments. Germany is doing especially well—and I should like to draw the attention of the noble Lord who is to reply to the debate to this point—thanks to her system of insurance for her foreign investors and her readiness to work through international consortiums. Japan is not far behind. To a large extent, compared to our potential, we have opted out. It was especially distressing when B.O.A.C. shut down their flights, because there is no doubt that a strong air link between countries is a great help to trade and contacts. B.U.A. have done nobly, but I hope that, having listened to my noble friend Lord Thomas, Concorde will be a further great strengthener in this part of the world.

We are sometimes suspicious of South American politics and I have occasionally said to myself, "Are they less trustworthy than the African ones?" I rather doubt it. The Germans and Italians certainly do not think so. I remember saying to my son when he first went to Buenos Aires—he has since settled there—that I was rather nervous about the revolutions which periodically took place. He said, "But, Mother, you have an election every four years; we have a revolution every four years; it is very much the same thing." I have now ceased to worry.

Gradually, I am sure that the South American States will find their way towards political stability, though I do not think it will be precisely on the Westminster model. They are faced with the great problem of turning over from a largely agricultural set-up to an industrial one, and trying to prevent their population from emigrating entirely from the interior to the seaside towns. They have to build up a stable middle class and develop inland industries. It is very natural that in the meanwhile in many countries the army should be holding the fort. I do not think that there is anything extraordinary about this; they are at the moment taking the place of the middle class. With the period of U.S.A. tutelage fading out, the South American Republics are looking towards Europe, their continent of origin, whose history and language they share. One might be allowed to say (although one hesitates to criticise one's American friends) that in the North of South America the indigenous culture has been very much overlaid with the American way of life. This is not congenial to all the South American Republics, especially in the South. They would infinitely prefer to strengthen their European ties and culture. Now that we are in the process of joining the E.E.C., it is time that we gave a much closer look towards this continent where there is a quite extraordinary fund of good will towards us, and where in the Southern part of the continent we shall find the British born or British descendant part of the population ready to receive and welcome us with open hands, and where we do not need to feel stupidly guilty of our colonial past.

My Lords, I commend to your interest a future of friendship and mutual benefit in this great continent, and ask you to lend your valuable influence in this House—and we have heard to-day that here there are many interested and expert people in these matters—to promote closer contacts and understanding in this part of the world which is only too ready to welcome us.

5.39 p.m.

BARONESS MACLEOD OF BORVE

My Lords, I am very grateful to my noble friend Lord Cowley for instigating this debate because it has given the House the opportunity of hearing two excellent maiden speeches. First, we heard my very dear friend Lady Northchurch, whom I have admired for so very long. It has been a great pleasure to hear her once again giving of her charm, and the knowledge and expertise that she has in this particular field. The noble Lord, Lord Vestey, spoke with eloquence, and I hope we shall all hear him a great deal in the future.

I was not aware that my noble friend Lord Onslow was going to take Brazil as his subject, because unfortunately I decided on the same course of action. It is one of those things that happen. My reason for doing so was that many years ago I made a memorable sea voyage. I was not very well at the time but that did not matter. I went to South America. I went all the way down from Recife past Rio de Janeiro to Buenos Aires, and all the way back again. This was a long time ago, and I was very impressed then by the country: by its vegetation, and also by the kindness and warmth of the people, which has been referred to to-day. I decided that if I was able to speak in this debate I should like to try to find out what has been happening, in particular to Brazil, since the time I took that voyage. I chose Brazil because it is the first landing place when one is going on such a journey by sea and, as all your Lordships know, it is such a vast country.

My noble friend Lord Onslow has, I think, given your Lordships all the relevant papers. I have a few pages of them but I shall now scrap them because you obviously will not want to hear them again. It amazed me that Portuguese was the only language which is used in this enormous country of Brazil with its 3.3 million square miles. It is so vast an area that it is almost impossible to realise the enormity of it, but the fact is that the one language is used by everyone in that country. I do so agree with one noble Lord who said that it is up to the British people, who as we know are so bad at languages, to learn Portuguese and be absolutely fluent in that language when they go out there and try to engage in trade.

I have been looking at the North-East of Brazil, which has a quarter of the whole of the population of that country, and it is very poor. The peasants farm and fish. They have a very bad mortality rate. The infant mortality rate is between 170 and 300 per thousand—a very high mortality rate indeed. It is generally brought about I believe by bad nutrition in the district, which in turn is brought about by continual droughts. However, in 1969 a new form of local government called the Sudene was set up and that has organised a certain amount of prosperity in the North-East of Brazil. Eighteen months ago, as I am sure all your Lordships will know, they started to build the trans-Amazonian highway. This is getting well on the way to completion now. It is providing a great deal of employment. It is President Medici's hope that towns will be littered all along the vast highway, which stretches more or less from coast to coast and is parallel to the Amazon and covers an enormous area. This of course will bring an enormous amount of employment to the people of the North-East.

When one tries to find out some of the facts and figures, what is so striking is that, whereas Brazil was a poor country up till quite recently, now it is a very prospering country indeed. It exports to the United Kingdom only £62.8 million worth of goods per year; it imports £60.8 million worth, which means that imports and exports (I am sure your Lordships' arithmetic is better than mine) are roughly parallel. Of course, we hope that in future all trade will he increased. The noble Lord, Lord Chalfont, had obviously visited Brasilia and was so immensely struck by the architecture of that very beautiful city. That has been increasing in population. So, of course, has the industrial city of Sao Paulo. It is the overall wealth of the country, and the potential for all countries of the world to trade with all the countries of South America, that I think gives us encouragement. One can have courage to go out—and I hope our industrialists do—to find more trade and more ways of communication with the countries of South America, and in particular Brazil.

I believe it was the noble Lord, Lord Gore-Booth, who emphasised what I feel: that through sport and culture as well we can do a great deal to know these countries. I have been informed by my son, who is an expert in these matters, that the Brazilian football team is almost second to none in the world. I know that we over here have enjoyed watching them and that our teams have enjoyed going to play in Brazil. I hope that through this debate we have had to-day, my Lords, the countries of Latin America will take note of the fact that we are interested, that we want to trade with them, and that we want to have closer ties. I am very grateful to the noble Earl, Lord Cowley, for giving us the opportunity to air our hopes in this direction.

5.48 p.m.

LORD LUKE

My Lords, my contribution to this debate will be as short as possible, and possibly, as a result of the many points that have already been brought out in the debate and which I shall skim over rapidly, shorter than it might have been. My first words must be of tribute to those who have made a maiden speech: to my noble friend Lady Northchurch and to Lord Vestey, who is not in the Chamber at this moment. One noble Lord spoke of Lord Vestey's father and grandfather, and they and my father and grandfather all had very close connections with, particularly, the Argentine and Latin America; and I think it is splendid that we should have had two maiden speeches on this subject to-day.

I should like to pay a sincere tribute to my noble friend Lord Cowley for having initiated the debate. I did not agree with all he said. I know that he will forgive me when I say that I did not altogether agree with his contention that comparatively little has been done. I very much hope that as a result of this debate he will see that quite a good deal has been done and is being done, and perhaps we may hope that the debate has brought out the opportunities which he sought. In any event, I share his enthusiasm for the subject. I am glad that the noble Lord, Lord Chalfont, in his speech said that there is nothing between us on either side of the House except agreement, which is a very good thing to go on to-day.

To my mind, the importance of recognising and appreciating the place in the world which each Latin American country has achieved is paramount. Noble Lords who have spoken to-day—and I hope it will be the case in an even wider sphere —have done much to correct wrong impressions, though none of us has minimised the difficulties in our relations with Latin American countries. Basically I maintain that we have strong, friendly ties and these are not lightly broken. They form a solid foundation for our forward progress together. After all, it is the privilege of friends to criticise each other. Perhaps it is rather a pity that we have not got a Latin American Peer to speak in the debate, as he might criticise us pretty forcefully on some of the things that we have said.

I think it was the noble Lord, Lord Nelson of Stafford, who paid tribute to the efforts of the British who live and work in those countries, and I would certainly add my tribute, both to the embassies and their staffs and also to the many worthy people in the British communities throughout Latin America. It is fifty years since I first went to the Argentine and, as my noble friend Lord Eccles has reminded us, it is in this present year that the 150th anniversary of independence is to be celebrated. I first went there in 1922. They were then celebrating the 100th anniversary, and I am delighted to think that a statue to Bolivar is to be erected in London to mark the 150th anniversary. I have been coming and going through all those fifty years and I have seen the influence of the close tics between the British communities and the countries in which they live and work, and I believe their influence has been mostly for good.

I regret very much the considerable decline that there has been through the years. It has been the result of the decline in trade between our country and the Latin American countries. I do not want to repeat the reasons for that decline in trade, because we have heard a good deal about it to-day, but we still have some very good communities there. For instance, we still have British schools in many of the Latin American countries, in which quite often the majority of the pupils are nationals of the country concerned. I was interested to hear what my noble friend Lord Eccles said about Latin American studies at the universities, and also the various other matters that lie mentioned, including the efforts of the British Council in regard to cultural relations. I have not yet heard anybody mention sport, in connection with the Olympic Games which took place in Mexico in 1968. What a wonderful effort that was! It was the first time that the Olympic Games had taken place in Latin America.

All the countries in that continent have expanding economies, some more soundly based than others—Argentina, Brazil, Mexico in particular, and perhaps Colombia and Venezuela as runners-up. Through the years there has been this strong stream of economic nationalism to which my noble friend Lord Cowley referred; but in whatever way development has taken shape, there has always been the necessity for outside assistance from this country or Europe or the United States of America. One of the impediments to two-way trade has been the development of industries in those countries for import substitution rather than for export, although, of course, this is all part of the economic nationalism.

If there has been criticism that some of those countries have been hostile to the United Kingdom or to the United States I would rather put it this way: it is not hostility but a strong sense of being pro-themselves. Their attitude to foreign capital has tended to be that the outside world wanted too much for it and were not prepared to lend it for long enough. Who can say with what justification? A better tendency lately has been for the mobilising of foreign resources through international banks, and this is where I think there is great promise in what the noble Earl, Lord Cowley, and the noble Lord, Lord Gore-Booth, called the joint development, with a proper balance between national and international sources. As I said, we have a great foundation of long-standing friendship which unfortunately, but rather naturally, fades into the past and needs to be renewed in each generation. It is this on which we try to build, and our British Weeks in various cities have undoubtedly done much in the right direction.

I would take issue with my noble friend Lord Cowley in regard to this matter. He said there was no follow-up: perhaps comparatively speaking there was not, but in point of fact there was a follow-up, and I think it is the way we look at this matter and whether the effect it should have is short-term or long-term. Undoubtedly there is an underlying need on both sides, on a continuing basis, for understanding and appreciation of the needs, the possibilities and the means available. We in this country need to pay more attention to what is going on in Latin American countries. This needs a lot more study, and I only wish that the Press, which is good in parts, could be more helpful to this end. I know what it has been like, carrying on a business there for many years, through hard times and good, but I think that in the end we, and our friends there, have made a contribution which has been worth while. I have seen the progress and development which nothing can stop. Those great nations are going on their way. They are shaping their own patterns of economy, and, to my mind, it is just a question of whether we, as a nation, are going to play our part alongside al the other countries who will undoubtedly be doing so.

5.58 p.m.

LORD DAVIES OF LEEK

My Lords, first, I apologise for the fact that my name does not appear on the list of speakers. That is not because on this side of the House there is no interest in this problem: it just happens that I had so much work to do this last week that I did not have much time to prepare a short speech on Latin America, though the Far East and Latin America are two of my first loves. However, before I make my speech, and since (I say this without any pomposity) I am the first speaker on this side of the House, apart from the noble Lord, Lord Chalfont, may I draw attention to the maiden speeches of the noble Baroness, Lady Northchurch, and the noble Lord, Lord Vestey, and say how interested were Members on our side in those maiden speeches.

Having said that, may I say to the noble Lord, Lord Luke, that I am grateful to him for mentioning in the latter part of his speech the value of the British Weeks that are held from time to time. As the noble Lord opposite will know, there is to be one in the near future in Japan. It is Government money that is spent, whatever Government is in power; and it is well spent. I deprecate the terms in which some newspapers sometimes rather deeply denigrate the work of the British Council in various parts of the world, when in fact it does a first-class job of work. It would be invidious for me to mention the name of a news paper because they would not have the privilege of attacking me direct, across the floor of the House. However, one need not be thin-skinned about that, because they attack anybody—sometimes merely for publicity. I know one newspaper which continuously—and "continuously" is better than "continually"—attacks the British Council.

May I say, if the noble Viscount, Lord Eccles, will accept it, how much I enjoyed listening to every word of his speech, which was informative, and the tribute he paid to the organisations who have given so much attention to Latin America? I should have liked him (though he may have mentioned it and I missed it) to mention Chatham House. That, too, in its own way has done a considerable amount there, and if there is any money for seminars and constructive work by people of ability, people who are qualified, I am quite certain that the work of Chatham House in the field of foreign affairs in various parts of the world would be worthy of attention. Now to the short speech in which I wish to draw attention to a few points.

The noble Lord spoke of his grandfather. I have mentioned my grandfathers in this House from time to time. I remember telling the House of the one who was a great milker and who was so enamoured of his job that he shook people's hands one finger at a time. I had a great-uncle who took oranges to California and Mexico. If Lord Raglan happened to be in his place at the moment, or if the ghost of old Lord Llanover was still looking over the ramparts of Heaven on to these red Benches, I would tell them that in the lovely little village church of Llanover, outside Abergavenny, there is a tomb of the Davies family with the name Maximillian on it. We never ascended to the Austrian power of being princes, but in Mexico, we got mixed up with that crowd. I do not want anybody to go too much into my genaeology but there is a "Maximillian" on the tomb. So. with those threadbare excuses, I stand opposite the Government to make a short contribution. I can bring it down to about five points.

In my day, if we did not pass all our subjects in an examination we failed the lot. It was for the Welsh Higher School Certificate, and a book I had to read was Plant yr Haul, which, translated, means Children of the Sun. It was all about the Incas of Peru, and I was delighted when the noble Lord in his own speech to-day spoke of this wonderful civilisation of the Incas of Peru. I was just a youngster then struggling, as we always had to struggle, to get what tiny bit of education we could through scholarships, to get what are now called A-levels—we had no highfalutin antonyms, we called things what they were; now we fill all our speeches with antonyms and nobody knows what anybody else is talking about. But, quite frankly, from that day on I always considered that one of the most dynamic parts of the world was this mighty continent. I am hoping that one day the Welsh of Patagonia will send a Rugby team to Cardiff Arms Park; they might be able to do it. When I heard to-night in this debate the comment, "Can we trust the Latin Americans any more than the Africans", I would, with all due humility, draw the attention of this noble House to the fact that it is Europeans we are dealing with in Latin America. So we must not be too "uppity" about the honesty of Latin American men as compared with European men. Whatever sins Latin American man has, he has derived them from his brothers in Europe.

The first thing that should be mentioned is that there is a change in the affairs of men. I have just been writing about this and this is why I am chatting about it, and I will only call it a chat. Nixon has turned a complete somersault and he has frightened the China watchers to death. The pundits have been prophesying about what is going to happen to Red China—I have been looking up my Marxism this weekend—and what is going to happen to the world. Suddenly, because we are not far from a General Election in the United States, we find that Nixon has changed his direction completely. I am not going to pass cheap remarks about that. If that change of direction is a sincere effort to get truth in the modern world, despite my political outlook it is my duty to do my best not to denigrate it but to help in whatever way I can to make it a success. So the first question I ask is: will this make a difference to the whole Monroe Doctrine approach to Latin America?

I want to take two countries, Chile and Peru. Last April the Chinese Deputy Foreign Secretary made an international agreement for the exchange of goods. I will not bother to read the figures; I want the spirit of the agreement rather than the statistics. It is a considerable amount of trade that the Chinese are doing there, and will do. But anybody who knows Chile will know that some of the hardest workers for generations in Chile have been Chinese men. I always regretted as a young man in my mentoring and tutoring days—because at one time I gave a series of lectures on Latin America—the slowness of British people to recognise the potentialities of Latin America. I do not want to make invidious comparisons, but I hope that my noble friend who spoke from the Front Bench will agree with me that in pre-Hitler days we allowed Germany to enter into Latin America, and in some inexplicable way (we did not have many Labour Governments in power) no Government in Britain seemed to pay enough attention to the volcanic possibilities of the development of this marvellous part of the world. I will not reiterate the first-clas well informed speeches that have been made in this House to-night, but to those of us who have had the pleasure and privilege of listening to them it is obvious that here is a part of the world of great potential development.

I have two loves: that on the Welsh side and in North Staffordshire where for 30-odd years I took a political interest and was a Member of Parliament for a quarter of a century. I want to pay a tribute to the North Staffordshire pottery industry for the way it has made a great penetration into the Latin American market. I did not have the privilege of hearing the noble Lord, Lord Nelson of Stafford, and for that I apologise, but I am sure he will have spoken of his great industry and the difficulties we are now having in penetrating there. So if I am asked—trying to make this a Socratic approach to the problem—what I am driving at, the answer is this. I hope that serious attention will be paid to the export guarantee side and export credit guarantees, and that, if possible, firms willing to pioneer in Latin America will, after suitable investigation, receive all possible help from the Government. Because no matter what attitude we take to economics—the Marxist attitude or the ultra laissez faire Conservative attitude—one of the stark realities of the world in which we are living is the need to ask ourselves, with the mighty possibilities of the machine to-day, whether you nationalise an industry or whether it is private ownership; does it create more jobs when you have mighty machines that can do the work of 10, 20 or 100 people? In other words, the world will be forced to look at this problem of mechanisation and of currency. And this brings me to the last point but one in this tiny little speech,

I do not think you can have a sane monetary policy in the world unless the Western World is prepared to sit side by side with the Communist world of Russia and China and also with the Latin American world, because these parts of the world, Asia, South East Asia and Latin America, are the great areas of the tropical and sub-tropical oils, greases and fats which are essential for the driving of modern technology. "Liquidity of currency" is one of those silly phrases; even the economists do not know what they mean when they say it—and I am not sure that I do, either. What I mean is an easy flow; and an easy flow of currency cannot be created if we have an atmosphere of fear in the world. That is why I draw attention finally to the Nixon volcanic change. If the Nixon approach to China—and one can read, as I mentioned only last week, Lord Avon's book on Mr. Foster Dulles and the Geneva Conference of 1954—and to Chou en-Lai and Mao Tse-Tung is going to lead to great changes in South-East Asia and the Far East, it certainly is going to lead to a new approach to Latin America, because China has already made a number of agreements there and has exchanged ambassadors with Allende. We have now a Marxist system of society which has been democratically elected. Whether it will work, I do not know. As Nye Bevan once said, "Why look at the crystal ball when you have the book?" I do not want to act as a prophet, but I think there is a chance of the Chilean system indicating a new approach to Latin American politics.

If this debate is worth anything to those who are Latin America watchers, at least it will tell the world that Britain once again—because I think the forces of history are pointing that way—is taking a dynamic and constructive interest in the problems of Latin America.

6.12 p.m.

LORD DRUMALBYN

My Lords, I must, and I do with great pleasure, start my speech by congratulating the noble Baroness, Lady Northchurch, whom I know so much better as Lady Davidson on her maiden speech, and my noble friend Lord Vestey on his maiden speech. I have sat for many years in another place with Lady Davidson, and I know how tremendously involved she gets in problems where she thinks she can do some good, and I know she does a lot of good. In her maiden speech to-day she certainly did a lot of good, and I hope that her speech will be widely read. Her own personal experience of visiting South America, coupled with the experience of being married to a man who devoted so much of his life and time to the very thing that this debate is directed towards, made her speech of particular importance in this debate. She always speaks with fluency and charm, and we hope we shall hear her very often.

So far as my noble friend Lord Vestey is concerned, he has great experience. I do not know whether he is more or less experienced in the same field as my noble friend Lord Luke, but he brought that experience to bear to-day with very great effect. I thought that two of his most telling points concerned the rapid power of recovery of the Latin countries and their richness in natural resources. Perhaps I may add a third matter—a fact that was referred to by a number of speakers—namely, that there is virtually no racialism of any kind in South America. His was an excellent contribution, and exactly what was required in this debate. We are grateful to him for it, and we hope that we shall have the opportunity of being grateful to him on many occasions in the future.

One must express great gratitude to my noble friend Lord Cowley for initiating this debate and for the way in which he set the pattern. I was particularly impressed with the forthrightness of his speech. Where he had criticisms he made them, and where he had praise he gave it. He had much advice to give, and he also had a torrent of questions with which I shall try to deal in the limited time that your Lordships would wish me to speak. I would also say that these three speeches were all the better for having a certain emotional content. This is certainly a subject which is near to the hearts of all these three speakers, and that made their speeches all the more interesting and convincing.

My noble friend Lord Cowley traced the history of our relations—and in particular our trade relations—with Latin America over the past century or so, from the time when British goods, capital and services far outdistanced other countries in South America, and British standards were widely accepted, including, may I say, the famous phrase which always endears Latin America to us, "palabra Inglese". They accepted this standard, and I think that possibly the admiration they have had for the standard we seek to set ourselves, of keeping our word, is something which has helped to cement relations between this country and the countries of South America.

Of course it is always true that no nation, young or old, is content to be too dependent on any other one country, however friendly. We had great influence in South America, and though that influence waned its decline neither arose from nor left behind any real sense of bitterness. Without being nostalgic we can say that the firm foundations for friendship remained and are still there. But friendship needs to be cultivated, and it is only comparatively recently that we, in this country, have realised that we have to some extent been neglecting it. If this debate does nothing else, it will at least give a clear indication, from both sides of the House, of our continuing good will, and our desire to help the countries of Latin America in their vigorous development, and, at the same time, to regain a larger share of their markets. There is undoubtedly in this country a lively and growing interest in Latin America which has been reflected not only in this debate but in the rapid growth in our exports, which in monetary terms have nearly doubled in the last four years. Last year alone our exports to Brazil rose from £61 million to £84 million. This interest is greatly fostered by the activities of Canning House. The newly formed Economic Affairs Committee is receiving the full support of the Foreign and Commonwealth Office, the Overseas Development Administration, and the Department of Trade and Industry, all of whom are represented on the Committee.

I thought that my noble friend Lady Northchurch was very right to point out that trade can never flourish for long on a one way basis, and the present rate of progress is likely to continue only if the Latin American countries are able to develop their exports to this country. Aid has a major part to play here. Advice and help, such as the Department of Trade and Industry contributes to Latin American Embassies in London and to visiting missions which come here, also has a part to play.

Then there is the generalised preference scheme. With the exception of Cuba, the Latin American countries all benefit from the tariff preferences which developed countries have agreed to give to developing countries. At the first UNCTAD conference in Geneva, at which the Prime Minister played such a distinguished part, Britain was the first developed country to give its support to the idea. Each developed country, or group of countries, has its own scheme for generalised preferences. The British scheme came into effect on January 1 this year and provides for duty-free entry on nearly all manufactures and semi-manufactures except textiles, and for duty-free entry or a duty reduction on a wide range of processed agricultural products. There are of course safeguards against disruption of trade. The third conference of UNCTAD—the second one was in New Delhi, as noble Lords will remember—is due to take place in April and May of this year on the ground of a Latin American country, at Santiago. The various groups, known as the 77 developing countries, have been preparing carefully for it, and they held a joint conference at Lima, in Peru, last November.

Official development aid to Latin America commenced on a very small scale in a limited number of countries in 1963. It has, in accordance with Government policy, expanded very rapidly even when there were restraints on the total aid programme and, with the increases planned in the overall programme, even more funds will be available over the next five years. The programme concentrated initially on technical assistance, particularly in the field of tropical agriculture and technical education in which we had particular expertise to offer. It was the original intention to give the greatest amount of aid to the poorest countries, but in fact our largest programmes have been in the middle tier of countries approaching the point of economic take-off; that is, Colombia, Peru, Chile, Brazil and Central America taken as a whole. Though agriculture and technical education remain favoured targets, many other fields are now covered. In particular, it is current policy to provide feasibility studies executed by firms of British consultants to all countries, including the richest. Incidentally, a feasibility study was provided for the underground venture at Guadalajara, to which the noble Lord, Lord Chalfont, referred in his excellent speech. Expenditure on technical assistance has risen from £3,000 in 1963 to nearly £2 million in 1971/72.

In the early 1960s, British capital aid in the form of loans was either for debt re-finance or disaster relief. Some small development loans were made later. This form of aid is also expanding rapidly, and development loans arranged on a bilateral basis for a total of approximately £30 million are at present at various stages of negotiation. In addition to bilateral loans, we have also contributed over £4 million in funds usable only for British goods and services administered on our behalf by the Inter-American Development Bank. The Bank also administers for us a fund of £4 million which is lent on highly concessional terms. This fund is not limited to procurement in Britain, but is open also to members of, and significant contributors to, the Bank. Our aid to this regional development bank is in line with our policy of supporting regional Latin American organisations, particularly those working towards the economic integration of the continent.

I should now like to turn to investment, which has been dealt with by a number of speakers, especially my noble friend Lord Nelson of Stafford. The long decline in British investment in the Latin American countries has been arrested and reversed. Our net annual direct investment—I am not going to bore your Lordships with a great many figures, but I think you will be interested in these—excluding oil, rose from £8.3 million in 1967, to £21.3 million in 1969. Net earnings increased from £23.8 million to £32.7 million and the book value of British investment in this area (excluding oil, insurance and banking) stood at £283 million in 1968. Developing countries benefit from British private investment not only through the provision of capital, but because it brings with it technical, marketing and managerial skills and a general stimulus to local private enterprise. But, of course, British private investment will be forthcoming only if British investors consider that each particular private venture is likely to benefit them, too.

Developing countries take the view that their sovereignty is absolute, and that foreign private investment must accept the rules laid down by the host Government. Indeed, the Andean countries, which my noble friend Lord Cowley mentioned—that is, Bolivia, Chile, Colombia, Ecuador and Peru—have agreed on a common set of rules. They are perfectly entitled to do so. What the would-be foreign in-investor requires to know is where he stands on such questions as the sectors in which foreign investment is not welcomed; any restrictions on the transfer of profit and repatriation of capital; rates of taxation; degree of local participation in ownership and control required; and employment of foreign and local personnel. Of course, the foreign investor wants to have as few changes as possible, while recognising that changes in accordance with the position of a country at a particular time are bound to occur. The balance between national interests and the reasonable expectations of the foreign investor is a fine one, but it has to be maintained if capital—which, after all, is a scarce commodity in the world—is not to be scared away.

My noble friend Lord Nelson of Stafford, and others, mentioned the Federal German Government's investment scheme that is operated by a German holding company. The British system which is being evolved is different, but will, I hope, prove no less effective. I think it will be of interest if I went into this question, because a number of noble Lords have raised it. During the past year, Her Majesty's Government have been considering what further incentives they might offer in order to stimulate a greater flow of private investment to those developing countries that wish to have the benefit of it and have shown that they will welcome it on fair terms. In a White Paper (Cmnd. 4656) published in April, 1971, a number of measures for stimulating such investment were announced. In the first place, the British Government have decided to introduce an investment insurance scheme—which I think will meet the first point of my noble friend Lord Nelson—comparable to those of other developed countries. The scheme will ensure new direct investment from Britain against the non-commercial risks of war, expropriation and restrictions on remittances. Subject to the passage of the necessary legislation, it is hoped that the scheme will come into operation in the early part of 1972.

Secondly, the British Government plan to extend the issue of capital aid in association with private investment. Subject to the approval of the host Government, aid will be available for necessary basic infrastructure (such as a road or a power supply) associated with particular British private investment projects. We shall also seek to extend the provision of capital aid through recipient Governments to local development institutions for use in joint ventures with British capital, and I fully recognise how important these are likely to be. Thirdly, we intend to introduce a scheme of financial support for pre-investment studies by British private investors in developing countries. It will reimburse a substantial proportion of the cost of approved studies which do not lead to a decision to invest. Subject to the passage of legislation, this scheme is expected to come into operation in the first half of this year.

My Lords, my noble friend Lord Nelson also referred to a scheme, operated by the French Government, to cover the loss caused by customers failing to pay price increases above 3 per cent. on account of inflation. The Government recognise that high fluctuating rates of inflation create particular difficulties for manufacturers of heavy equipment, who when tendering may have to estimate costs for some years ahead—this goes for ships, too—and who cannot always include price-variation clauses; but the real cure for this problem, of course, lies in curbing inflation, and the Government's policy should serve to bring inflation under control. My noble friend will recognise, in making a comparison with France, that France has had to live with a degree of inflation which far outdistances the degree of inflation that we have experienced in this country. Our objective should be to ensure that we do not have to live with that degree of inflation, and therefore the first endeavour must be to bring back to a proper level, to a minimum level, the annual degree of inflation. We fully recognise that other Governments, including, those of France and Italy, have provisions for providing cost-escalation insurance in certain conditions, but it is difficult to conceive a scheme on true insurance principles which would recompense firms against cost inflation above a defined level. For that reason, Her Majesty's Government have no plans at present for introducing a similar scheme, but we are keeping the position under review.

In addition, we have implemented a proposal to extend to foreign countries the arrangement applying to Commonwealth countries under which a United Kingdom investor need hold only a minimum of 10 per cent., instead of 25 per cent., of the voting rights in a local company in order to obtain United Kingdom tax relief for the foreign tax paid by the overseas company on its profits. This should be a further encouragement to the kind of participation that my noble friend referred to as being common in Germany and less common here. The British Government will seek wherever possible to conclude bilateral agreements with developing countries for the protection of new and existing investment. If these measures for stimulating investment (and hence, where appropriate, joint ventures) are seen in the context of the assistance which our commercial posts overseas and 0.D.A., with all its technical expertise, can provide, our range of facilities for encouraging the private investor should be as good as those in any country.

My Lords, I turn now to the point of exports. My noble friend Lord Cowley said that exports in these days could not succeed without guidance and encouragement from Government. I should prefer to put it in this way: that this country could not achieve its maximum export potential without Government guidance and help in co-ordinating, supplementing and supporting the efforts of industry. This the Government do through trade promotion, through the services provided for the British Export Board and through the guarantees provided mainly on a commercial basis by E.C.G.D. First let me answer one of the questions which my noble friend aimed at me in a burst of fire, and that is about the British Export Board. Although it is largely up to industry to get out and win export orders, the Government recognise that they have a major role to play in this matter. Towards the end of 1970, the Department of Trade and Industry conducted a review, during which other Whitehall Departments and outside organisations were consulted, of the whole field of export promotion services and organisation. It became clear that three criteria would have to be met if any new organisation was to be entirely satisfactory to exporters. These requirements were: first, that businessmen should be actively involved; second, that there should be one closely integrated organisation; and, third, that finance would have to come from Government and hence would have to be subject to public accountability.

It was from these requirements, these considerations, that the British Export Board evolved. Its concept is quite different, and its role is wider than that of the British National Export Council. It is an executive Board charged not only with giving direction to the export promotion activities of the Department of Trade and Industry and those handled formerly by the British National Export Council, but, having regard to the resources at its disposal, to bring the expertise of businessmen to bear on the question of what services should be provided, and the basis on which they should be made available. What it amounts to is this. The Board has available to it the export promotion services of the Department of Trade and Industry: the services to individual exporters, the provision of export intelligence, the general publicity effort at home and abroad in support of export promotion, the scheme for assistance at trade fairs and British Weeks, and the missions scheme, What is more—and this is very important—the Board of businessmen are able to sit down with senior officials and thresh out what the policy and priorities should be. At all levels there is machinery, both formal and informal, for very close liaison with the Foreign and Commonwealth Office, and with the commercial departments of posts overseas, who play such an important part—and play it so well—in developing our exports; and I was very grateful for the kindly references that were made to the efforts of the commercial departments overseas during this debate.

My Lords, the Board are in action now. They are quietly getting on with their job under the chairmanship of my noble friend Lord Thorneycroft, whom I saw earlier in the debate; and I can assure noble Lords that there will be no hiatus in activities, as has been feared. They have inherited some promotion events in Latin American countries which had already been planned. These include at present some 19 outward missions in 1972 and technological symposia in Mexico City and Caracas in June of this year, along the lines of those which were successfully mounted in Rio and Buenos Aires two years ago, in 1970. My Lords, it is not intended to allow the impetus gained by the major export promotion events in the last few years to be lost, and I very much take the point about follow-up which has been made repeatedly in the debate. I am referring particularly, in these major export promotion events, to the British Industrial Exhibitions in Mexico City in 1966, in Sao Paulo in 1969 and in Buenos Aires in 1970, not to mention the outward missions and the participation in local trade fairs. All this shows how much the interest in Latin America has been growing in recent years.

My noble friend Lord Nelson cast some doubt on the ability of British exporters to match credit terms, either in interest rates or in length, with those which exporters in other countries can offer, and I must say a word or two about this. In passing, I should perhaps say to the noble Lord, Lord Thomas, who made his usual vigorous intervention, that the Mexicans have decided to go out to tender again for the nuclear-powered power station in Mexico, discarding all previous negotiations, but it is too early to say whether any United Kingdom companies will be quoting for the project.

My Lords, I must say that I suspect that the complaint about credit terms is a complaint that is made by exporters in all countries. You cannot always win. The fact is that the scope of cover that E.C.G.D. offers is inferior to none. E.C.G.D. has been in the export credit race for years—many competitors will complain that it has made too much of the running. British official policy is aimed at achieving the maximum exports on the shortest possible terms. This is where the national interest lies. Normally, this means that the maximum period of credit is five years; but E.C.G.D. are authorised to approve terms in excess of five years to match those offered by competitors. My noble friend will be interested to know that in 1970 E.C.G.D. business on credit in excess of five years amounted to about £900 million of which about £400 million was approved on terms specifically to match foreign competition. Where there has been difficulty in matching it in the past is in those cases where a normal commercial credit is mixed with a Government loan at a concessionary rate of interest—what the French call crédits mixtes. The loan is normally used to finance the down or completion payments or even the first repayments or local costs.

Her Majesty's Government have therefore decided that either loans at concessionary rates or a special grant to provide for an interest subsidy could be authorised to match similar terms offered by foreign competitors. The importance of this concession is that its fits in with what the Latin American countries, and the Andean countries in particular, seem to be requiring. This is going to make joint ventures very much easier, because it will be possible for private capital to take up a part and for loans to be made on another part to organisations in the Latin American countries which, so to speak, can become their contribution (and will remain theirs because they are loans) to the joint venture. I think that this is something likely to be more effective even than the German schemes. E.C.G.D. naturally view each Latin American market separately and very great emphasis has been placed in the debate on the necessity to do just that. Each country holds with great vigour to its independence; but. nevertheless, with some limitations E.C.G.D. is on cover for all Latin American countries and in general its attitude to them is favourable. It would like to do much more business there.

I should like to reply to one or two other points which have been raised. My noble friend Lord Cowley asked about the Declaration of Buenos Aires. This arose from the sixth meeting of C.E.C.L.A., the Special Commission for Co-ordination of Latin America. It called for increased co-operation in particular between Latin American countries and the European Communities and made general proposals with this end in view. The countries represented were Argentina, Chile, Costa Rica, Ecuador, Paraguay, Peru, Uruguay and Venezuela with the addition of Trinidad and Tobago, Jamaica and several Latin American political organisations. While advocating that discussions between Latin America and European Communities should be institutionalised, it recognised that preliminary discussions would be needed at Ambassadorial level first. As the Chairman, Dr. de Pablo Pardo, is reported to have said, "Diplomacy means tact and patience". My noble friend also asked about Argentina's agreement with E.E.C. This is simply a special arrangement to enable Argentine beef to be imported into the Community under the benefit of special provisions which are spelled out in the annex to the Agreement. This means, among other things, minimising beef levies. The agreement provides for a Joint Commission to be set up which is to meet at least once a year.

My Lords, I hope I have covered most of the points that have been made in this debate. Her Majesty's Government will give careful consideration to everything that has been said and where it seems desirable, or where I have been asked to do so, I will willingly write and amplify some of the answers that I have given to-night. But it would not be right for me to conclude without saying what an important debate this has been for the future of our trade with Latin America and to express, on behalf of Her Majesty's Government, their great gratification that we have had the debate and at the way in which it has been conducted. I believe that it will give satisfaction to our friends in South America, in Mexico and in Central America, and I should like to conclude by once again congratulating my noble friend Lord Cowley on his initiative in initiating the debate.

6.45 p.m.

EARL COWLEY

My Lords, first I should like to add my own congratulations to my noble friends Lady Northchurch and Lord Vestey on their excellent maiden speeches on topics in which they are obviously expert. Furthermore, I should like to thank all noble Lords who have taken part in this debate this afternoon and made it of such high standard and immense interest. I hope that as much publicity as possible is given to the concern shown for Latin America in this House to-day. I think that what is of great importance in our future relations with the countries of Latin America is the unity of ideas on both sides of the House. This country's past relationship with Latin American countries has been fully debated and very important points have been made on the immense importance of these countries and the necessity for this country to strengthen ties with them. Furthermore, the efforts and work of the Government, the City and of Canning House have been brought out; but there is a great deal yet to do. I hope that the great enthusiasm for this area of the world expressed today bears equivalent results in the future and that the problems of those countries and the benefits of trading with them will be fully understood in this country as a whole.

Lastly, I should like to take the opportunity of wishing Mr. Godber every success on his tour of Argentina, Brazil, Chile and Peru. I feel certain that this tour by a senior Government Minister can only drive home to the countries in Latin America the importance that this country attaches to them. My Lords, I beg leave to withdraw my Motion for Papers.

Motion for Papers, by leave, withdrawn.