HL Deb 22 January 1997 vol 577 cc774-92

8.48 p.m.

Baroness Young rose to ask Her Majesty's Government what are their present relations with Cuba.

The noble Baroness said: My Lords, I tabled this Unstarred Question for two reasons. I did so first because I have taken a great interest in Cuba for some time now and I paid my third visit to that country last October. I believe that it is important that we should not neglect Cuba or any part of the Caribbean. I did so secondly because I believe that now that we know the results of the United States elections this is an appropriate time to look again at the effects of the Helms-Burton legislation. Perhaps I may add how very grateful I am to all those who are to participate in the debate.

Over the past four years Britain has established a wide range of new relationships with Cuba. During this time we have seen ministerial visits—two by my honourable friend Mr. Ian Taylor, the Parliamentary Under-Secretary of State at the DTI, and one by my honourable friend Mr. Tom Sackville from the Home Office. They were the first ministerial visits for 20 years.

What is valuable is that we are now able to discuss openly and frankly with all members of the Cuban Government—including, importantly, President Castro—issues ranging from trade and narcotics interdiction, to our concerns about civic rights and the development of a civil and more open society. We have also seen our relationship and dialogue with Cuba develop with a wide range of Cuban Ministers visiting the United Kingdom to discuss issues ranging from biotechnical, medical and other research in which Cuba is engaged to the problems of deepening trade and other exchanges. I wish to say at this point how fortunate I believe we are in our ambassador and his staff in Havana who have worked tirelessly and effectively to promote Britain's interests.

All this activity has been paralleled by a growth in British commercial activity in the spheres of both investment and trade. British companies are now involved in a wide range of investments and financing, from agriculture through to manufacturing. The Commonwealth Development Corporation, which is actively engaged in the creation of a number of joint ventures, will open an office in Havana before too long. This has been paralleled by an increase in trade, with companies being well represented at major exhibitions such as the Havana International Fair and Expo Caribe in Santiago de Cuba.

However, despite this mutual interest, what worries me at the present time is that we are now in danger of losing this early advantage to others in Europe and elsewhere. As your Lordships may know, I chair the Cuba Initiative. This consists of businessmen and women with officials from the DTI and the FCO and the noble Lord, Lord Kennet, whom I am glad to see in his place, and its purpose is to promote trade between Britain and Cuba. There is a similar committee in Havana chaired by Minister Cabrisas, the Minister for Foreign Trade.

The danger is that the good work I believe we have been able to achieve may come to nothing if we are not able to respond to Cuba's interest in involving our companies more closely in their economy. I speak here about the absence of ECGD cover and an apparent unwillingness to consider mechanisms which are acceptable elsewhere in other countries in the case of Cuba. I regret to say that the approach of ECGD is in stark contrast to that being taken by our European partners. That is why exports to Cuba from France exceeded 220 million dollars last year and those from Spain 380 million dollars in 1996. Holland totalled 120 million dollars, Italy 120 million dollars, and others in Europe were not far behind; Canada I believe exported 370 million dollars' worth. Indeed, if we in Britain were to be doing as well as France, Spain or Canada, Cuba would be one of our largest markets in Latin America and certainly the largest in the Caribbean.

It is therefore a sad fact that our exports at 40 million dollars come far behind. In saying this, I wish to make it clear that this is no criticism whatsoever of British companies, which have been working very hard indeed, but which have had this difficulty about ECGD cover.

Indeed, this startling recent progress on the part of our European Union partners has followed from a willingness to provide short-term credits on a revolving basis against guarantees of payment from the future earnings of commodities such as nickel and sugar. France and Spain appear to understand what we do not. That is that if Cuba is ever to be able to repay its commercial debt—a matter it has just begun to explore with certain other countries—it needs to upgrade and retool its productive sector, an approach facilitated by the provision of credits. There is therefore a double danger. Not only are we falling behind in our exports, but there is a real possibility that we will not get our debt repaid, either. Perhaps I may say while on this matter that it is something which I have raised directly with Ministers in the DTI. The position that ECGD is now taking will lead to the probable loss of a £20 million contract offered to a British supplier. If this is the case, I believe it to be a tragedy in which there are no winners whatever in this country. I find it difficult, if not impossible, to understand.

There is now a strong case for high level representatives of ECGD to visit Cuba to reassess their position, for them to consider the approaches that are being taken by other European nations and, if necessary, to discuss with them how they manage to deal with what are very similar problems to those which we experience ourselves. I hope also that the DTI will send a senior official at the earliest possible opportunity to learn about the unique trade opportunity that we are missing. I should be most grateful to my noble and learned friend if he will comment on these two particular points.

They are of the utmost importance, and I know that I am speaking, in saying this, on behalf of very many British companies today.

Turning now to the effect of the Helms-Burton legislation, in December last the EU agreed a common position on Cuba. That statement encouraged change in Cuba and makes it clear that member states would seek to effect change through engagement and dialogue rather than by the approach preferred, I am sorry to say, by the United States. Unhappily, the United States continues to seek some uncertain future for Cuba through a process of isolation, which I believe could only lead to social and political chaos that would eventually spill over into the rest of the Caribbean, were it to succeed.

Moreover, the United States—a country for which I have great admiration—has sought through the unacceptable extra-territorial Helms-Burton legislation a unilateral solution on us all in response to their differences with Cuba. Surely, this cannot be right in a world moving to multilateral solutions to problems. That is why the action brought by the EU in the World Trade Organisation has much wider implications and needs to succeed.

This month President Clinton again waived Title III of this extra-territorial law, thereby again postponing the ability of US citizens with pre-registered claims to allegedly expropriated assets to bring action against individuals or companies from third countries. However, the very fact that every six months international policy towards Cuba is held hostage in this way can hardly be acceptable in a world where we are trying to find long-term solutions to problems through consensus and debate. That is why the EU action at the World Trade Organisation against Helms-Burton is so important as it makes clear to our friends in the United States that they cannot assume the right to legislate for us on this or indeed on any other issue.

Much of the focus in the debate on Helms-Burton has been on Titles III and IV, which deny entry to named individuals into the US. However, I believe that we should also be concerned about Titles I and II, which seek to determine how a transition in Cuba should take place. While much of the content of this part of the legislation should be principally a matter of concern in the United States, surely it cannot be sensible that the US administration has allowed its hand to be tied in a matter as critical as determining how to respond to change in Cuba. Indeed, I believe it to be the case that if President Castro indicated that Cuba was preparing for multi-party elections, the legislation would not allow the US president to recognise this as a transition to democracy. Situations can change rapidly, as we saw in eastern Europe. Helms-Burton is, in my view, not helpful in any aspect to encourage a gradual change in Cuba in a manner that can be endorsed by all its people, which is something we all want to see.

On my last visit to Cuba I had the opportunity to meet with Dr. Lage, the vice-president of the Council of Ministers. Dr. Lage is by any standard an outstanding representative of all that is new in the Cuban Government's thinking. I believe that the time has come for Britain to facilitate a constructive dialogue with the new generation of Cuba's leaders, as have our friends in Canada and elsewhere in Europe. I therefore hope that it will be possible for Britain to recognise the value of inviting Dr. Lage to the UK either later this year or early in 1998 so that a broader range of individuals can fully understand Cuba's new thinking and the progress that is being made in restructuring the economy.

In some circles in North America it is suggested that the economic reform programme has ended. That is far from the truth. I believe that the Cuba Initiative knows this well from conversations with some intimately involved in that complex process. What is now under way is a far-reaching but low key process of consolidation of the first phase of the reform process. That involves the complete reform of the banking system, the full introduction of a tax system, the removal of subsidies, and the establishment of all enterprises on a fully commercial basis. That process which will affect the lives of every Cuban is of great complexity but is showing early signs of success, with the Cuban economy again moving forward with a growth last year of 7 per cent.

No one would deny that we have our differences with Cuba, but there are many other countries with significantly worse records with which we continue to trade and to deal. Our way is through engagement and dialogue. The time has come for Britain to move on to a deeper relationship from which our companies, our exporters and the Cuban people will all benefit.

9.1 p.m.

Baroness Hooper

My Lords, I thank my noble friend for once again bringing this issue before us and for giving us the opportunity to update our information on the current state of our relations with Cuba. Noble Lords may be aware of my interest in Latin America. In that region, Cuba is now the only country whose people do not enjoy the benefits of a pluralistic democracy and free and open government. Nevertheless, as my noble friend has enumerated, many changes have come about in recent years. In part, that is as a result of the break up of the Soviet Union. The move towards a market economy is very much to be welcomed. I support my noble friend in wishing to encourage Cuba to move further and faster in what we consider to be the right direction.

I, too, deplore the actions of the United States in seeking further to isolate Cuba and to penalise foreign countries doing business inside Cuba. If it is all right to trade with China, why not Cuba? I, too, will be interested to hear from my noble and learned friend the Minister the latest information on the status of the Helms-Burton legislation. As my noble friend said, the so-called temporary waiver brought in before the US elections has been extended for a further six months. It is important to remember that that waiver affects only the implementation of the policy; that is to say, the imposition of penalties and fines.

In the meantime, I understand that the US authorities continue to compile lists—black lists, perhaps we should call them—and on the latest figures I have those consist of some 318 foreign companies reportedly doing business with the Castro regime. They include 147 EU firms, 27 of which are British and include household names such as Fisons, Tate & Lyle, and Glaxo Wellcome. I was talking only this morning in the City to a leading stockbroker who deplored the fact that no member of his firm can go to Cuba at present because of the extent of its business in the US which would be imperilled by that legislation. At the very least, other companies have slowed down or delayed investment there. That must be a tragedy for all those in Cuba who are trying to push change further.

I am pleased that in addition to the unilateral protest from the UK, we have joined our EU partners in protesting, as my noble friend said. In demanding that the WTO declares the Helms-Burton legislation illegal, and contrary to the general principles of international law and the sovereignty of independent states, we are bringing to bear the most important forces. I shall be interested to hear from my noble and learned friend the Minister about the progress of the WTO intervention.

However, I regret hearing from my noble friend that the ECGD does not sufficiently support the trade effort of British companies which are keen to do business in Cuba. In that respect, I hope that the Treasury has not been deterred by the attitude of the United States. I know from my experience of the DTI that considerable support is given to businessmen and that subventions are available for trade missions to other countries in Latin America. A major conference, supported by the joint initiative of the DTI and the Foreign Office, will take place in early February. It will be attended by the presidents of Brazil and Peru and other leading figures from Latin America. It is intended especially to encourage the trade effort between this country and the various Latin American countries. I understand that Cuban representatives will also be attending that conference.

On another front, I am however glad that a second Minister to visit Cuba in 25 years is my honourable friend Tom Sackville, to whom my noble friend referred. He went there last month and was able to sign a Customs and Excise co-operation pact with Cuba as part of an offensive to close down drug smuggling routes through the Caribbean to Britain. I understand that two Scotland Yard officers are due shortly to go to Cuba as part of that effort. That policy affects the UK itself with regard to the five Caribbean dependent territories. I understand that the Foreign Office plans to take on new powers to crack down on money laundering in those territories as part of a joint effort.

Recently there has been even more encouraging information that Cuba is also co-operating—believe it or not!—with the United States on that front, and last month handed over to the US authorities six tonnes of cocaine seized from a Colombian freighter. Those are all welcome signs of progress and openness in Cuba and our relations with Cuba. I hope to hear more from other speakers and from my noble and learned friend the Minister.

9.8 p.m.

Viscount Waverley

My Lords, I am at one with the common desire to bring democracy, freedom and human rights to Cuba. That said, I am totally opposed to the principle of extra-territorial legislation, whatever its source.

I consider myself a friend of the United States and am sensitive to our close bilateral relationship. However, I would like to express certain concerns. Although I recognise that certain provisions of the Helms-Burton Act have been suspended, it is of continuing concern to me that the United States is not a team player.

Policy towards Cuba is only but one example. Development policy both near and far, decertification action against a number of regional states, a disagreeable protectionist attitude and holding out on UN arrears with a "What is in it for us?" approach is being neither statesmanlike nor appropriate as the sole superpower.

The United States could offer a great deal to our global village but is doing little more than being a recalcitrant big brother. It will not have escaped attention that even Canada's Foreign Minister, representing Cuba's leading trade and investment partner, began a state visit to Havana yesterday. It seems to me that Canada, as a co-partner in NAFTA, has proceeded with this visit in spectacular defiance of United States policy.

My fervent hope is that the forthright Secretary of State designate is able to knock some sense, worthy of her reputation, into the foreign policy of the United States and into Senator Helms.

9.11 p.m.

Viscount Montgomery of Alamein

My Lords, the noble Viscount, Lord Waverley, will be pleased to hear that I agree with every word he said. He is totally on the right lines, for once, which is very encouraging.

Noble Lords

Hear, hear!

Viscount Montgomery of Alamein

My Lords, I, too, am indebted to my noble friend Lady Young for introducing the debate. She has done sterling work in the past few years in promoting our trade with Cuba. Her chairmanship of Caritag and the Cuba Initiative is well known and is greatly to be commended. I was in Cuba in August. I went to many meetings which concluded in discussion of what my noble friend was to do and how much they were looking forward to her visit. I felt a little like John the Baptist in the context of preparing the way for someone much greater than myself. Long may that continue and I hope that my noble friend will continue with her work.

I first went to Cuba in 1960 as a senior executive of Shell in order to participate in the reorganisation of that company's affairs in Cuba. I had been involved in Latin America for some years and I hoped that I would stay in Cuba for some time. It is an incredibly beautiful island, filled with hard working, intelligent people. It is richly endowed with an enormous variety of natural resources and it is a veritable tropical Garden of Eden.

Unfortunately, my stay was short lived because by then the revolution was well on its way. It was decided that the foreign oil companies were not required and so I had to leave. Needless to say, I was a little irritated because I thought that my stay would be enjoyable. However, it did not curtail my Latin American activities and I have returned to Cuba many times since. Not only have I returned, but the Shell company, whose service I left more than 35 years ago, is also back there in action. It is looking to the future and not to the past, which is the case with so many companies.

At the time the revolution appeared to be entirely justified because it was replacing a wholly corrupt regime which had been in existence for some time. The Cuban Revolution espoused the notion of creating a pure socialist state, and because of circumstances, the Cubans were much encouraged in that by their subsequent linkage with the Soviet Union. When I was a young man at school, I thought that the notion of a pure socialist state was rather a good idea but many years of working all over the world has taught me that it does not work quite as well as I thought at that time. I have no doubt that the noble Lord, Lord Peston, might agree with that concept.

The Cubans were encouraged in that and to a certain extent had no alternative because the US policy was flawed from the beginning. The embargo that was created gave them no alternative, so that that linkage with the Soviet Union, which appeared to be so beneficial, turned out to be something of a millstone around their necks for so long. Indeed, those of us who visited Cuba in the interim period from time to time trying to do trade found that there was not much that we could do. There was nothing on offer because Cuba had that artificial trading system.

Since the collapse of the Soviet Union and the Soviet system, all that has changed and Cuba now has the option of trading with the whole world. That is what is so exciting and that is why the initiatives that have been taken and followed up by my noble friend Lady Young are so important.

I turn to Helms-Burton because that has been mentioned already and is bound to be mentioned again. That is a scandalous piece of extra-territorial legislation. It is absolutely contrary to the whole concept and idea of the WTO and for the world's leading economic power to conduct itself in that way is absolutely absurd.

I do not know what can be done about it because my understanding is that it is almost impossible to repeal legislation under the US constitutional system. I do not know whether that is correct and I do not know whether my noble and learned friend can answer that. However, perhaps he will inquire from his friends in the Foreign Office as to how the US can possibly repeal that legislation, because the idea that every six months it will be postponed indefinitely is absurd. Nobody can live in that sort of situation. Where do we go from there? How will the US get out of that hole into which it seems to have dug itself? It may be that when the WTO has its next plenary session it should censure the US as regards this matter so that it is forced to do something about it. Let us hope that something happens along those lines.

In the meantime, Cuba is very busy cultivating its new relationships, because obviously it has a great deal of support in those activities from the whole of Latin America and from the NAFTA countries of Mexico and Canada and, indeed, from the whole of the European Community. The United Kingdom has been in the vanguard of all that. We have pioneered the way. There have been missions by my noble friend Lady Young and others and visits by Ministers. As my noble friend Lady Young said, we have a first-class embassy there led by a superb ambassador for whom no praise is too high and who really does understand what is going on.

As a result of all these activities, a good number of very spectacular opportunities have opened up. But what is the result of all those opportunities being opened up? We have pioneered the way, as my noble friend's figures illustrate, but our European partners will reap the rewards because we have no government support. There is no ECGD cover. The French have credits; the Germans have credits; the Italians have credits; the Spanish have credits; and where are we? It is an absolutely deplorable situation.

I hope that my noble and learned friend will say something extremely positive about this. If he cannot give us an affirmative decision this evening, which may well be the case, I hope that he will talk to his colleagues and persuade them that something must be done about it forthwith because otherwise, not only will the opportunity be lost to which my noble friend Lady Young referred, but many other opportunities are also going out of the window. I wonder what is the point of the visits of my noble friend or anybody else if they have no proper back-up.

I turn now to the European Union because in the early part of last year the European Commissioner responsible for international affairs visited Cuba with the idea of negotiating a co-operation agreement but the Cubans did not like the conditions imposed upon them at the time. When I was in Cuba in August, I spent quite a lot of time discussing the matter with them. I pointed out that when there is an international agreement, conditions are always imposed. I remember talking to the Cubans. They said that they had no dealings with either the Inter-American Development Bank or the IMF. They told me that they disliked those two institutions. I told them that many other countries in Latin America and around the world also disliked those institutions but as time developed they found it necessary to make adjustments in order to obtain the benefits. I told them that all international banking and loan arrangements are always subject to conditions. Anybody here who wishes to have a loan is subject to conditions. That is the normal procedure. I believe that the Cubans are beginning to think about the real world in which they now live. Conditions are always imposed in order to obtain benefits. They may not like it initially, but it is something which they must come to accept as a necessity if they are to live in the real world in which they now find themselves.

It is also encouraging to think that at the last meeting of the European Union's economic and finance Ministers—known as ECOFIN—a policy was adopted, to encourage a process of transition to pluralist democracy". That implies that there is now a specific policy towards Cuba in the EU which is a very new development. I hope that that will lead to further visits from the EU Commission so that the co-operation agreement can come back into existence because it would certainly be very beneficial to Cuba; and, indeed, to the EU, of which we are a major and important part.

Before I close, I should like to make one further point. My noble friend Lady Young suggested that Dr. Lage should come on a visit here. I have met Dr. Lage. He is a quite brilliant young man. I believe that it is a splendid idea. Indeed, not only should Dr. Lage come here on an official visit but so should many other Ministers. I hope that my noble and learned friend will not only encourage this but that he will also encourage others to do likewise. The idea of a concept of a deeper, better and more profound relationship with Cuba is something which we must all welcome and to which we must look forward.

9.21 p.m.

Lord Kennet

My Lords, may I begin by saying how convinced I am, from direct acquaintance with it, that the work being carried out by the noble Baroness, Lady Young, as chairman of the steering committee of the Cuba Initiative is extremely valuable. I count myself very fortunate to be associated with her. In point of fact, I do not believe that I have ever before known of such a body. I think it may be a little atypical.

It is an organisation within which there is a representative of each of the two major parties from this House, the purpose of which is mainly to encourage and give political edge to an interface between government departments and British firms as regards what to do next, and between the bureaucracy of this country and the European bureaucracies. Our voices get heard—at any rate, that of the noble Baroness does. When it is looked at retrospectively by whatever government are in power to see whether it is worth doing, it may be that this form of organisation will be found to be worth expanding for use in other circumstances.

The noble Viscount, Lord Waverley, said much that I would have said if he had not said it. I shall not dwell on the position of the United States in the world. However, I should like to dwell for a moment on the position of Helms-Burton as a political/constitutional phenomenon within the United States. It goes not only against international law, because, as is perfectly obvious—indeed, it has been for I should have thought about eight or nine centuries now—you cannot go charging businessmen of a third country who happen to be in your country because they have been trading with another country which you happen to dislike. The principle is pretty well enshrined. You cannot go excluding businessmen from your territory because they had dealings with another country. All that is completely beyond the pale of international law.

And now a case has arisen in that respect which shows pretty clearly that the Helms-Burton Act is producing results which are unconstitutional in the United States. The case is that of Mr. Tom Johnson who is the President of CNN. Of course, the latter is not known as a great friend of American governments; but, equally, it is not known to be a particular enemy of them. Nevertheless, Mr. Tom Johnson has had an experience which he says beggars comparison with the experience he had with Chinese bureaucracy when he tried to set up a CNN operation in China.

The experience was as follows. Mr. Johnson wanted to set up an operation in Cuba and was informed that in order to do so he must have a licence—presumably under Helms-Burton—a kind of waiver which should ensure that he would not be imprisoned. But he was told that he would not be granted such a licence. If one looks further into the background—Mr. Johnson has said this publicly—one sees that the reason apparently is that the proprietor of the Miami Herald, which is the chosen newspaper of the hundreds of thousands of Right-inclined Cuban refugees in Florida, has kicked up a political storm about the matter. He has said that he wants to keep his monopoly of reporting on Cuban reality to the American people. Such is the weight of the Florida vote that he is winning the day and CNN is to be excluded.

I seem to remember that the American constitution was amended for the first time in the direction of the freedom of the press. This is a direct denial by the American Government of the right enjoyed by one of its citizens to go to another country and report home on what is going on. That in itself is almost as important as the trade shenanigans. Such action is against the first amendment to the American constitution as well as being against the WTO and the rest of it. I hope that under the guidance of the noble Baroness we shall be able to—

Noble Lords


Lord Kennet

My Lords, we are 17 minutes ahead of time.

Lord Chesham

My Lords, the noble Lord still has only four minutes in which to speak.

Lord Kennet

My Lords, I understand that. I utter one hope. Under the guidance of the noble Baroness I hope that we shall be able to play a more active part to get European Union movement in this field, and especially to line up with the European ECGDs.

9.27 p.m.

Lord Thomson of Monifieth

My Lords, like other noble Lords who have spoken I, too, thank the noble Baroness, Lady Young, for asking this Unstarred Question, and especially for being such a notable ambassador for Britain in expanding trade with Cuba. I was therefore all the more disappointed to hear some of the criticisms she felt she had to make about the response of the Government in terms of ECGD. That was echoed by the noble Viscount, Lord Montgomery. I hope that in due course we shall receive an answer from the Minister on those points.

My own view is that by far the best way to increase our influence in a country such as Cuba is through trade and dialogue. During my many years in politics I have had some experience of sanctions. I started as a sanctions enthusiast, but as the years have gone by I have become more sceptical about them. Sometimes they are no doubt necessary and inevitable, as in the case of Iraq, but they involve the difficulty that they tend to make the poor poorer and powerful politicians more powerful. Ever since the Second World War and ever since the revolution in Cuba we have maintained an embassy and an ambassador there and have maintained a dialogue. I believe that is the better way to proceed in this case. Britain has, of course, historic relations of importance in the Caribbean generally. We have much to gain from encouraging the right sort of developments in Cuba. Cuba is, I suppose, almost the last of the old fashioned Soviet type communist states in the world. If we can do something to encourage a gradual movement towards a more civil society—as the noble Baroness called it—that would be important. It is important to encourage it to join the mainstream of Caribbean democracy.

As has been said, as a byproduct of our efforts in Cuba, there is the useful co-operation in the battle against drugs. I was glad to read that the Cuban Minister, the chairman of the commission, visited this country last year, and Scotland Yard has a team in Cuba at present. As almost every noble Lord has said, for their own domestic and regional reasons the Americans have adopted a different policy towards Cuba over a period of years from that adopted by the United Kingdom and our European and Commonwealth partners. The latest example of that is the notorious Helms-Burton Act. In terms of its results, the American policy seems to leave them in a very solitary situation. I note that the last time there was a resolution at the United Nations on the issue, 137 members of the United Nations voted to persuade America to repeal the Helms-Burton Act, with only two supporters, Israel and Uzbekistan. That is hardly a recipe for successful international diplomacy.

On our side of the Atlantic, not only the Government but the Government in association with its European partners have been wiser and more active in the diplomacy that they have promoted. I listened to what the noble Viscount, Lord Montgomery, said about this. I was interested to see that the European Union recently passed a new regulation to deal with the matter. It seemed to be of a usefully balanced character. It was robust and vigorous in terms of defending the interests of the European Union in international trade if the United States were foolish enough to pursue seriously the Helms-Burton proposals. At the same time, it was equally forthright in its espousal of the need to promote human progress and human rights in Cuba. I believe that it may have helped President Clinton at least to give the further six months suspension of the Helms-Burton Act. I believe that it was a good example of how European Union diplomacy can be effective and can play a useful part.

I believe that the European Union regulation requires a United Kingdom order to implement our responsibilities in respect of that regulation. I should be grateful for information on how that is proceeding. I should also be grateful to hear from the Minister the Government's position about any British companies which feel that they are suffering damage from the effects of the American Act, and what help they can expect if the Americans were to proceed further on that matter.

As other noble Lords have said, the Act is still on the statute book. As the noble Viscount said, it is unsatisfactory that we have to proceed on the basis of hoping for a fresh suspension every six months. I do not know what the constitutional answer is. However, I hope that if the Act cannot be repealed, like many Acts of parliament in many countries it might be allowed to wither on the vine or allowed to rust away and not be put into effect. I believe that the maximum international effort is required through the World Trade Organisation, and in other ways, to ensure if possible that the Act is never put into operation. I hope that Her Majesty's Government will play a leading part in that.

Before I sit down, I should like to say how greatly I admire, not for the first time, both the stamina and the versatility of the noble and learned Lord, Lord Fraser. He has just turned from the intricacies of domestic trade union law to the intricacies of the Helms-Burton Act. When he replies, I hope that he can give a positive response to the complaints made by the noble Baroness, Lady Young, about the trade matter, and reassure us that Her Majesty's Government will do everything possible in association with their partners to deal with the situation created by the Helms-Burton Act.

9.34 p.m.

Lord Peston

My Lords, we are indebted to the noble Baroness, Lady Young, for raising the matter before us tonight. I speak as an outsider. Noble Lords are aware that only in the most extreme circumstances do I ever allow myself to cross an international frontier. My speeches never contain sentences such as, "When I was in such-and-such a country". That does not mean that I am not sympathetic on this or on other occasions.

My task is particularly easy. The noble Baroness, Lady Young, and other noble Lords have raised the important points. All I can do is echo and reinforce their remarks.

I start by emphasising that the Cuban people are our friends, and I wish them well. I have no desire to tell them what to do, or to interfere with their freedom to make political and economic choices according to their preferences. That does not mean that I agree with them; nor—following my good friend, the noble Viscount, Lord Montgomery of Alamein—that I regard the command economy in its communist or other forms as desirable or as remotely economically efficient. I had my starry-eyed days, as did the noble Viscount. I was very sad to realise that one has to learn other things. But one does.

For me, as for all other noble Lords, the one-party state is unattractive. However, I take the view that the Cubans themselves must decide the path that they wish to follow and when they wish to follow it. All I say to them is that it is possible to have parliamentary democracy and a free, mixed economy which is both prosperous and able to achieve fair outcomes for all citizens. I do not say that it is easy or guaranteed, or that, for instance, the democracies of the West do not sometimes go backwards as well as forward. However, I am optimistic that, over time, we do move forward and that we know how to rectify evils when they occur. I wish to persuade the Cubans, and for that matter others, of that belief. But I have no desire to threaten them, nor any wish to associate myself with those who do. In that connection—this is the nature of our debate—we do not mean in the military sense. I include economic threats. In the case of the Cubans, such threats are undesirable per se. But they are also undesirable in practice when confronting a proud nation. Here I somewhat echo the remarks of the noble Lord, Lord Thomson of Monifieth.

I am not naive. I do not say that the position in Cuba with regard to human rights, for example, is acceptable. However, I repeat, the Cubans themselves must rectify that situation. I very strongly agree with the noble Lord, Lord Thomson that we must not reinforce the belief of those in Cuba who see the outside world as enemies and seek to justify limitations of expression and other freedoms on the basis of preserving the nation against outside threats.

The relevant comparison is with the totalitarian dictatorships of Eastern Europe. In the end it was the people themselves, coupled with the inexorable power of modern economic forces, that led to the downfall of those regimes. They were not brought down by economic or military threats. Sadly, and it is worrying in the present context, the economic failure of the successors to the former Soviet Union—I hope only for the time being—provides a very poor model to follow. I truly believe that the West failed the Soviet Union in its responsibilities there.

However, there need be no similar failure in Cuba when the time comes and when, as it is already doing, it eventually opens itself up more fully to the rest of the world. The Cubans are right in not wanting to see the return of United States based Mafia corruption, and worse, and all that went before. I hope that they are aware that we agree on that point. There is no inevitability that that will happen if Cuba opens itself up and we trade with that country as friends, not enemies.

The point about threats holds good equally in regard to the relationship between the United States and the European Union, and, from our particular point of view, between the United States and the United Kingdom. The United States and the European Union are of equal importance, and neither should threaten the other. That is my point regarding the Helms-Burton legislation. The United States and United Kingdom are allies of very long standing and, a fortiori, neither should threaten the other. That is what Helms-Burton seems to seek.

Let me say a word on ECGD. I was very upset to hear what the noble Baroness said and I hope that the Minister can reassure us. I am particularly concerned about this matter. It is not entirely my field of expertise, as an economist, but I would have thought that using ECGD in this area should be self-financing and that there should be no public expenditure implications. I should like to know whether that is the problem and whether we are prevented from doing something which is sensible because of the forthcoming election and because no one is allowed to say that they would like to spend money on anything. In this case I do not see that that is the issue. I shall be told to be at least as silent as the Minister is on these matters. It seems to me that this is an example of something sensible which would not place a burden on the public purse. I should like to hear the Minister's view on that.

I believe there is no doubt about the illegality of Helms-Burton and its eventual total ineffectiveness. Essentially it is causing a lot of trouble to no good end. Can the Minister tell us whether United Kingdom companies have already been in touch with his department? There are two dimensions to this. Have they been in touch because, as Lord Thomson said, they have been threatened? More to the point, is there any truth in the rumour that the US has been constructing what I think is called a hit list of companies and is having a go? I am quite confident—and it shows how confident I am that I am able to speak in this context—that, if that is happening, Her Majesty's Government will stand up to this nonsense. It is quite intolerable in the modern world, at the end of this century, after having fought for 200 years for free trade, that, of all countries, the US, the great leaders in our time in matters of free trade, should adopt this kind of policy.

We are all in complete agreement. In this case I am absolutely certain that Her Majesty's Opposition is in complete agreement with Her Majesty's Government, whichever way it turns out we shall be in a few weeks' time.

9.42 p.m.

Lord Fraser of Carmyllie

My Lords, I am delighted that in this important and well-informed debate—unlike in the debate to which I responded about an hour ago—there is clear unanimity of view about how Cuba should be approached. I am grateful to my noble friend Lady Young for giving the House an opportunity to consider our relationship with Cuba. We take that relationship very seriously.

In recent years there has been an extensive exchange of business delegations, Ministers and officials responsible for trade, investment, health, justice and other fields. My ministerial colleague at the DTI, Ian Taylor, paid a very successful visit to Cuba in 1995. In line with our policy towards Cuba, there are currently no plans for an exchange of visits on a purely political level. However, my noble friend may know Mr. Mike Mowlam, the DTI Director for Trade Promotion in the Americas. He will be available to visit Cuba at a suitable time to explore commercial opportunities.

It will come as no surprise to your Lordships to know that our policy towards Cuba, along with our European Union partners, is to encourage that process of transition to pluralist democracy and respect for human rights and fundamental freedoms, as well as a sustainable recovery and improvement in the living standards of the Cuban people. A Common Position to this effect was adopted by the European Union in December last year. The Common Position notes that transition would be most likely to be peaceful if the present regime were itself to initiate or to permit such a process. We believe that constructive engagement is the most effective way of encouraging the reform process in Cuba, as the noble Lord, Lord Thomson, and many other noble Lords indicated.

We hope that our political relations will progress in tandem with our trade and investment links. While we have made some headway in that political relationship, human rights and fundamental freedoms—we must be open about this—remain areas of particular concern.

We have called for an ending of arbitrary detentions and for the release of political prisoners; fair trials with independent courts; freedom of expression; free media; the right of citizens to seek political or public office individually or as members of parties or organisations; publication of legislation; lifting of restrictions on non-governmental organisations; Cuba's accession to the international covenants on civil and political rights and economic, social and cultural rights; and co-operation with the United Nations special rapporteur on human rights. So there are a number of areas where we have our differences, but we have spelt them out openly.

Let me turn to the other main strand in our relationship with Cuba: the development of our trade and economic relations. These have been further strengthened over the last year with, I am glad to say, a substantial increase in two-way trade. The figures to the end of November last year show exports of goods from the United Kingdom to Cuba of £23.1 million. That is an increase of some 33 per cent. on the same period last year and already exceeds those for the whole of 1995 when exports were just some £19 million.

In the other direction, imports from Cuba to the end of November 1996 were £18.5 million compared with £8.2 million for the whole of 1995. I am sure that the visits to Cuba made by my noble friend and others will have played their part in this satisfying increase in trade.

Activities last year which attracted financial support from my department included DTI-sponsored representation at the Havana International Trade Fair. That 1996 fair was the largest ever, with some 36 companies at the fair.

In June there was a DTI-CARITAG trade mission which comprised some 14 companies. I am pleased to say that another trade mission is planned for the coming month of July.

I turn to the Commonwealth Development Corporation. I am sure those who have participated in this debate will probably be aware that the corporation received ministerial authority to commence operations in Cuba in June 1995 and that an agreement was signed for the CDC by my honourable friend Mr. Ian Taylor when he visited Cuba. The CDC has identified four areas in which initially to concentrate its investment activity: the financial sector, mining, agriculture and industry.

I am delighted to be able to tell your Lordships that the first investment by the CDC will be signed on the 5th of next month for a financial sector joint venture. CDC will own 60 per cent. of a company to provide short-term working capital facilities in Cuba and will second a general manager to run the company. The remaining 40 per cent. will be owned by the commercial banking arm of Banco Nacional de Cuba. In line with CDC's private sector focus, the company will provide working capital and lease finance to commercial enterprises in Cuba which are subject to market disciplines. CDC will provide a line of credit of up to 15 million US dollars to the new company.

The Investment Promotion and Protection Agreement between the United Kingdom and Cuba which came into force in May 1995 will, I hope, encourage further investor confidence and investment flows. I should add that the CDC is also a financial intermediary for the European Community Investment Partners Scheme, an EU initiative which the DTI promotes to British companies wishing to create joint ventures in Cuba or indeed in other parts of Latin America.

Financial funding remains a necessary part of our relationship, both for humanitarian purposes and to underpin our efforts to encourage economic reform in Cuba. We contribute significantly to EU aid to Cuba, which was approximately £24 million in 1995, of which our share was about £3.7 million. That covered humanitarian assistance, support via non-governmental organisations and economic reform.

We recently donated some £50,000 to the Red Cross for emergency relief, following the damage caused by Hurricane Lili in October last year; the EU provided £480,000 in addition to that, of which our share was about £81,000. Again to encourage economic reform, there is a British Partnership Scheme through which £150,000 is available per annum for suitable schemes.

Several noble Lords raised the issue of drugs. Certainly drugs and drug-related crime pose the biggest single threat to the security and stability of the Caribbean islands as a whole. Cuba, by virtue of her geographic position, is a particularly attractive target for drug traffickers. Fortunately, the Cuban Government now recognise that threat and recognise also the importance of close international co-operation in that fight.

Our counter-narcotics is increasing and over the past few years the Government have provided assistance bilaterally and also through the United Nations drug co-operation programme in the form of training and equipment for Cuban customs and police. That has been very successful. Indeed, one such course run by Her Majesty's Customs and Excise resulted in a significant seizure of cocaine during the practical part of the course at Havana airport.

I turn to the issue of the ECGD. I shall take a moment or two to spell out the various ways in which we believe we have been extremely helpful in seeking to improve the economic performance and offering various lines where trade and investment might be improved in Cuba. The position on ECGD may not be as encouraging or satisfying to those who have contributed to the debate. ECGD's short-term operations were transferred to the private sector credit agency NCM in 1991 and NCM, as a private sector company, will underwrite business with Cuba—it is a decision for NCM—only if a confirmed letter of credit is in place. The medium cover provided by ECGD was withdrawn in 1983 when Cuba first rescheduled its debt with the Paris Club. I regret that Cuba has allowed substantial arrears to build up under these rescheduling arrangements. Once Cuba has normalised its position with its creditors, ECGD would be prepared to review its cover position with regard to Cuba's readiness for new medium-term credits, but resumption of cover would depend on Cuba being able and willing to service new external debt on commercial terms in a proper manner.

My noble friends Lady Young, Lady Hooper and Lord Montgomery made reference to the approach adopted by other countries. Our information is that ECGD's approach is not out of line with export credit agencies in other countries trading with Cuba. The key issue for most agencies is whether in a given project the payment risk can be externalised. If it can, ECGD would be prepared to consider medium-term cover. I understand that the French credit agency adopts a similar policy view. As my noble friend Lady Young mentioned, the French have provided short-term cover in an arrangement involving sugar bartering. Although that may be the case, it was for short-term cover, and in the United Kingdom that is now in the hands of NCM and not in the hands of ECGD.

Baroness Young

My Lords, I am sorry to interrupt my noble and learned friend because what he is saying about ECGD is so extremely important to everyone. I want to make sure that I have understood the position. As I understand it, it is very difficult for Cuba to repay its debt unless it can get better machinery and so on to improve its sugar crop, nickel output and so on. We are in a kind of chicken-and-egg situation whereby we cannot help Cuba to improve its production and therefore it cannot repay its debt. Therefore, I do not quite see how we can get out of this log-jam.

Lord Fraser of Carmyllie

My Lords, I appreciate the real difficulties for Cuba. However, those have arisen because, having come to an agreement with the Paris Club and having secured a rescheduling, Cuba has not allowed that position to be worked through, and substantial arrears have built up. That is why I took some time to try to express to your Lordships the other ways in which opportunities are being opened up with the support of the United Kingdom to allow for investment in Cuba and to allow, through ECGD and others, for lines of credit to be opened up. It is through those routes that we would hope it will prove possible. I do not suggest that it can be achieved overnight, but it would be a way to improve the performance of the Cuban economy.

What is quite clear, but will not help it, is the Helms-Burton legislation. The noble Viscount, Lord Waverley, and, I believe, everybody who contributed to this debate, expressed their concerns about it. Of course we and the United States share a desire to see the democratisation and economic reform of Cuba. However, we have made it very clear that we do not accept that the United States has the right to export its sanctions legislation and to penalise United Kingdom business people for undertaking normal trade.

I believe that it was the noble Lord, Lord Peston, who asked me whether anyone had in fact yet been targeted. Two UK citizens, Sir Patrick Sheehy, who I do not believe is known for having a particularly leftist view of politics, and Mr. Rupert Pennant-Rea, who are both board members of the Canadian mining company Sherritt, have for that reason been excluded from the United States. Otherwise, we are not aware of any United Kingdom companies or citizens being targeted at present, but that is enough. In our view it is quite unacceptable.

The United Kingdom and its EU partners have taken positive action to respond to the unacceptable assertions of jurisdiction by the United States contained in this legislation. We have instituted proceedings in the WTO against the legislation and the EU has also adopted a regulation designed to counter the effects of US legislation on Cuba and indeed on separate US sanctions against Iran and Libya. They came into force on 29th November last year.

These actions demonstrate that the United Kingdom and its EU partners have responded firmly to these unacceptable assertions of jurisdiction. I believe that the views expressed during the course of this debate that the firmness of the EU response has paid off are correct because on 3rd January President Clinton suspended the right to bring actions against alleged traffickers in expropriated US assets for a further six months.

My noble friend Lord Montgomery is absolutely correct to say that endless repetition of these suspensions is no satisfactory conclusion. However, I cannot answer him as to how easy it would be for the United States to repeal this legislation, but ultimately we are quite clear about this: that must be the end goal. We shall persist with our pressure. I hope that the Americans themselves realise that and that the six months' repetition is not suitable.

What we must emphasise is that we consider Helms-Burton to be an international trade issue and not an argument with the United States about the aims of policy towards Cuba. As I have already stated, the goal of promoting political and economic reform in Cuba is one that we share with the United States. However, we differ fundamentally on the means to achieve that.

I have possibly taken a little longer than I ought to, but it is an important relationship with Cuba. I hope that this debate has been helpful to spell out the individual initiatives and activities through which we are taking forward our political and economic relations.

In summary, we need to maintain pressure to improve human and civil rights while engaging in a constructive relationship in which support for the growth of a market economy plays a prominent part. That approach is in the common interest of Britain and Cuba. I can assure your Lordships in a House where there seems to be a keener interest in Cuba than in another place, that the Government will continue to conduct their policy towards Cuba on these principles.

House adjourned at one minute before ten o'clock.