HL Deb 15 October 1981 vol 424 cc438-41

3.22 p.m.

Lord Caccia

My Lords, in the unavoidable absence of the noble Lord, Lord Chelwood, this afternoon, I beg leave at his request to ask the Question standing in his name on the Order Paper.

The Question was as follows:

To ask Her Majesty's Government—

  1. (a) whether they will summarise the aid in kind given or promised to Poland by the European Community since the Solidarity movement was created;
  2. (b) what part the Community is playing to reschedule Poland's 27 billion dollar debt to Western Governments and banks with a view to access to fresh credit; and
  3. (c) what contribution the United Kingdom is making in these fields.

The Parliamentary Under-Secretary of State, Foreign and Commonwealth Office (Lord Trefgarne)

My Lords, the European Community has made available to Poland substantial quantities of food and agricultural products (chiefly grain, meat, butter and sugar) at special prices. The cost of the discount is borne by the Community budget, while the necessary credit is made available by individual member states.

Member states rather than the Community as such have been involved in the rescheduling of Poland's debts. An agreement was signed on 27th April between the Polish Government and the Governments of its main overseas creditors, including ourselves, dealing with debts maturing in 1981. The question of Poland's debt servicing for 1982 will be considered shortly. The United Kingdom has made a substantial contribution in both fields. Since this is a complex subject, I am circulating a more detailed account in the Official Report.

Following is the information referred to:

"Under offers made in December 1980 and April/May 1981 the European Community has already made available to Poland substantial quantities of food and agricultural products at special prices (15 per cent. discount on average from world market prices). The main products included were 452,500 tonnes of barley, 272,500 tonnes of wheat, 45,000 tonnes of butter, 100,000 tonnes of meat and 100,000 tonnes of sugar. The cost of the special discount (estimated by the European Commission to be some £48 million) is borne by the Community budget. Individual member states have made available the necessary credits to cover the cost of products they supplied under these offers.

"On 7th October the Community approved a further offer of food and agricultural products to be made available to Poland in the fourth quarter of 1981 on the same special terms as the earlier offers. The products to be offered are wheat (275,000 tonnes), barley (25,000 tonnes), rice (10,000 tonnes), beef (10,000 tonnes), butter (5,000 tonnes) and lemons (30,000 tonnes). The cost of the special discount to the Community budget is estimated by the Commission to be just under £10 million. The necessary credit will again be provided by member states supplying the products. The Council has also agreed to consider in due course the proposals made by the Commission for deliveries in the first quarter of 1982.

"In addition a Council of Ministers resolution adopted in August made it possible for member states to deliver to Poland free of charge fruit and vegetables withdrawn from the market in accordance with the provisions of the common agricultural policy.

"The Community as such is not involved in the rescheduling of Poland's debts. However most member states (the United Kingdom, France, the Federal Republic of Germany, Belgium, the Netherlands, Italy and Denmark) have been involved in the multilateral talks between the Polish Government and the Governments of its main overseas creditors. An agreement was signed in Paris on 27th April dealing with debts maturing in the remainder of 1981. A Joint Commission comprising the Poles and their creditors will meet shortly to consider the matter of Poland's debt servicing in 1982.

"The United Kingdom has made a substantial contribution in both these fields. Under the first two Community offers the United Kingdom provided all the barley included (452,500 tonnes), 10,000 tonnes of butter and 3,000 tonnes of beef. The necessary credit to cover these purchases has also been made available. Allocations under the third offer have not yet been made, but we expect to provide the barley included in that offer.

"Within the framework of the Paris agreement of 27th April on the rescheduling of Polish debts a bilateral agreement between Her Majesty's Government and the Polish Government was signed in Warsaw on 2nd July. This provides for a restructuring of the principal and interest of 90 per cent. of debts guaranteed by ECGD and falling due for payment between 1st May and 31st December 1981. After adjustment to take account of interim assistance given earlier in the year, the sum to be restructured will be about £75 million. These debts will now be repaid over four years commencing 1st January 1986. The restructured debts will carry interest at a floating rate of 1 per cent. above the appropriate market rate. The Paris agreement provides for possible extension of these arrangements by stages through 1982 and 1983 by agreement between Poland and its creditors, depending on the progress of the Polish Government's stabilisation plan.

"In addition, ECGD have been instructed to maintain for the time being a modest level of general short term export credit facilities, and to provide guarantees for specific new credits totalling £45 million for the remainder of 1981, in addition to the credits of £20 million which were announced on 9th April 1981."

Lord Caccia

My Lords, I am grateful to the Minister for that forthcoming reply on a factual basis, and also for his undertaking to circulate further information in a convenient form. May I ask, in addition to this factual information, two questions. First, is it right to conclude from this reply that it is a confirmation of the importance which Her Majesty's Government have attached, and are continuing to attach, to the Polish issue? Secondly, taking all due account of obvious political and financial constraints, will they continue to stress the importance of this issue in their dealings with other powers, and not least while they hold the presidency of the EEC?

Lord Trefgarne

My Lords, the noble Lord describes the Government's concern in this matter very succinctly, and I certainly give him the assurance for which he asked in the second part of his supplementary.

Lord Shinwell

My Lords, may I ask the noble Lord whether he will disregard any suggestion which would appear to be either a snub or an offence to the Soviet Union? Would he not regard this Question as perhaps one of the most important that has come before your Lordships' House?—because unless we can not only increase production but increase the capacity for consumption, not only in Poland but in many other countries—China, India, parts of Africa, Latin America and elsewhere—either directly through trade or aid or in some other fashion, while, on the other hand, other countries can increase production, there is no hope of making even an approach to a solution that concerns not only the United Kingdom, but the whole world.

Lord Trefgarne

With respect, my Lords, that is a somewhat comprehensive supplementary to this Question, but I can take the point made by the noble Lord about the Soviet Union. It is certainly our wish that the Polish Government and the Polish people should be allowed to resolve their problems without intervention from outside of any kind whatsoever.

Lord Campbell of Croy

My Lords, will the Government, both within the EEC and outside the EEC, take a lead in encouraging action in view of two serious problems: first, that the Soviet Union has clearly withheld supplies on which Poland has had to rely, being part of the East European bloc; and, secondly, that Poland has already accumulated a massive burden of debt to the West? Is it not worth taking great trouble to find suitable ways of providing further essential aid, in order to enable the Polish people to continue their brave attempt to shape their own future?

Lord Trefgarne

My Lords, we are certainly doing what we can—within the limits of our resources, naturally—to assist the Poles at this difficult time. Indeed, the record to which I referred in the original Answer bears witness to that.

Lord Davies of Leek

My Lords, while concurring with the supplementary question of my noble friend Lord Shinwell, which was of paramount importance, may I ask whether the noble Lord is aware that the problem of loans, and the very question of export credit guarantees which we discussed yesterday, can be upset if nations do not have a possibility of repaying their debts? Lastly, is the noble Lord aware of the fact that the entire exports of Poland are not enough to pay the interest on the loans that they have had from overseas? It is a problem beyond party politics. It is a problem for us to face with loans all over the world.

Lord Trefgarne

My Lords, the noble Lord is right when he suggests—which, I think, is the implication of his supplementary—that the long-term solution to Poland's problems is the regeneration of their economy and their ability to produce more to service their quite considerable outside debt.

Lord Barnby

My Lords, in supporting the urgings for consideration being given to Poland, may I ask the Minister whether it is to be understood, with regard to these external debts which are under discussion and negotiation, that any portion of them carries a guarantee, for what it is worth, by Russia?

Lord Trefgarne

No, my Lords. So far as I know, none of the debts owed to Western Governments or Western hanks is guaranteed by the Soviet Union.

Baroness Llewelyn-Davies of Hastoe

My Lords, as the noble Lord referred both to the 1982 debts and to the low productivity point, may I ask him whether, since Poland first asked for emergency consideration to be given to the 1982 position in June and they have had no answer—and the noble Lord can give no answer now—he would agree that, at this particularly urgent moment, the "too little and too late" approach can lead only to further economic and political dependence by the Poles on the Russians? While one understands the difficulties created for the lending authorities, the banks and Governments, by the low productivity rate in Poland, is not that last question more important than anything else?

Lord Trefgarne

My Lords, as I said in the original Answer, the question of rescheduling the 1982 debt repayments and interest repayments has yet to be agreed upon finally, but it is certainly being considered. However, an important feature of that will certainly be the plans which the Poles themselves are now working on, which relate to the improvement of their own economic prospects.

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