Dáil Éireann debate -
Wednesday, 24 Nov 1971

Vol. 257 No. 2

International Development Association (Amendment) Bill, 1971: Second Stage.

Minister for Finance (Mr. Colley)

I move: "That the Bill be now read a Second Time."

The purpose of the Bill is to enable this country to take part in the current international programme to provide additional funds for the International Development Association. The funds are required so that the Association may be able to continue and expand its work of promoting the economic development of the less developed countries. The Government have agreed to contribute four million US dollars for the purpose, subject to the approval of the Oireachtas.

The International Development Association is a subsidiary of the International Bank for Reconstruction and Development—the World Bank. At present it has 107 member countries, including Ireland. It was set up in 1960 to provide aid on easy terms. This is done by making interest-free or low interest loans repayable over periods up to 50 years. Usually there is an initial grace period of ten years during which no repayments are required. The need for this type of organisation arose from the fact that many developing countries were finding it increasingly difficult to finance their development programmes by borrowing on normal market terms. Market borrowing was straining their credit-worthiness and was creating a serious debt-servicing problem for them, a problem which has tended to become more acute in recent years.

The Association shares the same management and offices as the World Bank and much of its staff. It works closely with the Bank in its operations. Many projects are financed by a combination of Bank and Association loans, the Bank funds being provided on more conventional terms. The overall effect is to reduce substantially the cost to the borrower.

At an early stage the Association decided to concentrate its activities on developing countries whose per capita income did not exceed $300, about £120, a year. From its inception in 1960 to June, 1971, it made available a total of $3,340 million. This comprised 274 loans to 58 countries. There has been a steady increase in operations, particularly since 1967 according as the Association has had access to greater financial resources.

Loans are usually provided to finance specific projects and are normally intended to cover the foreign exchange costs involved. Sometimes funds are given to assist a general development programme or reconstruction measures. For example, a loan to assist reconstruction in Nigeria was made earlier this year. Every project is carefully evaluated and the Association must be satisfied that it will contribute to the economic advancement of the country concerned. A large proportion of lending has been for agriculture purposes but transport and communications, irrigation, power supplies, education and technical assistance have also benefited. An important feature of the Association's aid is that recipients are not tied to any particular suppliers for the purchase of machinery and equipment needed for their projects but can "shop around" to get the best value.

The organisation depends largely on the 19 richer member countries for funds. In 1960 when it was set up, those countries, which are known as Part I members, subscribed $751 million in convertible currencies. The other members, called Part II members, comprising the less industrialised countries, like ourselves, and the developing countries, paid $265 million but only 10 per cent of this sum had to be paid in convertible form. In 1964 the Association found it necessary to replenish its resources and the Part I members contributed a further $741 million. A second replenishment in 1968 also provided by the Part I members, brought in a further $1,200 million. Earlier this year agreement was reached on a third replenishment to provide a total of $2,450 million over the next three years. This replenishment has not yet become effective as the necessary procedures have not been completed by sufficient members. It is hoped that the formalities will be completed shortly.

Ireland has been a Part II member of the Association since its inception in 1960. Our initial subscription was $3.03 million. Although the conditions required that only 10 per cent of this sum be paid in convertible currency, we paid the subscription in full in foreign exchange as an indication of our support for the Association's work. As a Part II member, we did not participate in the replenishments in 1964 or 1968. On the present occasion, however, approaches were made by the association to the more advanced Part II members, including this country, asking that they share in the latest financing arrangements. The demand for concessionary aid is almost insatiable, as more and more of the poorer countries find themselves unable to finance their development programmes by conventional means and meet rapidly rising burdens of debt repayment. "Soft" aid is one of the most important means at present of ensuring a real transfer of resources from the developed to the developing world. The Commission on International Development, set up by the World Bank under the chairmanship of Mr. Lester Pearson, former Prime Minister of Canada, in its report published in September, 1969, called for a massive increase in this type of aid.

We are committed to increasing our development aid according as our economic circumstances improve. The Government have decided, therefore, that it would be reasonable to increase our contribution to the International Development Association, subject to the passage of this Bill. As already mentioned, the additional contribution proposed is $4 million. I might mention that, Spain, Switzerland, New Zealand and Yugoslavia have also agreed to contribute.

It is proposed in the Bill to authorise payment of our further contribution out of the Central Fund. This is necessary because a firm arrangement must be made at the beginning to commit the sum in three annual instalments, so that the Association will have some assurance that funds will be available to enable it to meet its commitments to developing country borrowers. Actual disbursement may be spread over a longer period and will be a matter for agreement with the Association.

It has been said that our aid effort is too small and that we are not keeping up with the efforts of other countries. The great bulk of the aid we provide is made available through international bodies, such as the various United Nations agencies, the World Bank and the International Development Association. This helps to ensure that it is applied to the best advantage of the recipient countries. In the case of other countries a large part of the aid given is of a bilateral character, much of it between the major powers and their former colonial territories, and a high proportion is tied in one way or another to the purchase of goods, perhaps machinery and equipment, from the donor countries. Thus, the donor countries may be doing little more than extending credits from which they will get valuable benefits in production and exports.

Our case is quite different. We do not benefit to any extent in trade and a definite sacrifice of resources is, therefore, involved. It must be remembered, too, that we have to import capital in sizeable amount to finance our development programmes. As long as this is so and as long as we have a serious balance of payments problem, our ability to provide capital for overseas countries must necessarily be limited. Nevertheless, the amount of our aid has been increasing. It has grown from £673,000 in 1964-65 to £1¾ million in 1970-71 and the increase of $4 million now proposed will provide a further boost. This is an earnest of the Government's wish to do our best by the Third World.

I need hardly remind the House that for many years we have been making significant contributions to the poorer countries through the missionary effort which includes contributions in such fields as education, medicine and nursing. We have also made personnel available to international agencies for technical assistance missions and we provide educational and training facilities in our universities for students from the less developed countries as well as training facilities in the Army and other public services. Taking all these contributions into account, our record is not, perhaps, so bad.

In any case, I am sure that the Bill will find favour with the House as a further step in the right direction.

Mr. Donegan

I agree with the Minister that our record in this field is not bad. I welcome the Bill inasmuch as it means that Ireland's commitment to the undeveloped countries, comparable to our gross national product, is quite creditable when compared with the contributions of the US, Britain and the other very wealthy private enterprise economies.

I should like, first of all, to say that we are doing this freely—I have no doubt the House will be unanimous about this Bill—at a time when there has been in the US a Bill which cuts off US aid to those developing countries by 23 billion dollars. I understand the position there to be that the US President is using all his artifice to see how this can be changed because if the amount of aid that a country like America can provide for those developing countries were cut off it would mean privation such as has not been witnessed before.

I make these statements not in criticism of America, which is a democracy and in which elected representatives have the right to make their contribution or not to make it and to vote in a certain way, but I find it most creditable that Ireland is providing such a contribution in relation to its GNP and its annual budget which is very fair towards the aid of those countries who need it so badly.

There are many features to this question of aid for undeveloped countries. When I attended an FAO congress some years ago the question arose of a surplus of dried milk in Common Market countries and elsewhere and it was suggested that the amount of the surplus would provide protein for a very large number of children in countries where because of tsetse fly and other things the production of fresh milk is impossible. The answer received at that congress was that it was not proper to provide something that is only a temporary alleviation, that the supply of protein to those people must be regulated vis-à-vis the supply they could themselves provide thereafter, something on the lines of the British ground nut scheme.

I do not go with that. There are many criticisms of our existing private enterprise economies. I am a strong private enterprise man, having been named within my party as a person a bit towards the ring wing. However, the main criticism is as I have stated it. My other criticism would be the case not so many years ago of the grain ships lying around the coasts of America with surplus grain which would not be moved to areas where nutrition was at a level inhuman to behold. The grain was not moved largely for financial reasons, because the movement of such volumes of grain might disturb the international grain market. These things are inexcusable. The decision of the US Congress or Senate to refuse to provide 23 billion dollars aid was inexcusable.

Turning to the last page of the Minister's speech we read that we do not benefit. It is doubtful because of the privation existing in those developing countries if we will benefit in our lifetime by any aid we provide. Perhaps our children will benefit. However, there are aspects from which the big powers could benefit. First, they have the production methods and the capital to send to those countries which have labour forces, and the sustenance and the health of those labour forces, physical and mental, could benefit those powers. These are things the big powers might exploit with advantage to themselves.

Unfortunately, the degree of aid to those countries is far too little and it opens up something that we in Ireland abhor. The peoples of those countries have not the nutrition or the education necessary to help them to provide normal living standards and there is the danger that this lack will instil into them what used to be described as atheistic communism. They believe that it is wrong for anybody to have any property or any degree of comfort. Who is to blame them when the great nations of the world are not providing sufficient aid?

I have no criticism to offer of this Bill except to say that notwithstanding our Capital Budget situation and our commitments on borrowing abroad, all I wish as a Christian is that the amount sought were greater and the amount paid were greater. It is an irrefutable fact that if at this moment a United Nations force were required for the north-eastern part of this country it would be financially impossible to provide it, not because of any dereliction on our part or because we did not pay our subscription but because subscriptions were not paid by greater nations and these not the private enterprise or capitalist nations.

I welcome the Bill and I hope the programme for aid for deprived countries and people will become an international priority in the years to come. It certainly has not been a national priority in past years and I am certain this has been a major factor in the unrest in the world today.

Dr. Cruise-O'Brien

The Labour Party welcome the Bill but we do so with a sense of our collective inadequacy in this island in relation to the scale of this problem. The Minister appears to be aware of this from the words which Deputy Donegan quoted: "Our record is not, perhaps, so bad". It is not, perhaps, so bad compared with some other countries which have more and have done proportionately less. But it is not very good. Towards the end of his speech the Minister said the amount of our aid has increased from £673,000 in 1964-65 to £1,750,000 in 1970-71. Perhaps the Minister or his advisors could quickly tell me what is the equivalent in today's currency of £673,000 in 1964 money. I should be glad of that information in his reply, so that we may see the extent of the real growth, if there has been a real growth in our aid contribution. From what we all know about inflation and what every citizen has been forced to know about it, we must infer that the increase is not great but we should welcome the information since this is presented as an increase here.

It is also a fact that even if our aid from this almost pathetically low level has grown a little in five years in absolute terms it has still decreased in relative terms because while we have been considering what little we can spare for this problem the problem grows every day of every year. World population is doubling in less than every 30 years. The imagination of people in better-off countries—and in a global sense we are slightly better-off than most or a lot better off—has not begun to take in what doubling of the world population in less than 30 years means, granting that enormous increase is taking place in the main in areas that are already desperately poor and that we are piling poor on poor —and by poor in a world sense we mean something we can hardly imagine in our European sense.

Several Deputies, myself among them, this year visited one of the world's population disaster areas in the eastern part of India. I refer to it as a disaster area because it was that even before the refugee problem arose, even before 10,000,000 people without any means of support were added to the poor of the area. In the city of Calcutta approximately two million people are sleeping in the streets; you pick your way over them as you walk the streets and nobody any longer pays any attention to that. It is accepted by people in the area as we ourselves are accepting it when we make token contributions of this kind of which the main effect I fear is to salve our own consciences. I am not making a case against the Government: this applies generally; it affects the very low priority given by the people in the richer countries, of which we are one, to the plight of the poor ones and it is basically the same attitude to other people's problems that we felt bitter about when other people applied it to our problems in the mid-19th century at the time of the famine. People in other parts of the world are living and dying in conditions comparable to those of that time.

The build-up of world population is producing strains among categories of people, tribes and communities, leading to war as in the Nigerian Civil War and as in the war which imminently threatens between India and Pakistan of which a main cause is the inflammation of local animosities and hatreds by the extreme scarcity of land and of rewarding jobs and the savagely bitter competition for these among groups of people. All this is a world problem, of course, and it would be presumptuous and absurd for a little country like ours to claim any determining role in regard to these things: we cannot do it. Furthermore, doubt has even been cast on the possibility at this stage of the advanced countries collectively preventing the movement towards disaster which is happening through the population explosion in the underdeveloped countries. It may already be too late to avoid such disaster.

In the light of the population problem, the urgency of curbing population growth through family planning becomes very real indeed and in terms of the human need and of the additional human need generated to disaster point, nothing should be allowed to stand in the way of family planning. I would hope that Ireland will not now, as she has done in the past, stand in the way of international planning effort. Ireland was among the countries which on what I would describe as ecclesiastical rather than religious grounds, did, in the past, hinder the making available in the poorer countries of methods of family planning. I would regard that as an extremely immoral and wrong thing to do.

In his speech the Minister referred to the missionary effort and said in a sentence that runs in sequence:

This is an earnest of the Government's wish to do our best by the Third World.

I need hardly remind the House that we have for many years been making significant contributions to the poorer countries through the missionary effort....

By that juxtaposition the Minister appears to be claiming for his Government credit for the missionary effort. That is a misleading juxtaposition because the people who deserve credit for the missionary effort are those in the churches and religious orders and those who sustain their effort by private contribution. The effort has almost nothing to do with the Government and it has been Ireland's most serious contribution to aid in these areas. That may seem to be in partial contradiction to what I said earlier about the necessity for family planning in these areas and the necessity of not standing in the way of such family planning but I think the contradiction is only apparent. I have met many missionaries in this country and in various other parts of the world and I have never found them to be opposed seriously to the development of family planning in the areas whose immense near-disaster needs they know so well. Recently I heard two nuns who had returned from India express their concern at the comparative failure of the Indian Government's family planning effort. They were so impressed by the necessity for family planning that the Indian Government's comparative failure in this area seemed to them to be ominous because if, as these sisters were doing, one was finding himself at his wit's end to support the poor in a given village of 8,000 or so, knowing that before long that population would be about 12,000 and with no more jobs being provided, the reflection carries with it its own message.

In West Africa, for example, the populations of the coastal cities are increasing by 10 per cent per year whereas the job increase is less than 1 per cent so that each of these cities becomes ringed year after year with another ring of starving or semi-starving jobless, unskilled, hopeless humanity with no outlet but crime. In Nigeria they are trying to check the tremendous growth in crime by such methods as public execution for theft. Such methods are doomed to failure.

To ask what we can do in this situation is to ask a question which tends to reduce one to silence because of the scale of what we can do and the sense of the drop in the ocean about it all. The Minister must be concerned—his statement reflects some concern and an attempt to be more cheerful than is real —with the inadequacy of occasional arbitrary doles. How much do we consider we can afford in this particular year? How much are we being badgered by Lester Pearson or some other international personality who is a good salesman in this field? Nobody can consider that to be a satisfactory way of proceeding. It cannot be satisfactory for the Government. The idea has been mooted of the fixing of contributions at a fixed percentage of national income so that those in need would have to contribute almost nothing and this would have the advantage of fair, even and steady gradation. There would be no question of belt tightening at particular points for reasons other than objective ones. I would ask whether the Government would support such a development at the UN and elsewhere, that is to say, the placing of aid to underdeveloped countries on a fixed percentage basis based on national income assessed by an international agency. I do not think there is any other fair or proper way of doing this and I would ask the Minister to give us some indication when he is replying of whether he favours this or any similar method of putting aid on a less random basis not only for us but for the other countries with which we are associated.

Parliamentary Secretary to the Taoiseach (Mr. Andrews)

I welcome this Bill as proposed by the Minister. Without blowing our own biblical trumpet and without making protestations of our Christianity, the Bill can be seen as a proper, Christian and multilateral approach to aid to underprivileged countries. I intend being very brief in my contribution but there is one comment I want to make and which I would consider to be the key to this Bill. This is that the aid we give has been criticised, not here but generally elsewhere, rather uninformedly, as being too little and that we are not keeping up with the efforts of other countries. The Minister points out that the great bulk of the aid we provide is made available through international bodies such as the various United Nation agencies, the World Bank and the International Development Association. Of course, this helps to ensure that the aid is used to the best possible advantage in the countries where it is needed most. The point here is that in the case of other countries a large part of the aid contributed is contributed on a bilateral basis so that for whatever aid may be given by these countries to underdeveloped countries, they want to ensure that, to be rather crude and naked about it, they get a return for their investment. Therefore, it is not aid in the sense of the aid given by us. We give but we do not want any return.

They give and they want a return on the aid they give. These other donor countries, unlike ourselves, may be doing little more than extending credits from which they could get valuable benefits in production and exports. Our case is different.

The Minister mentioned that the aid in our case has grown from £693,000 in 1964-65 to £1¼ million in 1970-71. This is a further four million dollar boost to aid already given. This is a fair indication of the Government's sincerity in regard to the third world.

Deputy Cruise-O'Brien mentioned that he was in Pakistan with a deputation. The other two members of that deputation were Deputy Sir Anthony Esmonde of Fine Gael and Deputy Dr. Loughnane of the Fianna Fáil Party. We are not unaware of the hardship which exists on the Indian SubContinent. Deputy Loughnane made a very comprehensive report to me in my capacity as Chief Whip. The report was welcomed. It was a harrowing report and I should like to record my own appreciation of the courage of these men who went into the conditions and the circumstances of that area. It was tough going. It was a good thing that a deputation from this House went to India to examine conditions at first hand. I hope that in future deputations from this House will go in an all-party sense to other areas of the world where there is hardship, famine, war and so on. Maybe the Minister for Finance, in his kindness, might consider the possibility of financing all-party deputations from time to time to have a look at areas of hardship.

I should like to add my praise to the praise already expressed of our missionary effort. The Minister said that this is a further contribution in terms of hard cash. In terms of personnel we can hold our heads high because of the missionaries we have sent over the centuries and continue to send to the various countries in the third world. Their contribution is by way of their physical presence in these areas and their ability in the sciences, in education, medicine and nursing. That is in addition to the contribution being made by Africa Concern and the Irish Red Cross through the International Red Cross and indeed through all the associated bodies under the aegis of United Nations. These are other areas where we make a contribution. Whereas this might be the Government's financial contribution on behalf of the nation the people themselves are very quick to come forward where financial assistance is needed. In addition to the Government giving money the people of Ireland give generously when they are asked to do so. I welcome this Bill and I thank the Minister for introducing it.

Mr. Colley

I am very glad that this Bill has been welcomed by all sides. There are just a few points I want to make in reply to what has been said, mainly to answer some questions that were asked.

On the basis of the increase in world prices, our aid of £1¾ million for 1970-71 would be worth about £1¼ million at 1964-65 prices but this is a very rough calculation. We have, therefore, about doubled our aid in real terms since 1964-65.

On the question of adopting a percentage of GNP as target, as far as we are concerned there is no objection to adopting a percentage of GNP as a target for us or for other countries but we do say that any such arrangement will have to be tailored to the national circumstances of each country. Indeed this target of 1 per cent of GNP which was for development aid and which was adopted by the United Nations in the United Nations Conference on Trade and Development requires to be examined just a little further. That 1 per cent has been refined in the Pearson Report to .7 per cent for official aid and the balance for private assistance, these targets to be reached by 1975, but it has been generally recognised that this 1 per cent international target did not necessarily apply to countries such as Ireland which are still in the process of development and which have to import capital for their own development. When the target of 1 per cent was being discussed a target of .2 per cent or.3 per cent was suggested for countries like us.

The point has been made, but I think it is worth mentioning again, that there is a difference in kind between our aid effort and the bulk of aid effort of some of the major countries. This has been underlined by the Parliamentary Secretary. Our official aid is almost entirely multilateral and it is not tied to any trading arrangements with us. Therefore, it is the most valuable kind of aid that the developing countries can receive and conversely is of least value to us, there is the least self-interest for us involved in it. This factor must be taken into account in assessing comparative figures of aid.

I have some figures available, the latest for this purpose. They relate to 1969 but I do not think the position is likely to have changed very much since then. They show that our aid via multinational agencies, at .1 per cent of GNP, was well in line with the official multilateral aid of the EEC States and of the other applicant States for EEC membership. These countries and also the other major aid donors, such as the United States and Canada, give the greater part of their aid directly to developing countries as bilateral aid. It is important to note that we are pretty well in line as regards official multilateral aid with the countries of the EEC and the applicant countries.

Mr. Tully

Is there any estimate of what this country's contribution could be if instead of giving cash we gave food, clothing, et cetera?

Mr. Colley

The Deputy will appreciate that while we do a certain amount of that it is very limited. It is not always very welcome unless in special circumstances because of course it is used, where they get the chance, by some countries simply to get rid of surplus produce.

Mr. Tully

I appreciate that. I just wondered if there was a figure. What would our contributions represent in goods?

Mr. Colley

I could not say.

Mr. Tully

Could we double or treble it if we were giving goods?

Mr. Colley

Possibly. A few years ago we would have been very tempted to make part of our aid available in the form of butter. Everybody else was trying to do the same thing. We would not do it today, of course. The real comparison is with the amount of official aid that is given multilaterally with no strings attached. On that test we stand pretty well in line with the EEC countries and the applicants.

Question put and agreed to.

Agreed to take remaining Stages today.