Multilateral Investment Guarantee Agency Bill, 1988: Second Stage.

Minister for Finance (Mr. MacSharry)

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

The purpose of the Bill is to approve the terms of the Convention establishing the Multilateral Investment Guarantee Agency, and to enable this country to honour the financial and other obligations associated with membership of that agency.

The Multilateral Investment Guarantee Agency, or MIGA for short, is the most recent member of the World Bank Group. It was established last April and almost all the major industrial countries, including seven of our EC partners, have now joined the Agency. Ireland is a strong supporter of the World Bank and is an active member of all affiliates. By enabling us to ratify the MIGA Convention, this Bill will ensure that we can now participate fully in all aspects of the groups's operations. The various institutions, taken as a group, offer a wide range of services and expertise. It is intended that the activities of MIGA will complement those of the other organisations, and that conflicting priorities will be avoided. In particular, MIGA may be seen as a link between the World Bank Group and the international business community.

As Deputies will be aware, there is general agreement that foreign direct investment in developing countries enhances their capacity for growth and strengthens their economies. Unfortunately, all too often, investment opportunities are not taken because conditions in these countries may be such as to create doubts in the minds of investors as to the security of their investments. Also, despite the fact that many industrial countries have guarantee schemes similar to that offered by MIGA, there can still be difficulties in finding adequate insurance cover in such cases.

MIGA is an attempt to remove such impediments. It has the specific aim of encouraging investment flows to developing countries by providing insurance guarantees against non-commercial risks. Such risks can include restrictions on the transfer of currency, the expropriation of assets, the risk of war or civil disturbance and breach of contract.

Guarantee schemes in isolation will not, however, produce miracles. A favourable investment climate and appropriate policies by governments are necessary too. In this respect, an important role which MIGA will also have, in addition to its guarantee function, will be in advising host governments on their investment laws and regulatory and other policies affecting foreign direct investment programmes. It is also hoped that MIGA will heighten the awareness of investors to the investment opportunities offered by developing countries.

The type of investments eligible for cover will include equity investment, different forms of direct investment, and medium or long-term loans made or guaranteed by owners of equity in the enterprise concerned. Investments guaranteed by the agency will have to be new, a designation which covers investments made to expand an existing investment and the reinvestment of earnings which might otherwise be transferred outside the host country. In this way, profits will be encouraged to remain in the country concerned and existing investments could well be strengthened. Guarantees can also apply to foreign capital which citizens transfer from abroad for reinvestment in their homeland, upon the joint application of the Government and the investor concerned. In this way, the return of flight capital may be encouraged.

MIGA's capital base is £1.082 billion. Each member will be entitled to subscribe for a specified number of shares and, in Ireland's case, this number is 369. In terms of total cost, our subscription will amount to about IR£2.750 million at current exchange rates. However, only 10 per cent of this amount will be paid in cash. Both this cash element, and a further 10 per cent in promissory notes, are payable within 90 days of ratification. The balance of 80 per cent will be subject to call by the agency to meet any exceptional obligations which might arise during its early years. As the agency is expected to conduct its activities on a sound business basis, and to meet its financing needs from premiums and fees, recourse to either the promissory notes or to the callable capital is not anticipated. I should also add that any paid-in contribution will count as part of our official development assistance programme.

It is envisaged that industrial and developing countries will be fully equal partners within the organisation of MIGA. This is reflected in the intention that voting power will be split evenly between the two groups. Moreover, for the first three years of MIGA's operations, while membership will still be somewhat fluid, a system of supplementary votes will ensure that the position of the minority grouping will be protected. An important feature of MIGA's guarantee operations will be that the proposed investment must first be approved by the host country before any contract of guarantee may be concluded. This will give the host country an opportunity to evaluate the investment and will also ensure that it is fully in accord with its development needs.

There can be no quarrel with the view that developing countries should encourage inward direct investment to the maximum extent possible, particularly in view of the burden of their debt repayments and, in many cases, their impaired creditworthiness. Direct foreign investment offers a way for developing countries to acquire much-needed foreign exchange without adding to their debtservicing liabilities and to some extent, can fill the gap left by reduced commercial bank lending. Of course, leaving aside the investment finance itself, there are benefits in terms of increased output and employment, not to mention the advantages attendant on the transfer of technology, modern management skills and marketing know-how.

In my opening remarks, I referred to the fact that MIGA is designed to complement the activities of the other agencies in the World Bank Group. There will be a particularly close complementarity between MIGA and the International Finance Corporation. The IFC's objective is also to encourage direct investment in developing countries and it does this in a variety of ways — it makes equity investments in and gives loans mainly to privately-owned enterprises, it helps develop local capital markets and financial institutions and it offers technical advice to Governments on the encouragement of private investment. Given this close complementarity between MIGA and the IFC, both agencies will co-operate fully in achieving their common aim.

MIGA is a new institution and any real judgment as to its effectiveness will not be possible for some time to come. While we should not be overly-ambitious regarding its likely achievements, at least in the early years, the main measure of its success will be the extent to which it is able to promote flows of additional financial resources to developing countries. Net direct investment flows to the capital importing countries peaked in 1981 at $14 billion and fell sharply to $10 billion in 1983. They have remained at roughly that level ever since. If MIGA helps to redress that situation, even in a small way, its creation will have been worthwhile.

Before I touch on the essential provisions of the Bill, I should also like to draw Deputies' attention to the fact that under the terms of Article 29 (5) (2) of the Constitution it will be necessary for the Dáil to pass the motion, which is number 12 on today's Order Paper and which formally approves the terms of the MIGA Convention. This will ensure that the convention is binding upon us in international law.

Turning to the Bill itself, section 1 defines various terms.

Section 2 provides for the approval of the terms of the convention.

Section 3 contains the financial and other provisions. In particular, subsection (2) provides for the payment out of the central fund both of our initial subscription, and of any subsequent subscriptions which might arise if the agency's capital were to be increased and we were to participate in that increase. Subsection (3) provides for the issue of promissory notes. Subsection (4) provides for the disposal of any moneys received under the convention, for example, the refund of any moneys paid on call. As is customary, the Central Bank will act as depository for MIGA and subsection (5) makes provision for this. In addition, this subsection also covers the possibility that the Central Bank may advance any moneys required for subscription payments. Under subsection (6), the servicing costs associated with any moneys thus advanced will be charged on the central fund.

Section 4 provides for the recognition by the State of MIGA's subrogation rights. Subrogation is a generally accepted principle in insurance law. In this case it will mean that where an investment is compensated by MIGA, under the terms of a contract of guarantee, MIGA will then assume the rights of that investor against the host country where the investment was located.

Section 5 specifies that arbitration judgments involving MIGA will have the force of law in this country.

Section 6 contains the Short Title to the Bill and the terms of the MIGA Convention itself are set out in the Schedule to the Bill.

I recommend this Bill for the approval of the House.

Mr. Noonan

(Limerick East): As the explanatory memorandum states in the first paragraph, this Bill will permit ratification by Ireland of the Convention establishing the Multilateral Investment Guarantee Agency which is generally referred to as MIGA, and will enable the State to comply with the financial and other obligations of membership.

I would like at the outset to congratulate the predecessor to the Minister for Finance and now deputy leader of Fine Gael, Deputy John Bruton, who, as former Minister for Finance, took a personal interest in the negotiations which led to the establishment of MIGA, and I welcome the present Minister's initiative in bringing the Bill before the House, the passage of which will permit ratification by Ireland of the Convention.

Investment in Third World countries is fundamental to their growth and development. The situation has improved in Third World countries in recent years, especially in Asian countries — and I am speaking not just of South Korea, Singapore and Taiwan but of the Asian region as a whole.

The same is not so in South America however. South America drifts increasingly into debt, and this is accompanied by lower living standards and more political instability.

The situation in Africa is nothing short of disastrous. Sub-Saharan Africa has gone into a tailspin of lower productivity which has led to and will continue to lead to widespread destitution, famine and death.

Any initiative which seeks to encourage direct foreign investment in developing countries is not only necessary but essential if tragedies such as that which took place in Ethiopia and the Sudan are not to be repeated again and again in the coming years.

The DAC countries, that is the OECD assistance countries, have failed to live up to their stated obligations of providing development assistance to Third World countries. While it is true that for Asian countries development aid is declining in importance, for many of the least developed countries, even in Asia, and for many poor people living in Asian and in Latin American countries, development aid remains an important factor and a source of hope. It is absolutely vital for Africa.

The targets of the DAC countries however have not been met. These countries now are spending $37 billion annually on development co-operation activities. This amount means, in real terms, a slowing down of the percentage increase over the last decade. The original annual target for overseas development was 0.7 per cent of the gross domestic product of these countries and $37 billion annually is exactly half of that target. Living up to the promised target would mean the expenditure of an additional $37 billion or so per annum.

As the Minister has stated, the paid in element of the MIGA fund will be classified as official development assistance and will be payable from our central fund so I feel it appropriate to comment on our attitude to overseas development aid because this is going to be reckoned as part of it. There is no doubt at all that Ireland has been one of the leading culprits in not meeting its obligations and fulfilling its targets under ODA. Not only have we not achieved the committed target of 0.7 per cent of GDP but we are well below the average payment of 0.35 per cent of GDP for the OECD countries. In fact since the present Government came into power our development aid has been further reduced from 0.25 per cent of GDP to 0.18 per cent of GDP. We would need to contribute over £100 million annually extra to achieve our promised target. Against a background of total callousness and failure by the present Government to live up to their international obligations in this respect, any initiative is welcome and, in this context, I welcome the introduction of this Bill by the Minister.

It is interesting to note that if the industrial nations, including ourselves, had lived up to promises made over the past years, the international debt problem of Third World countries would have been solved since the sum involved in outstanding debts in Third World countries of $37 billion represents the difference between what was promised and what was delivered. I wonder what contribution a convention such as this will make to the relief of hunger and to increased living standards in the Third World while those countries continue to flounder in the massive international debt which accrued during the seventies and early eighties.

Monetary transfers from the south, the underdeveloped countries of the Third World, to the north, that is to the industrial countries, are on the increase. Interesting figures were brought to my attention recently. In the early eighties there was a major transfer from the northern countries to the underdeveloped countries of the south. In 1980 the transfer from north to south was $30.6 billion; in 1981, $35 billion; in 1982, £17.8 billion and in 1983, $7.1 billion. However, by 1984 this had gone into reverse. The reverse transfer from the underdeveloped south to the industrial north was £7.3 billion in 1984, by 1985 this had gone up to $20.8 billion and by 1986 that figure had gone to $30.6 billion. Those figures were produced by the World Bank and all totals are the net transfers between industrialised and developing countries. It is evident from those figures that from 1983 onwards the underdeveloped countries have been transferring billions of dollars of their resources in debt repayments to the industrialised countries. Those transfers exceed the sums that have been provided in aid by the industrialised countries to Third World countries.

In those circumstances is it any wonder that there is anger in the Third World when, under the pretence of the rich countries aiding the poor countries, they are actually subsidising the rich? I will deal with the Bill in some detail on Committee Stage. When we are dealing with section 2 which ratifies the convention, I hope to refer at length to the terms of the convention which are contained in the Schedule to the Bill.

I should like to pose a question to the Minister and I hope he will respond when replying to Second Stage. It is an accepted international principle that trade follows the flag but in more recent years trade has seemed to follow the ability to insure against risk. Most countries have internal insurance schemes of one type or another, like our own scheme administered by the Department of Industry and Commerce, which insure against the risk of non-payment when trade is conducted with certain countries. This is an international development of that concept and the insurance provided is for non-commercial risk. The Schedule, which outlines the terms of the convention for us, enumerates the type of non-commercial risk which will be covered, restrictions in currency transfers, expropriation, breach of contract, civil unrest and so on. The investing company will still have to carry the commercial risk.

I wonder to what extent will investment, under the guise of aid, guaranteed by this convention be really to the benefit of the host country, the recipient, rather than to the benefit of the country whose citizens or whose corporate units are investing in the host country. Quite frequently the concept of trade following the flag has moved to trade following the elimination of commercial risk and I wonder if the industrial nations will, once again, use this convention as a method of eliminating risk in their own commercial activity, as a method of eliminating risk which they are unwilling to carry so that they can benefit further from investments in Third World countries. Are we starting in this Convention another cycle of investment in Third World countries posing as aid but in circumstances where the real beneficiaries would be the companies and the individuals who invest rather than the host country intended to be the recipients?

I hope the Minister will comment on what I have said or give the House his views of how he envisages the convention working in practice to the benefit of the recipient countries. I should like the Minister to deal in detail with the participation by Ireland in the total cost of the underwriting envisaged by the convention. Ireland's share is 369 shares and there is a total cost of about £2.750 million envisaged but I notice that only 10 per cent of this amount will have to be paid in cash and a further 10 per cent in promissory notes.

I note also that there is an enabling section which allows the fund to draw down the total. Will the £2.750 million, whether it is drawn down or not, be reckoned as part of our bilateral aid or our ODA or is that the amount that will be drawn down? Will a nominal draw down be included to exaggerate the amount of aid which we are giving to underdeveloped countries? Will that amount be computed in the totals while the real sum will be between 10 per cent and 20 per cent of that? I would like clarification of that point from the Minister.

I notice that the agency will be managed through a council of governors, a board of directors and a president. Each member state is entitled to appoint one governor and one alternate governor to the council, the body in which the essential powers of the agency are vested. I note that the board will be responsible for carrying out the general operations of the agency but when it comes to voting rights the Explanatory Memorandum points out that it is the intention that each group will ultimately have equal voting power. It states that during the early years of the agency's existence a system of supplementary votes will operate in order to protect the voting position of the minority group. In this context, which group is the minority group? Does that refer to the host countries or the investing industrialised countries? In numerical terms there are fewer DAC countries than there are underdeveloped countries and, on the face of it, it appears that they are the minority group but on the other hand shares are allocated not only on a national basis but relevant to the amount invested. There is one subscription vote for each share of stock held by a country. I would like further explanation of the mechanism to protect the minority group. Is it intended as a protection of the native countries of the investors or is it in the interests of the host countries?

There are other matters I should like to raise in regard to the Bill but they are more appropriate to Committee Stage. I would like an opportunity to discuss and seek clarification of certain aspects of the convention which appears as a schedule to the Bill. I should like to know if it is the intention to discuss that as a separate item or should it be taken under section 2 which simply states that the terms of the convention are hereby approved. I should like to ask the guidance of the Chair in regard to that matter. As a number of my colleagues are anxious to contribute to this debate I will delay the House no further but the Chair will be aware of the context in which we envisaged debating the Bill and the reasons we are taking it in terms of a further contribution to an already inadequate payment of official development aid by this country to underdeveloped countries.

An Leas-Cheann Comhairle

I will endeavour to assist Deputy Noonan as best I can. I am sure the Deputy appreciates that on Second Stage any Member is free to comment on what is in the Bill or what he or she feels is not in it but should be in it. That allows for very wide ranging comment. The schedule will be taken, ordinarily as schedules are taken, as I see it on Committee Stage debate on the schedule. The indication I have given would allow a Deputy to arrange to do this at a certain distance, if he felt so disposed. That is the best advice I can give the Deputy at present.

Mr. Noonan

(Limerick East): Thank you, Sir.

An Leas-Cheann Comhairle

I am not encouraging the Deputy to go too far but am indicating to him that I do not anticipate that there should be any great restrictions. I hope that will not be used in evidence against me later.

Mr. McDowell

I hope the House does not intend to amend the convention because that would be a somewhat futile exercise. I want to point out that this debate is centred on a proposal that Ireland should ratify the Multilateral Investment Guarantee Agency Convention, which establishes as an off-shoot of the World Bank a new agency designed to give indemnification against non-commercially insurable risks for investment in Third World economies. The Progressive Democrats welcome this measure in principle. It is our view that the climate for commercial investment in Third World economies is a definite inhibiting factor which retards economic growth and social development in those countries.

A substantial international agency and fund which can insure against political and non-commercial risks in respect of investments which have been carefully assessed and adapted to local conditions is in our judgment, a very significant step forward in promoting Third World development. The developed countries have a clear moral duty to help the Third World. Sadly, such help, is often intermittent, unco-ordinated and worse still frequently undermined by other actions on the part of the developed world. Our selfish interests create dumping of agricultural surplus which in turn devastates any agriculture above subsistence level in Third World countries.

The northern hemisphere by its agricultural programmes and policies creates the conditions for famine in the Third World. The northern hemisphere showers Third World countries with weapons and munitions by way of subsidy to its own armaments industries and to further national geo-political aims. That is not confined to the western section of the northern hemisphere. It applies to the eastern section also. The effect is to destabilise politically countries which have no need for such armaments.

Our commitment to Third World development aid must change dramatically. The work of GOAL in building up a solid agricultural base is commendable, and deserves support. The MIGA Convention is an important complementary step in industrialisation, but it is not something which is of itself likely to change the basic problems of famine, hunger and destitution in the Third World. It is likely to be of more benefit to those economies which are on the road to industrialisation than to those who are struggling to keep subsistence agriculture in existence and to stave off famine.

The work of Concern and other famine relief agencies is vitally necessary and needs our strong support as a community. We must also strive to support and develop democracy, civil liberties and the rule of law in the Third World, not as a form of political or cultural imperialism but rather to nurture and conserve basic political and social justice in those countries. That aspect of Third World aid should not be left to Trocaire alone. This House, the law reform agencies of this State, the Judiciary, our legal professions, can also, by voluntary aid help to sustain democratic instituitions, laws and rights in the Third World. Amnesty International is one organisation active in that area on a voluntary basis.

Is it not time that as parliamentarians, some of us as lawyers, and others involved in the executive side of this State, that we put that collective expertise at the disposal of Third World democracies in order to sustain democracy and create stable conditions rather than giving them arms to fight off insurrections and internal crises and to subvert the rule, based on the democratic principle of one man, one vote? I believe that democracy, civil liberties and the rule of law cannot be transplanted en bloc by way of a patronising post-imperial gesture to the Third World but where they do exist they can be nurtured and sustained by institutions and people in Ireland who have experience of and insight into the problems of those countries.

I wonder if our democratic institutions — our Parliament, our courts, our system of Government and our professionals — really provide their fair share in this sphere? I doubt it very much. Those who work in these areas are hiding their light under a bushel. There is very much work to be done in the Third World. I suggest that our approach to creating the conditions for social justice in the Third World should involve our own agencies and personnel who fulfil those functions at home.

The profile of Irish international development aid is very disappointing. In 1988 the level of spending on international co-operation was reduced by 21 per cent — more than £2 million. This year the same Vote shows a nominal 10 per cent increase, but in real terms the value of our international co-operation budget is down 15 per cent on its level of two years ago. Worse still, bilateral aid, the one area where we have discretion as opposed to multilateral aid where our commitment is ordained by forces outside our control, is being further reduced this year, by 10 per cent. That is on top of a reduction of £3 million last year.

In general terms, this bilateral aid is focused on countries which are least developed — Lesotho, Sudan, Tanzania and Zambia. The Government have made major cutbacks in the aid to these countries in the past two years; millions of pounds have been cut from our expenditure programmes. As a community we have down-graded Government aid to the Third World in the one area where we had a choice in the matter, bilaterial aid, where our discretion determines the level of aid rather than multilaterial aid where we are bound by international obligation to contribute to international funds.

While some may argue that as a borrowing, developing nation ourselves, our first priority is to achieve fiancial viability at home, the fact is that the Government choose to ignore and to avoid politically sensitive expenditure programmes for cutting and to cut instead the bilateral aid programme because obviously the recipients of aid from that programme have not votes in this country. These cutbacks have continued for two years and have decimated aid to our so-called priority countries — that is a phrase we use to describe Lesotho, Tanzania, Zambia and Sudan.

In 1988 the cutbacks in bilaterial aid were concentrated on co-financing aid projects which were slashed by 74 per cent. The same kind of cuts are likely again this year. The level of overseas development aid has fallen from £42 million in 1986 to £33 million in 1988 — from 0.25 per cent of GNP it has slipped back to 0.18 per cent. In terms of meeting the UN target of 0.7 per cent of GNP originally to be met by 1980, the further we are from 1980 the further we are going away from that target. The cash subscriptions to MIGA are supposed to be a further reduction in the funds already earmarked for overseas development aid. In this regard it is worthwhile and revealing to look at the actual phraseology of the explanatory memorandum which states:

Ireland's share allocation in MIGA is 369 shares at a total cost of $3,992,580, or IR£2.75 million approximately at current exchange rates. The paid-in element, which will be classified as Official Development Assistance and payable from Central Fund services, will be 10 per cent in cash and a further 10 per cent in demand notes, to be encashed only if the Agency is unable to meet its obligations. Payment of our subscription will be made within ninety days of Ireland ratifying the Convention.

In other words our contribution to a fund which is there to indemnify investors against arbitrary political action and other non-commercial risks is now being classified as overseas development aid. That is fair enough in one sense but if it is coming out of the existing budget and the Estimate prepared for 1988 it means that in other areas there is to be a corresponding cutback. Deputy Noonan queried whether the whole nominal sum is to be included as part of our multilateral aid programme? I doubt if that is intended based on paragraph 6 of the explanatory memorandum, but if it is, that would compound the concerns I have expressed.

The development assistance committee of the OECD, the DAC as referred to earlier, are to examine Ireland's overseas development aid programme in 1988. This year there is to be a review of our performance. It is worthwhile noting that in previous years they were complimentary and supportive of our efforts by way of bilateral aid in Lesotho, Sudan, Tanzania and Zambia three of which were classified as least developed countries. It is interesting to note that the comprehensive public expenditure programme which was circulated to Deputies in this House recently and which drew down precisely on this issue stated that Ireland's overseas development aid was reviewed by the development assistance committee — DAC of the OECD — in 1986. The committee expressed its appreciation of the quality of Ireland's aid which was provided entirely in the form of grants. The bulk of bilateral aid was extended to four low income sub-Saharan African countries — the ones I mentioned — three of which were least developed countries. Aid to the least developed countries as a group was well above the DAC average. The DAC would again review Ireland's ODA in 1988.

Is that not sad in this year when our performance is going to be assessed? Perhaps it is fitting in another sense when we are going to slash that budget yet again. By the time that review occurs the compliments which were given to us in earlier years will be substituted by — I hope — justified and well merited criticism that we always choose the easiest targets when it comes to expenditure cuts.

For the second year running we are providing a pathetic £1,000 in our estimates for next year for international disaster relief. This compares with actual expenditure, funded on an ad hoc basis, of £715,000 and £600,000 in 1987 and 1988 respectively.

Even in terms of food aid the real value of aid provided for in the 1989 estimates is lower than in 1988. We have only to look at subhead I.1 of Vote 33 relating to the Department of Agriculture and Food to find that out. The sad fact is that virtually on every front we are reversing our record of improvement since 1974 when Ireland's overseas development aid programme was first established on a formal basis. The aid then amounted to 0.05 per cent of GNP. It rose to nearly 0.25 per cent and it was targeted to rise to 0.7 per cent under our moral commitment to the UN to attempt to achieve that target by 1980. It is now on the way back down again and it is down to 0.18 per cent of GNP. We were more than half way towards our goal of giving 0.15 per cent of GNP to the least developed countries. That achievement this year has again been thrown away and undermined.

I know the Government face financial difficulties and budgetary constraints but the one thing I want to emphasise is that every time the Cabinet sit around the table with a view to making economies there is one certain result, that is, that people who have no TDs in this Dáil but who rely on us as much as our constituents do are starving and living in subsistence economies. If every time their interests are cast aside and they get the cut, then I wonder what the real extent of our commitment to Third World aid is. If every time the Government make economies they go to the Third World allocation to raid the locker, if that is to be the policy of this Government — that we are suspending any commitment to the UN targets — why not say that and be honest? What is going on now is flimflam and public relations politics which when examined shows that we are going in the wrong direction.

We are one of the beneficiaries of high priced agriculture in this country and we are one of the economies creating agricultural surpluses which are causing famine and starvation in Third World countries because they eliminate subsistence agriculture and drive out any effort on the part of indigenous agriculture to commercialise itself or make itself safe from climatic catastrophies. We have a moral obligation to spell out a five year development plan for overseas development aid. What would the five year development plan be? I am not asking that every single project should be set out in a five year plan but I think it is reasonable that the Government should say that we propose over five years to restore, at the very least, the real value of the moneys we were giving to Third World aid a few years ago and to map out precisely how we will do that. There is nothing to constrain the Government from doing that. On the other hand I am convinced that if there is no strategy enunciated by Government as to where they are going in terms of overseas development aid the Minister for Finance next year will snip £1 million or £2 million out of Third World aid in real terms in order to make the books balance.

We are very good at projecting job targets and tourist targets and setting out five year and three year plans for national recovery and for employment in various sectors. Why cannot any Minister of this Government specify in advance for the next five years the shape and volume, in global terms, of Ireland's overseas development aid programme. If we did that we would be able to judge in each budget by how much and to what extent the Government were living up to our communal obligations to the Third World.

I also call on the Government to establish an official voluntary, legislative, judicial and legal programme to sustain democracy, the rule of law and civil liberties by seconding personnel with experience in those fields for voluntary duties overseas. What I have in mind in that context is an Irish version of the peace corps but I am not talking about fresh faced kids going out to work in Third World countries, I am talking about people who have experience in, for instance, the guaranteeing of human rights, in establishing procedures for people in detention, in vindicating the rights of those who have been deprived of their civil liberties and in helping Legislatures in the Third World to do their job. I suggest we have the resources here to give on a political front help to the Third World and by virtue of our neutral status and by virtue of our own constitutional and national history such political aid offered by us would be received as genuine help and not as an effort to dominate or to mould the institutions of the recipient countries in any particular direction.

This Bill is like so many others passed in this House such as environmental measures on air pollution and the like, it is window dressing to a large extent. If it means that Ireland is going to put more into Third World development aid, that is all very well, but if it means that more of our resources are to be applied to what is effectively an insurance fund for Third World investment and less are to go to our bilateral aid programmes, which I believe is the consequence of this particular measure, then it is disguising with a well intentioned and superficially attractive legislative gloss what is a further slide away from our moral and international political obligations. Legislation without resources is about as much help to overseas development as legislation to amend or repeal the laws of gravity. We in the Progressive Democrats support this Bill but we have to point out the sad fact that it is a milestone on a road which has sadly doubled back on the direction whence we came and in which direction we were travelling just three or four years ago.

Proinsias De Rossa

Firstly, it has to be re-emphasised that the main purpose of this Bill is to permit ratification by Ireland of the convention establishing the Multilateral Investment Guarantee Agency and to enable the State to comply with the financial and other obligations of membership of that new agency. The Multilateral Investment Guarantee Agency is a member of the World Bank group and its main objective is to encourage foreign direct and presumably private investors with financial guarantees against non-commercial risks such as restrictions of currency transfers, expropriation, breach of contract, or civil unrest. Under the Convention Ireland will be expected to make a payment of £275,000 in cash within 90 days of ratification and a similar sum in demand notes, which will be cashed only if the agency are unable to meet their obligations.

It has to be said that measures which assist in promoting economic progress in the under-developed and developing countries are of course very welcome, but it is unlikely that the establishment of this new agency is going to have any great impact on those countries which are facing the most severe problems from hunger and deprivation.

The need for effective measures to help these countries is now more acute than ever. The situation in many parts of the Third World has deteriorated rapidly in the past decade due to a combination of political and climatic factors. For instance, commodity prices, on which many Third World countries depend, have fallen to the lowest level in 30 years with a consequent fall of 15 per cent in the purchasing power of Third World exports in the first half of this decade. The massive burden of Third World debt — now estimated to be in excess of US $1 trillion — a lack of new investment and static aid levels resulted in an outflow of more than US $30 billion from the Third World during 1986 alone. Countries like Ethiopia, Sudan and Bangladesh have had to face appalling problems from famine and natural disasters such as flooding. Within the past ten days Nicaragua has been devastated by a hurricane which has destroyed the homes of more than one in ten of the population. Up to 40,000 children are estimated to die needlessly every day from the effects of hunger and disease — hunger that could be ended and diseases that could in most cases be cured — yet in many Third World countries great wealth and great deprivation exist side by side.

The tragic human consequences of the developments I have just mentioned were summed up by UNICEF in their 1987 report on The State of the World's Children and I quote:

Malnutrition during the 1980's is increasing in many parts of the developing world. Evidence of rising malnutrition exists in ten African countries; (plus) Belize, Bolivia, Brazil, Chile, Jamaica, Uruguay and parts of the Philippines and Sri Lanka. Infant mortality has been rising in some area — including Barbados, Brazil, Ghana and Uruguay — after decades of decline, while the trends towards improvement has been halted in at least 21 countries. The proportion of low birth-weight babies increased in at least ten countries between 1979 and 1982, including Barbados, Cameroon, Guinea-Bissau, Jamaica, Malaysia, Rwanda and Tanzania. Diseases thought to have been eliminated have reappeared — yaws and yellow fever in Ghana, for example, and malaria in Peru. And these are just the countries for which information is available.

The failure of the more developed world to respond adequately to the crisis of hunger, disease, death and poverty in the Third World verges on the criminal. Of course we have serious problems in our own country but our difficulties pale into virtual insignificance when compared with those of the Third World countries. I should like to bring the attention of the Minister and the House to a report produced by Trócaire called The Costs of Cutting Third World Aid. This report makes a very strong case against further cuts in overseas development aid by the Government. On page four of the report there is a table which outlines the basic quality of life indicators and compares them with statistics in Ireland. I want to mention a few of them. It compares statistics for Lesotho, Sudan, Tanzania, Zambia and Ireland. In relation to gross national product per capita in US dollars, it points out that we have 20 times the gross national product per capita at around US $5,000 whereas in Lesotho, Sudan, Tanzania and Zimbabi it ranges from US $250 to US $370. The average daily calorie intake per capita in those four countries compared with Ireland shows that we have something like onethird more or, to put it another way, the other four countries have a third less calorie intake than the population in Ireland. The infant mortality rate per 1,000 live births in those four countries ranges from 82 to 108 compared with Ireland which has a rate of nine per 1,000 live births. The average life expectancy in those four countries ranges from 49 to 55 whereas in Ireland it is 74 on average.

Those statistics very clearly, but perhaps very coldly, indicate the kind of life which most children born in Third World countries have to face. Against this background the decision of the Government last year to cut Ireland's bilateral or direct aid to the Third World by 30 per cent in real terms was surely one of the most cruel and heartless decisions to have been taken by the Fianna Fáil Government since coming into office. In 1987 we spent £24.7 million in international co-operation. This year that figure will be just £21.65 million. Our bilateral aid fund has been cut in the 1989 Estimates by 10 per cent, from £10 million to £9 million. So far as this country's financial commitment to the Third World is concerned — and obviously I am talking about Government commitment — it seems to be a case of one step forward and two steps backwards.

Non-governmental organisations on the other hand such as Trócaire and Concern have had a very good and positive record in the area of development aid. The response of the Irish people to appeals such as the Band Aid appeal for Ethiopia has been especially generous but the response of successive Irish Governments has been one of broken promises.

Ireland has never come anywhere near meeting the target level of 0.7 per cent of gross national product or, to put it more simply, a commitment of 70p out of every £100 of gross national product which was set by the United Nations. The last Coalition Government promised to increase overseas development aid to £50.9 million by 1987. The actual figure allocated in the 1987 Coalition budget was £44.4 million which would have represented about 0.26 per cent of GNP. This was cut back even further by Fianna Fáil. A target date must be set for this country to reach the target figure of 0.7 per cent of GNP. A date should be set and a timetable agreed and adhered to without qualification.

I think it is worth while to again quote the document produced by Trócaire called The Costs of Cutting Third World Aid. The document points out and I quote:

While Ireland reduces its aid, the need in developing countries remains vast. Over 500 million people are chronically hungry in the Third World and while progress has been made in the last three decades, in certain areas the need is growing. The United Nations World Food Council (WFC) points out that "the 1980s have become a decade of declining staple-food consumption in many low-income countries, which can least afford a further decline of already inadequate average diets.... Declining food availability affects above all the poor, who simply have no way of further tightening their belts below their survival diets without severe risks to their health and lives."

The report goes on to say:

In total, the number of children in the developing world suffering from what has come to be called proteinenergy malnutrition increased from 150 million in 1975 to close to 160 million in 1984.... Malnutrition and disease caused the unnecessary deaths of some 14 million children under five every year during the first half of this decade.

That is an appalling state of affairs in this world where there is such vast wealth and the capacity for the creation of such vast wealth at a time when we belong to a community which stores vast quantities of food and destroys vast quantities of food because it does not suit the market to put it up for sale or to distribute it. This is something on which Ireland as a member of the Community should take a very strong stand. We should make it clear that we are not prepared to stand over that and the best way to do that is to meet the commitments we have made over the years to provide at least the minimum of 0.7 per cent of GNP.

As I said at the outset, it is very doubtful if the establishment of this agency is going to have any significant impact on the scale of the problem facing Third World countries. It could in some respects be seen as an attempt by the World Bank to "privatise" development aid. The fact is, however, that the 40 most underdeveloped countries are just not considered to be credit worthy, and are not likely to attract private investment.

There must also be doubt about the role of the World Bank and particularly about its willingness to take the sort of urgent measures to help the Third World deal with its problem. While the World Bank plays a major role in international matters, its policies are largely determined by five of the major western industrialised nations, the USA, the UK, West Germany, France and Japan, and its policies in recent years in particular have reflected the rampant "free market" ethic of these countries — ethics which ensure that the strong exploit the weak and that the rich ignore the poor. The World Bank has never shown any determination to see fundamental developments in the Third World which would impinge on the self interest of the major countries referred to. Indeed many of these countries see the Third World simply as markets for products and they are loath to see any developments there which would upset the balance of their own economies.

The rather complicated voting structure in the new agency also seems to have been designed to ensure that the major nations retain control over policy.

It is unfortunate that voting in the World Bank and in the Multilateral Investment Guarantee Agency is not, as it is in most other UN and other international bodies, on the democratic basis of one country, one vote.

I find it strange also that Ireland should be included in category one of the members of the new agency, along with all the developed nations, while our EC partners, Spain, Portugal and Greece, are included in category two, with some of the poorest countries. Does this mean for instance, that investment in Spain, Portugal and Greece, by third countries will be guaranteed by the agency? I would ask the Minister to clarify this point in his response to the debate.

I would also ask for clarification of the paragraph in the explanatory memorandum which says that this country's payment to the agency will be classified as Official Development Assistance. Does this mean that our already meagre allocation of money for direct development aid, will be cut further by the £275,000 to cover the initial payment to the agency?

I am also very alarmed to see South Africa included along with Ireland in the list of developed countries. It is totally hypocritical to suggest that South Africa has any role to play in encouraging development in the Third World countries. The problems of many Third World countries such as Angola and Mozambique have been greatly exacerbated by the direct and indirect military intervention of South Africa. In Angola the South African armed forces and the UNITA forces which it backs have brought death and destruction to the south of the country. In Mozambique, RENALMO, which is organised, trained, armed and financed by South Africa has deliberately set out to destroy the economic and social infrastructure of the country, and has greatly contributed to the problems of famine and hunger. South Africa should be shunned by the civilised world. It should have no place in this or any other international agency until is has scrapped its apartheid policies and its policies of interfering and intervening in other countries.

We are not opposing this new agency. We hope it will have some benefiting effects although we do not see a lot of hope for it doing anything significant. I would ask the Minister to clarify the points I have raised. I hope he will be in a position to state that our overseas development aid will be restored and will not be cut as is being proposed in the Estimates.

Mr. M. Higgins

I must express my very serious disquiet at the content of the Minister's speech. I find it strange that there is not a representative from the Department of Foreign Affairs here while we are discussing this issue. I say this having had the experience of watching international development association section loan legislation requirements come here before this House again and again and being passed through in relatively brief periods without any discussion as to the implications of passing this legislation for our overall foreign policy. In dealing with the International Development Association section of the World Bank, we are dealing with the soft loan section of the World Bank and the matter is not perhaps serious but I must say that I have to consider, having read the Minister's speech, whether, as foreign affairs spokesperson for the Labour Party, I will have to recommend to my party to perhaps even oppose this legislation on the strength of the speech I have before me. I say this in a considered way because normally when legislation involving small amounts are brought before the House it is considered that it is not worth while delaying the legislation and so on. I want to take up and contest a number of points as ones that do not represent the view of my party or the view of the Irish people. In paragraph 3, page 1 of the Minister's speech he says:

That is not the view of the international community and that is not the view of people in Ireland who look at the World Bank. That is the view of the US, the view of Mrs. Thatcher and of a number of others and I would ask Members of this House to place it in comparison with a basic document issued by the Chilean Government in an introduction to trade and investment, which says that the figures of foreign investment in Chile have exhibited a sustained upsurge in the past ten years, that this is the result no doubt of a policy which guarantees investors a treatment consistent with their rights under the operation of an economic system that has evident significant social as well as economic progress to warrant essential future stability required for the execution of substantial investment projects, and that accordingly, three fundamental principles represent the basis of the Chilean foreign investment policy — equal treatment to national and foreign investors, free access to the various markets and economic sectors for foreign investors and minimum state interference in connection with the activities of foreign investors. It goes on to say that as commonly known, a clear and stable policy is not sufficient however, to entice foreign investors, that several other factors must be simultaneously available to make attractive investment in a given country, and that in the particular case of Chile, such factors are, the operation of a stable economic policy open to foreign markets, availability of first level infrastructure and services and excellent professionals and labour availability to comparative advantages in various sectors including agriculture, forestry, fishing and mining and respect for private property and social stability.

It is extraordinary to find a speech by an Irish Minister for Finance on an aspect of foreign affairs affecting our relationship with world institutions which repeats verbatim the justification by General Pinochet's Government for foreign investment in Chile. This House is a Parliament where words and statements should mean something. I repeat what the Minister said:

As Deputies will be aware, there is general agreement that foreign direct investment in developing countries enhances their capacity for growth and strengthens their economies.

That view is a tendentious one which does not represent the view of my party or of many people in Ireland. They would object in the strongest possible terms. The Minister went on to make offensive remarks about many other countries who are part of the world community of nations. His speech continued:

Is this to say that in countries where there is a struggle going on to remove a dictatorship such as in Marcos's Philippines, the administration of Pinochet in Chile or to remove General Stroessner, we can say we have a responsibility to defend private speculative international investment and say that those who are struggling within these countries are somehow creating unstable conditions? Who do we think we are? This is a House to which I have to come week after week listening to what I can only call republican guff and so-called decolonisation positions from different people around the House. This language is the language of the coloniser, the language of the rich and the language of the north in international economic terms. It is not taking into consideration the view of the south in relation to international aid. It is offensive and insulting language in relation to many countries where there is a problem about economic structures and who are struggling for human rights in the economic and social realm. I have had a good personal working relationship with the Minister for many years and I would ask him when replying to this debate to disown some of this language because of what it could possibly create by way of a bad impression internationally.

The Minister went on to say:

That is what was said to Julius Nyerere when he was forced to abandon the process of native development in Tanzania at a meeting before he returned as President to his country. The Minister and those who might have influenced this atrocious speech may be glad to hear President Nyerere's speech in 1981. He stated:

The World Bank and the IMF were set up by and are still controlled by the rich nations of the world. Whether they are now effective in serving the purpose for which they were established is, I would have thought, questionable. But what is quite certain is that apart from the IDA, a subsidiary of the World Bank, they are not instruments for attacking world poverty and dependency. The IMF, in particular, endorses and serves the present international financial structure, rather than in any way acting as a corrective in its injustices. Further, although it is a creature of the developed nations, these hide behind the IMF when they find it convenient. They pretend it has a special expertise and is politically neutral; when a poor country seeks credit, it is therefore told first to reach an understanding with the IMF.

I say in parenthesis that I am not confusing the IMF and the World Bank. I have read the publications from the World Bank, including their most recent one about supporting private investment and so forth. I had hoped that we would not be in the front row in trying to disgrace ourselves by prostrating ourselves in this new kind of international relationship with the Third World.

Dr. Nyerere went on to say:

This approach must be ended and replaced by a system which will support development and not crush it, as in the current deplorable case of Jamaica.

Michael Manley in Jamaica wanted to give bread to his people and he was broken by the international financial system. Nyerere was forced from office because he could not face the personal problem of looking at the concept he had for native Tanzanian development being scrapped in front of his nose, with the example of a capitulating Kenya next door to Tanzania

Now that we have taken in the speeches of the Minister for Finance to quoting Pinochet economics in relation to aid, I should like to tell the other side of the story. I was recently in Chile, as some Members of this House will know. In the briefing document Chile — A Resource Book issued by the United States Embassy in 1988, there is a page which describes the Chilean economy and states:

Chile is now in its third year of 5 per cent-plus growth and its fifth year of positive numbers, following a massive recession in 1982 and 1983. Inflation has been reduced to one of the lowest levels now experienced in Latin America, investment (both domestic and foreign) is strong, unemployment rates are dropping while the workforce expands. Real wages are climbing, but from an extremely low base. Perhaps more important for a highly indebted developing country, Chile is running a substantial trade surplus. Exports now represent nearly a third of gross national product. Chilean officials state that they will export more this year than Argentina.

It could almost describe this country — exports up, investment up, inflation down and the only things wrong being emigration, poverty and unemployment. May be that comparison is the one which is getting home to the people in the Department of Finance when they are asking their Minister to make speeches such as he has made this afternoon.

The other side of it is very interesting. While these figures were being presented as one face of the Chilean economy — I am only using it as a case study to refute the kind of nonsense to which I have just listened — those indicators were established at a time when the average Chilean was poorer than he was 16 years earlier. In addition the right to organise trade unions was lost, something which is not true here. Wages are 44 per cent lower than in 1973 and overall income is down 15 per cent from what it was in 1973. There is no social security system; it has been curtailed. In negotiating with the World Bank and international institutions the social fabric dealing with basic needs has been scrapped. The health system has been privatised. People get credits which they can cash in at private health institutions. One could go on and on. In 1970, 17 per cent of the Chilean population were classified as poor. In 1987, 47 per cent were classified as poor, involving five million people and many children.

There were, therefore, if you like, two faces to the economy. What we are doing is taking the official gloss, the rhetoric, of external, disembodied, dehumanised type of economics and saying that this is the logic we will follow. Therefore, on a November day, in the Irish Republic the Minister for Finance seeks authorisation to lend the great international assistance that Ireland has to offer to establish a new agency which will guarantee the risks of any social disturbances, such as liberation movements, or any kind of upset that investors might suffer if they invested in any part of the south in the world.

What a disgraceful kind of attitude to have. Of course it will come back, as it always does in this casadh an tsúgáin kind of politics we have in this House, that these are matters for Finance and have nothing to do with Foreign Affairs; that it is the remit of Foreign Affairs to deal with our international policy. I believe there is still somebody alive down in Iveagh House dealing with overseas development aid. That thinking, in the speech to which we have just listened this afternoon is, quite frankly, an atrocious attitude to take.

For example, the Minister had this to say about the obligation that will arise:

Each member will be entittled to subscribe for a specified number of shares and, in Ireland's case, this number is 369.

I am sure that is terribly important. The quotation continues:

In terms of total cost, our subscription will amount to about IR£2.750 million at current exchange rates. However, only 10 per cent of this amount will be paid in cash.

When one looks at the dreary document that constitutes the Estimate for Overseas Development Aid this year this means that yet again, whatever little we will give, we will be giving because we are forced to do so under international obligations while the amount we give by discretion will become tinier and tinier.

What is most interesting is that in the case of this converted Government they seem to have passed on that conversion to the rest of the apostles so fast that it is unbelievable as an exercise in faith itself. The one thing the Government do not have, that nobody in this House has, is a mandate to cut overseas development aid. Nobody went before the people saying that they were going to freeze the existing level of overseas development aid, or that they were going to cut it back. Certainly they did not say — in the course of preparation of the Estimates in 1986, 1987 or 1988 — they were seeking a mandate to cut aid more than cuts in every other area — 36 per cent in one area, 29 per cent in another and so on. They did not say to the Irish people: because you are so generous — another kind of lottery — this time you are not gambling but putting your hands in your pockets and, because you are so generous, we are going to cut our own aid at Government level.

If one looks at where that development aid has been cut one notes that last week the ebullient acting Taoiseach, the Tánaiste and Minister for Foreign Affairs, came into the House and said — in another disgraceful comparison — that when he had been asked as part of the general community of Ministers of Foreign Affairs by the President of Nicaragua, Daniel Ortega, to respond to the greatest disaster that had occurred in Nicaragua in recent times he said, "we are watching the situation; we are being briefed; we are told it is not as bad as it might seem; we are told it is not as bad as Bangladesh and Sudan," thereby making the seedy comparison of one major disaster part of the world with another. Of course the truth is that whoever is advising the Tánaiste and Minister for Foreign Affairs about Nicaragua might have referred to the official statement from the Nicaraguan Embassy in London that said that the disaster was as bad, or worse, in parts of Nicaragua than the 1975 earthquake, that one house in ten had been affected by it, that 300,000 people had been made homeless or had had to move; that 40 people were missing on the outskirts of Managua. But our Minister for Foreign Affairs said they had been advised that it was not as bad as it might seem, that hard choices had to be made and we had to send money from the national lottery to Sudan and Bangladesh. When history comes to be written I hope people will read the records of this House for the last couple of years. I hope they will look at parliamentary questions when they will discover that I asked, week after week, about our office in Sudan. For example, when we rented the office we appointed an individual to take up a position there, to set up an aid programme. That was 18 months before the famine in Sudan. They will note that the Minister was asked every week and month what they were doing about it. The fact of the matter is that the Government closed the office in Sudan, brought the official home and appointed him to a post in Iveagh House. Then, when the Sudanese famine was happening, they decided, late in the day, to respond from the national lottery. Let the world know that: Ireland's foreign policy in relation to aid is to close offices in advance, remove the personnel; then when everyone else in the world is contributing to the point of embarrassment, go back to the gambling fund, take a bit from the national lottery and throw it out. But even crumbs from the national lottery were not available to a Government whose Vice-President and Foreign Minister we entertained here.

In Tanzania, another country in the bilateral aid programme, there was the winding down of projects of which many Members of this House were aware, in Kilosa and other places. Incidentally these projects were not set up for those parts of Tanzania. They were set up as model projects to be replicated and translated to other places where they would be models of community development. They are gone as well; they do not really matter.

When one looks at the other different countries, the different projects there, one discovers the people in APSO who are being called home as are the people in DEVCO. There is now a new philosophy which is more or less this: maybe there is money in Third World poverty and debt? Would it not be nice if they gave us all contracts — if we sent off our medical personnel and got paid for doing so — for building this or that? It is almost an insult to the company but we have almost a Masstock theory of development in current Government circles.

Supposing it were true, that none of this had anything to do with foreign affairs, then why is there not any reference in the Ministers speech this afternoon to the other issues of trade and debt? This speech is about removing the insecurity of foreign investors, about Ireland's international commitments, our obligations under the Constitution to pass this today so that we will be able to remove the insecurities of these people. When will we hear about an overall approach on the part of this country towards the international financial institutions? Do the people we appoint or nominate to directorates in these different financial institutions ever write home? Or should they sent postcards saying how they are getting on? What is our view on the structure of international trade? What is our view on the restructuring of GATT so that it might help the South in relation to trade? What is our view in relation to the debt anyhow? When we go to the United Nations what is our view in relation to the Latin American countries? What proportion of GDP do we think countries should pay in order to fulfil that commitment? I know the answer that will come back — we are a small little country; we have to look after ourselves and are we not debt-ridden; are we not doing nicely with our General Pinochetic economics? They call it the absence of economic rights in Chile. We call it emigration and unemployment here when we get our rare attacks of honesty.

I agree with what Deputy de Rossa has just said, that we have spectacles regularly in this House. I am not being in the slightest emotional about it. I just feel that in relation to the question of our relationship to the international financial institutions, to foreign policy and aid, we are disgracing ourselves more day after day. I would offer one concept alone for consideration, that of mutual interdependency. If we are to take our mutual interdependence seriously do we not need to recognise that it is in our approach towards the international financial institutions, our initiatives and energy should be used in twisting these institutions into such a shape as will meet the needs of the developing countries rather than those of the major donor countries? Where is there any evidence to be found that we are doing so?

What about women in development? What about all of these issues? The answer is this: this country, if it ever dies, will not die in a way that anyone will notice. It will gradually fall asleep and die in its sleep because, in foreign policy at present, we are beginning to be noticed as the sleepwalkers: we do not stand foranything; we do not have a view on anything. We have a lovely principle in regard to all the people struggling for liberation. We picked up this principle somewhere on the road between Westminster and here. It is that we do not recognise opposition or liberation movements and we tell people like the blacks struggling in South Africa, for example, that we will recognise them when Apartheid has been removed. We tell all the other countries the same thing. We tell the Salvadoreans that if they ever achieve true democracy in El Salvador we will then recognise them. Are we not wonderful? We treat the colonised who got free to establish themselves, in a unique, sleveen kind of foreign policy in the late eighties. I am getting tired of it all being justified and accepted on the basis of some windy statements that all these matters are an on-going process under constant review. That is Alka Selzer kind of language and we have been getting more and more of it when we asked questions about foreign policy. The truth is that we have no position on the international financial institutions by way of philosophy or policy. We have no philosophy or position on trade or on the debt. We have no concept of recognising oppositional forces and we never analyse the impact of international borrowings on the internal structured economics in terms of rights. We are intervening now to guarantee the people who might take a risk, who might buy copper shares in Chile. If the copper mines were nationalised that would be a tragedy and the Irish people would like to know that they will be contributing to bailing out these discontented people, these poor hapless investors who got upset when the people demanded some of what was their own in the first place.

There are a number of principles — but I am not interested in being negative — which could be made. The Minister is correct in saying that this is not the time to discuss the whole question of aid in detail. We may get ten minutes in the next 12 months to do that so we must not burden anybody today in case we take advantage of our ten minutes in advance. I do not agree with much of what Deputy McDowell said but I agree that there should be a co-ordinated approach towards aid. It is very important and there could be an all-party commitment — there is consensus in this regard — towards reaching an aid target over a period of years. We could all agree on that but no response is forthcoming. There is no point in saying that the former Taoiseach, Deputy FitzGerald, rejigged the figures by saying he was talking about the previous year and not the previous five years. I am not interested in riddles. There is a possibility that there would be support from all parties for a continuous movement, over a short period, towards achieving our aid target.

A second point is that our multilateral aid could and should be maintained in conjunction with an examination of international agencies who are receiving it and looking at the pattern of its impact on the poorest in the different countries to which it is going. Very often there is an enormous difference between agency to State aid and agency to people aid. An examination of the funding of water schemes in Africa would give a clear example. No doubt the Minister will answer a question which arises in relation to how all the philosophy in his speech fits in as being consistent with our attitude towards the United Nations development programme? Do we say one thing when we are dealing with the World Bank and another at the UN? Maybe we have two policies and that, being Irish, it does not bother us if they contradict each other.

What about our attitude towards the International Fund for Agricultural Development? What is our philosophy in relation to the International Development Association to which I referred earlier? It is time to come clean in relation to the amount of Irish aid — tied aid — we give because of our existing commitments under international agreements. We should specify the discretionary component of our aid. It is time, equally, in relation to the question of the overall debate to talk about the world financial agencies. As Deputy De Rossa pointed out, we are speaking at a time when most of the imports to the Third World countries have increased in price. There has been a slump in relation to many of the basic commodies being exported by the countries of the south.

It is very clear — and many writers, including Susan George, have said it — that unless there is a renegotiated new international economic order there will be one famine after another. Are we waiting to get our kicks from watching one famine after another shown on our television screens? All the people who examined the causes of world hunger, malnutrition and disease and all the avoidable illnesses — Deputy De Rossa referred to UNICEF — have pointed out the tiny amount of resources which would be necessary to complete a vaccination programme by 1990. They have already pioneered, through ORT and through different kinds of charts and so on in relation to the progress of children, programmes which have saved a number of children. Have they saved babies and children to die as adults in a world that refuses to critically glance at the structure of its trade, aid and debt?

There could be a role for Ireland, which prides itself on some kind of moral authority, to look critically at the structure of these institutions instead of sleep-walking its way through assent in something which, at the end of the day, is working against the peopled part of the world and not towards any kind of philosophy of life itself. We are living in a very contradictory situation, one where the work of the non-governmental organisations and the voluntary contributions of the Irish people are being used to frustrate the official actions taking place in the name of the Irish people. Thus, without a whit of shame, the Minister for Foreign Affairs will say that last year the Irish people gave so much money for aid. He will not bother to break down the amount and say whether it was by voluntary subscriptions initiated by Mr. Geldof or given by the Government. The Minister is not too worried whether it came from the national lottery or if it is under the Estimates for the Department of Foreign Affairs.

I listened with interest to the Minister for Foreign Affairs last week saying that he wanted to nail this canard that there was only a sum of £1,000 in the Estimates for disaster relief. That is the sum mentioned in the Estimates but he is really saying he is keeping a line open and that he can always give more later. Of course it did not seem to matter that it came from the lottery. The people working in the field for aid want to know if the bilateral projects will continue or have they been so structurally damaged by another run of cuts that they will not be able to continue. The people working in different, special projects want to know the future of those projects. We never answer these questions.

A number of principles could and should affect our policies in relation to the Multilateral Investment Guarantee Agency. Now that we have wasted our time discussing MIGA I suggest that there are other interests and principles at which we might look, for example, at our pattern of discriminating support for aid projects and loan applications in terms of whether they satisfy basic economic and social needs.

We should develop a philosophy of support for the eradication of hard core poverty in the Third World. We should look at projects directed at education, literacy and participation and at the whole question of people's ability to take part in affairs governing their country. I gave an example from Chile simply to illustrate that. Chile can look sweet from outside in relation to the literature I quoted, but the experience inside was a life of deprivation, poverty and exclusion for five million people. Is our loyalty in terms of these institutions towards the peopled world or towards international investment? I say "congratulations" to those involved in preparing this. It is the most brazen speech I have heard in a long time and it is extreme in its language on the rights of the free market, liberal economy. I hope nobody abroad reads it because I hope to continue to travel abroad occasionally and I hope, because of its disgraceful language, that nobody will ever be able to quote it to me. The problem is that we no longer think about our development strategy because we do not have one. We say nothing about food and rural development. We do not look at the question of access to markets. There is nothing in any speech I have heard from the Minister for Finance or the Minister for Foreign Affairs about the international commodities market and how it excludes many Third World countries. There is nothing about technological transfers and the way they are weighted in favour of the north. There is nothing at all in relation to a philosophy of debt or, for example, the sale of armaments to the Third World. There is nothing about women, or about ecological and environmental projects and whether they should be favoured when they come before the different international institutions. We are in a time when it is almost facile to look for informing principles for our development policy, and in the absence of a development policy there can be no theory, policy or philosophy of aid. Unfortunately, we can look forward more and more to the little messages that come back in terms of our international obligations and what we are required to do.

I conclude by saying that I reject absolutely the suggestion made in this speech at the point at which I began, that there is support in Ireland, this country, for the philosophy of this speech here, that our role in international lending institutions is one of guaranteeing the risks of foreign investment, of saying as stated here, that it is upsetting for foreign investment very often to be located in countries where there is instability. We have no right to make those remarks. We are not bankers, we are politicians. We are not the international copper company of the world. We are not investing in mines. We are not De Beers. We are politicians. We are supposed to reflect the feeling of the people. You can expect that kind of thing from people who would be investing in South Africa. You do not expect it from people who are elected to this House.

Then we have these trite remarks about having guaranteed the risks of social instability, and in case the peasants got stroppy we would be able to say something else as well. We give a lecture to people who have more courage than we have, politicised decent people who have enough courage to struggle, often against insuperable odds. We give them a lecture. The Minister said, "A favourable investment climate and appropriate policies by governments are necessary too" Who are we to lecture anybody when people are flying from our country through lack of work, when people are homeless and in poverty, when old people no longer look forward to dying in dignity or to proper health care in their old age? Who are we to give lectures on international meteorology? Having talked about the weather instead of economics for years we are now taking to lecturing the world? Maybe the Minister is thinking of not going to Europe but of going on a world tour. He said, "A favourable investment climate and appropriate policies by governments are necessary". Think of the sheer arrogance of that kind of remark. I suppose what is encouraging is that the Minister will not be making this kind of speech so often. It is merely that he considers he has to when issues like the question of our relationship to the Third World, particularly through the joint shared forum of international institutions, manage to surface like a mad mushroom occasionally in this House where we rarely discuss anything of relevance any more.

Then the Minister refers to the International Finance Corporation and I quote:

The IFC's objective is also to encourage direct investment in developing countries and it does this in a variety of ways — it makes equity investments in and gives loans mainly to privately-owned enterprises, it helps develop local capital markets and financial institutions and it offers technical advice to governments on the encouragement of private investment.

So we have taken it on ourselves to look after private investment.

Mr. McGahon

What is wrong with that?

Mr. M. Higgins

I expect Deputy McGahon to agree with this philosophy. I am not surprised by him because he has not been converted——

An Leas-Cheann Comhairle

Would Deputy McGahon allow Deputy Higgins to direct himself to what is in the proposed legislation?

Mr. M. Higgins

I am quoting from the Minister's speech about this. That is the best I can do. Here is the nice part:

Before I touch on the essential provisions of the Bill, I should also like to draw Deputies' attention to the fact that under the terms of Article 29.5.2º of the Constitution it will be necessary for the Dáil to pass the motion, ...

I realise that, but all I know is that the Constitution, however bad it was in 1937, was about something much more principled than this version of our relationship to international and financial institutions. Therefore, I regret to say that I have to think and ask my colleagues to think whether our disagreement which was represented by way of philosophy in this speech is so serious that we will refuse to support this Bill.

Mr. Barnes

I also welcome at least an opportunity for us within this forum to have some discussion and debate on the whole area of an Irish role in Third World development particularly as we pride ourselves on the fact that we seem to share a certain identity and experience with developing countries, having so recently developed ourselves, although Deputy Higgins might feel we have not reached a great sense of development yet. I would like to address my few remarks to that area of our identity and experience and particularly what our commitment should be to developing countries without losing sight of the experience we have so recently had of being colonised and robbed of our resources, being denied our education and being contemptuously used by what was considered the coloniser. We all have deep within us a great sense of and a reaction to what was put upon for so long and we can never afford, not alone not to lose sight of it, but to neglect to make a commitment alongside that experience. I say to the Minister here today, to the present Government and to all who may be in Government in the future, that I would like to feel we could make some kind of reform, of amendment, of softening of the process. This should be done particularly in the areas of the World Bank, of the International Monetary Fund and the huge money cartels that hold the Third World countries to ransom. We have a moral right to do it and we can do it out of our own experience. We should be co-operating in any area that will improve the rights, independence and development of developing countries, insisting on our riders to what is being done.

I share the concern and anger at what has been done to the developing countries up to now by the richer countries. We have creamed off their resources and reduced them to a lifestyle of total dependency on the crumbs that fall from the rich man's table. We have denied them the right to choose what crops they will grow and that resources they will use for their own needs by forcing them into a situation of having to grow quick cash crops that will go even to feed the interest on the debts incurred by them. It is such an uneven game that all of us, particularly politicians, must cry out and use our political and international influence to get the cartels of banks and moneylenders to bring a halt to it, to put a moratorium on it, to decide that in some way they will allow the developing countries not alone to survive but to grow as they would wish themselves with the benign support of countries that have made it already.

I will not go over ground that has been covered already by Deputies De Rossa, Higgins and others. Perhaps I could cheer Deputy Higgins up a little by quoting from a book that he would probably feel should almost be censored were he not as liberal as he is. I refer to the World Bank Annual Report of 1988. Within that report there is an awareness and a consciousness that we can work on. If we write into our agreement to conventions the solutions to the problems that the World Bank report is raising then we can be an influence and we can help to do what all of us in this House would like to do. On page 22 of the report is what we all know to be the harsh reality:

Improvements in the current balances of developing countries in 1987 reflect increased exports, as well as cutbacks in imports in the highly indebted, middle-income developing countries and low-income countries in Africa. For these two groups of countries, estimates of recent growth in production generally remain low.

Then they add what all of us have got to take on:

Thus, differences in growth between the countries constrained by debt and those that do not have serious debt problems continue to be marked.

They will continue to be marked and those countries constrained by debt will not have a chance of survival unless the richer countries and the money markets of this world come together to roll on that debt to dissolve it, to reduce it in some way. Further on the report makes reference to technical assistance and this is something that we all feel a great sense of concern about, particularly when we talk about private investment and protecting private investment which this agreement would help. I do not think that carte blanche should be given to private investment without a lot of conditions being written in as to how and where they can invest, from the point of view of the good of the host country and not of the investment company itself. Again on page 78 of the report it is stated:

The analysis concluded that effective utilisation, absorption, and sustainability of technical assistance were hampered by the fact that (a) it was often seen as being imposed by donors rather than being a response to local demand; (b) some technical-assistance projects were overdesigned, reflecting an unrealistic assessment of borrowers' needs; (c) resources and efforts were often dissipated because of lack of coordination among the donors.

In another part of the report the very serious point, which Deputy Higgins has made, is referred to, that is, the lack of continuity, that can be promised within these. Among the conditions we should write in is that the host country should not have the investment imposed and it should be in line with the development and benefit of that country and not the investment company itself. Above all we should not get rid of our second rate or redundant weapons or machinery to Third World and developing countries who are not alone not trained to use them but, as a result, only incur a larger debt than they have already.

The social implications of development from the first world, as we call it, are very serious as well. The World Bank takes this into consideration also. As a result of industrialisation and development in many of the developing countries hard problems follow which need solutions. Sometimes the solutions create problems that also need to be tackled. Often there is an increase in consumer prices and a reduction in public employment which leads not alone to unemployment but to less than minimal basic wages for workers trying to get work elsewhere. I would also try to put in a condition that when investment companies do invest there would be certain basic conditions of work and basic wages accompanying the investment that would not allow developing and Third World countries to be used as cheap labour with no national or personal development of their own. It is interesting that in that respect the World Bank report tells us that some action programmes have been undertaken in several developing countries to try to counter this. Again, I wonder if there is any area within our Department of Foreign Affairs that could keep a watching brief on these action programmes and projects that are being attempted in certain developing countries to see how effective they are or if we could learn from them and, hopefully, import them into other countries that might not yet have access to them; that is what dissemination of information is all about. For instance, the World Bank has created a task force on poverty and food security to prepare programmes to give priority to cost effective policies, to raise the income of people who are too poor to buy adequate amounts of food, and also to develop ways to stabilise incomes and prices and improve response to emergencies and increase the effectiveness of food aid. The bank has not embarked on that just as an exercise in itself; what it wishes to do is to use the results of these task forces and projects that they have set up in conjunction with the donors and the agencies investing in such countries, so monitoring and learning from such projects is absolutely essential.

As a developing country we should have a greater insight into what is involved. We must ensure that development work takes account of the environment and the dignity of the people in the countries being assisted. Very often development projects are terminated before they have an opportunity of succeeding because management structures of the First World are operated. Often the responsibility is not delegated by the supporting agency and local people are seldom trained in management structures so that they can take over the project. That should be the ultimate objective of our aid programmes in developing countries. External agencies, in their efforts to succeed in Third World countries, on occasions damage the autonomy of those countries and their people. Very often financial and training decisions are made without regard for the local people.

When contributing to debates on developing countries I never miss an opportunity to refer to the role of women in them. Members will be aware that many of the agricultural programmes in developing countries are initiated and carried through by women. However, women are excluded from the decisionmaking process and training programmes. That is unfortunate and is to the detriment of many projects. For example, the Netherlands and Sweden have instructed their diplomatic missions in several developing countries to help fund womens' groups and projects sponsored by women. In fact, the Netherlands attached a condition to the overseas aid they give to the effect that women must be part of the project being established. I would like to see a similar condition attached to all projects.

A great deal of the aid we give to developing countries goes towards the educating and training of the natives. However, disease is rampant and life expectancy is short. Living conditions in most countries are unbearable. There is a great need to concentrate on educating those people. For instance, infant mortality, and the risks of maternal mortality, are very high in developing countries and much higher among mothers aged below 20 or over 35, for closely spaced pregnancies and for fourth or higher pregnancies. Due to constraints on the economies of those countries and the high infant mortality rate there is great pressure on mothers to produce many children in the hope that some of them will survive. That shortens the mother's life and leads to overcrowding. Infant mortality rates in those countries are horrendous and none of us should feel happy about them.

If family planning was practised extensively womens lives would be saved. There is a need to improve access to education in that area. Women with four or more years of education have one to three children fewer than women with no education. They are also more likely to use contraception. However, women are still gravely disadvantaged in education. In 1984 in developing countries there were only 82 girls for every 100 boys in primary school and at secondary level only 69 girls for each 100 boys. In 1985 the female illiteracy rate at 49 per cent of adult women was almost twice the male rate of 28 per cent.

I should like to ask the Minister for Foreign Affairs, and the Minister for Finance, to bear that incredibly important dimension in mind at all times. In encouraging people to invest we should insist on protections for the people of the host countries rather than concentrating on the profit motive. We should be embarrassed that we did not increase our overseas development aid. Other member states, and Scandinavian countries, have endeavoured to reach their targets. In fact, most countries increased their aid in times of recession. Trócaire, in the course of a briefing document circulated to Members, pointed out that in the countries where the contribution was highest and where the UN target was reached, two factors were to the fore, the political will existed and the people were in favour of sending aid to developing countries. We can feel proud of the fact that the popular will exists here to aid the Third World. We have poverty, unemployment and emigration here but last year Trócaire raised more than £3 million for developing countries. Those who contributed to that campaign want the Government to match that figure. Voluntary contributions have increased annually but the Government's aid has been cut.

All parties should make a commitment to increase our contribution until we reach our target. We have no idea of what can be done in developing countries because we do not debate the issue often enough. I suggest that the Government establish a foreign affairs committee to deal with such issues. If reports of such a committee were debated in the Houses of the Oireachtas we would learn of the problems of the Third World. We should have a greater commitment to the people of the Third World. We owe that to the people in the developing countries. We have a real moral and Christian duty to them and Irish people in particular have a certain commitment in that area. We also have a duty and a responsibility to report back to the Irish people who by their contribution have shown in the past that they wish this aid, not alone to continue but to increase.

An Leas-Cheann Comhairle

I congratulate Deputy Mary Flaherty on her new role.

Miss Flaherty

I am glad that the opportunity has presented itself so early since my appointment to use the occasion of this Bill to have a general debate on our overseas development aid. Previous spokespersons from the party have indicated that while we in Fine Gael welcome the publication of this Bill which will allow ratification of the convention establishing a multilateral investment guarantee agency, we deplore every other aspect of this Government's action in relation to Ireland's overseas development assistance programme.

We welcome the fact that this Bill is before the House. It gives us an opportunity for the first time since the publication of the Estimates of publicly airing our concern at the direction the Government are taking with regard to the total aid programme and in particular to the bilateral aid programme. The financial commitment entered into as a result of the passing of this Bill today involves an increase in our multilateral commitment, but we note with concern that this seems to have been funded by cuts in our bilateral aid programme. We find this totally unacceptable, given that bilateral aid goes to the poorest of the poor, for whom this agency will have little relevance.

The agency is to be welcomed as a new agency of the World Bank. In the context of our commitment to our EC partners we are obliged to implement this Bill and to proceed with commitments alrady entered into. Deputy Michael Noonan, referred to the initiatives taken by Deputy John Bruton at European level to encourage our EC partners to move rapidly in developing this area so that extra resources would be directed into development. This is very much needed to seek to reverse the outflow of resources from the developing countries into the developed areas, a point that was dealt with in detail by Deputy Noonan.

It is a major shortcoming of the Bill that it will benefit the middle income developing countries and that the poorest of the poor, whom we target for bilateral aid, will be excluded. It is relevant that we look at what we are doing to those countries. We are single minded in saying to the Minister opposite that we are setting a mark that this must be the end of the decline and that we must return to the commitment we had undertaken along with our partners in the OECD to reach the UN target as soon as possible.

Along with the attacks on health care, these unprecedented cuts over the past two years must rank as this Government's greatest shame. In 18 months the Fianna Fáil Government have wiped out years of slow but steady progress towards achieving the UN targets established for all member countries. There is obviously, as Deputy Barnes more generally put her finger on it a lack of political commitment and vision on the benches opposite. I know this matter is not strictly the responsibility of the Minister for Finance. The Department of Foreign Affairs and the Department of the Taoiseach indeed all of us, have a responsibility to the world's poorest. The Government do not seem to share the vision and commitment which shaped our development aid programme slowly along the right road from 1973. This programme allowed us to hold our heads high and offer a lead to others in Europe and elsewhere in the world.

Others have referred to the fact that we are not a highly developed country. We are not many generations removed from what these developing countries are currently experiencing. It is because of that memory that we hold our commitments so strongly. We are proud of our commitment from 1973 on. We made progress — and I would remind the Minister that we initiated our programme of expanding our aid to the Third World at a time when we faced an oil crisis and very difficult financial circumstances. We developed our bilateral aid programme and we moved slowly but steadily in the right direction. What has happened in the past two years is unprecedented and has gone by without adequate comment in this House.

The bilateral aid programme is not the only programme affected. Twenty five children die every minute. That figure is very hard to come to terms with but I would like that we in this House dwell on it. We have been talking on this subject for a little over two and a quarter hours and during this time close to 1,000 children have died in the developing countries. That is a very real statistic. I would like that we bear that fact in mind and that we strengthen our resolve to do what we as part of an international group in the UN have identified as the minimum required of the developed countries to contribute towards the development of the less developed countries.

In the recently published Estimates our official aid was once again severely attacked. This leaves us the third lowest of the OECD countries in the matter of the provision of aid. In the recently published Estimates, bilateral aid which was pioneered by Ireland — and in which we gave the lead to many other countries — has been slashed again. For the first time ever there is no provision for disaster relief in the major Estimates. We are led to suppose that the lottery may help but that is an entirely inadequate response to disaster which is no uncommon occurrence in the Third World. It is inevitable that there will be disaster. There are constant disasters, and increasingly so, with climatic problems in recent years. A provision for disaster relief is the minimum we should try to provide. Certainly we should also have disaster relief funds available through the national lottery, as additional funds which may be available in response to a very great crisis. Furthermore, there is no provision — and this was referred to by both Deputies McDowell and Higgins — other than a nominal £1,000 for a contribution to the UN world food programme, which traditionally came out of the agriculture Vote. Perhaps we are to expect that this may be dealt with by way of lottery funds, I am not familiar with too many agricultural projects being supported from the lottery funds. This is a further cut in aid of the most basic kind, food aid, which we have traditionally been associated with.

Indeed, our disaster relief is a tradition which goes back to the fifties — well in advance of our overseas development aid programme — when we had very little to share. Even if one could ignore the human, Christian and moral motivations which these cuts deeply offend, Trócaire pointed out recently that our investment in aid is recouped substantially by receipts in terms of salaries and contracts in the developing world. That is a double edged sword and, as Deputy Noonan indicated, as it becomes attractive, motivations which were originally altruistic can change and, consequently, it is very necessary to watch carefully the motivation and the impact of what we do. Deputy Higgins also aired this issue.

Let us look at the history of Ireland's development policy. As other members have said, it is based on our colonial relationship with Britain, which leaves us with a short enough memory, but it conditions public and political opinion towards a sympathetic attitude to the problems of developing countries. Our approach developed an international context as a result of UN membership. Within the UN we found ourselves with an unique voice and an unique contribution to make by virtue of our experience.

When we joined the EC we attempted to align ourselves with the Netherlands and Denmark who also had a positive approach towards the developing world and encouraged the formal incorporation of development aid as one of our basic objectives of Irish policy. In 1973 the year in which we joined the EC there was for the first time commitment by the new Government to increase official development aid substantially and thereafter, in absolute terms, as a percentage of GNP in a planned manner over a period of years. That was contained in a speech delivered by the then Minister for Foreign Affairs with Government approval. Therefore in 1973 we first stepped along the road towards official governmental commitment to an overseas development aid programme as an important part of our foreign affairs policy. Each year since then we have moved along steadily until last year and this year. Very difficult negotiations, with the many competing interests which there always are when it comes to budget times, have been eroded so substantially that when it comes to reinstating them, as I believe we must — and I hope there can be no argument against that from the Government side of the House — it will make it all the more difficult to get ourselves slowly back on the steps of progress which we all wish to take towards the UN target.

In 1970 the UN established a target of .7 per cent of GNP as the desirable target to be reached. In May 1973 we aimed at an annual increase of the order of .05 per cent of GNP. Given the financial problems facing the State after the oil crisis this commitment was entered into with some hesitation. A number of speakers concluded their contributions by asking, and I at this point ask the Minister who has a particular influence on budgetary matters, to relay to the Minister for Foreign Affairs, who we hope will have an ongoing interest in matters and influence in Europe——

Mr. MacSharry

One day at a time.

Miss Flaherty

——and to the Government benches the single view of all Members of this House that we are disgracing ourselves and that we must return to establish a programme of steady progress towards achieving the UN target. The need is enormous and many Deputies in addressing this matter have referred to the need and have quoted from Trócaire's position paper both of this year and last year indicating that the problems instead of being alleviated in this decade have got worse; certainly in two of the major regions. Malnutrition and disease caused the unnecessary deaths of some 14 million children under five every year during the first half of this decade. While it is at its worst in Asia severe malnutrition has recently become wide-spread in sub-Saharan Africa, a most serious condition affecting the health of children. Those details are contained in Trócaire's position paper of 1988.

The least developed countries to whom we in particular directed our bilateral aid are virtually entirely dependent on aid other than perhaps their single cash crop for which they are receiving the lowest prices for many years. They are uniquely dependent on bilateral aid or direct cash aid from bilateral and multilateral agencies. In this context it is unacceptable that this is where we have chosen to make our cut. It is also unacceptable, particularly in an EC and world environment where many of the countries involve themselves were colonising countries. Irish agencies have easier access to these countries than do many of the larger countries due to their colonial associations, bitterness and problems arising out of historical relationships. We were in a unique position to develop programmes and we took the lead. We have developed a very high profile but that is all changed. Deputy McDowell referred to the OECD's DAC report of the performance of each country in achieving their targets and indicated, quite rightly, that for the first time we were criticised strongly for failing to reach our targets and for cutting aid over and above even the level of general cutbacks implemented throughout the different sectors of the Government's budget. Extraordinarily the development aid areas suffered more than the average cutback in all other Departments.

The situation becomes even less defensible when we look at what is happening in most other developed countries who are also seeking to reach the UN target. Some have reached it and exceeded it and have set their own targets in excess of the UN target of 0.7 per cent. Some of these countries have set targets of 1 per cent of GNP and even in excess of that figure. While only four countries have exceeded the target, most countries have established steady programmes of increasing aid over a number of years in an attempt to reach the targets. As regards the UK, Mrs. Thatcher came in for some comment from Deputy Higgins but even there the aid figures in the statement on public expenditure for January 1988 indicate an increase in aid expenditure in real terms over the next three years. Provision for the overseas aid programme is planned to grow by an annual average of 4.8 per cent during the period 1987-88 to 1990-91.

One of the interesting features of aid in all the programmes of the other countries is how they are beginning to select qualitatively the type of aid they will give. In the case of Japan the area of debt obligations is one they are examining closely. In that context in the area where we excelled and where we were uniquely placed to move in in a sympathetic way where the doors would not be open to all other agencies in all other countries, we have cut off that area of activity and reduced it substantially in the last two years.

Swiss aid increased by 4.7 per cent in national currency in 1987. These figures largely relate to 1987 and as such the 1988 assessment will obviously leave us further out of line. There the Confederation have projected in their current financial plan to represent about .35 per cent of GNP early in the next decade and they have selected particular aid programmes which they will support. The Swedish ODA expands in real terms roughly in line with GNP growth. At .85 per cent the Swedish ODA GNP ratio is among the highest in the DAC and is expected to remain at a very high level. I could go on and list them all but I will not do that. There are perhaps only two or three other countries in the list who have cut their development aid and often it relates to the fact that they had a long period of expansion. Most countries are moving steadily towards the target and, as I have said, most have agreed new initiatives in the areas which suit them.

In that context I should like to return to the central reason for us in Fine Gael choosing this debate as an opportunity to hone in on this major change in policy in the past two years. First, by way of an aside I should like to refer to the vision of Deputy McDowell and other members of the legal profession following perhaps the experience of one of our colleagues who went out to the Third World with optical equipment and who led a team of enthusiasts who wanted to offer their services in those countries. Do I take it from that that Deputy McDowell is finding the direct political arena a little unsatisfactory, unsuitable, unrewarding or unfulfilling?

As Deputy Barnes said, the challenge for us as politicians is to give the same priority to this very important programme as the public give to it and to reverse the trend of the past two years. I hope that the Minister in his response will indicate where the Government stand in relation to our commitment to reach the UN target. I hope he will reassure us that we will be back on line in the next budget and that no more estimates will be presented by the Fianna Fáil Government which will further cut aid or will not reverse the trend of the past two years.

Mr. Birmingham

I will be brief in my contribution. The first thing I want to do — and I imagine I will not be alone on this — is to welcome the Bill before the House. Private investment and private enterprise have an important role to play in the Third World and the risks of investment are such that in the absence of effective guarantees, whether on the basis of individual countries putting schemes in operation or a multilateral approach, people will be very reluctant to invest. Consequently, I welcome the Bill.

It is worth saying that what we are about here is a guarantee scheme and that the nature of a guarantee scheme is that it is a fall back mechanism. Effectively it says to people who have made investment decisions "You are not sticking your neck our completely and there is some kind of a long stop or safeguard". We hope that the existence of that long stop or safeguard will tip the balance in favour of a decision to invest in a developing country. However, that is all it can do; it can only tip the balance and it clearly will not cause people to invest if they believe there is no possibility whatever of a return on an investment.

One of the things which is striking is the extent to which much of the Third World — and I am generalising here — has become more open to the private sector and private investment in recent years. For example, the number of countries in Africa with notionally Marxist governments which have promulgated legislation on profits and repatriation of profits would do credit to many of us who like to think of ourselves as living in an open and mixed economy. If one looks, for example, at the investment legislation in Mozambique I think it is fair to say that it represents a headline which many of us would have few difficulties with. If one looks at the legislation that was put through during the past three of four years in Tanzania — a country which historically had a very centralised socialist society — again the change is towards a much more receptive climate for the private sector.

Mr. M. Higgins

An enterprising society.

Mr. Birmingham

Clearly I would be very reluctant to debate the details of socialist ideology with Deputy Higgins. I am happy to say it is a subject I manage to stay well clear of.

Mr. MacSharry

National or international socialism?

Mr. Birmingham

I stay as far away as possible from both of them.

Mr. MacSharry

I was just wondering.

Miss Flaherty

Any brand.

Mr. Birmingham

I think it is fair to say that by and large the climate is increasingly sympathetic to private investment. Difficulties remain and it is appropriate that those who seek to assist should be prepared to raise those difficulties and discuss them with the countries which are now seeking investment. Certainly one of those difficulties is the extent to which many of these countries are extraordinarily bureaucratic. Some time ago I had an opportunity to attend a conference of the SADCC and at that conference the general secretary, Dr. Malone, conceded that it was hardly an inducement to foreign investment for a would-be industrialist, when he turns up at an airport, to be invited to change a certain amount of currency into the local currency but during the rest of the time he is there not allowed to spend the local currency and then have to labour with little prospect of success to change it back into a hard currency on his way out. It is appropriate that we say to countries which seek investment and which we want to encourage to obtain investment, and in order to assist them obtaining investment are prepared to put this guarantee scheme in place — that whatever they can do to make their climate for private investment more attractive will certainly prove very worthwhile.

It seems that the argument for us playing our part in responding to the needs of the developing world are absolutely overwhelming and that they exist on all sorts of different levels. I suppose the most compelling argument of all has to be the basic one couched in terms of humanity or morality — the need to respond to people who are suffering. During the course of the debate people have itemised what form that suffering takes — children dying from easily preventable diseases or subcontinents experiencing grave food shortages. Perhaps the most basic argument is the absolute human obligation to respond to those who are in need.

There is, too, a need to respond just in terms of what one might describe as enlightened self-interest. As a small country which does not invest heavily in defence or whatever, obviously we have a particular interest in a stable world order but a situation in which much of the world finds itself in grinding poverty is not conducive to the creation of such an order. Again in the area of enlightened self-interest we live by trade and we clearly have an interest in achieving a situation where there are more potential customers around who will be in a position to trade with us and, most specifically, people who will be in a position to buy our goods.

Other speakers have mentioned the fact that there is a direct economic benefit in terms of our ability to create jobs in the semi-State sector through consultancies and so on and the fact that very many Irish people have found employment either with the various international agencies or are directly employed in our own programme. It has often struck me that it is appropriate to regard this question of working in the Third World, whether in a voluntary capacity or in a professional capacity, as a significant — though obviously limited — element in Irish manpower policy and that this should be built into our various calculations.

Miss Flaherty

You can share in Deputy McDowell's plans.

Mr. Birmingham

If Deputy McDowell wants to lead me to some suitably challenging court case I will be delighted to go with him.

Mr. McDowell

Strasbourg.

An Leas-Cheann Comhairle

Do I take it that Deputy Flaherty is trying either to encourage or to discourage Deputy McDowell in regard to leaving us?

Miss Flaherty

It is a very worthwhile vocation——

Mr. Birmingham

I do not think Deputy Flaherty should be pressed on this point. She cannot be entirely objective.

The other reason we should enthusiastically involve ourselves is that there is the clearest possible evidence that it works. It seems to me that some times people have a tendency to say, "The Third World will always be with us," as people at one time were wont to say "The poor will always be with us," and that they will contribute, whether as individuals on a voluntary basis or whether they do their bit as a government, but they ask what it is actually achieving. It is achieving a great deal. Much has been achieved in the space of the last two decades. In the early sixties the stories that dominated the newspapers were of food shortages in India and China. These countries are now self sufficient, in part because of outside assistance, in part because of sensible domestic policies and in part because of their ability to harness technology and produce drought resistant strains of grain and rice and so on.

If we are prepared to put the effort and resources in, the results can be obtained. Does it really matter as to what role we play, whether we hover around 0.23 per cent of GNP as we have tended to in recent years, or whether we attain the UN target, seeing that it is not a great deal of money one way or the other? It does matter because, particularly since our membership of the UN, we have carved out quite a distinctive niche for ourselves and this means that in the past we have had a voice that was listened to with some respect. The fact that our aid has always been other than in the form of loans, that our aid has never been tied and has always been non directive, responding to the needs and wishes of our partner countries, rather than on the basis of what we think is best for them, means that we have been able to approach the question on a somewhat different basis from some of the more traditional donors, that we have been able to have a common cause with a number of other countries who have a similar philosophical position. We did so through the so-called like minded group when we got together to talk with people like the Scandinavians, the Canadians, the Dutch and so on.

The fact that so much of our activity is on a co-funding basis, harnessing the enthusiasm of the non Governmental organisations in a way that does not happen anywhere else and that we have so many micro projects, mean that our aid programme in the past has been worthwhile. That means that it is not just a question of how much money we put in. It means that we have something to say at meetings of the DAC of the OECD and that we have something to say when aid questions come up to be discussed by the European Community. As a country which had a small but growing and appreciated programme that at this stage had received a very enthusiastic endorsement from the DAC, we could speak with some conviction. We did not simply ask other countries to put their money in. We have shown our seriousness by putting our money in. But the real tragedy of the reverse that has taken place is not so much that some Irish programmes will not now take place, because often the volume of activity that we will manage will be influenced as much by what happens on the crunch option as by what is put in or out of the Estimates. The direct relationship between activity and what is in the Estimates is not as clear cut as many would believe. By halting and reversing what has been a growing programme you lose all credibility and all right to exhort others to greater effort. That is very disappointing indeed.

I have a certain understanding and sympathy with the Minister of State with responsibility in these areas in the difficulty in which he finds himself. I realise that it is not easy to defend a budget aimed at the developing world and that it is not easy, given that so many of our products are health and education projects, at a time when we are cutting back on health and education at home, to say that we want to increase our programmes for technological education in Lesotho. There is an apparent contradiction between spending less on the VEC system at home and more on technological education in Lesotho. I understand the Minister's difficulties but they will continue so long as it is left to the Minister of State to take his chance on the annual Estimate procedure. For that reason there is a very strong argument for us to approach this on an all party basis and take the question of development aid outside of the normal budgetary process.

We should set ourselves modest targets to increase our aid programme to an agreed figure over the period of the next five or ten years, a figure that would be accepted by all parties in the House so that when individual estimates are being considered, that money would be spoken for and it would not be a question of having to decide whether to go forward, backwards or stand still in a given year. Everyone would known that all the parties had committed themselves to programmed growth at specified rates. Only by that approach will we make progress. If we fail to do that nobody will be able to plan.

If one wants to build a school or a hospital in Leitrim, if the money is in the Estimates, one can make reasonable headway with the building during the period for which the money is provided. However, the lead-in time between taking a decision here and being able to carry it out at a distance of some thousands of miles, in a bureaucratic society, is a very long one indeed. That means that for people not to be able to plan with any certainty some years in advance is a very serious impediment. It means that we do not get the value that we would otherwise get for the money we spend because people are not in a position to know which programmes they can invest in, maintain at an existing level or expand. Our failure to do that means that our aid is less effective. The only way we can give confidence to those involved is if we agree to approach this on an all party basis. That would have to be on the basis that it was being approached without prejudice. I can well imagine that the Minister for Finance would make an exception and agree that something sought was laudible and that the aspirations of people were admirable, but if one were to start making exceptions we would be told that everything was a special case. If we decide that we will not impose limits on our expenditure on development aid, we will then be told that education or health or the need to develop agriculture are all special cases. I have no doubt that some people would seek to treat as a precedent any concession granted on the overseas development area. For that reason there should be all-party agreement that development aid would grow, but that that would carry no messages for any other area of public expenditure. I make no secret of the fact that I support the idea of controlling public expenditure and that I am prepared to tolerate some very unpalatable decisions to have that achieved domestically, but the people of the Third World should not be co-victims of our own profligacy of the past.

Mr. J. O'Keeffe

It is clear that the establishment of MIGA has the support of all sides of this House.

Mr. M. Higgins

It is not clear.

(Interruptions.)

Mr. J. O'Keeffe

Perhaps I can convince my colleague, Deputy Higgins, to join in the all-party approach acceding to the establishment of this body. There may be some aspects of my speech other than those related to its direct establishment in which I would have his total agreement.

It is quite clear that the establishment of this body will help to encourage foreign investment in developing countries. It is an additional instrument by which countries in the Third World can be helped, and from that point of view it is to be welcomed. In many discussions in international fora I detected an attitude, particularly among speakers from the United States and to some extent from the United Kindgdom, that help to the developing countries should be totally related to that kind of approach. If that is the quibble being expressed by Deputy Higgins, then I can understand his viewpoint. I see the establishment of MIGA as an additional instrument and not a substitution for other forms of support and aid for countries of the third World. I believe it will be a useful body which may over a period make an impact, but I do not expect miracles. The amount of funding in which we are involved — a total of £275,000 — is a drop in the ocean, but let us not at the christening of this new body set it off without our full blessing and benediction. I support the Minister in getting this through the House. It is well to recall the efforts of his predecessor, Deputy John Bruton, who was instrumental in securing the support of EC member states for this approach. I fully support the Bill, with the reservation that we should not expect too much from the establishment of this body.

The debate has opened up the broader issue of ODA and many of my colleagues have given their view. It is important that all Members of the House should indicate to the Government their alarm and reaction to the trend which has developed. I am one who has been fully supportive of the efforts of this Government at macro level to restore this country to solvency, although I have some serious reservations at micro level. I press upon the Minister that the restoration of solvency must not be done at the expense of people dying of hunger and starvation in the Third World. Effectively this is what has happened. ODA has been seen as a soft target by the Government. I voice my objection to that approach. It is not enough to pay lip service to reaching the UN target or making other advances in the area of overseas aid and development co-operation. Actions must match words. Over the years there has been a lot of lip service from the colleagues of the Minister for Finance but actions have not matched words. The slashing of the ODA budget in the past two years has set back the cause of development co-operation to an enormous extent. It is appropriate that Members should strongly express their disapproval of that course of action by the Government. It has been accompanied by a degree of cynical hypocrisy in relation to our obligation to the Third World, which does not help those who are anxious to encourage development co-operation. We should use the opportunity of this debate to make a plea to the Minister and his colleagues in Government to change course and consider an all-party approach to a planned programme of overseas aid, restoring it initially to the level at which we left it and gradually expanding on a phased basis towards the UN target. That is the only way in which to take this whole matter out of party politics and make a positive programmed advance towards the target to which we all committed ourselves many years ago.

It is relevant to look at the background. We in Europe can remember a time when this Continent did not enjoy full and plenty. Folktales in Ireland bring us back to the time of our own famine. Those who have read and talked about the famine must feel a twinge of conscience which would affect even the most hard hearted, knowing that on this very day hundreds of millions are at starvation level and thousands, including the very young and the very old, will not survive into the morrow. I do not think that a country like ours which suffered in the past, particularly in the last century, can overlook that fact. Perhaps with the pressures of life it is easy to close our minds to it but we must not do so. It is happening today and it will happen tomorrow. Clearly it calls for a response. It is salutary to recall that it is not very long ago that the Marshall Plan was responsible for huge shipments of food and other assistance to Europe in the late forties and early fifties. Many of us can remember it to some degree. Right into the sixties this country was a recipient of aid from the UN special fund. That is the background for us in Ireland and in Europe. The position has largely turned around for the EC and for us, despite our problems. When we talk about poverty in this country it must be clearly realised that the kind of poverty we are talking about bears no relationship to that in the worst situations in the developing world.

Over the years this country has had a marvellous tradition whereby the flag has been carried, mainly by our missionaries, to virtually all parts of the developing world. It is in relatively recent times that we have had the establishment of an official aid programme, leading to the establishment of the bilateral aid programme by the national Coalition Government in 1974. I think it can be fairly said that this marked a turning point in the development of our official development assistance. This included the establishment of the agency for personal service overseas, the identification of priority countries and the establishment of various projects and programmes there.

Debate adjourned.

Dáil Éireann debate - Wednesday, 2 Nov 1988

Multilateral Investment Guarantee Agency Bill, 1988: Second Stage.

Dáil Éireann debate -
Wednesday, 2 Nov 1988