asked the Minister for Industry and Commerce, in respect of export credit insurance policies underwritten by his Department in respect of the export of beef to Iraq in 1987 and 1988, the average amount of cover afforded by such policies as a percentage of the invoice value of the beef exported to that country in those years; and the reason approximately 22 per cent of all the cover afforded by him for all exports of goods and services to all countries was granted to two companies in respect of one product to one high risk country.
Ceisteanna—Questions. Oral Answers. - Export Credit Insurance Policies.
9.
The level of indemnity provided for beef exports to Iraq in 1987 and 1988 insured under the export credit scheme was 80 per cent of contract value for contracts with credit terms of 12 months and 70 per cent of contract value for contracts with credit terms of 18 months. These levels of indemnity were set in 1987.
The level of cover provided at any one time for any one or a number of markets or for any exporting sector can be determined by such factors as the level of market opportunity available, the capacity of the exporting sector concerned and the assessment of commercial and political risks involved.
In dealing with Iraq, in particular, there is also the additional element of the political goodwill which developed between both countries since the beginning of the eighties which has expressed itself over the years in intensified levels of commercial co-operation. Indeed, as a former Minister for Industry and Commerce the Deputy himself led the Irish Government side to the first joint commission with the Iraqis in May 1982 in Baghdad thereby facilitating the development of trade between the two countries.
Up to early 1983, Iraq had been a good cash customer for Irish exports. However, by 1983 the continuing demands on the Iraqi economy and on its oil exporting capability began to affect its ability to pay cash for imports.
In June, 1983 the then Government, mindful of the importance of the Iraqi market to Irish exporters, decided that a longer term perspective was necessary in the provision of export credit insurance for exports to Iraq, over and above the normal commercial underwriting considerations. In effect, this amounted to a confirmation of continued confidence in the development of our economic relations with Iraq. Consistent with this, all cases requiring cover for Iraq required, from that time, prior ministerial approval. This policy was adhered to by that Government throughout the following years. Throughout this period increased levels of export credit insurance cover were approved in various correspondence between the Ministers for Finance and Industry and Commerce.
This Government, when they took up office, decided to implement this policy with a view to continued support for the development of indigenous business, particularly our agri-business, our exports and the creation of employment opportunities.
This policy met considerable success in that Ireland's experience in the area of export credit with Iraq has been that a payment pattern emerged whereby funds were generally remitted to Ireland three to six months after the due date. In the light of our repayment experience, cover for the market expanded in line with the increased level of business opportunities there.
Towards the end of 1987 an increased level of interest in doing business in the market had begun to express itself especially within the beef sector which was reacting to the demonstrated interest by the Iraqi authorities in Irish meat products. The main difference between this potential new business and normal applications for export credit insurance was one of volume. On the other hand, the business involved was such that many downstream benefits would follow for the economy in terms of output, added value, employment and export earnings.
The element of payment was, of course, important but the fact still remains that Iraq has never defaulted in a trade debt to Ireland. Indeed, I might take this opportunity to remind the Deputy that to single out one country such as Iraq as being high risk, in a context such as this, cannot be beneficial to our trade and economic relations with that country and can cause apprehension in the minds of other trading partners about the manner in which we conduct our business affairs with them. For my part, I would like to confirm the Government's confidence in the wellbeing of our economic relations with Iraq.
Finally, in relation to the two companies which obtained export credit insurance for beef exports to Iraq in 1987, I have already outlined the position in my reply to Parliamentary Questions Nos. 56 to 59 on 20 April 1989. The first two companies to apply had, at the time of their applications, firm contracts for the supply of beef to Iraq. At the same time the total amount of insurance cover sought by these two companies — when added to existing exposure on the market and allowing for a reasonable level of residual cover for industrial exports — reached the overall limit set for the market. Accordingly, it was possible to facilitate only the first two applicant companies with export credit insurance in respect of their firm contracts.
We have got an answer which is extremely important and very lengthy. Perhaps part of the reason for its length is to conceal some of what it does not answer. The assertion I have made in the last part of the question — that 22 per cent of all the cover afforded for all exports of all goods to all countries ends up covering two companies for one product in one country — is significant. Would the Minister agree, in view of the answer he has given to the earlier part of the question where he said that there was 80 per cent cover for 12-month credit and 70 per cent cover for 18-month credit, that as a result of that information the excess of insurance cover provided by the Irish Government over our actual exports is greater than was believed to be the case up to now? That figure now appears to be somewhere in the region of £50 million to £60 million rather than £35 million as previously suggested. What is the origin of these exports which were covered by us but which, according to our own CSO, did not emanate from this State? Did that beef come from Northern Ireland, another Community country or somewhere else?
The Deputy has, through various Deputies in the House, had about 24 questions down on this matter. I have answered continually and said I am continuing to examine the question of the differences between the CSO figures and the insurance figures, in consultation with the CSO, the Insurance Corporation of Ireland, the Department of Agriculture and Food and the exporters. That examination, which I consider to be very important, as the Deputy apparently does, is ongoing and I should not like to speculate on the outcome of the investigation. As far as the first part of the question is concerned, in the whole series of questions on exports to Iraq the Deputy seems to be suggesting that in some way favouritism was shown to particular companies. I would emphasise the policy in relation to exports to Iraq. The following letter was sent in December 1988 to seven companies who indicated an interest in the Iraqi market:
I am writing to you in response to your application for export credit insurance for beef sales to Iraq and to convey to you the Minister's decision on your application which has already been notified to you by telephone on 16 December 1988.
The Minister wishes to inform you that on production of a signed/ confirmed contract, he is prepared to consider your application as sympathetically as possible, within the overall limit of national cover established for the Iraq market which is limited. The Minister wishes to emphasise that the above should not be taken as a commitment to automatically grant the cover sought having regard to the constraint outlined above.
I assure the House and the Deputy that this is the general policy in relation to all companies and no specific company get particular treatment. In relation to the overall question on export credit insurance, there are about 450 companies which use the scheme. They have an approved credit limit for about 20,000 buyers in about 130 markets. They employ about 40,000 people. This export credit insurance scheme is a very great help to our export drive and I fail to understand the consistent sniping at it in recent weeks.
There is no sniping at this scheme. There is sniping, if it could be called that, at the abuse of the scheme. The letter which the Minister conveniently read out was dated December 1988 after all this had blown up and it was very politic to write such a letter to keep it on the record. Why does the Minister complain about my describing Iraq as high risk commercially and politically when he himself on 1 January 1989 took Iraq off cover because of the risks involved and because of the non-payment? In the earlier years, 1986, 1987 and 1988, almost all other western European countries, so far as one can judge, had Iraq off cover because the risks were too high. Notwithstanding that, we ploughed ahead and the State has a potential liability to exporters and banks here in excess of £100 million. Why did the Minister allow that to happen?
The point to emphasise is that we have never had Iraq reneging or defaulting on a trade debt.
Because they were rolled over.
There is no question of a roll over. The Deputy listens to the wrong people — people who have vested interests — rather than listening and getting the facts right. Despite the fact that he put down more than 20 questions in different names he was still not able to read the situation correctly.
I have a fairly good picture of it now.
Iraq has never defaulted in relation to a trade debt with Ireland.
Why did the Minister's Department put out a statement that they were owed £59 million?
Payments from Iraq are coming in and the Deputy will be delighted to hear that we got another £3 million this week.
We are owed £56 million.
We have most favoured status with Iraq. There have been delegations from my Department. The Ambassador has been in touch with the Iraqi Finance Minister and payments are coming in. As distinct from the rescheduling which is taking place with other European countries, we are being paid. The Deputy has taken a keen interest in Industry and Commerce. As part of the courtesy which is normal when there is a new spokesman appointed on Industry and Commerce, I wish him well and a long time as spokesman. I had more faith in Deputy Cullen as spokesman for Industry and Commerce but apparently he has been dropped to allow Deputy O'Malley to come in with priority questions.
Would it not be better for the Minister to answer the questions he was asked?
Somebody said it was only for one day but I do not think Deputy O'Malley would be small enough to cast a man aside and have it all under his umbrella for the one day.
The Minister is only drawing attention to the fact that he is refusing to answer the questions.
Time for priority questions is exhausted and I am proceeding to deal with other questions. No. 10, please.
The Deputy put down 24 questions and every one of them has been answered straight. He is not getting the answers he wants — that is what is wrong with him.
I am getting plenty of information.
I knew the Deputy when he was not a dirt thrower. Unfortunately he has been reduced to that.