HL Deb 16 December 2003 vol 655 cc1058-61

3.8 p.m.

Lord Lamont of Lerwick

asked Her Majesty's Government:

Whether they support the decision by the United States Government and the Coalition Provisional Authority in Iraq to restrict certain contracts for reconstruction in Iraq to countries that supported military action by the United States and the United Kingdom.

The Minister of State, Foreign and Commonwealth Office (Baroness Symons of Vernham Dean)

My Lords, the United States is one of a number of countries, including France and Germany, which places restrictions on their spending of taxpayers' money as overseas aid. Her Majesty's Government stopped the practice of tying aid to trade in April 2001. We believe that aid-related contracts should be awarded on the basis of value for money. We shall continue to try to persuade our partners in the European Union and allies elsewhere that that is the fairest and most efficient policy.

Lord Lamont of Lerwick

My Lords, I thank the Minister for that highly interesting reply. I declare an interest as the director of a UK company that could theoretically benefit from the reconstruction of Iraq, although the question that I wish to ask is directly opposed to that interest.

Given that the United States wants other countries to take over some military tasks after next June, that it has asked Germany and Russia to write off large amounts of Iraqi debt and has asked Canada to donate hundreds of millions of dollars to Iraq—as Canada has done—is it not short-sighted and wrong-headed of the United States to impose financial penalties on countries that simply failed to support military action?

After the capture of Saddam Hussein and the hope that that gives rise to, I urge our Government to use their influence to persuade the United States Government in general, and Mr Wolfowitz in particular, to look to the future and to forget about settling old scores.

Baroness Symons of Vernham Dean

My Lords, I wish that the noble Lord could make the contribution that he has just made to a number of countries in regard to how they give aid. I think I have made it clear that the United Kingdom's policy is very different from that of the United States. I also hope that I make it clear that the United States is not alone in being a country that we wish to persuade to operate its aid in a rather different way. The noble Lord says that the policy is short-sighted. It is also putting a very difficult task in the path of James Baker, who is embarking on a series of visits to a number of countries including France, Germany and Russia, in order to persuade them on debt forgiveness. So I think that a lot of what the noble Lord has said is right on the mark.

Lord Wallace of Saltaire

My Lords, could the Minister explain whether this was a decision for the United States Government or for the Coalition Provisional Authority? Could she perhaps say whether there is any distinction between the United States Government and the Coalition Provisional Authority, and whether Her Majesty's Government have any formal part in the process of decision-making within the CPA?

Baroness Symons of Vernham Dean

My Lords, the noble Lord has asked a huge question and I think that we have to make this clear. The decision that the United States made is not about the totality of aid to Iraq. It is not about the 33 billion dollars pledged at Madrid. It is about the 18.6 billion dollars of supplemental funding under the US Foreign Assistance Act. It does not apply, of course, to aid from other countries. Moreover, it does not apply to Iraq's own resources from oil. It applies solely to the United States money. Actually, if I may say so, it is something of a liberalisation from the United States' usual policy, which is to grant primary contracts only to United States companies. So what the world is now seeing as a very restrictive practice is in fact in many ways a policy that is liberalised from the norm.

The noble Lord asks about the different ways in which decisions will be taken, which is a complicated question. There is the international reconstruction fund facility, set up at Madrid, and there is also the Development Fund for Iraq, both of which will play a role. I shall write to the noble Lord with the details on that and place a copy of my letter in the Library of the House.

Lord Gilbert

My Lords, is it not the case that a great many countries would like to contribute to the reconstruction of Iraq so long as the United States pays for it, just as they were very happy to be members of NATO under the protection of the American defence umbrella when the American taxpayer was paying for it? Is it not a piece of infernal impudence on the part of the French and German Governments to try to tell the Americans how they should spend their own taxpayers' money?

Baroness Symons of Vernham Dean

My Lords, I am bound to say that I think that the case of our friends in France and Germany would be considerably strengthened if they did not tie their own aid to trade.

Lord Howell of Guildford

My Lords, in a speech last night, and again just now, the noble Baroness referred to the United States' policy of, on the whole, tying its aid to its trade. However, I do not quite see what that has to do with the present discussion. What the United States is doing in this case is discriminating against countries which it believes were trying to stab it in the back over its Iraq policy, which is a very different matter. Even those countries will, of course, have access to some of the subcontracts from the Iraqi contracts that are placed. So are the Government in favour of what the United States is doing—which as she rightly says is wider, less discriminatory and more liberal than its previous policy—or are they against? I am not at all clear from her answers.

Baroness Symons of Vernham Dean

I do not know why not, my Lords; I thought that I was very clear indeed. The noble Lord says that these matters are very different, but they are not very different. This is placing a restriction and tying aid to trade. It is to that which Her Majesty's Government object. I made it very clear to the noble Lord, Lord Lamont, and to my noble friend Lord Gilbert that we do not think that the tying of aid to trade is right. The noble Lord used rather pejorative language about the United States stabbing people in the back. I have already made it clear that I agree with the noble Lord, Lord Lamont— who on this occasion was very statesmanlike in the way that he put his question—when he says that it would better serve the interests of what the United States is trying to achieve in other areas if it acted more as the United Kingdom Government do in looking at the needs of countries in terms of aid in its own right and then looking at the awarding of contracts on the best value for money. I would hope to persuade not only our friends in America but also our friends elsewhere in the world that our policy is right.