Mexico Summit Meeting
The Prime Minister (Mrs. Margaret Thatcher)
With permission, Mr. Speaker, I shall make a statement on the Cancun meeting.
At the invitation of the Mexican and Austrian Governments I attended the International Meeting for Co-operation and Development at Cancun in Mexico on 22 and 23 October. My right hon. and noble Friend Lord Carringtonthe Secretary of State for Foreign and Commonwealth Affairs accompanied me. Seven of the 22 countries represented were from the Commonwealth and three were members of the European Community.
At the end of the meeting the Mexican President and the Canadian Prime Minister, who had presided over the summit, gave their own summary of the results to the press. I have placed a copy of this in the Library of the House.
The summit was never intended to negotiate or to make precise commitments, since we could not bind countries that were absent. The aim was to promote greater understanding between the participants and to give a lead in seeking solutions across a range of subjects.
The summit achieved those objectives. The participants came not only to give their own viewpoints, but genuinely to discuss and debate the issues. Although we could not expect universal agreement, everyone showed a willingness to be both positive and practical in approaching the problems that face both developed and developing countries.
We were all very much aware of the poverty and misery which affect so many people in the developing countries. We in the industrial countries want to help as much as we can, despite problems of our own.
As the United Nations international development strategy for the 1980s points out, the primary responsibility for development rests with the developing countries themselves. But we have to find ways to co-operate with these countries to help them realise their full potential.
There was a constructive discussion of each of the four main themes chosen for the summit—food, trade, energy and finance. On the first of those it was agreed that, while food aid was needed for temporary shortages, the main priority must be for developing countries to grow more food for their own people. This means giving farmers the right incentives and technical support. Aid should be designed to reinforce these objectives.
It was recognised that, for most developing countries, trade flows are more important than aid. We were very much aware of the difficulties created by world recession, but agreed on the value to all of maintaining the fabric of the open trading system. In the discussion of commodity matters I confirmed our intention to ratify the common fund agreement.
The discussion of energy focused on the need to increase investment in developing countries to enable them to build up their own energy resources. I joined a number of other participants in supporting the idea of an energy affiliate of the World Bank, provided that this would attract additional finance for energy investment, especially from OPEC surplus countries.
There was wide recognition of the need for developing countries to pursue policies that would attract private [column 558]investment and bank lending. The discussion showed how much the developing countries relied on the help they receive from the International Monetary Fund and the World Bank. For many countries funds from these institutions should complement and encourage private finance. More aid could then be concentrated on the poorest countries.
There was much discussion on how best to pursue the proposal for “global negotiations” , although it was evident that this term meant different things to different countries. We finally agreed to go back to the United Nations and to try to work out how to launch global negotiations on an agreed basis and with a real prospect of progress. A number of countries, including ourselves, made it clear in this context that the independence of specialised bodies like the IMF and the World Bank must be respected. It would certainly not be in the interests of the developing countries if those institutions lost the confidence of their major subscribers and of the financial markets.
The organisation of the summit meeting by the Mexican Government was excellent. I must pay tribute to the skill and statesmanship displayed throughout by the two chairmen, President Lopez Portillo and Mr. Trudeau, who took the place of Chancellor Kreisky of Austria, regrettably absent because of ill-health.
Immediately after the summit I was invited by President Lopez Portillo to go to Mexico City to join him in signing a memorandum of understanding for the Sicartsa steel mill contract, which has been awarded to Davy Loewy. Its total value is £330 million, with a British content of about £200 million. This is the largest single turnkey contract ever won in Mexico by a British company, or indeed by any foreign company. It will make a valuable contribution to the development of the Mexican economy and will create jobs here at home.
Mr. Michael Foot (Ebbw Vale)
I thank the Prime Minister for making her statement so promptly on her return from Mexico. However, the statement must come as a great disappointment to both the House and the country.
The right hon. Lady's description of events—modest as it was—seems to differ from that given in almost all the reports that I have read that preceded her to Britain. In addition, her description differs from that of Prime Minister Trudeau, who was one of the co-chairmen of the meeting. Such an outcome from the conference must come as a cruel and mocking anticlimax to millions of people all over the world.
The hopes of many countries and of many people in the developed world were raised by the prospect of the conference, which was proposed by the Brandt Commission. Those hopes must have been dashed to the ground by the chilling statements that came from President Reagan, as well as from others who apparently supported him. We have ended up with a promise to have talks about talks. Not a extra penny appears to have been promised—or, in the right hon. Lady's words, “committed” —to the poorest people in the world. Therefore, I should like to put a few specific questions to the right hon. Lady.
If the results of the summit are as positive and practical as she says they are, what precise steps does she agree should be taken to follow up that conference? When is the next meeting to take place? Apparently, President Mitterrand was much more disappointed than the right hon. [column 559]Lady was when he came away from the conference. He has urged that steps should be taken at an early stage to follow up the discussions at Mexico. Does the right hon. Lady agree with him?
Is it true that the Prime Minister praised President Reagan 's nineteenth century attitude and described his contribution as
“very positive, very practical and very constructive”
when, on a number of occasions, his attitude prevented the summit from proceeding to further steps?
Is it not the case that the right hon. Lady seems almost to have gone back on some of the statements made by her Foreign Secretary when the conference began, particularly about the World Bank affiliate and the approach to global negotiations? The right hon. Lady said that the approach to global negotiations took different forms in the mouths of different people. There would appear to be some difference of approach between the Foreign Secretary and herself. Could not the right hon. Lady have gone to the conference and pledged this country's whole-hearted support to ensuring that such global negotiations took place? The vast majority of under-developed countries are asking for such negotiations. Will the right hon. Lady say specifically how much extra money—if any—she, as Prime Minister, committed at the conference on behalf of the United Kingdom?
May I ask the right hon. Lady especially what is the amount that will be contributed under the world energy affiliate? She made some reference to it, but I am sure that she appreciates that it can succeed only if it has the backing of the United States. What undertakings has she secured in that respect?
Does the right hon. Lady think that this Mexico summit meeting has lived up to the Melbourne declaration which she signed? Where is the “determined and dedicated action” that was promised then? Where is the
“revitalisation of the dialogue between developed and developing countries” ?
Where is the
“political commitment to a clear vision” ?
None of this is dealt with in the platitudinous account that the right hon. Lady has given the House on these matters.
Finally, may I ask the right hon. Lady about the contract that she announced? Is that to come out of the aid money? If so, it will merely deprive other areas. I ask whether it is to come out of the aid money because there have been discussions on these matters before. At any rate, can the right hon. Lady give a clear undertaking that it represents an addition to what is proposed?
I underline to the right hon. Lady that the Opposition do not believe that, when she went to Mexico in this mood, she represented the views that masses of British people had been expressing. A few months ago there was a great lobby of this House on the subject. The right hon. Lady would have done much better to go to Mexico and speak in the language and the tones expressed on that occasion.
The Prime Minister
The right hon. Gentleman appears to forget that the press statement by the co-chairmen was the result of the deliberations of 22 countries. The right hon. Gentleman, clearly, is critical of at least 21 of them in what he says. Most of us went to Cancun knowing that the meeting would not take any decisions obligating countries that were not there. That was made clear in the opening speech of President Lopez Portillo of Mexico. He pointed out that one of the main purposes of the meeting was to secure greater [column 560]understanding and that it was widely hoped that the global negotiations would be relaunched in the United Nations. That was very much the wish of the developing countries. There were other means of proceeding before we went back to the United Nations. But the decision was to return to the United Nations—I assume under the auspices of the President of the General Assembly, who already must have this matter in hand.
As for what the right hon. Gentleman said about global negotiations, clearly the phrase means different things to different people. It has become a jargon term. Many people who speak about it do not fully understand the United Nations' resolution on the subject which itself is vague enough. That again has been modified by proposals of the Group of 77, and there were further proposals by Baron von Wechmar to modify it further. There are different meanings, and nothing that the right hon. Gentleman says can alter that. We have to return to the United Nations to decided precisely what shall be covered by that term and what shall not. A large number of us felt very strongly that the IMF and the World Bank must always be excluded from receiving instructions from the United Nations.
Let me deal with some of the right hon. Gentleman's other comments. The next step is to return to the United Nations and consider further an energy affiliate to the World Bank. There was not universal agreement about it, though it was advocated, and we supported it. If an energy affiliate were set up we should, of course, be expected to contribute, but not necessarily in the same proportion as we contribute to the World Bank.
I might point out to the right hon. Gentleman that the 1981–82 aid programme is higher in real terms than in any year during the period 1971 to 1977. In this connection the right hon. Gentleman asked about the Sicartsa contract. The aid money comes out of what I might call the aid-trade budget, and it is of benefit both to Mexico and to jobs in this country.
I thank the right hon. Lady for what she has said. She is seeking to take cover behind all the other signatories to the document. I am complaining about the advocacy that she made, or failed to make, on behalf of this country at the summit meeting. I have little doubt that the Prime Minister of Canada will agree very much more with what I say on the subject than with what the right hon. Lady has said. Great hopes have been raised, but nothing specific has been achieved. The right hon. Lady has not even given us a timetable for the next meetings on the subject.
The Prime Minister
The right hon. Gentleman still has not got the main point, which was set out by the President of the host country at the outset. It is that the 22 countries represented themselves and could not commit any of the countries that were absent. The proper forum really is the United Nations. We were not meant to supplant that in any way.
There is one other matter raised by the right hon. Gentleman to which I did not reply. President Reagan 's statement was extremely well received. He set out the record of the United States in terms of aid to developing countries, which all recognised was an extremely good one. That was practical. It was not rhetoric.
Mr. Fergus Montgomery (Altrincham and Sale)
Is my right hon. Friend in a position to give the House more [column 561]details about the Sicartsa steel mill contract? Is there any follow-on to the contract recently awarded to Davy McKee in India, and is it not true that both orders were won in the face of fierce international competition?
The Prime Minister
We were delighted to get both contracts. The biggest one is for the Davy McKee steel plant in India, to which we shall contribute about £150 million in aid. The one in Mexico will contribute about 28,000 man years of work. It will help a great deal with Davy Loewy 's main manufacturing centre in Sheffield. It will also mean the provision of about 80,000 tonnes of British Steel Corporation steel, probably from the North-East, and a good deal of electrical work through GEC at Trafford Park. It is a very welcome contract and was won in the teeth of French, German and Japanese competition. We won it on price.
Mr. David Steel (Roxburgh, Selkirk and Peebles)
Will the Prime Minister accept that the lack of positive results from the Mexico summit will be felt not just in the Third world, but among a growing section of British public opinion, which had higher hopes than have been fulfilled? Does the right hon. Lady accept that the brand of free market economics to which both she and President Reagan subscribe makes it difficult to discuss these issues in concrete terms and that few people believe that the appalling problems of world hunger can be met with phrases such as her own about giving farmers the right incentives? What is required is capital investment in such schemes as irrigation, technical assistance and soil and plant development. To what extent will there be a reduction in the number of people under contract to our own Overseas Development Administration in the Third world next year?
The Prime Minister
If the right hon. Gentleman wants to know precise numbers, he must put down a specific question about them.
The right hon. Gentleman's first question was very critical of the economies of some of the countries represented at the summit. I might point out that the countries being asked for most aid are those that run liberal economies, which the right hon. Gentleman's party used to espouse.
Mr. David Crouch (Canterbury)
Before my right hon. Friend went to the summit meeting, she and most of the leaders of the other countries had announced that no one should expect too much from it. Nevertheless, is my right hon. Friend aware that the public expected a great deal from it? I welcome the line that my right hon. Friend has taken about encouraging global negotiations and advocating the energy affiliate, but can she say what is the attitude of the United States Government to both proposals?
The Prime Minister
The final statement on global negotiations was agreed specifically by all the countries represented at the summit. There was not universal agreement on the energy affiliate. Some of us, myself included, said that there was no point in setting up an energy affiliate unless it was likely to attract more funds than would otherwise go to the World Bank. Some of the countries wished to have one in any event, and some of [column 562]the countries likely to provide the funds, including the United States, said that we ought to pursue the possibility of setting up an energy affiliate.
Dame Judith Hart (Lanark)
Will the Prime Minister recognise that the use of a phrase such as “having reached a greater understanding” is the greatest alibi for non-action ever known? The right hon. Lady said—I think that I am quoting her correctly—that the concept of global negotiations at the United Nations had been vague enough. Was that not partly due to the British Government's actions at the United Nations Special Assembly just over a year ago? Will the right hon. Lady give an assurance that she will seek to make them less vague and to make them meaningful?
The right hon. Lady says that IMF independence must be respected. Does she agree with the Brandt Commission recommendation—some of us would like to go a little beyond it—that there is a real need for the reform of the international financial institutions? Given the complicated politics of the Cancun summit, will the right hon. Lady say whether she aligns herself with President Reagan or with the other countries of the industrialised world that were represented?
The Prime Minister
I must point out once again that the United States, the most liberal of the economies there, was expected to cough up most aid and does, in fact, do so. It does not help anyone to criticise the United States for being the nation that helps most of all. Most of the developing countries recognise that fact. President Reagan's opening statement was received extremely well by those countries. They were particularly happy and agreed to refer the question of global negotiations back to the United Nations.
With regard to our own efforts on global negotiations some months ago, we were adamant, as was Germany, that they should not result in a body like the United Nations being able to give specific instructions to the World Bank, to the IMF or to the GATT. The World Bank and the IMF have their own governing bodies, and they must be run competently by them. In so far as any reform is required, it must be discussed in the governing bodies of the IMF and the World Bank, but no one requires permission to talk about it. No one, I believe, should be capable of instructing those bodies. If that were to happen there would jolly soon cease to be a World Bank and very soon cease to be an effective IMF.
With regard to changes in the IMF, a number of the developing countries thought that some of the conditions for the loans did not wholly take into account some of their own circumstances. I believe that the IMF has been dealing with some of these matters a good deal more sensitively recently than in past times. There must be some conditions. There must be some discipline. It helps to get the economies of those countries on a better course, and it also helps to attract private investment if those countries have the seal of approval of the IMF.
Mr. Christopher Brocklebank-Fowler (Norfolk, North-West)
Following her visit to Cancun and her discussions with the leaders of 22 countries, does the Prime Minister now accept and agree with the view of the World Bank that trade is much less important than aid to the poorest countries? Can she say when she proposes to devote a higher proportion of our GNP to aid?[column 563]
The Prime Minister
For the very poorest countries I think that aid is probably as important as trade, although even the very poorest often wish to export goods to the developed world. The hon. Gentleman knows the problems that that can sometimes cause, for example with textiles. For many of the other countries trade is much more important than aid. The figures show that flows of trade are 13 times as great as flows of aid. Time and again the countries at the conference pointed out that they must have trade. If we are to sell them the latest machinery, we must not deny them the possibility of exporting the things made on that machinery.
Mr. Peter Emery (Honiton)
Does my right hon. Friend agree that the attitude of the Leader of the Opposition shows that the Opposition did not understand the main purpose of the conference? Is it not correct, as was felt at the CPA annual conference in Fiji, that the attitude taken by President Reagan was very much more forthcoming than originally expected at the start of the conference?
With regard to the energy fund, will my right hon. Friend say whether Britain is to take a lead in trying to approach the OPEC and energy exporting nations in an attempt to ensure that a greater contribution is made by them to assist the least well-off nations, which are badly affected by the massive increases in energy prices?
The Prime Minister
I think that there was a lot of misunderstanding about the purpose of the conference. I think that hopes were artificially raised. I believe that those who organised the conference tried to see that that would not happen, but I admit that they did not succeed. One only has to look at the composition of the countries represented to know that they could not commit other countries about basic propositions or precise commitments.
President Reagan was very forthcoming. His approach was well received and the developing countries were very pleased. They were also pleased that President Reagan had agreed to attend. I am sure that he profited, as did all of us, from hearing direct the experience of those countries.
With regard to the energy fund, Saudi Arabia was one of the participants in the conference and joined in advocating further study of an energy affiliate. I think that we may take it that Saudi Arabia has very much in mind the matters mentioned by my hon. Friend.
Mr. David Ennals (Norwich, North)
Is the right hon. Lady aware that at his press conference immediately after the conference the Foreign and Commonwealth Secretary said that he was determined to get practical results to reduce the difference between rich and poor? One would have assumed that that would mean an increase in our official overseas aid, rather than the decrease that has been promised. I should be grateful if the right hon. Lady would say whether that is true. Does she feel any sense of shame that 12 of the OECD countries have been increasing their contribution to official overseas aid on a percentage basis, while Britain is the only one that has been cutting it?
The Prime Minister
I cannot promise the right hon. Gentleman any increase in the amount that goes to aid. I can only point out, as I did a few moments ago, that the 1981–82 aid programme is higher in real terms than it was in any year in the period from 1971 to 1977, despite some of the problems that we are encountering. [column 564]
The right hon. Gentleman said that the OECD countries had been increasing their aid. I wish to point out, as I did to the conference, that if one takes aid, private investment and financial flows together, all of which matter—private investment and flows of money matter a great deal to those countries—our record is the best in the world.
Several Hon. Members
Order. I propose to call four more hon. Members from either side. It must be remembered that two short, but important, debates are to take place later in the day.
Mr. Edward Heath (Sidcup)
Is my right hon. Friend aware that the statement by the Secretary of State for Foreign and Commonwealth Affairs on his arrival in Cancun, that the British Government would spend more on agricultural research to help developing countries, would pursue measures that encouraged food production in developing countries, would support the energy affiliate of the World Bank, would channel aid particularly into the least developed countries, where the trade flows do not sufficiently account for their economy and where there is a need for aid, and would push for specific renewal of global negotiations was the most forthcoming statement yet made by the British Government and was greatly encouraging? Does that remain the position of the British Government?
It was always accepted that no member of the Cancun summit could commit other countries, but there was nothing to prevent their committing themselves. The intention was that they would make firm commitments that would provide leadership for the rest of the world in the event of global negotiations. It is, of course, right that the existing institutions, particularly the World Bank, the IMF and the GATT, should continue to run their own affairs. This will carry conviction with the Third world and the South only when the North shows that it is prepared to bring about the changes that are now so obviously necessary. That applies especially if we are to gain large sums for further investment from the OPEC surplus countries.
Because the North has not been prepared, even as recently as last month, to bring about the necessary changes and has blocked the proposals, the South has become so frustrated that it has turned to global negotiations. Will my right hon. Friend give an undertaking that the Government will bring about the changes now recognised as necessary by both the IMF and the World Bank?
The Prime Minister
We have already committed additional money to agricultural research. At Cancun we made it clear that if countries put in their bids for additional money for agricultural development we would slant our aid in that direction. I cannot say that there will be more aid, but more money will be slanted in that direction. Therefore, that point has already been met.
We advocated and supported the energy affiliate, so that point also has been met.
With regard to aid to the least developed countries, Britain already achieves the 0.15 per cent. target agreed in Paris. There is a problem with that, because India and Pakistan do not rank as least developed countries.
On the question of the relaunching of global negotiations, we agree with the summing up of the President that that should occur in the United Nations. [column 565]
My right hon. Friend said that although no member of the Cancun summit could commit others, he could commit himself. I must point out that three of those who attended committed their countries to ratifying the common fund. A sufficient number of people have not ratified it.
Reform of the existing institutions must come from within the institutions themselves. Saudi Arabia has a considerable voting strength within the IMF—although not such a large strength in the World Bank—as, indeed, has India. The voting strength of the developed countries present at Cancun is about 45 per cent. of the total votes. Those ranked as developing countries, including Saudi Arabia, have only 17 per cent. There needs to be a change in that proportion.
Dr. Jeremy Bray (Motherwell and Wishaw)
The right hon. Lady said that the purpose of the Cancun summit was to increase understanding. Can she say in what respect her own understanding has increased?
The Prime Minister
By the time that I had listened to many speeches and discussed matters for two days my understanding of the practical problems had increased. The understanding of the developing countries of the problems of the developed countries seems to exceed the understanding of the Opposition.
Mr. R. A. McCrindle (Brentwood and Ongar)
I support the role played by international trade development in narrowing the gap between North and South, and I warmly endorse the Prime Minister's underlining of the role that can be played in helping people to grow food for their own resources. However, I turn my right hon. Friend's attention to a problem of great immediacy that cannot wait for the continuing negotiations under the United Nations.
I refer to the real shortage of food in some of the least developed countries. Does my right hon. Friend have any plans for an initiative, either by the Government alone or in association with the EEC, to alleviate that appalling problem and to lift the standards of the poorest people in the world?
The Prime Minister
My hon. Friend will know that a great deal of food aid has been provided through the EEC. We have contributed both separately and with the EEC. Last year our total contribution to food aid was about £50 million. There are parts of the world where we need to give food aid urgently, and in many cases that aid is being sent. At Cancun many countries said that food aid was not enough because it would make them dependent upon the Western countries. They said that, except in cases of emergency or temporary shortage, they would prefer aid to assist them with their own agricultural development. That message was loud and clear.
Mr. Laurie Pavitt (Brent, South)
Does the right hon. Lady have a personal antipathy to the Brandt report? If so, will she go back to the 1969 Lester Pearson report and, as a result of the greater understanding that she has brought [column 566]back from Mexico, seek to persuade her colleagues in the Cabinet to reach the targets put forward in that report when considering public expenditure?
The Prime Minister
The phrase “greater understanding” was used by one of the hosts at the conference. I am surprised that it has not received much of a welcome in the House. I reiterate that this year's aid programme is higher in real terms than for any year in the period 1971 to 1977. We have not reached 0.7 per cent. of GNP and nor have many other countries. In addition to our aid—itself not a bad record—our record in private investment, which is what many countries want, is second to none. I am sorry that Opposition Members are not proud of that record.
Mr. Cyril D. Townsend (Bexleyheath)
What thought was given at Cancun to involving the Soviet Union in future discussions? Is it not obvious that, without aid flowing from the Soviet Union and its allies, we shall not get far?
The Prime Minister
The Soviet Union was criticised for not accepting an invitation to the summit. I pointed out that in 1979 aid from Great Britain alone exceeded the amount of aid from the whole of the Soviet bloc.
Mr. Stanley Newens (Harlow)
Does the Prime Minister believe that an adequate contribution to the problems of developing countries can be made by countries that pursue monetarist policies, maintain high interest rates, cut back development aid and are planning greatly to increase their expenditure on arms?
The Prime Minister
Those are the countries from which the developing countries seek more aid.
Mr. Patrick McNair-Wilson (New Forest)
Did my right hon. Friend explain to the conference that, as a result of years of slip and slide, Britain is now engaged in a battle for national solvency and that its ability to help the poorer nations will depend upon its ability to win that battle?
The Prime Minister
There was a good deal of understanding of our problems. Many of the developing countries pointed out that unless we could beat the problem of inflation they would have to pay more for machinery imported from Britain. Therefore, they regarded quite highly our priority to beat inflation. They also understood some of our unemployment problems and the fact that despite them they have had a good share of imports into Britain.
Mr. Frank Dobson (Holborn and St. Pancras, South)
Does the Prime Minister recognise the contribution that the London and Liverpool schools of hygiene and tropical medicine have made to the health and welfare of many poverty-stricken people in the Third world? If so, will she reverse her education policies, which threaten the future of those institutions?
The Prime Minister
I pay tribute to all the work and research in tropical medicine done in Britain, which stems from our imperial history. The question of which institutions should continue to receive funds is a matter either for the many research funds that are available or for the Department of Health and Social Security.