§ Viscount Montgomery of Alameinasked Her Majesty's Government:
Why they have failed to provide any capital subscription to the proposed Inter-American Investment Corporation (IIC), a subsidiary of the Inter-American Development Bank (IDB), which has been formed to stimulate private sector investment in Latin America.
§ The Parliamentary Under-Secretary of State for the Armed Forces (Lord Trefgarne)The Government's declared policy is to restrain the growth of multilateral aid as a proportion of the aid programme as a whole. The Government therefore look critically at all potential new multilateral aid commitments, and particularly so where an entirely new agency is involved. It was decided that the balance of advantage lay in our not joining the Investment Corporation. The money saved could then be used to provide bilateral aid instead, where we have greater control over its use and where the benefits to British exporters are generally greater than they are under the multilateral aid programme.
§ Viscount Montgomery of Alameinasked Her Majesty's Government:
Whether they will confirm that the capital contribution proposed for United Kingdom participation in IIC is only US$1 million to be subscribed over four years; and whether they will appreciate that failure to make this investment will be a considerable discouragement to British industry, commerce and banking.
§ Lord TrefgarneThere is no capital contribution proposed for United Kingdom participation in the Inter-American Investment Corporation.
The contribution to be subscribed by the non-regional members of the corporation will depend on (a) which members decide to participate and (b) the total number of shares finally allocated to the non-regional group. If the United Kingdom were to join, and assuming its share was about 2 per cent., the initial cost would be about US$4 million (say £2.7 million), payable over four years. But the cost would not necessarily stop there. Under the agreement establishing the corporation, members could be liable to participate in subsequent increases in the paid-in capital and to contribute to callable capital.
We do not accept that failure to join the corporation will be a considerable discouragement 0074o British industry, commerce and banking. On the contrary, funds allocated to the bilateral aid programme generally yield greater commercial dividends than do our contributions to the Inter-American Development Bank Group.
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§ Viscount Montgomery of Alameinasked, Her Majesty's Government:
Whether they appreciate that failure to subscribe to IIC capital will preclude British industry from participating in any supply contracts that may result from the new ventures that will be created.
§ Lord Trefgarne; The agreement establishing the corporation is silent with regard to limiting procurement to member countries, and also with regard to the application of international competitive bidding procedures. In due course, the corporation's board of executive directors will have to decide on these issues. But even if non-participants were excluded we would expect better prospects for exports from our bilateral aid.