HL Deb 19 July 1988 vol 499 cc1197-9

2.48 p.m.

Lord Chelwood asked Her Majesty's Government:

Whether they will take an urgent initiative through the European Community and NATO to seek an agreed policy to monitor and control the growing flow of Western credits to the Soviet Union until there have been verified and significant reductions in Soviet armed forces.

The Minister of State, Foreign and Commonwealth Office (Lord Glenarthur)

My Lords, much Western credit to the Soviet Union comes from commercial sources. Support by Her Majesty's Government is only provided in order to encourage trade beneficial to British firms. It would not be appropriate to respond to encouraging developments in the Soviet Union by imposing new restrictions.

Lord Chelwood

My Lords, does that reply mean that the Government are fully seized of the dilemma that faces the West? Is it not generally accepted that perestroika has no hope of success unless there is a massive inflow from government and non-government sources to help it along? Is there not a risk that there will be an overflow into Warsaw bloc forces, particularly the conventional forces, numerically and technically, thus creating an even worse imbalance with NATO?

Lord Glenarthur

My Lords, I believe that perestroika needs a certain amount of encouragement. However, I do not believe that there is a risk in supporting the Soviet military effort, as my noble friend suggests. The COCOM rules are designed to ensure that equipment which might help the Soviet military effort is not exported to the Soviet Union or to eastern Europe.

Lord Taylor of Gryfe

My Lords, is it true that any such contracts are approved by the DTI and by COCOM, in which the United States plays a leading role? Is the Minister aware that last year's contract for £100 million with John Brown Engineering and this year's contract for £250 million with Simon-Carves are welcomed in terms of employment in this country? Is it true that the Soviet Union has never defaulted on a credit agreement?

Lord Glenarthur

My Lords, credit is provided only on a commercial basis and for worthwhile trade. The terms are subject to OECD consensus rules and in the past month there has been a tightening of interest rate conditions for the Soviet Union. I am afraid that I cannot answer the last point raised by the noble Lord, nor can I go into the details of the individual firms concerned.

Lord Cledwyn of Penrhos

My Lords, with regard to the latter part of the Question, will the Minister say what is the reaction of Her Majesty's Government to the proposal by the Warsaw Pact leaders that there should be talks on conventional arms? If the Government agree that such talks are a reasonable possibility, can the Minister say what the forum will be? Will it be the Vienna talks or the conventional stability talks?

Lord Glenarthur

My Lords, any words such as those the noble Lord has quoted are encouraging. As regards arms control, we are working hard for balanced and verifiable agreements which enhance our security. However, I am unable to give him any information as regards any forum in the future.

Lord Mayhew

My Lords, are the prospects for conventional disarmament more promising than usual? Does the Minister agree that the threat of financial penalties, as suggested in the Question, may do more harm than good?

Lord Glenarthur

My Lords, as I said in answer to my noble friend Lord Chelwood, I believe it is important that perestroika should be encouraged. As regards the military effort of the Soviet Union, I do not believe that these arrangements need work to the Soviet military advantage.

Lord Orr-Ewing

My Lords, in an attempt to start conventional arms talks, will my noble friend consider asking the Russians to reduce the surplus over the NATO strength of 30,000 battle tanks which now exist in the Warsaw Pact countries? Is this not a good place to start conventional arms reductions when there is a huge imbalance of that kind?

Lord Glenarthur

My Lords, your Lordships discussed that matter last week. My noble friend's Question is concerned with credit and I think that this question goes a little wide of that.

Lord Whaddon

My Lords, will my noble friend confirm that under perestroika there are increasing possibilities for profitable joint enterprise, and will he do his best to ensure that British industry is kept informed of those developments and opportunities?

Lord Glenarthur

My Lords, I am sure that that is a good point. We are aware that British firms are already making successful inroads.

Lord Williams of Elvel

My Lords, in response to the noble Lord, Lord Taylor of Gryfe, will the Minister accept that the Russians have defaulted on obligations particularly in respect of bonds issued prior to the revolution, and until those bonds are cleared the Soviet Union will not have a full and clear credit? Can the Minister tell the House what the Government are doing to ensure that the Soviet Union is meeting its obligations under those bonds?

Lord Glenarthur

My Lords, I am afraid that I cannot answer that question without notice but I shall look into the matter and write to the noble Lord.

Lord Chelwood

My Lords, in his reply my noble friend mentioned COCOM. Can he confirm that the Government do not wish to see the rules relaxed at present?

Lord Glenarthur

My Lords, so far as I am aware we have no wish to see the rules amended.