HL Deb 09 July 1997 vol 581 cc660-77

5.15 p.m.

Debate resumed.

The Earl of Sandwich

My Lords, we return to the very important issue of international debt. It is a pleasure to support the right reverend Prelate the Bishop of Oxford as one who has shared part of his experience of international development, and having myself served with Christian Aid, Save the Children, CARE and others working with Africa's poorest over the past 20 years. It is also encouraging to hear that there is so much consensus on this issue, not only in this Chamber, but also in another place. It was very encouraging also to hear the maiden speech and the sincerity of the noble Baroness, Lady Lestor.

It is said that there is always something new from Africa, but that does not necessarily mean something good. Optimism and faith in new solutions will not sustain any economy, and many areas of Africa are still under the shadow of civil war—the "darkness" so mercilessly described by Conrad—and the distorted nationhood so bitterly and lucidly attacked by the Nigerian writer, Wole Soyinka.

And yet with that caveat I believe that important political changes are taking place and it is time that European politicians came out again to talk positively about African economic development. The French Foreign Minister, M. Hubert Védrine, said a fortnight ago, We have totally to rethink our policy; the whole of Africa is on the move … France must be supportive of the movement in Africa towards emergent economies and democracies". I am sure that the Government have taken heart from that statement by the new French Government.

The Economist recently described Africa as a "potentially emerging market" for the West. As we have heard, Africa's economy enjoyed a 5 per cent. growth rate last year compared with 3 per cent. in 1995. The African Export Import Bank has crudely put this down to, the strength of adjustment policies and "good weather conditions". I believe that we can add "human endeavour".

However, as we have heard, these broad statistics can often conceal the truth. They do not say, for example, that the poorest and most indebted countries, for whom we are holding this debate, are dependent on volatile commodities like coffee, cotton and sugar to earn their foreign currency and not on metals and petroleum which do comparatively better. They do not say that, according to the Overseas Development Institute, 60 per cent.—and we have heard a lot of figures—of the aid which flows into national earnings in the poorest developing countries, so desperately needed, is being taken out to service international debt. As has been said, the problem was again identified at the Denver G8 Summit, which focused on Africa and produced Britain's welcome new aid initiative.

Conditional aid and trade under such positive schemes as the 20:20 compact, the post-Lomé negotiations and structural adjustment programmes, are almost irrelevant without debt relief, which incidentally is not the same as an aid programme—not in the UK at any rate. I hope the Minister will confirm that it has been, and will remain, additional to the aid budget bearing in mind that 95 per cent. of debt in this country is ECGD-related. Unless something more is done soon by ourselves, the moneylenders, we are condemning the poor in these societies to gradual starvation.

The Debt Crisis Network and the World Development Movement remind us how urgent all this is. I take just two most indebted countries as an example. Mozambique—which I once visited in the midst of a civil war from which it is still earnestly trying to recover—was being asked for nine-tenths of its export earnings to pay for its debt servicing until it obtained 67 per cent. relief on its Paris Club debt under the Naples terms, as we have heard. It is now hoping for 80 per cent. relief on that debt if it meets the conditions. Tanzania, which has enormous potential for economic recovery, has also received 67 per cent. relief on Paris Club debt but is not likely to receive any more. In the case of countries like Uganda and Mozambique this relief only applies, I am told, to debt up to the cut-off dates of 1981 and 1984 respectively.

The ability to pay is obviously linked to the wider African economy and to political and economic reform. There have been a lot of moves lately to encourage outside investors. The change of government in Kinshasa has offered some hope of democratisation in the Congo. There is new leadership in the Horn of Africa. There have been gradual improvements in Southern Africa.

South Africa has acted as mediator in various African conflicts and is cautiously taking its pan-African responsibilities seriously. This is one reason why Washington has shown so much interest in Africa of late and has launched a major new Africa initiative. Another is that South African investors have been moving rapidly into central and east Africa.

There has been a mood of democratisation and Africanisation. President Mandela's address to the Zimbabwe Parliament on 19th May offered a challenge to our perception of Africa. "The time has come," he said, for Africa to take full responsibility for her woes, use the immense collective wisdom it possesses to make a reality of the ideal of African renaissance … It is a renaissance that must mean that Africa refuses to be a passive onlooker in a changing world, hapless victim to modern machinations of the forces historically responsible for her woes. Only in this way can Africa assert her right to be an equal partner in world affairs. Indeed, we have the right to claim and the obligation to ensure that Africa occupies her rightful place in the new world order in the making". It is easy to dismiss President Mandela's words as an old warrior's rhetorical stirring of African feeling. Of course, we recognise he has a job keeping alive the ANC's aspirations in bringing home solutions. But look at his record. He has not only triumphed over one of the world's foremost evils, the apartheid state—without much help—but he has renewed in all of us a sense of moral obligation and a desire to continue the essential process of eradicating poverty, increasing security and providing leadership in that great continent. His recent forays into the Congo and other internal disputes make clear that he is determined, in the years left, to succeed where others have fallen.

We can understand what he is saying to Africa, but what is he saying to us? Let us look at the basic thesis that Africa should help itself. This, of course, reinforces the need for the OAU, ECOWAS, SADCC and other regional or international bodies to take more of the initiative, but at the same time it suggests that Europe should move away from the great power game towards this Africanising process, strengthening local African institutions instead of camping in its safe areas of mineral wealth, motorways, city elites and tourism. Is this not the real point of the African renaissance, that Europe has always pandered to dictators and hideous regimes if they suit its own purposes?

Surely that strengthens the case for good governance, democratisation and the liberal economy. Mandela and Mbeki, like Museveni, Kabila and others, seem to embrace pluralism and the new African realism of structural adjustment and free enterprise, but they see it also as an awakening of the skills and initiative that exist among the unemployed and in the townships. Of course, they need foreign investment, like every other state, but they must release the energy of the people too—people who have been waiting for their chance to join in the economy. That can be done through a variety of non-governmental channels—there is no time to rehearse them here—as well as through large enterprises. I believe that the Commonwealth is vital in assisting with that process.

In conclusion, I have two questions for the Minister. Now that we have heard what France says—but perhaps we have not heard it in full—does the Minister believe that the European Union is genuinely doing enough to support the process of democratisation in Africa by strengthening civil society and promoting democratic institutions outside, as well as inside, the centres of power? I am not talking here of human rights, which I regard as a separate, parallel exercise. Secondly, can the Minister guarantee that supporting those severely indebted countries in Africa through trade and investment as well as aid and debt relief will be a priority in the much-heralded new White Paper since there is a human as well as an economic imperative to help them?

5.24 p.m.

Lord Taylor of Gryfe

My Lords, this has been a splendid debate. These Benches have pricked our moral conscience on an important matter. We have had some excellent advice also from the Conservative Benches. The noble Viscount, Lord Torrington, speaks with expertise gained from dealing with international financial adjustments. However, I regret that there has been only one speaker from the Conservative Benches. I hope that that does not represent any lack of concern about the very important issue before the House. Those who have spoken have revealed a range of experience and knowledge. We have heard from people who have exercised power and authority in government as well as from those who have been involved with non-governmental organisations and in related activities.

Yesterday, the noble Lord, Lord Elton, asked a Question about the Christian content of the millennium celebrations. It occurred to me that this issue should be the highlight of our Christian commitment to dealing with the major problems in our society. This should be our celebration because the aims of Jubilee 2000 are important. But they do not concentrate on the whole question of debt which is a very complicated matter. Jubilee 2000 seeks to make a particular gesture at this time by saying that we are concerned by the issue of debt and recognise that we have to do something immediately.

Jubilee 2000 proposes, a one-off cancellation of the backlog of unpayable debt for the world's poorest countries—which either cannot be paid, or can be paid only with enormous human suffering. This wouldn't set a precedent for cancelling all debts repeatedly. Rather, it would be a once-only gesture to mark the millennium, a gesture showing that creditors and debtors alike have made mistakes and that the slate needs to be wiped clean. This would change millions of lives, without taking away the responsibility of debtors to pay their future debts". The complications involved in sorting out world debt and the question of the World Bank initiative will require careful consideration and are important, but all we are discussing today is whether this nation should commit itself to supporting the Jubilee 2000 objective.

There are moments in history when you have to make a stand—and that stand can change the course of history. I was involved in relief work after the war and in the rebuilding and reconstruction of Europe. The great gesture at that time which changed the whole course of European history was the Marshall Plan, the 50th anniversary of which we celebrated the other day. That gesture was made at a time when Europe had been devastated, countries had been destroyed and the whole structure of the continent was in the melting pot. The impact of the Marshall Plan changed the course of history. I suggest that we have now reached such a situation.

Many noble Lords have spoken with intimate knowledge of the debt situation in Africa. They have indicated that there is a crisis. Not only does the debt situation affect millions of lives but massive social problems flow from it. There is insecurity in the world. One cannot possibly have any security or stability in a world that is so unevenly divided. There will always be a danger of war. One cannot solve the massive problem of refugees without relating it to poverty and instability in debt-ridden countries. We face a crisis that requires a major gesture, and it is good that we should make that major gesture. At the end of the Second World War when I was involved in relief and reconstruction work, this country devoted 1 per cent. of its GNP to the relief of suffering in other countries that it felt were worse off. We have never hit anything like the 1 per cent. target since. That was what we did and we all felt better for it. We were a better, more moral and less selfish nation. I hope that with new politics, new Labour, and the changes that have taken place in the political atmosphere after 1st May, we are ripe to take a new direction and to make generous gestures.

I wish to say one word about a related matter: the arms trade. The instability of the world creates a demand for arms. The excellent briefing note from Jubilee 2000 quotes the ex-president of the World Bank: Arms are often a prime source of external debt—military aid accounts for a third or more of total debt service in several large developing countries". We are very active in the provision of arms. Britain uses the Export Credits Guarantee Department to subsidise arms sales in the south. In 1993–94, 50 per cent. of all export credits provided by this country to exporters related to arms sales. We cannot stand by and say that debt is a problem when at the same time arms sales are a consequence of it. So long as there is instability in the world, arms manufacturers will ply their trade. I suggest that in making this commitment to Jubilee 2000 we should recognise that we have committed sin as well as others. For example, if one compares arms purchases with expenditure on health services, The Economist, which has already been quoted today, has stated: Worldwide public-health spending on a malaria vaccine, for example, has been estimated at just $60 million in 1996. That for a disease which kills around one million people, and affects between 200 million and 400 million others, every year. Of those deaths, 90 per cent. are in sub-Saharan Africa". Private spending is making little contribution in this area. We cannot regard ourselves as a caring Christian world unless we get our priorities right. In this case our priorities are to do several things: first, to popularise and support Jubilee 2000 and give it effect; secondly, to examine our responsibilities in arms sales; and, thirdly, in the long term to take a continuing interest in the situation in Africa by following the advice of my noble friend Lord Callaghan of Cardiff and to regard this matter not solely as a matter of debt but to make it possible for the people of Africa to help themselves. That will be done by creating trade and providing markets for their goods as well as dealing with the immediate problem of debt.

5.36 p.m.

Lord Cocks of Hartcliffe

My Lords, I thank the right reverend Prelate the Bishop of Oxford for introducing this debate. I very much appreciate the activities of the Bishops in arousing interest in the problems of our fellow creatures in other parts of the world.

Twice I have been present in your Lordships' House when your Lordships have adopted a Procedure Committee report which states that noble Lords must severely curtail the compliments and congratulations conveyed to maiden speakers in the interests of saving time. No one takes a blind bit of notice of this decision, and nor will I. It is a great pleasure to congratulate my noble friend Lady Lestor. She is an old colleague of mine. I am pleased to pay great tribute to her integrity and steadfastness. Such is her sensitivity that when we were in government preparing a questionnaire and one or two of the questions were quite sensitive, although the matter did not fall within her remit I insisted that she see the matter herself and approve it before it was published. I said that if it satisfied my noble friend it would be all right for everybody else.

I have been interested in the subject of world poverty for over 40 years. During the first famous constitutional by-election of the right honourable Anthony Wedgwood Benn in Bristol he tried to conduct the meeting as a series of seminars. I was one of the so-called specialist speakers and I spoke on this topic. That occurred nearly 40 years ago. It was one of the first acts in a very long and fruitful political relationship that I have had with the right honourable gentleman the Member for Chesterfield.

When I first spoke on this topic these countries were referred to as backward nations. It was realised that this was virtually insulting, and they were then referred to as "underdeveloped". That was also unsatisfactory and was regarded as patronising, and they became "newly-developing". However, that greater appreciation of the respect and consideration that are due to those countries has not been mirrored in the same way in the economic field. My noble friend Lord Taylor referred to the percentage of GNP spent on overseas aid following the war. Noble Lords who like myself grew up during the war will recall that all kinds of commodities were in short supply and were rationed. The one item that was never rationed was bread. However, the post-war Labour Government introduced bread rationing because people in other parts of the world were starving. I find it difficult to imagine such an idea being proposed today, yet it was done at that time and some of the grain went to our former enemies. I wish that we could get back to that kind of spirit now.

One of the reasons why I opposed the Common Market was that in my view it was wrong to establish a rich man's club of industrialised nations at a time when world poverty was such a problem. I do not believe that that point was fully appreciated at the time. If that burgeoning of the Common Market were accompanied by an increased distribution of resources from abroad it would not be so bad, but I am afraid that that is not happening. There is something else overlaid on that, because apart from the two previous speakers, the debate has been rather compartmentalised.

One of the great problems we now have is the protection of the environment. We are asking those countries which are not well off to restrict their consumption of fossil fuels; to take care of the environment. They say, "Well, you have had 200 years of doing all that. You have done most of the damage which exists. Now you are lecturing us and saying that we cannot do this, that or the other". There is a danger of being cast into a neo-colonial phase which will make our efforts in other fields difficult.

The statistics from Christian Aid and other sources have been useful. I shall not weary the House with a further discourse on them. But a fact which has hardly been touched on is that the provision of relief cannot be separated from the observance of human rights. I have in the past spoken in your Lordships' House about human rights in sub-Saharan Africa, particularly in relation to Sudan. The most reverend Primate made an extremely powerful visit to Sudan which encouraged everyone who is struggling with the problems there.

The human rights situation in Sudan, as noble Lords will know, is desperate. Like other countries, Sudan has an enormous debt. Some estimates put it at 16 billion dollars. Yet Sudan is being removed from the IMF. Of course grounds for removal are its poor human rights standards.

Because of the intransigence of the Sudanese Government, the people are suffering economically as well as in all sorts of other respects. That has been drawn to your Lordships' attention on many occasions, particularly by the noble Baroness, Lady Cox. On 18th January 1994 she referred to reports of detention and torture in ghost houses and the enforced Islamisation of people so that the distribution of relief and food was made almost conditional upon a conversion. In the same debate, the noble Lord, Lord Avebury, spoke about how the militant Islamists had destroyed all the institutional structures which underpinned the democratic system. The most reverend Primate spoke about the lack of fundamental human rights.

It is important to consider that issue in the round because there is a package here which does not apply just to economic matters. Human rights occupy a great deal of our time, and are dealt with in one or two of our newspapers. However, it is a limited form of human rights. It is limited to the UK basically. I sometimes wonder what people think of us. Like many noble Lords, I knew people who were killed in the war. I sometimes wonder what they would think now of the descriptions applied by some people to the country for which they fought and died. To listen to some people talking one would think that we live in a police state. I wish that some of the intellectual energy of highly gifted people who talk about human rights could be diverted abroad, because that would be an enormous transfusion of encouragement and effort to people who are trying to address the problems which we have here today presented.

It would be a catharsis in a way if we could combine all those issues which relate to the world, its population, its resources and its problems in one great thrust. I congratulate the aid agencies on what they are doing, in particular the voluntary work that is going on. If we could open our vision a bit and think about human rights abroad and the responsibility to try to do something about them, and the way in which lack of human rights cramps the chances of improving people's standards of living, and all that together with economic aid, that would be a great advantage. I thank again the right reverend Prelate for giving us the opportunity to debate the subject. I hope that some more thought can be given to widening the whole issue.

5.45 p.m.

Lord Redesdale

My Lords, I thank the right reverend Prelate for initiating the debate. I recognise the work that the Churches are undertaking in spreading worldwide the message that debt is becoming unsustainable. At the same time, I welcome the work of Jubilee 2000 and the debt crisis network, both of which have campaigned hard to raise public awareness of the debt crisis that the developing world faces. I take the lead of the noble Lord, Lord Cocks, and welcome the noble Baroness, Lady Lestor, and congratulate her on her maiden speech. It is heartening to welcome her to the small, happy band of Peers who regularly take part in debates on development issues.

As many noble Lords have pointed out, if unsustainable debt is allowed to continue to accumulate in the way that it has over the past decade, then there is little hope that any of the most highly indebted countries will ever be able to escape the poverty trap that spiralling debt creates and sustains.

Poverty in the most highly indebted countries will never be addressed as long as the richer countries believe that it is more important for debt commitments to be met than that there should be provision for even the most basic health care or even primary education in developing countries.

Until recently, the multilateral institutions failed even to admit that the debt burden was unsustainable. The best that most countries can achieve is to attempt to pay the interest charges with little or no provision to pay off the capital sum. Most foreign aid is now supplied so that the existing debt burden can be serviced rather than contributing to the basic social provision which is so desperately needed.

The increase of 427 billion dollars in the long term debt of countries between 1985 and 1992 is accounted for by 220 billion dollars paid as interest, with a further 205 billion dollars added to the debt as unpaid interest. It is clear that much of the debt which should be remitted is the product of interest rather than of new principal disbursements to the debtor countries.

There is a commonly held misconception in this country that aid to developing countries is a charitable contribution. Few voters realise that a large proportion of foreign aid is provided so that developing countries can service their debt commitment. An indication of that—I mean this with no disrespect to the noble Lord, Lord McIntosh, who is sitting on the Front Bench with his Treasury hat on rather than his Department for International Development hat, if he has one—is that the cause of the debt crisis was initially based on the ill-considered borrowing that took place in the 1970s. It was borrowing based naïvely on the assumption of permanently stable interest rates of below 10 per cent. but also fuelled by the banks which needed to lend petrodollars and were lax about the criteria under which they would lend their money. The noble Lord, Lord Hunt, covered that issue.

There is an argument which suggests that if the developing world had been unable to borrow that money there would have been a severe financial crisis in the West. That point relates to the issue raised by the noble Earl, Lord Sandwich, who linked the lending of large sums of money to African dictators for political rather than for financial reasons.

Another reason why the scale of debt was ignored was the view that a country could not go bankrupt. Financial mismanagement by the poorest countries and political instability mean that the 41 countries on the HIPC list are, to all intents and purposes, bankrupt. The blame for that bankruptcy may rest with those countries. However, to a large extent, it must be extended also to those who lent the money. One of the questions that can be asked is to what extent borrowing countries are responsible for debt taken out by predecessor governments.

The noble Viscount, Lord Torrington, raised the issue of military debt and said that perhaps it should not be forgiven. An ironic situation arose in Zimbabwe when it was forced to pay to South Africa the debt of the Rhodesian Government for the military hardware used against the Zimbabweans in their struggle for independence.

The World Bank and the IMF are by far the largest creditors and should be the first rather than the last to act. The HIPC is the first attempt at addressing the problem. "We have adopted a very important initiative … we are ready to start immediately and ministers have urged us to do so." Those were the words of the IMF managing director Michel Camadessus speaking on the adoption of the highly indebted poor country initiative last September. They echo the sentiments put forward by the World Bank president, Mr. Jim Wolfensohn.

The HIPC was to target 41 of the most indebted countries. The draft agreement was given the optimistic title, The Solutions Paper. That is ironic because seven months on, the HIPC has achieved almost nothing. Instead of attempting to inject any urgency, the IMF, Germany, Japan, Italy and the US, seem to be actively delaying any form of implementation. Indeed, the US is pushing for an even harsher agreement on structural adjustment programmes, the pain of which the right reverend prelate the Bishop of Leicester pointed out. The US is pushing for the implementation of further structural adjustment programmes because it believes that they worked well in Poland. However, there is little correlation between the situation in Poland and that in many of the sub-Saharan African countries. It is also ironic that Japan and Germany, which were beneficiaries of the Marshall Plan after the Second World War, should be dragging their feet. As they were so greatly advantaged by debt relief it is ironic that they are not at the forefront in pushing for it.

The criteria under which any government can apply to benefit under HIPC are so stringent that even Uganda, which has adhered to structural adjustment programmes for the past 10 years and would be a prime candidate for immediate consideration, will now have to wait until April 1998 to be considered, with a completion date of not earlier than 1999. The noble Lord, Lord Judd, pointed out that the delay to Uganda will cost 193 million dollars, more than double the projected spending on education.

As the noble Lord, Lord Callaghan, pointed out, Uganda is a best-case example. Most countries deemed eligible for debt reduction will see no benefits until after the year 2000 because of the requirement that candidates undertake six years of economic reform under the IMF auspices. The experience of Uganda suggests that flexibility will be applied by creditors principally to extend the period of eligibility.

Assuming the earliest likely dates for debt-stock reduction by the Paris Club, Ethiopia will not qualify for HIPC debt reduction until the end of the year 2000; Nicaragua, the world's most heavily indebted country, will not qualify until 2001; Mozambique, Tanzania, Niger and Zambia will not qualify until 2002 and 2003; and Rwanda may not qualify at all and, if it does, it will not be until after 2003.

If the HIPC were to solve the problem of unsustainable debt these delays could be accepted. However, the scale of remission is far too limited; 8 billion dollars over 10 years with as few as 10 countries even being eligible for the programme within the next three to six years. The noble Lord, Lord Prys-Davis, pointed out that 1 billion people are suffering due to international debt. That can be seen perhaps as an unacceptably small solution to their problems.

I realise that in one respect, in speaking to the Government I am preaching to the converted. As Clare Short, the Secretary of State, said, the Government are giving their full support to the heavily indebted poor countries debt initiative. The aim is to give the poorest, most indebted countries a once and for all exit from their debt problem. I urge her to push as strongly as we did under the previous Government and to take a lead role in pushing other countries for debt remission.

The debt problem has a very human face. Several noble Lords mentioned Mozambique. I went to Mozambique during the civil war and was lucky enough to be one of the observers of the elections after the war. It is incredible that in a country in which hardly a building stands, having been shattered by the war, and hardly a bridge is in existence, we counted between two polling stations 15 miles apart 36 people who had obviously stood on landmines and had only one leg. It is astonishing that in a country so desperately poor so much money should be sucked out by international institutions.

I have three questions for the Government. To what extent will they be pushing in the international fora for debt relief? Will there be any specific action at the G7 meeting in Birmingham next year? Are they proposing to put any debt-related issues on the agenda in Edinburgh later this year?

The right reverend Prelate the Bishop of Oxford pointed out that it is not only financially prudent that the debt crisis should be solved; it is morally unacceptable that it is not already solved.

5.56 p.m.

Earl Attlee

My Lords, I, too, am grateful to the right reverend Prelate the Bishop of Oxford for introducing the subject for debate. He explained the problem and the HIPC initiative particularly clearly.

Before saying anything substantial, I cannot resist the opportunity of congratulating our maiden speaker, the noble Baroness, Lady Lestor of Eccles. She brings her wide experience of these matters to your Lordships' House. I hope that she will be active and that we will hear from her often. She made many good points and they were well delivered. In particular, she mentioned the difficulty of the SAP—the structural adjustment programme—and how it adversely affects education and health. Education is clearly vital to future prosperity. One of the problems I experienced in Rwanda was the availability, or rather the non-availability, of skilled technicians. Education is the foundation stone for future technical training.

It seems to me that the phrase "heavily indebted poor country" is a bit of a euphemism. Perhaps in many cases it should be called "hopelessly indebted poor country". It is quite clear that some countries have no chance whatever of clearing their debts. Superficially, a policy of simply writing off the debts appears to be attractive. Of course, steps would have to be taken to avoid the problem repeating itself but some noble Lords have recognised that severe difficulties are associated with uncontrolled debt write-off. It would not encourage the affected countries to adopt sensible or sustainable economic policies or convince them of the need to push through market reforms. Several noble Lords have accepted that.

A problem relates to countries with severe human rights difficulties. They could receive entirely the wrong message if those problems were ignored. On the other hand, we must break the link between poverty and political instability. Completely unsustainable debt and poverty may be making matters worse.

Another disadvantage with a simple debt write-off scheme is that some countries—and Uganda springs to mind—have made strenuous efforts to overcome their problems. Many noble Lords have noted today Uganda's relative success in getting near to meeting the criteria. What message will those countries which have tried hard receive if they see other countries having their debt written off, despite having made little or no economic progress?

In order to tackle the problem of third world debt, we need to proceed on two fronts. First, we need to encourage international action to help HIPCs service and reduce their debts. My noble friend Lady Chalker led the way in the previous government by cancelling £1,000 million of debts of the poorest countries. I believe it was the noble Lord, Lord Judd, who very kindly mentioned the positive contribution which my right honourable friend Mr. Kenneth Clarke made while in government.

The Minister will be aware that some G7 countries—and some noble Lords have singled out Germany and Japan—are rather hostile to debt reduction for HIPCs. In addition, as has been pointed out by the noble Lord, Lord Callaghan of Cardiff, the US sees a golden opportunity, if that is the right term, to impose heavy conditionality. It seems that the Minister's right honourable friend, Clare Short, will have some real challenges ahead.

I should like to take a few moments of your Lordships' time in order to recognise the achievements of my noble friend Lady Chalker and the ODA, which she led with such distinction. Many noble Lords have far more experience and interest in international aid than I do. It is almost embarrassing. My friend, the noble Lord, Lord Redesdale, is one and another is my noble friend Lady Cox. However, in the two aid missions which I undertook, the ODA was pre-eminent, particularly in the field of logistics. That is fortunate, as it is my own field.

When I talked to ODA expatriate workers on the job, as it were, it was "Lady Chalker this" and "Lady Chalker that". Of course, when I talked to people at a high level, it was exactly the same story. I hope that the Minister's right honourable friend can also acquire such a high reputation because if she can she will ensure that the UK remains one of the most responsible and compassionate members of the international community.

The noble Lord, Lord Taylor of Gryfe, made the point that not many noble Lords are speaking from these Benches. I too am rather disappointed about that and I am disappointed in particular that we did not hear from my noble friends Lady Chalker and Lady Cox. However, these Benches are reasonably well populated this afternoon and I expect that the two noble Baronesses are actively engaged in aid work as we speak.

One real problem that I see with the HIPC initiative is the long timescale required to demonstrate economic progress. That point was picked up by many noble Lords. I do not envy the Minister's task of replying to the debate as the case for debt remission has been so well made by many noble Lords. Noble Lords have spoken with great experience of those matters. However, the Minister and his right honourable friend will also have to consider the difficulties associated with uncontrolled debt remission which I have mentioned already. In addition, they will have much to achieve in order to persuade our international partners of the need to make progress.

6.5 p.m.

Lord McIntosh of Haringey

My Lords, it gives me great pleasure to echo the thanks that have been expressed to the right reverend Prelate the Bishop of Oxford for introducing this important debate. There are a number of reasons for doing so: first, his own excellent introduction with its clear exposition of the problems and some of the solutions; secondly, the quality of the contributions, and they are literally from all sides of the House, but I have a bias towards my own side; and thirdly, the marvellous maiden speech of my noble friend Lady Lestor, who combined, as I knew she would and as she always has, moral integrity with complete intellectual conviction and coherence. It was a remarkable speech.

The thrust of the debate has been very much about the moral issues and about idealism. Indeed, that is as it should be. It is necessary perhaps to introduce the Government's position on this by referring back to the tribute which my noble friend Lord Callaghan paid to Clare Short, the Secretary of State for International Development. I want to make the theme of what I am going to say a Written Answer which she gave in another place on 26th June of this year.

As your Lordships know, Written Answers tend to be cool and cautious and probably heavily edited. But even so, what she said echoes many of the concerns expressed this afternoon. She was asked what is the Government's policy towards the proposals of Jubilee 2000 and she said: The Government shares many of the objectives of the Jubilee 2000 campaign, including the fundamental one of the eradication of poverty in developing countries. We believe that debt relief should accompany a wider commitment by debtors to create the conditions necessary for sustainable economic growth and lasting poverty reduction. The Chancellor of the Exchequer and I are pushing for full and rapid implementation of the Heavily Indebted Poor Countries (HIPC) initiative. We believe that much remains to be done and are pressing with urgency for the international community to provide further debt relief".—[Official Report, 26/6/97; col. WA 605.] I suppose that I could sit down at that stage and say that the Government's views have been expressed, but no such luck because there are important issues arising from this debate which deserve fuller comment.

I am sorry to disappoint my noble friend Lord Rea and to confirm what the noble Lord, Lord Redesdale, said—that that comment will be from a Treasury point of view rather than an international development point of view. My noble friend Lord Judd said that it is not just a matter of macro-economic policy. Of course, he is quite right, but it is also a matter of macro-economic policy and it is one to which I am obliged to refer because there are economic and financial interests in this. There are economic costs for us all in world poverty as well as the political costs of instability to which reference has been made.

I shall not take your Lordships back at length to Ricardo's theory of comparative advantage, but you will recall that the principle is that even if other countries grow faster as a result of international trade or benefit more, we still benefit. Britain will still benefit from trade with countries which are less efficient at producing many of the things which we can produce, perhaps more efficiently.

Of course, that means that we benefit from successful development, especially in the emerging countries. There are opportunities arising for exports from this country and investment by this country. But we benefit also from successful development of the poorest countries because, after all, they are the emerging countries of the future.

Conversely, we feel the bad effects of a high level of indebtedness, not as much and not as fiercely as the poorest countries do, but we feel them as well because of the deterrence that that brings to inward investment in those countries which could come from this country. Those countries feel it because of the extent to which resources which would otherwise be devoted to investment, and above all to the relief of poverty and to social spending and development, are taken away by the need to service high debts. In the end, that has been the theme of this debate. Virtually every noble Lord who has spoken has done so with deep concern and very often with personal knowledge of conditions in the poorest countries of the world. I think I can say that about every single noble Lord, but I merely pick out a few.

The right reverend Prelate the Bishop of Leicester told us of his experiences in Zambia in the 1970s. A number of noble Lords have experience of Mozambique. The noble Earl, Lord Sandwich, has experience of South Africa. The noble Viscount, Lord Torrington, told us of his travels in a number of African countries. I have referred already to Mozambique, of which the noble Lord, Lord Redesdale, has experience, and most recently, the noble Earl, Lord Attlee, told us of his experience in Rwanda. Indeed, there are many others.

We have had many effective and, indeed, moving statistics mentioned about the degree of poverty in those countries and the degree to which poverty is entrenched and enhanced by the need to service external debt. I am not sure that I follow the complaint of my noble friend Lord Cocks about the compartmentalisation of the debate. I believe it entirely proper that noble Lords should. as they have done, concentrate on our responsibilities, as, indeed, did my noble friend. His speech was also a moving testimony to a lifetime of concern over such matters.

I turn now to the solution, or I should say the range of solutions, which we have to consider if anything effective is to be done. I believe that it would be common ground for all of us to acknowledge that we need to ensure that when we tackle such problems we do so in a way that they do not recur. We need to be sure that anything we do contributes positively to increasing prosperity in the poorest countries and that the poorest people in those countries have a share in that prosperity. I believe that there is common ground in that respect.

However, I do not believe that we can avoid caring about policies in the countries and we cannot give aid regardless of what happens in such countries. It is a difficult distinction: it is a distinction between the deserving poor and the undeserving poor. Indeed, it is most readily typified by Alfred Doolittle, who, your Lordships will remember, featured in Bernard Shaw's "Pygmalion" as the father of Eliza. He said: I am one of the undeserving poor, that's what I am. Think about what that means to a man; it means that he's up against middle class morality all the time. If there is anything going and I put in for a bit of it, it is always the same story: 'You are undeserving, so you can't have it'. But my needs are as great as the most deserving widow that ever got money out of six different charities in one week for the death of the same husband. I don't need less than a deserving man, I need more. I don't eat less hearty than him and I drink a lot more. I want a bit of amusement because I'm a thinking man. I want cheerfulness and a song and a band when I feel low. Well, they charge me just the same for everything as they charge the deserving. What is middle class morality but an excuse for never giving me anything?". There is the danger of a Treasury position being rather like that. But, all the same, if we ignore the social and economic policies in the countries which we seek to help, we will then deal with debt overhang—yes, that has been a theme of today's debate—but we will not deal with the further build up of debt or with the problem of how the money saved will actually be used for productive policies.

We must be sure that anything we do creates a climate for investment; that it makes certain that there will be primary healthcare and education; and that there will be, as I said, benefit to the poorest people and not to a wealthy elite. That is what we mean by good economic policies. We do not mean to raise the stakes or to complicate the conditions under which we give multilateral help, but we do mean to ensure that they are effectively used for investment, for health and for education. We need to ensure that there are open markets and open trade; that there is low inflation; that there are efficient honest public services; and, as my noble friend Lord Cocks said, that there is respect for human rights; and, finally, that there should not be wasteful military expenditure, as mentioned by my noble friend Lord Taylor and the noble Viscount, Lord Torrington. Those considerations must be taken into account in the way in which we allocate resources.

We must, therefore, be looking to a range of measures to help, and of course debt relief is one of them. But, in addition, there are the other classic development objectives: well-targeted aid, opening our own markets to the exports of the poor countries and encouraging private investment. Perhaps I may also refer to the Export Credits Guarantee Department and remind your Lordships that my right honourable friend Clare Short reminded us in a debate in the other place on 1st July that so much of investment goes to the wrong countries, and that the 50 poorest countries in the world attract very little private investment unless there is positive action taken, especially by multilateral institutions, to ensure that such investment goes where it is most needed. So debt reduction—and that is what the debate is largely about—is of course necessary but it is not sufficient. We need to ensure that it forms part of balanced, economic reform programmes.

I move on now to the other great theme of today's debate; namely, the Heavily Indebted Poor Countries Initiative, initiated last year, as noble Lords have said, by the IMF and the World Bank. I should like to emphasise that the initiative is in addition to existing debt rescheduling and sometimes relief programmes both by individual countries for bilateral debt and by the international financial institutions; and, indeed, collectively by creditor countries as members of the Paris Club and other subsequent and previous clubs. The initiative is a long stop rather than the only initiative available to us. As noble Lords have reminded us, it is concentrated mainly on unsustainable debt. The noble Earl, Lord Sandwich, who clearly knows more about such matters than I do, referred to the criterion of the debt to export ratio. I can confirm that his interpretation of it is correct.

However, we cannot—and I believe Jubilee 2000 recognises this fact—talk about the elimination of debt; we need to talk about the reduction of debt to affordable levels. Indeed, Jubilee 2000 talks about a limited number of countries—namely, those with a gross national product of below 2,000 dollars per head per year—and inert debt from the oil decade of 1973 to 1983. I am afraid that all those limitations are necessary. The important point about the HIPC is not that it is the only initiative but that it is the only one in which all the major organisations are participating, the IMF, the World Bank and the Paris Club.

Perhaps I may take the World Bank as an example. After all, it is putting 2 billion dollars into the HIPC, although it is responsible for only 7 per cent. of the outstanding debt. I should like also to mention the Paris Club. There, the prospect of the addition of Russia to the club is very welcome, but we have insisted that the Russians should only join the club on the basis that they recognise and implement their participation in the work of the HIPC.

I acknowledge that there are criticisms to be made of the slowness of some of the procedures and also that criticisms have been made as regards the secrecy of the procedures. However, the getting together of all the major creditors so that help is concentrated on the poorest rather than assisting other creditors—which might otherwise be the case—is the critical feature of the HIPC. Indeed, that is why it was endorsed at Denver by the G8 within the past month.

The right reverend Prelate the Bishop of Oxford reminded us of the millennium aspect of the problem. He told us about the Book of Leviticus and the importance of debt relief every 50 years; and, indeed, that applies even more so with the millennium. But we are talking here not about the relief of all debt, which might have been possible in Biblical times, but the relief of debt of exceptional years. The work of Jubilee 2000 and of Christian Aid has been enormously valuable in raising awareness in the United Kingdom of this problem. I humbly suggest to those who have been responsible for this most valuable work that the best thing to do in the next couple of years until the millennium is to exert pressure internationally. This is an international problem. I do not believe that Britain is the worst offender in all of this. I am not a devotee of the concept of sin, but I recognise the fault that exists in all of us as regards the way in which debts have been encouraged.

As has been indicated, the Government will publish a White Paper in the autumn setting out how they will promote sustainable economic development and tackle global poverty. This will be the first White Paper in the development field in over 20 years. The strategy will cover all aspects of our relationships with developing countries. I confirm to the noble Earl, Lord Sandwich, that it will cover trade and investment as well as debt. I do not suggest for a moment that we should just wait for that paper and I do not suggest that the White Paper will be a solution to all the concerns which have been properly expressed. However, the activities that we are undertaking and the views which we have expressed show a recognition of those concerns and a great deal of sympathy with them.

6.21 p.m.

The Lord Bishop of Oxford

My Lords, it remains only for me to thank all noble Lords who have contributed to this valuable debate. I especially thank the Minister, the noble Lord, Lord McIntosh. I am particularly grateful that a number of noble Lords have spoken this afternoon from their long political experience and that others have spoken from their first hand experience of the developing world. It was particularly gratifying to hear such strong support expressed this afternoon from all around the House.

It would be tempting to highlight one valuable point made by every speaker this afternoon. However, there will at any rate be one form of relief this afternoon in that I shall resist that temptation. I simply sum up the mood of your Lordships' House this afternoon by saying that there is clearly widespread concern about this issue. There is a real welcome for the HIPC initiative. The fact that all the major international instruments are collaborating in this way is a new phenomenon. As a number of noble Lords have said, there is disappointment about slow progress, conditionality and the lack of success so far. We must register that.

An important Labour Party document was issued before the present Government came to power. It is entitled A Fresh Start for Britain. It states, Labour welcomes discussions within the World Bank and the IMF aimed at reducing the burden of multilateral debt. But we believe that further action is needed if we are to reach a lasting solution to this problem. Labour will press, as a matter of urgency, for international agreement on further write-off of official bilateral debt owed by the poorest countries and more decisive steps to deal with the growing problem of multilateral debt". One cannot help noticing the words "matter of urgency", "further write-off" and "more decisive steps". We look to Her Majesty's Government to take a lead on this crucial issue in the years ahead. I am sure that Jubilee 2000, Christian Aid and the other aid agencies will take seriously what has been said about trying to exert pressure on the whole international community. However, they and we very much hope that Her Majesty's Government will take a decisive lead on this issue. I beg leave to withdraw the Motion.

Motion for Papers, by leave, withdrawn.