HL Deb 19 June 1995 vol 565 cc20-31

3.37 p.m.

Viscount Cranborne

My Lords, with the leave of the House, I shall now repeat a Statement made in another place by my right honourable friend the Prime Minister on the Halifax Summit on 15th to 17th June.

"With permission, Madam Speaker, I should like to make a Statement on the Halifax Summit, which I attended with my right honourable friends the Foreign Secretary, and the Chancellor of the Exchequer and my honourable friend the Minister of State at the Treasury. I have placed the communiqués in the Library of the House.

"As last year, the summit was in two parts. We started with a G7 meeting focusing on economic matters and were then joined by President Yeltsin for a G8 meeting on wider political issues.

"In the G7 countries, growth averaged 3 per cent. last year, with the United Kingdom growing somewhat faster. The issue of most concern is the continuing high levels of unemployment, particularly in continental Europe. For example, unemployment across the European Union is currently at 11 per cent. We are all agreed on the policies needed to tackle that. They are the ones set out in the G7 Jobs Conference last year, and taken forward in the recent OECD study: more flexible labour markets; deregulation and the scrapping of restrictive practices; and better training and education. These are just the policies being pursued by the British Government and which have led to unemployment falling by more than 600,000 over the past two years.

"We agreed to hold another jobs conference in France next year to review progress on these issues. All countries will be represented by finance and employment Ministers; further consideration will be given to including others—such as education and trade Ministers—as well.

"Last year at Naples we agreed to conduct a review of international institutions. At Halifax, we have drawn up a series of specific proposals to strengthen the Bretton Woods institutions and the United Nations.

"We all agreed that the most effective way to tackle exchange rate instability is the pursuit of sensible economic policies at home. Finance Ministers and Central Bank Governors will maintain close co-operation on economic surveillance and on exchange markets. We also agreed on a range of measures to strengthen co-operation between the world's financial regulators and supervisors on such matters as prudential standards and transparency. Among the proposals for the international financial institutions, I would single out those aimed at improving the IMF's early warning mechanisms and its ability to handle crises where prevention fails.

"The summit also discussed the problems of poverty and sustainable development. We agreed in particular to encourage better use of all existing World Bank and IMF resources to tackle the substantial burden of multilateral debt faced by some of the world's poorest countries. This is an area where the UK has taken the lead in pressing for action. All G7 countries have now agreed to explore the option of pledging some of the IMF's gold, and we and some others will continue to argue the case for modest outright sales of gold to help reduce the debt burden.

"This year is the 50th Anniversary of the United Nations. We all want to see a strong and purposeful UN, able to play the full role envisaged under its charter. We agreed that reform is essential if the UN is to continue to meet demands placed upon it. We have made a number of proposals for eliminating duplication and waste, and consolidating and streamlining the UN's economic and social bodies.

"We shall be actively pursuing these proposals in partnership with the rest of the UN's membership, since decisions on these are not just for the G7. We also recognised the need for the UN to be properly financed. All UN member states should meet their financial obligations and agree to reform the system of assessment. The G7 gave a strong push to the next stage of liberalising world trade. There is unfinished business from the Uruguay Round, as well as new areas to be tackled including non-tariff barriers, investment and government procurement.

"We dealt with a number of other issues including the environment where we agreed on the need to review and, where appropriate, strengthen the commitments we made at the 1992 Rio Earth Summit. We also discussed international crime, where the G8 have taken up our suggestion to establish a high level group to look at existing arrangements for co-operation against crime and to make practical proposals to improve them.

"President Yeltsin played a full part in the political discussions. He described the tragic consequences of the taking of hostages by Chechen guerrillas in Budyonnovsk. The crisis, which has claimed many lives, has taken a new turn today. The guerrillas are now reported to be leaving, by agreement, with a large number of hostages as well as Russian deputies and journalists. I hope there will be no further loss of innocent lives, but the wider problem of Chechnya remains. We urged President Yeltsin to do all he could to find a political solution.

"Terrorism has been a problem in many of our countries, and we agreed to set up a better system for exchanging information about terrorist incidents and methods of dealing with them. We also agreed to President Yeltsin's proposal to hold a special summit in Moscow next year to discuss a range of issues on civil nuclear safety.

"On Bosnia, Security Council Resolution 998 on the reinforcement of UNPROFOR was adopted on 16th June. The summit supported the new Rapid Reaction Force which the United Kingdom and France have helped to establish. President Clinton said that he had not yet secured Congressional approval for this force to be funded from UN assessments, but made clear that he wanted the United States to share in the financing. Following new offensives in Bosnia, summit leaders called for an immediate moratorium on military operations so that political negotiations based on the contact group proposals could resume.

"Over the past day, the remaining UNPROFOR hostages have been released and the level of fighting has decreased. There has so far been no significant change in the military situation as a result of the latest offensives, and we continue to believe that this question will not be solved militarily.

"Bosnia clearly remains in a dangerous phase. Mr. Carl Bildt, the former Swedish Prime Minister, is about to begin his mission as the European Union's negotiator. He will do so with the strong support of the eight summit nations. This was a summit that addressed a range of long-term and short-term issues: growth and employment; the reform of international institutions; the debt problems of the poorest countries; pushing forward free trade; the conflict in Bosnia; and terrorism.

"The people of Nova Scotia gave the summit a conspicuously warm welcome. This helped to make it a friendly and productive meeting without the over elaborate formalities that have characterised some previous summits. That is something I have pressed for some time, and I hope we can take the process further forward next year."

My Lords, that concludes the Statement.

3.46 p.m.

Lord Richard

My Lords, I am grateful to the Leader of the House for repeating the Statement made by his right honourable friend in another place. I am glad to hear that the summit was friendly and productive; it may have been friendly, but I am not sure how productive it was. It was certainly not particularly earth-shattering. I read the communiqué and it seemed to me, even judging it by the normal pallid standards of such documents, that it was a pretty thin one.

We welcome the progress that may have been made and may be made on jobs and the fact that there is an agreement to meet next year in France. Can the Leader of the House confirm that the main impact of the summit was made by President Chirac, the new president of France? It was said in the press today that he brought a fresh face and fresh voice. Did he bring any fresh ideas? Perhaps the Leader of the House could help us on that.

The reform of the international financial institutions seems to have played a major role in the summit. I agree that they need looking at and it may be that the IMF early warning mechanism proposals are important. However, the UN economic institutions—UNCTAD, UNIDO and some of the others—provide independent voices in international economic policy which perhaps the IMF and the World Bank do not particularly like. Will the Leader of the House confirm that those institutions will be supported?

Concerning the war against world poverty, I was interested in a passage that appears at the top of page 6 of the communiqué. In relation to Sub-Saharan Africa, we are apparently now to, work with others to encourage relevant multilateral institutions to: focus concessional resources on the poorest countries, especially those in Sub-Saharan Africa, which have a demonstrated capacity and commitment to use them effectively, and take trends in military and other unproductive spending into account in extending assistance". Presumably that means that if countries spend a great deal on arms, they will not do too well as regards aid. I wonder whether the Leader of the House takes the point that it is a little rich that that appears in the communiqué from the nations who are doing their best to persuade those very poor countries that they should buy more and more arms rather than concentrating on other matters.

As regards the United Nations, is there any sign that the United States is yet prepared to pay its dues? I note what was said about the new assessment as concerns Bosnia, but was anything said about the fact that the United States of America is unfortunately still massively behind in its payments to the United Nations budget, and that that is causing difficulties with the UN?

The statement of the chairman rather than the communiqué itself, contains quite a lot about the United Nations and how it could possibly be strengthened. I cannot help pointing out that if what is said in the chairman's statement is to take place in practice, it will give the United Nations a greater capacity to intervene more quickly in international areas of tension. That is something that we on this side of the House would strongly support. I should be grateful for the Lord Privy Seal's confirmation that that is what is intended.

I note that in the chairman's statement the Government and the whole G8 call upon the warring parties in Bosnia to impose a moratorium on the fighting. If there is no moratorium, where do we go then? Merely calling for a moratorium and then saying that, nevertheless, we recognise that the only real way to deal with the problems is by negotiation and that we hope that the contact group's proposal will be accepted, begins increasingly to look like a doctrine of despair. Do the Government have any statement to make about discussions that may have taken place in Halifax, perhaps on a rather longer term basis, about what is to happen in Bosnia if the war there continues?

We give the Statement, the summit communiqué and the documents emerging from it, a reasonable welcome. I am not going overboard in their favour because I do not find very much in the communiqué and the Statement that would lead us to jump ship. Nevertheless, so far so good. We look forward to the jobs conference next year.

Lord Jenkins of Hillhead

My Lords, we are all grateful to the noble Viscount for repeating the Statement. It is, on the whole—I would not put it higher than that—desirable that the summit communiqué Statement should habitually be repeated in this House. It would be difficult to pretend, as the noble Lord, Lord Richard, said, that this was a hard decision making or ground breaking summit. To be honest, I do not have much in the way of comment to make or questions to ask upon it. The communiqué reflects, inevitably, its somewhat anodyne quality.

I remember being told, and subsequently finding it a very good working rule, that a test of whether a Statement is interesting is whether you can imagine a sane man (or a group of, presumably, seven sane men) in the same context stating the reverse. If you can, the Statement is interesting. If you cannot, then it is not. It would be difficult to imagine the statement being made: "We had a notably unconstructive meeting in Halifax, and were very disaffected at the lack of welcome given to us by the Canadians". That statement would be remarkable, but it would be an interesting one. On such a test, very few parts of the communiqué pass. Nonetheless, as an old summiteer—going back, not to the very first but to the third, fourth, fifth and sixth summits, though on a somewhat unwelcome foot-in-the-door basis (at any rate at the third)—I believe that, on the whole, summits serve a useful purpose and are not to be justified only by their hard decisions. They serve to focus the minds of the world's foremost leaders in the few days of the run-up, in the 36 or 48 hours there and, one hopes, for a week or so afterwards, on a more international context and in a less inward-looking direction than would otherwise be the case. That in itself is worthwhile. But if that is the reasonably limited objective, then it is much better that the atmosphere should be more like the fireside chats—although that was always a slightly romantic vision—of the original Rambouillet gathering, rather than the extravagant jamborees of Versailles, Williamsburg and one or two others. To that extent, I congratulate the Canadians on having given a useful lead on this occasion in that direction.

I end with one question. Is it intended that the G7 should continue to exist alongside the G8? Or is it likely that the G7, as expanded (it began as a group of five), will become a group of eight in the future?

Viscount Cranborne

My Lords, the noble Lords, Lord Jenkins and Lord Richard, are united at least in one thing; namely, in finding the summit pretty unexciting. It is one of the features of good management that things do not happen, rather than that things obviously do. The absence of crisis sometimes offers more evidence of good management than do crises. In answer to the question of the noble Lord, Lord Richard, as to whether the summit was productive, I can do no better than repeat to him the remarks, which I believe I noted down correctly, of the noble Lord, Lord Jenkins of Hillhead; namely, summits perform a useful purpose if they focus minds on a more international rather than an inward-looking context. From that point of view it would be safe to say that the summit was a success.

However, I should hate the noble Lord, Lord Richard, to go away with the thought that nothing useful was achieved. Progress was achieved in a number of areas, and indeed on initiatives taken in previous .summits and in previous international forums. To that extent it was useful. Also, my right honourable friend made reference to a number of new initiatives—a notable number of which originate from the United Kingdom—which will become matters of considerable moment in what is, after all, an increasingly interdependent world.

The noble Lord, Lord Jenkins, asked me whether the G7 will continue to exist, or whether it will be transmogrified into the G8. I think I can reassure the noble Lord that we look forward in due course to Russia joining the G7. But a great deal has to happen yet before it is possible to see Russia as a fully fledged member. Nevertheless, it is perfectly clear that President Yeltsin's presence was not only welcome, but was extremely useful when G7 became G8, which it did from the evening of the first day.

On United Nations institutions, the noble Lord, Lord Richard, quite rightly asked me about UNCTAD and UNIDO. Her Majesty's Government are wholly committed to the United Nations and its various agencies. It is perfectly clear that those agencies have an extremely useful role to perform. However, a number of them could patently perform their role more cost-effectively and better. One of the positive aspects of the summit was the unanimous view that action should be taken to try to ensure that that happens. Certainly, so far as the financing of UN agencies is concerned, it is clear from the communiqué, and indeed my right honourable friend's Statement, that the United States is not paying its dues. The communiqué calls upon all United Nations members to meet their financial obligations clearly. That is a call with which Her Majesty's Government are pleased to associate themselves.

On the matter of world trade and the poor countries, it is superfluous to remind the noble Lord, Lord Richard, that the United Kingdom is still the fifth biggest provider of international aid to what used to be called the third world. My noble friend Lady Chalker has a notable record in trying to focus that aid and ensure that the British taxpayer gets better value for money, and in trying to ensure that the recipients of aid see that it is used to their most constructive and long-term advantage.

Noble Lords will also take considerable comfort from paragraphs 29 and 30 of the communiqué, and particularly from paragraphs 39 to 42, headed "Creating Opportunities Through Open Markets". It has been the feeling of many of us over the years that trade is very often—indeed, almost always—better than aid. There is a very strong determination, which became clear during the course of the Halifax Summit, that open markets throughout the world are crucial to accelerated economic growth in the developing countries. That is the phrase used at paragraph 30. The World Trade Organisation will monitor and review the Uruguay Round. It is clear too that we are talking not only about tariffs but also about non-tariff barriers which are very often more difficult to deal with.

With regard to Bosnia, I merely remind the noble Lord, Lord Richard, that, unless one wants to go to war and intervene in a civil war, peacekeeping is only possible if there is a peace to keep. The noble Lord has delivered himself of that important observation a number of times. It has become clear in what was central Bosnia that, where the Croats and the Bosnian Moslems have wanted to make peace, the UN and particularly the British forces, who are strong in that area, have been able to help very much in the establishment of what, for the past 15 months, has been a relatively peaceful period.

I am afraid that Bosnia is a subject to which your Lordships will want to return all too frequently over the coming weeks and months. It is clear that the decisive action taken by Her Majesty's Government has had an immediate effect. Our hostages have been released, as have other UN hostages. It has been made clear that the Rapid Reaction Force can be used to reinforce any necessary action to enable the UN forces to deliver the task that they are there to do. Equally, if that task becomes impossible, there Is no doubt that we shall have to withdraw. If I may say so, the unanimous support which both Houses of Parliament gave in the debate that took place a couple of Wednesdays ago played an important part in making sure that the world at large and the Bosnian Serbs in particular realised that we meant what we said.

4.3 p.m.

Lord Boyd-Carpenter

My Lords, I thank my noble friend for repeating the Statement. Particularly in the light of certain observations made by the noble Lord, Lord Jenkins of Hillhead, it seems to me at any rate that it is a matter of major importance to the whole standing and operation of this House that when such Statements are made in another place, they should always and indeed automatically be repeated in your Lordships' House. I believe that if this House is to function as a House of Parliament, it is essential to insist on that.

I want to ask my noble friend only one question. In the light of the decision of the American House of Representatives on the financing of the Bosnian exercise, what will happen now in respect of United States' participation with France and ourselves in Bosnia? As I understand it, the President of the United States has been denied financial provision for that by the House of Representatives. I should like my noble friend to tell us what will happen. Is all support from the United States to be given, as it were, on tick; or will some other method be found of financing the quite expensive operation in Bosnia?

Viscount Cranborne

My Lords, I agree with my noble friend on his first point. I have frequently observed to your Lordships—perhaps more frequently under questioning from the noble and learned Lord, Lord Simon of Glaisdale than from anyone else—that this place is not a gentleman's club. It is a House of Parliament. If your Lordships ask for Statements to be repeated in this House, that is entirely proper and Her Majesty's Government are only too delighted to comply, particularly in view of the extraordinarily well informed nature of your Lordships' questioning. I sometimes feel that I would rather repeat Statements in another place than here.

With regard to the United States, as usual, my noble friend puts his finger very much on the nub. It is perfectly clear that the United States Administration has given its strong political support for Resolution 998 and President Clinton himself would very much like to pay his whack. But, as my noble friend made clear, the president has difficulty with Congress. It is important that discussions should continue between the United Nations and all troop contributors as a matter of urgency. We hope that a satisfactory resolution can be found, because without money it is difficult to see how troops can be maintained.

Lord Bruce of Donington

My Lords, the noble Viscount was justifiably very modest in his claims about the results of this conference. He said that one of the advantages was that it enabled the individual statesmen who attended the conference to allow their minds to roam over the field of international affairs. We are all relieved about that. Indeed, it must have been a great boon to a number of statesmen, apart perhaps from Monsieur Chirac, to be free from the troubles that most of them are experiencing in their own countries, including our own Prime Minister.

Perhaps the noble Viscount will answer my question with regard to the first point. If the principal achievement is to focus the attention of the various Prime Ministers on international affairs, to what extent were the proceedings of the summit in excess of the information that could be derived from an intelligent reading of The Times newspaper for about a week? That seemed very adequately to cover the whole spectrum of events.

One of the truly disappointing things about the summit is that the conference followed exactly the same form as the one held in Naples: "We are urging this; we are strengthening that and considering the other" and all the rest of it. Why bother once again to repeat the platitudes relating to unemployment? Those platitudes are contained both in the communiqué and in the speech that the noble Viscount was good enough to read to us. All that has happened since the last summit is that all the member states have followed exactly the same economic policies as they have followed for the past 10 years, the result of which has been a growth in worldwide unemployment.

The noble Viscount may claim credit for a certain decline in unemployment in this country—which may be not wholly due to a decline in numbers but more to statistical manipulation. But the fact of the matter is that those who are concerned with unemployment in the world, in our own country and in Europe deserve a far better result from the heads of state at the G7 meeting than is contained in the quite vapid and meaningless communiqué that was issued after it.

Viscount Cranborne

My Lords, had the noble Lord, Lord Bruce, drafted the communiqué, I am sure that it would have been greatly improved. Nevertheless, I hope that he will not underestimate the purport of the content of what he feels is a collection of platitudes.

His reference to President Chirac enables me to attempt to answer a question put to me by the noble Lord, Lord Richard, which I am conscious that I failed to answer when I took up his other points. The answer is that President Chirac was indeed a most welcome new influence in the counsels of the G7. He is full of ideas. I cannot say that they are necessarily fresh ones because they mirror very closely the ideas that Her Majesty's Government have been deploying on the central matters of growth and employment in this country for 16 years. But it is extremely refreshing to find that one of our longest standing allies in Europe is taking up the approach to encouraging growth and employment that we ourselves have long advocated. We refreshed ourselves most distinctly with that. It is very much reflected in the extremely good relations that have been established between my right honourable friend and President Chirac not only in Halifax but also in Paris the weekend before last.

I look forward to those ideas being combined and put into operation throughout Europe. As the noble Lord observed, the unanimous view was expressed that the economic route we have taken is the right one. Perhaps he will see that we are not talking of platitudes, but of a distinct difference—a difference between us and the party opposite in this country and between President Chirac and the experience of the French Republic between 1981 and 1983 when they attempted to put some of their ideas into operation.

The Earl of Lauderdale

My Lords, perhaps I can make a point in relation to the rapid reaction force. I understand what has been said; the Americans are not yet paying their whack. Is its deployment being delayed on that account? What is the state of play? If it is being deployed without any money, how will it be paid for?

Viscount Cranborne

My Lords, there is no delay in the deployment. The financing must urgently be sorted out. I have made that clear. However, I hope my noble friend will appreciate that the sums of money involved are substantial. They will have to be found and if we are to remain in Bosnia, the discussions will have to be urgent and fruitful.

Lord Harris of Greenwich

My Lords, perhaps I can ask the Minister two questions. First, in relation to international crime, the Prime Minister referred to a British initiative when it was proposed that a high-level group to look at the issue be set up. Who will provide the secretariat for that group? Will it be a meeting of Ministers of the Interior and the United States Attorney-General? What is involved in that passage of the Statement? Secondly, on the question of terrorism, the Prime Minister referred to a better system for exchanging information in relation to terrorist incidents. We welcome that, but there is already substantial co-operation between the security services. What is involved in that passage of the Prime Minister's Statement?

Viscount Cranborne

My Lords, I hope the noble Lord, Lord Bruce, will agree with me that that passage of the communiqué was of anything but a bland nature. The noble Lord, Lord Harris, rightly points to those important issues. The secretariat, and what I am told are called the "modalities" of these things, have not yet been agreed. However, they will be addressed as a follow-up to the summit on crime and terrorism as a matter of urgency. As the noble Lord said, there is already a good exchange of information on terrorism between interested parties and with the Russians. There is clearly room for improvement and he will be aware more than most that the technical advances of the past few years have been taken up to a marked extent by international criminals and terrorists. It is important that the government agencies that have to respond to those developments should at least be ahead of those they are trying to catch.

Lord Beloff

My Lords, it is characteristic of summits that they are a long way away from the plain. Perhaps I can suggest to my noble friend one comment from the plain on the matter of Bosnia. When one asks ordinary people about Bosnia, what strikes them most is that the city of Sarajevo has been under siege for three years. The United Nations is prevented from delivering even the basics of humanitarian aid to its inhabitants and those who venture from their cellars in order to secure water for their families risk death from mortar fire. I agree with my noble friend the Minister that that does not mean that the United Nations should go to war with the Bosnian Serbs, but surely a meeting of leaders who claim to represent the major civilised countries of the world could at least have expressed their horror and grief at the sufferings of the inhabitants of Sarajevo. People on the plain do it; why cannot the summit?

Viscount Cranborne

My Lords, I am sorry that my noble friend feels that those sentiments were not expressed by the leaders who met in Halifax. It would be fair to say that all the leaders who met there, in all they did, expressed implicitly and explicitly the horror which my noble friend expressed so eloquently and which I take the opportunity once again of expressing on behalf of Her Majesty's Government.

Lord Taylor of Gryfe

My Lords, the Minister rightly paid tribute to the contribution of President Chirac in these affairs and to the new relationship that appears to be developing between France and ourselves following his election. One disappointing feature is that it was almost on the eve of the summit that the announcement came that France is about to resume testing nuclear bombs. From today's newspapers it appears to have encouraged the United States to make a similar declaration. That follows the signing of the non-proliferation treaty only last month. I wonder whether the leaders of the countries concerned, during this meeting, discussed either the security or environmental aspects of this new development.

Viscount Cranborne

My Lords, the question of the conference covering a non-proliferation treaty review and extension was discussed. The decision to extend the treaty indefinitely was greatly welcomed. It has been a good outcome for all and there has been close co-operation between the G7 members who played an important part in securing that result. The membership of the non-proliferation treaty is approaching almost universal membership worldwide. There are now 178 parties to the treaty and we urge all states which have not yet acceded to the treaty to do so and to allay international suspicions about their nuclear activities.

French nuclear testing was not directly discussed. The important international objective is the early agreement of a comprehensive test-ban treaty and all members of the G7 reaffirmed their commitment to it. It is a decision for the French. It is not for us to comment on French requirements and how it decides to meet them. However, we are pleased to find that French commitment to a complete test-ban treaty is well known and has been reaffirmed. In relation to the United States, it is alleged that Secretary Perry made remarks of the kind reported by the noble Lord. We have not yet had confirmation of that and there is no evidence so far that the United States intends to resume nuclear testing. We must be aware that testing covers not only new nuclear weapons, but can be a most effective way of securing the safety of existing ones.

Lord Pearson of Rannoch

My Lords, I was interested to hear my noble friend say that the G7 leaders discussed the problem of unemployment. My noble friend alluded particularly to the fact that unemployment is running at some 11 per cent. in the European Community. All leaders agreed on what needs to be done about that. My noble friend alluded to lowering social costs, for instance, and perhaps increasing international free trade. It is good news that the new President of France agreed with those conclusions.

Perhaps my noble friend can tell the House what effect that kind of agreement will have on the European Commission and other countries of the European Community, who show no sign of having understood the wisdom dispensed at the Halifax G7 meeting.

Viscount Cranborne

My Lords, it has long been an objective of Her Majesty's Government to bring about the sort of labour market conditions which I understand my noble friend would welcome. Both at Essen before Christmas and at this G7 summit not only were those objectives and methods endorsed, but they were endorsed unanimously. I hope that my noble friend will therefore be a little less sceptical. Progress is being made and the free market, which he and I greatly welcome not only within the community but also world-wide, can deliver jobs far more effectively than can regulations.

Lord Desai

My Lords, the Statement mentioned reform of UN economic institutions. One of the problems with the G7 is that although the leaders meet once a year, nothing happens in between. I believe that the report of the Commission on Global Governance suggested some time ago, as did the UNDP in its human development report, that an Economic Security Council should be constituted. Perhaps the G7 could form the core of that body, adding other members. Has any thought been given to making the G7 a body with a permanent secretariat and expanding it to include other leading nations of the United Nations?

Viscount Cranborne

My Lords, I understand the predictable justice of the diagnosis which the noble Lord has given. In the context of the Mexican crisis, which I am sure is a good example of the sort of thing that the noble Lord described, the G7 particularly considered the slightly banal dictum—perhaps the noble Lord, Lord Bruce, will forgive me for saying that—that prevention of financial crisis is better than cure. That is why sound domestic policies matter. However, rather than the body which the noble Lord proposed, the G7 thought that there was already such a body to hand in the form of the International Monetary Fund, and that more effective surveillance by the IMF might be a more cost-effective way of dealing with this, combined with measures to improve the transparency of markets worldwide. I am sure that the noble Lord, with his great knowledge of the subject, will want to return to this.

Baroness Farrington of Ribbleton

. My Lords, will the noble Viscount comment on whether government policy will change with regard to the balance underpinning our trade with developing countries through export credit guarantees moving away from military sales towards sales in other areas in line with the statement that was made following the summit and in keeping with encouraging such countries to develop their non-military trade?

Viscount Cranborne

My Lords, in no way do I apologise to the House or to the noble Baroness for the fact that this country has a highly developed and efficient arms industry. Indeed, under the United Nation's Charter, it is the right of every country to defend itself. However, the best way to reduce demand for weapons is to make sure that the world is at peace and that threats are defused. One of the very best ways of ensuring that in the long term rather than merely by patching is to increase the volume of international trade generally. It is for that reason that I particularly welcome the paragraphs to which I referred earlier. The noble Baroness will be aware that although this does not always seem to be the case from the headlines, with the end of the Cold War, the overall size of the international arms market has declined. It has declined as a proportion of overall international trade also. I am sure that both the noble Baroness and I greatly welcome that fact.