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Seanad Éireann debate -
Wednesday, 16 Nov 1960

Vol. 53 No. 2

International Development Association Bill, 1960—Second and Subsequent Stages.

Question proposed: "That the Bill be now read a Second Time".

As Senators will recollect, Ireland became a member of the international lending agency known as the International Bank for Reconstruction and Development, or World Bank, as it is also called, in 1957 and in 1958 joined its affiliate, the International Finance Corporation. A few months ago a further affiliate of the Bank, the International Development Association, was established. The purpose of the present Bill is to enable Ireland to become a member of this new institution.

The Articles of Agreement of the Association are given in the Schedule to the Bill. The principal provisions are briefly summarised in the explanatory memorandum which has been circulated.

The main purpose of the Association is to supplement the work of the World Bank by providing financial assistance on terms which are less onerous than those of the Bank. Under its charter, the Bank is obliged to make loans only on strict commercial principles. For example, the interest rate which it charges on its loans has to be related to the rate at which the Bank itself borrows money. When, as has been the case in recent years, the cost of raising money in international markets has been high, the rate of interest on loans made by the Bank has also tended to be high. In addition, the Bank requires that loan repayments should be made in hard currencies.

Because of its policy in these matters, countries in process of development have experienced difficulties in obtaining loans. In certain cases, despite the undoubted value of a project to the economy, the country has been unwilling to borrow and the Bank to lend, in case the conditions of the loan should prove a burden to the country. The member countries of the Bank felt that something had to be done to meet this situation and it was decided to establish an affiliate of the Bank whose special concern would be the provision of aid to the less developed countries. The new Association has much greater freedom than the Bank in the type of finance it is able to provide. It can lend at a low rate of interest or even free of interest. Specially lenient terms of repayment may be given, such as long maturities, long periods of grace and repayment wholly or partly in local currency.

The Association has, however, been at pains to make it clear that this does not mean that any and every project submitted to it will receive approval. All applications for loans will be carefully scrutinised to ensure that only sound projects of high priority from the point of view of a country's economic development will be approved. Furthermore, loans will be given only as a supplement to—and not in substitution for—loans made from private sources or by the World Bank.

Schedule A of the Articles of Agreement gives details of the subscriptions fixed for the 68 member countries of the Bank who, subject to signature of the Articles of Agreement before the 31st December, 1960, may become original members of the Association. There are two points of importance to be noted in relation to these subscriptions. The first is that in general the amount of each country's subscription has been arrived at by the simple process of adopting the proportion that the country's subscription to the World Bank bears to that institution's total subscribed capital. This seems a reasonable and fair method of procedure and is unobjectionable from this country's point of view.

The second point is that the secretariat of the Bank have, on the basis of certain important economic indicators such as per capita national income and degree of industrialisation, divided prospective members of the new organisation into 2 groups, as shown in the Schedule to the Articles of Agreement. The countries in the first group, numbering seventeen and comprising the more industrialised member countries of the Bank, will be required to pay their total subscriptions in gold or freely convertible currencies.

Despite the fact that the countries in this group are numerically small in relation to the proposed total membership of the Association, their subscriptions will amount to some three quarters of the total resources of the Association. The countries in the second group, numbering fifty-one and comprising the less well-off member States of the Bank, are let off more lightly. They need pay only 10 per cent. of their subscriptions in gold or freely convertible currencies, the balance being payable in their own currency. Ireland has been included in this group.

It is likely that some of the more developed countries in this second group, perhaps including Ireland, may be asked to release some of the subscription payable in national currency in the form of freely convertible exchange. This will be a matter for agreement between the Association and the country concerned. The subscriptions of countries in both groups will be made in instalments, portion immediately and the balance over four years.

If Ireland joins the Association, her subscription will amount to $3.03 million or £1.08 million. Of this amount £108,000 will be payable in gold or freely convertible currency, £54,000 initially and £13,500 annually for the four succeeding years. The balance of £972,000, payable in Irish currency, is to be paid in five equal instalments, one immediately and the remainder annually over the following four years. This money will be available only for use within Ireland except as otherwise determined by agreement between the Government and the Association; the latter will not be free to convert it into other currencies or use it to finance exports without our consent. To the extent that the portion of the subscription payable in local currency will not be required for use, there are the same arrangements as in the case of the World Bank for the substitution of non-negotiable, non-interest-bearing demand notes for it. These notes will be lodged in the Central Bank as the Association's depository, to be cashed only in the circumstances just described.

Under the Articles of Agreement the Association will be limited in its operations to the less developed areas of the world included within its membership. It is impossible to know at this stage whether Ireland will at any time seek financial aid from the Association. If at some time in the future it does so, it will be for the Association, and in particular the Board of Executive Directors, which conducts its normal day to day operations, to decide whether Ireland is eligible for assistance. Quite apart, however, from the question of securing aid from the Association, the Government consider it desirable, in view of the country's membership of the World Bank and the International Finance Corporation, for Ireland to become a member and thus show our continued willingness to co-operate with other countries in international economic development. The initial subscription is relatively small and as mentioned already need be paid only to the extent of 10 per cent. in convertible currency.

And now a few words about the organisation of the Association and voting rights. The powers of the Association are vested in the Board of Governors consisting of the Governors and Alternate Governors of the World Bank serving ex officio in the Association. However, the effective exercise of the Association's functions rests, as in the case of the Bank, with a Board of Executive Directors, consisting of the Executive Directors of the Bank, at present numbering 18, serving ex officio in the Association. I may mention in passing that the Bank's Executive Directors are chosen partly by nomination, partly by election, five of them being nominated by the five largest stockholders and the balance being elected by the votes of the other members. Voting rights in the Association are measured by the size of initial subscriptions. Each member will have a basic 500 votes plus one vote for each $5,000 of its initial subscription. On this basis Ireland's voting power would amount to 1,106 votes, out of a total of approximately 234,000. These votes would be cast at the Executive Board by the Executive Director representing this country. We are represented on the Executive Board of the Bank by the Executive Director for Canada. He would therefore also be our representative on the Executive Board of the Association.

In addition to subscribing to the capital stock of the Association, membership involves the according of certain privileges and immunities to the Association. These are similar to those granted to the International Monetary Fund and to the World Bank by the Bretton Woods Agreements Act, 1957, and to the International Finance Corporation by the International Finance Corporation Act, 1958.

In accordance with the Articles of Agreement of the Association it will be necessary for the Government to sign the Articles and to deposit with the World Bank an instrument setting forth that it has accepted the Agreement in accordance with its law and has taken all steps necessary to enable it to carry out its obligations. This Bill is designed to give approval for the acceptance of the Agreement by the Government and to provide the powers necessary to enable the Government to implement it. The Bill follows generally the lines of the Bretton Woods Agreements Act, 1957, in so far as that Act relates to the World Bank and the International Finance Corporation Act, 1958. The purpose of the various sections is indicated in the explanatory memorandum.

This Bill provides for the last of these operations, so far as I can make out, starting off with our joining the International Monetary Fund, the World Bank through to the International Finance Corporation, and now this International Development Association. With regard to the International Finance Corporation, it was pointed out by the Minister, unless my recollection is at fault, that we would be unlikely to make application to that body for assistance. If that should be the case—and I think it is very much the case—it is still less likely that we would be inclined to make application, if we are eligible at all, for assistance from this body.

In his Second Reading speech in the Dáil, the Minister repeated the words of the White Paper which set out:

The Association will operate only in the territories of its less-developed members. What countries will be included in this category and whether Ireland will be one of them has not yet been decided.

I for one hope that Ireland will not be one of them. In his reply to the Second Stage debate in the other House, the Minister said: "At the moment I personally cannot see that we shall be making an application to this organisation." He goes back to-day to the original wording of his brief and we have this half mumbo-jumbo that one never can tell whether we might or might not get something from this organisation. We are not in that category, I hope

In recent times in this country there have been three words used in relation to this country and I notice to-day we have a fourth. We had many people saying that it was an "undeveloped" country. Then we had a gentleman who said it was "underdeveloped" and finally we have the people who say that it has been a mature economy since the year 1910 and that the "take-off" took place in the year 1850—not in 1958 or 1959 when we had so many members of the Fianna Fáil Party saying that we were taking-off into a new era altogether. This Bill uses the words "less-developed".

I think I am justified in that description of the situation by Professor Roscow's opinion, though I do not necessarily agree with him all the way. One thing is certain, that this island as a whole in the year 1910 was a mature economy. The first and most important of the Land Acts had been in operation for seven or eight years. In 1930, this country was a mature economy, subject to the fact that there was—and I am speaking now of Saorstát Éireann—not quite enough industrialisation, shall we say, light industries, because nothing else has been added, worth speaking about, since, except perhaps the development of the bogs but that is not a large thing in our economy as a whole.

To prove that this was a mature economy is quite simple—this country rode the economic blizzard from 1929-1932 better than any country in the world. This was complete proof that it was a completely mature economy and this mumbo-jumbo the Minister goes on with in the White Paper and his speech here is just cod of the lowest sort. We know that this is a subscription by us and we should be prepared to say it in the hope that people in the vast regions of the world where the standard is not one-tenth of ours will recognise that we are making this small contribution to their development. Have we reached the stage when, although we spend vast sums sending people to international bodies and subscribing to U.N.O., we cannot say with our hand across our heart that we are going to give, £1,000,000, without expectation of return, so that it can be put into some part of the world, if necessary, where it will do good?

The Minister referred to this question of convertible and non-convertible currencies. The Agreement talks about "in the national currency of the country", and part of our subscription is to be put into the Central Bank. Is it to be in sterling or in our own currency? If it is to be spent, will we have it spent here for goods to develop those other lands, to develop the rest of the world in the fourth category?

I should like to complete my analogy—you have "undeveloped""underdeveloped" and "less-developed" countries.

If we make a contribution to one of these schemes, have we any guarantee that the money will be spent in our nation, that is to say, in the Republic of Ireland? That is what counts. Or can this money be spent somewhere else in the sterling area? This is a small matter and it is not going to bankrupt this country, but why cannot we be told straight out? The Minister hardly answered the question when he said as reported in column 404 of the Dáil Debates:

Apart from that, we subscribe at 10 per cent. over four years and the other half over four years—roughly £100,000. That will be in gold or convertible currency. The remainder will be held by the Central Bank.

How will it be drawn out of the Central Bank? Will it be drawn by way of contribution to the Association, and then will the Association spend it initially in the sterling area? Obviously, if it is not freely convertible, it cannot be spent anywhere else.

Again, I notice that the Minister in reply to a question in the Dáil when he was asked if sterling is notaconvertible currency, said at column 405: "Yes". My information is rather different from that but I might not be up to date, though I think my information is correct. I think that sterling is not a freely convertible currency now, in spite of all the talk in the British Press about the weakness of the dollar. I said something on that subject on the Finance Bill.

It may be that the wording of the White Paper was caused by people just following the wording of the various agreements, but this is not a complicated matter and the Minister should tell us exactly what the position will be. The Minister's remarks in the Dáil were not clear. I am not saying that there was any deliberate withholding of information. The arithmetic of the thing is complicated but it is the only thing complicated about it. The principles of it ought to be pretty easily explained but they were not explained. If we were to make even a larger subscription than this, nobody would have any objection, if we were assured that we would supply a share of the goods on which it would be spent, which is of course parallel to the scheme of finance started off in England 100 years ago when they built the railways of half the countries in the world—financiers of London lending the money on the condition that the engines were bought in Birmingham, the ships in Liverpool and so on.

There is one other thing to regret about this. I do not know why we are in Part II of the Schedule to the Agreement in this Bill. In Part I, there are countries described as strong economically and financially, and among them are Italy and Norway. Before the war, the average income in this country was about double that in Norway. What has happened in the interval? Is it that the economy of this country has fallen way behind while other countries were going ahead? Finland, in the shadow of "the great blight," is in Part I and we are in Part II.

I welcome this Bill as a step in international co-operation for the relief of poverty in the rest of the world, raising the standard of living in the undeveloped areas. I think it is the duty of every European country, every country with a high standard of living, to participate in these international enterprises. It is our duty to do that on humanitarian grounds. The modern notion of a welfare state should not be considered in purely nationalistic terms. There should be an effort to share prosperity internationally as well as nationally. It is important on political grounds that the help to the backward areas should be given as far as possible by the rest of the democratic nations, of which Ireland is one. As we know, a measure of goodwill in general in these backward areas which are so helped will create what may prove to be valuable markets for our exports, and therefore from the selfish point of view it behoves us to assist them to rise out of their present deplorable conditions.

The World Bank, excellent though it is, has been limited in its operations by the terms of its constitution. For one thing, it has to observe commercial standards in lending, and those standards are not always relevant in considering some of the problems of the undeveloped areas in the world. Again, it has to try to obtain the current rate of interest, which at the present moment is very high and imposes a severe burden on the borrowing country. Finally, it has to insist on the repayment of the loans under guarantees which may be difficult to obtain by these impoverished countries owing to their limited financial resources.

The result is that up to the present under the machinery of the International Bank most of the countries that need help most have received less and most of the assistance from the International Bank has been given to countries which are either nearly fully developed or certainly are not at all near the bottom of the scale. Therefore, this new organisation is necessary. At the same time, I wonder if duplication of world organisations is not perhaps becoming a danger. I suggest that although this organisation is welcome and necessary there ought to be some attempt to co-ordinate the various international lending bodies if possible under the aegis of the United Nations.

I do not think I am delaying the Seanad unduly in emphasising the magnitude of the task of raising the standard of living in the underdeveloped areas of the world. I do not think one can exaggerate the differences in the standard of living in the richer and poorer countries. I shall not quote figures. Many very spectacular figures are easily available. It is generally agreed by all who have studied this problem that the amount of capital necessary to raise the standard of living of the underdeveloped areas even by a very small amount runs into thousands of millions of dollars. Therefore we are dealing with a problem of the very greatest magnitude.

The problem that this new organisation is designed to help is not a problem such as that of the European Recovery Programme after the war. The so-called Marshall Aid was for helping countries which had the infrastructure of economic life. Therefore, a certain amount of assistance enabled them to rise very rapidly. The countries we are now dealing with have no infrastructure at all. They have to start from the very bottom.

The national incomes of many countries in Africa and Asia are quite incredibly small, measured by European standards and still more so by American standards. It is one of the ironies of the present time that the very assistance being given by the more advanced countries to the less advanced countries is in itself making the solution of the problem even more difficult than it was before.

The introduction of modern health services has had the effect of reducing the death rate very materially in many of these countries with the result that, although no change may have taken place in any of the other vital statistics, the populations are growing much more rapidly than the resources. Therefore, the problem is becoming greater as it proceeds. The difficulty of the problem is that it is an almost accumulative increase.

Wherever Western methods of medicine and administration are introduced into backward countries the difficulty of raising the standards of living becomes accentuated. The need for this Bill is that these backward countries are quite unable to help themselves. The essence of their position is that they have no surplus income for saving and that, without that, they cannot create any capital. Without capital creation they are not able to raise the standard of living. It is a complete vicious circle. Their poverty. Therefore, it is important for a lack of capital means continued poverty. Therefore, it is important for other countries with surplus supplies of savings to render them available.

This Bill is only one part of the solution of the problem. The mere supply of very large amounts of capital does not raise the standard of living in backward areas. Countries must have something more than capital. Merely pouring in capital can result and has resulted in a great deal of waste. Elaborate structures of capital formation in some of these backward countries do not always produce results. Such countries need a complete revolution in psychology and in outlook. There is the need to impress on their populations the necessity for work, for thrift, for saving. There is the need to impress the necessity for building up a wholly new attitude towards economic progress. There is the need for a class of business people, entrepreneurs, who are prepared to take risks and invest.

Therefore, side by side with this elaborate provision of capital, there is necessity for the provision of skill at every level, professional skill and technical skill. Possibly a country such as Ireland which is very rich in professional skill in relation to the size of its population and its own opportunities of employment might be able to contribute something of great value to the lifting of these poorer countries by the provision of skill, of engineers, of doctors and of graduates of universities rather than by the provision of capital. A very rich country such as the United States is in a position to provide the capital. We are in a position to provide the skill. Unfortunately, we have a surplus of professional people looking for employment outside. Therefore, it might be our contribution to this great world task to provide skill rather than capital.

The ideal solution of this problem would be if we could re-animate the private capital movement of the 19th century. The fact is that the conditions in the world today are very different from those of the 19th century. One difference in particular is the lack of political security. In the 19th century there were practically no wars. It was a century practically of world peace. Therefore, international investment was able to proceed with political security. One thing that might help in the great task which this Bill is designed to assist would be something in the nature of an international treaty or fund to compensate for confiscation of capital invested abroad.

In the 19th century, vast sums of private capital were invested abroad because people were quite sure that they would not suffer political confiscation and that the great powers in the world would prevent that from taking place. One thing that would help this great task would be some sort of international guarantee fund against losses caused by the type of expropriations in some of the newly liberated countries we have read about in recent years.

If Governments could try to reproduce the type of lending which took place under private enterprise in the 19th century the whole process would be more fruitful. It is true, I think, in the whole of economic life that what one ought to try to do is to harness the selfish motives—the motives of mutual trade between the two countries. If the lending countries could be led to believe that the development of backward areas would lead to new markets for their products and new sources of cheaper raw materials for their industries, they would have a greater inducement to lend than they possibly have today.

In other words, I would suggest that we might try to reproduce in public lending of the 20th century the entirely good, selfish motives which led to the great capital transactions overseas in the 19th century. In order to achieve that, it might be necessary slightly to alter our views relating to multilateral transactions, that in order that there should be a growth of healthy markets between lending and borrowing countries, bilateral trade should not be regarded with disapproval as it is to-day, and a certain amount of bilateralism might, I think, pay its way.

I think also that some of the surplus countries in the world might be asked to do more than they have done. At the present moment, the United States of America is doing more than any other country and doing so much that it has actually weakened its own international financial position. It is undoubtedly its vast expenditure abroad that amongst other things has led to that position. I think the richer countries in the world are not contributing equally in this great task and that some of the European countries which have a surplus in their balance of payments should be encouraged, or should be coerced as far as possible by public opinion, to do more than they have done.

There are two points about which I should like to ask the Minister and which are not quite clear to me in the Bill. The first one was raised by Senator O'Donovan: is Ireland going to benefit to any extent from expenditure under this Bill? Paragraph 4 of the explanatory memorandum says:

The Association will operate only in the territories of the less developed members.

What countries will be included in this category and whether Ireland will be one of them has not yet been decided. Will we, in this Bill, co-operate with the richer countries for the development of backward areas or enter into some sort of association from which we hope to benefit ourselves? Are we people who are to give or to take and if we are to take in what form will we take?

I think the answer to the second point I want to raise is already clear, but I should like to have it stated by the Minister that Ireland is not committing itself to indefinite future obligations under this Bill because all the literature on the subject suggests that the present amount of capital in the International Development Association will have to be increased, and very substantially increased, if capital demands grow. As I read the articles of agreement, I take it that no country can be asked to increase its subscription without its own consent and that every country is free to resign from the Association at any time it wishes. I should like to have that categorically affirmed by the Minister because it is quite certain that the capital of the International Development Association will have to be increased very substantially year after year, if the whole thing is not to break down. I should like to be quite assured that in passing this Bill we are not giving a blank cheque that Ireland may be called on to increase its subscription without its own consent.

I think Senator O'Brien and Senator O'Donovan before him have dealt with all the main points that seem to arise on this Bill, apart from the detailed explanation of how the thing works, which seems to be rather involved. We must agree with the Bill and this proposal to join in the International Development Association. International associations do not always give immediate or very local benefits which are visible but we have learned in the past few years the necessity for Ireland taking its part in world affairs. In many ways, there are many benefits to be got from participation, but as well as that, there are sometimes long term objects not immediately visible to some of our citizens and I think this is one of those cases. It is very important for the free world to prevent Communist countries from putting their hands on undeveloped countries all over the world and introducing the Communist system into places where perhaps through dilatoriness, or unwillingness the free countries have not provided help. The Communists, as we have seen before are very quick to put their hands on countries where there are disturbances or where people are emerging into self-government and building up new nations.

Therefore, this is part of that setup which we are quite rightly joining. It is obvious to everybody that if in the future Ireland is to be prosperous and to expand as we wish to see it do, we must see that the free world and the free nations of the world are at least able to carry on their own existence and that we shall be able to take our part in the free areas of the world.

At present it is not quite clear to anyone what may be the state of affairs in the next 20 years, whether there will be a complete domination by the Communists or whether Communism will tone down and perhaps evaporate into some type of liberalism and freedom which will enable peoples to live in reasonable harmony with one another. In order to achieve a free world in the future, it is obvious that there must be international co-operation of all free countries and even though we are a small country, we can contribute in a big way, a way which is out of proportion to our size. We have already seen that in the United Nations where we have as President, an Irishman. In this regard, we are taking our place with the Scandinavian countries. The Swedes, the Norwegians and the Danes have in such international conferences as the I.L.O. at Geneva, shown themselves to be chairmen acceptable to the more involved countries as neutral chairmen and they have done an immense job in creating world cooperation and world peace by their impartiality, Ireland can do the same thing and I am glad to see that we are being accepted in the same way.

I was at a conference last week in Paris where that point was made by the Scandinavians themselves. They said that they were glad that the Irish were able to share the burdens of these particular posts with them. Senator O'Donovan referred to the different names for undeveloped and under- developed countries. I heard one name being applied to Ireland at the conference which I thought was rather unfair. We were described, with Portugal, Finland and Iceland as one of the forgotten countries. I think it can be said that we shall not be forgotten and by doing what we are doing not only shall we not be forgotten but we shall be very much visible.

I was interested in the remarks of Senator O'Brien on the factors which are of importance in dealing with undeveloped countries through organisations such as these which we are discussing. I attended a conterence in London a couple of weeks ago under the auspices of the Council of European Industrial Federations which was attended by some of the most eminent businessmen from America and all parts of the world.

I was a member of a committee that actually dealt with this very subject —the problem of developing countries. The very points to which Senator O'Brien referred were the subject of our discussions. First of all, there was the necessity that if any country were to develop as it should and as rapidly as it should, it should have political security. Many of these undeveloped countries today have not got the financial resources upon which to build security, because everything is built on finance. Therefore, it is of importance that a country such as ours and free countries in general should enable them to have the finance and capital upon which they can build political security. If they cannot get the capital from the free countries, they will get it from the communist countries. Therefore, the provision of capital is absolutely essential for the basic requirement of political security.

Finance is no use without the provision of technical assistance. Ireland, after providing for her own needs has plenty of technical assistants who will be of benefit to the countries to which they are sent. Also scope will be provided for Irish technicians and for qualified Irish people to earn their livelihood and develop their talents.

Another matter to which Senator O'Brien referred was insurance against the loss of capital which is necessary in these countries. It is hardly fair to expect people to invest in a country where their capital may be confiscated, where there may be a political upheaval or where a political philosophy might evolve as a result of which capital would be confiscated. We have seen in many countries that that is a deterrent against the investment of capital. At these international conferences which I attended, that subject of insurance against loss of capital was very much in the forefront of the discussions.

Finally, there was the question of tied loans—a matter to which Senator O'Brien also referred. The feeling on that subject was that in future there should be less tying of loans than in the past, that there should also be freer lending and, above all, that there should be longer terms of lending. Up to now, the terms upon which international loans were made were very short. In many cases, they were unrealistic and did not enable an impoverished or poor country to be given the time in which to earn the money to pay off the loans.

I fully endorse the action of the Government in joining this body and I trust that our citizens, many of whom do not see the necessity for our participation in international organisations of all kinds, will have a greater awareness of this country's participation in the international organisations which exist to-day.

I merely wish to make a few points on this Bill. I am very glad that Senator McGuire spoke on this matter in such a kindly fashion and that he has welcomed the Bill. We all know—that is, those of us who read the newspapers at any rate—that this and other measures in the past have been brought about by the East-West complex. To my mind, it is futile to get up in this House to ask a Minister to guarantee what may happen in ten years' time. To my mind, that sort of query is worth about as much as a fistful of sawdust. None of us knows now what may happen in the future. If we did, we could be prophets and we would probably be too good to be in this House at all.

We have, as the Minister pointed out, accepted membership of the parent organisation and I do not see at this stage what is to prevent the Government or the people from accepting membership of this organisation. As was pointed out, it is a logical associate of the World Bank. It does not carry the same obligations. It makes easier either the granting or the acceptance of a loan. I shall not go into detail as to the type of loans visualised under the Bill, nor, for that matter, shall I comment upon whether it would be wise for us to pose the question whether we should apply for such loans in the future or accept liability for such loans or not.

We purport to be members of a free society in the free world, as it was described here. I assume that when Senators refer to the free world, they refer to that part of the world outside the Iron Curtain. Therefore, if we are to be represented in international councils, we should, in my opinion, accept our share of whatever liability that involves.

It is beside the point, I think, whether we are what would be described as underdeveloped, overdeveloped, or less developed. As Professor Joad used to say, it all depends on what you mean when you say "developed". It has been said here—and I think incorrectly—that we have no industry only light industry since 1930. That is not correct. No one would describe the activities of Bord na Móna, Comhlucht Siúicre Éireann and various other heavy industries sponsored by semi-State companies as light industries.

I shall not go into that point or contest it, but I say that the Bill is designed as an intelligent approach to this matter. None of us, I think, would like to go back to the jungle of the last century to private enterprise, especially when it comes to colonialism. None of us would like to see the Bible in one hand and the gun in the other.

That is State enterprise.

I am referring to colonialism.

It is State enterprise, not private enterprise.

I beg the Senator's pardon. I am prepared to contest that point with him at any time.

It is a nice point.

That may be what used to be described as the Manchester school of economics.

(Interruptions.)

Perhaps Senators would let me make my point. As I said, I am not very well qualified to deal with this Bill but I am trying to do so, and there is no need for Senators to try to scatter whatever thoughts I have on the matter. I am trying to make the point—and I am sure I am speaking for this side of the House—that we welcome any intelligent effort in this direction. The Bill before us is a far cry from the jungle activities of the previous century, the 1800's, the late 1800's or even previous to that. I am sure its sponsors mean what they say in the Bill, namely, that the objects of this International Development Association are to uplift and develop countries in need of development. Those are admirable sentiments and I am quite sure we all subscribe to them.

How this Association will go about that is not strictly our business, except as a member country, and in so far as the voice of the Government will go in representing us, or in advising our representative to this body. Therefore, to my mind, it is an ingenuous query to ask the Minister what insurance policy we have. That, in effect, is what is meant, if we subscribe to the Association which, in turn, would lend money to certain countries, and if we ask what insurance have we that that money will be properly used and what insurance have we that the applicant country will not, in future, confiscate the proceeds of the money so subscribed.

There is no answer at this stage to that query. We all know from experience that there can be a revolution in any country at any given time. Neither is it up to the Government, at this stage, to say exactly what type of development will qualify for a loan from this international development authority—even if the Government were in a position to do so. I have read in the past of loans which are made from the World Bank to certain under-developed countries which, incidentally, made excellent use of the loans. No doubt heavy capital expenditure was involved but no one can foretell what use will be made of it as the years go by. At the moment, at any rate, good results are being achieved in the shape of developing the natural resources of certain countries.

If I were asked at the moment whether we are underdeveloped or fully developed, I would say that at present, having regard to a comparison with other countries, if you like, we are not fully developed, nor will we reach that stage for a long time. However, I shall not go into that matter now. It is due to a number of factors, some of which were outside our influence in the past. Taking European or even northern European standards today, we are not as developed as any of the countries comprising that group. If, for instance, in five, six or ten years' time, we were short of money, and if the Government of the day, in their wisdom, thought that a loan from the International Development Association would solve some of our problems, perhaps for expenditure of a heavy capital character, I do not think that Government would be at all at fault in applying for such loan.

But under this Bill in five years' time we will only get a liability of £220,000.

The point is that if we wish to participate intelligently in free world councils, at least we shall have that commitment and we must at least become a member. We were blamed in the past by some of the people who are blaming us now for isolationism. We were described as isolationists in the past and now, when we are trying to be progressive, we are wrong, too.

Under this Bill, a debt of £972,000 will be left behind for the next Government.

It is nothing to what you left behind you.

It is only a fraction of what the Senator left in his Government's last Budget.

Perhaps Senators would keep to the Bill.

This Bill is designed, as I say, for a useful purpose and a purpose which may in turn serve us in the future. This is a nice point: I should like the Senator to give me a definition of what, other than gold, is hard currency at the moment. What will be a hard currency in 10 years' time? If the Senator will give me a dissertation on that in the ante-room in 10 or 15 minutes' time, I shall be very grateful to him.

One can ask all these hypothetical questions on a Bill like this simply because it lends itself to these questions. It is not designed at the moment to gain us a quick return. It is designed as a long term proposal and, to my mind, is a wise and intelligent proposal, because, as Senator McGuire rightly said—and he was associated last week in councils at world level in Paris—if we accept these things, then we must accept the liability that goes with them. The liability visualised in this Bill does not amount to a great deal and in the future may pay off in the shape of handsome dividends.

I should like to support this Bill in the spirit in which it is put forward. I should also like to echo the surprise of Senator O'Donovan in relation to the division of countries in the Schedule. We are told in the memorandum, as he pointed out, that the countries eligible for membership were divided into two groups, the first comprising 17 countries "in a strong economic and financial position." Ireland is in the other group. I should like to read the names of the first group and the amount of their contributions. They are: Australia, 20.18 million dollars; Austria, 5.04; Belgium, 22.70; Canada, 37.83; Denmark, 8.74; Finland, 3.83; France, 52.96; Germany, 52.96; Italy, 18.16; Japan, 33.59; Luxembourg, 1.01; Netherlands, 27.74; Norway, 6.72; Sweden, 10.09; Union of South Africa, 10.09; United Kingdom, 131.14; and United States, 320.29.

We are excluded from this group which includes such countries as Japan, Luxembourg and Finland. I should like to have been able to look back to 1922 when we got our independence in this country, more or less at the same time as Finland, and to feel that we had made as good use of our time as Finland has, but it is apparent from this document that we have not. It cannot be claimed that Finland had immense resources which were not available to this country. It is a question of national initiative, in which in many cases we have fallen down.

Senator O'Donovan asked the Minister who did the choosing, and what the basis was. We rank in the longer list side by side with Afghanistan, Costa Rica, Libya and Korea, rather than in the smaller group of those who are described as being in a strong economic and financial position. I personally think that the classification implied by the Schedule is correct, and that it illustrates our failure as a country, so far, to take our opportunities. I am afraid that we are rightly placed in the second category, and that it is but just that attention should be drawn to that fact, in the hope that we may merit ranking, in world opinion in the future, with such progressive small countries, countries of initiative, as Finland.

A point was made by my friend, Senator O'Brien about the entrepreneurs who in the 19th century were capable of supplying the world with the capital that was required. He asked a question as to why it was that that could no longer be the case, and he answered it partly by suggesting that in the 19th century they had a sense of stability and so on which enabled and encouraged the simple capitalist to place his money abroad. These conditions, he seemed to suggest, alas, no longer obtained, and therefore we have to indulge in international organisation in order to supply capital on these lines. I feel that if he had been more realistic when reminding the Seanad of those 19th century days, the picture would not have been painted in such over-rosy terms, for those were the days of colonialism and imperialism in which Irish sentiment certainly was with the countries that were being not so much helped as exploited by private finance capital, which was not State capital but was privately invested, though publicly protected, here and there and everywhere —in Russian railways, African gold-mines and so on—and in which in fact the private capitalist got back his investment over and over again before finally, though not in all cases, the industry was confiscated.

Senator O'Brien would now like some arrangement to be made by this fund to compensate people for such confiscations. When he talks about the entrepreneur who is prepared to risk his money, and in the same breath, he says (a) that he did it because of the security and smallness of the risk, and (b) that he now should be compensated because the risk went the wrong way, I feel that there is an implicit contradiction there, because if you risk money, you are not entitled to be compensated if the risk goes wrong and you lose out, particularly when, as often happens, your money has been returned to you sometimes tenfold before you finally “lose” your investment.

This applies to State investment also.

I am taking the example that was suggested of the 19th century when the investments were very far from being State investments.

The proposal on this occasion applies to State investments. You can only see one side always.

I am not quite clear about what Senator McGuire means, but perhaps he might be able to explain the next point I want to put, that is, that sometimes there seems to be some difference of opinion as to the way in which the private capitalist should be looked at. When an American company starts a motor company in Britain and then has decided that the time has come for it to own this company in its entirety, there is almost an international crisis. I thought that this was all very friendly between the investing nations——

An Leas-Cathaoirleach

It is not relevant to this Bill, whatever it is relevant to.

I am sorry I allowed myself to be led astray. The point is that it is folly to suggest that this fund should be in any sense concerned to compensate people for possible future confiscation, when in fact they have done extremely well already out of foreign investment.

I should like to put the question to those who suggest that: should similar compensation be given to the people who lost money over land annuities in this country, which is quite a close parallel? In fact, of course, the community that does the major share of the work for the invested capital has a distinct and basic right to ultimate ownership in every case.

I should like to make one final point in relation to this capital to be provided by international organisations such as this. I should like to feel that the ordinary people in the undeveloped countries to be helped in this way will be as directly and fully helped as possible, and that not too much of the capital that is to be poured into these undeveloped countries will stick on the way in private hands.

I want to mention an analogy. Under the Technical Assistance Board of the United Nations, it has been the habit in the past to help undeveloped countries in precisely this way. I spoke to the Swedish representative of the Technical Assistance Board in Israel who was there for many years. He indicated there was a very sharp contrast between the attitude in Israel, which he praised, and the attitude in a small Mediterranean country, which he named but which I shall not name, which he condemned. He said that, in Israel, the money goes for development schemes for the benefit of the whole of the country but that in the other country he mentioned, the money is going into the hands of private people who are getting a big slice of this foreign "investment", largely in dollars, and that, from the community point of view, there is very little to show for this aid. Therefore, I should like, in praising this Bill and in supporting it, to express the hope that this help to undeveloped countries will be given in as fully distributive a way as possible and that it will not be allowed to stick, on the way, in too many private hands.

I am glad we are prepared to make some contribution to help our less well-off brothers. In the past, we have felt that anything of this nature that required to be done could be done better by a country such as the United States. The cause of the present difficulties from which that great economy is suffering is that everyone in the world—in fact many of the very buoyant economies in Europe—was inclined to leave all the burden of our times on the citizens of the United States who taxed themselves white to ensure that Europe would be allowed to survive. They are now turning their attention to Asia and other countries.

We have a responsibility to manage our economy in such a way that we shall have surplus cash. We ought to get down to the realities of the situation rather than speak about it in a theoretical way. I am glad Senator O'Donovan and Senator O'Brien gave us a survey of the situation. However, it is for all of us here to apply this matter in a practical way.

Every one of us who thinks knows we are trying to run this small economy with a big set of books. We are not finding fault with the ability or integrity of the book-keepers but it is no good having very good book-keepers with ability and integrity, if we have not the wherewithal to pay them.

We are spending up to and beyond the limit of our resources. We hope somebody from Britain and America will solve our problem for us. The problem has the same application to the income of any one of us. If we spend less than our income, we shall be well-off. If we make our wants in our personal affairs relative to our ability to pay for them, we shall be happy. The same applies in affairs of State. I fear we have missed that point.

We are so much better off in many ways, than many of the people we shall be asked to help that it is incumbent upon all of us—Departments of State, business enterprises, the salaried class, the wages class, and so on—to make this a low-cost rather than a high-cost economy. In that way, we shall have the money to give to the less-developed countries. In doing that, we shall, in the final analysis, be helping our selfish interests. These people will become better off and will provide us with markets for our growing industries. That is commonsense economics.

Much has been said about what happened in Britain during the last century. If anyone says there is a germ of truth in what the classical economist said, he is immediately branded as a person who is subscribing in toto to the Manchester school of economics, as someone who believes in all and every one of the evils of capitalism. I suggest there are evils in nearly every philosophy that is distorted. There can be abuses in even the best of human institutions. It is for us to cut out the abuse and run the machine properly. In this country we have struck as fair a balance as possible between the various economic forces but waste must be cut out so that we shall always be a surplus economy.

If we can make ourselves a surplus economy, we shall do away with many of our problems and be able to help people existing on a standard of living maybe 100 times lower than the standard we have here in Ireland. We should guard against insularity of thought more than anything else. If we see how these people exist, we shall realise how well off we are. During and immediately after the last terrible war, people who saw the devastation and deprivation in Europe and many other places came back here and said Ireland was an oasis in the world. When we consider the amount of grumbling that went on here about very insignificant privations, we must realise we should get rid of our isolationism and consider how thousands of millions in Asia have to exist.

I welcome a measure such as this. It is a sign that we are attaining maturity and that we want, even in our small way, to help people who are less well off than we are. I believe that with a somewhat parsimonious economy we should be able to help them even more and, in the final analysis, help ourselves because, in time, they will be in a position to purchase some of our industrial products and agricultural goods.

This is probably as vague a set of proposals as I have ever listened to. A question which springs to my mind is whether we are involved in this project for reasons of prestige or of altruism, or because we think we can get something back. Every one of the three reasons has been advanced. I am not quite sure what the proposal is. It is very easy to be cynical in a matter like this. If I can discover whether we are giving something or asking for something, I shall be satisfied. I do not think it would be a good job for us to be involved in this. I do not believe we would be missed if we stayed at home. We have not yet got out of the infants' class in building up our own economy. Here we are now in the back seats of this organisation, with other third-raters. We are putting ourselves there. If I have anything to say about the nineteenth century, it is that it is very far in the dusty past and that we shall never see it again. Lenders never get their money back.

They never do.

If you think of the people who lent money to this State, or organisations in the State, and to local authorities in the past 30 years, you will find they are getting very bad value in return. They are being paid back with money which is not worth half the money they lent and now we have effected a social revolution that has not escaped, I am sure, Senator Sheehy Skeffington's mind.

We have not got it yet.

We built roads and hospitals and schools and we are paying the people with watered-down money.

7/11d. for every £.

7/11d. for every £. In spite of Polonius, I think it is a good time to be a borrower. I am not sure it is a good time to be a lender, although I do not want to be an altruistic person and sit in with a great many and wear the badge of this new club, but I think I would prefer if we went straight at the job and adopted one of the smaller, newer African countries and helped them with technical and administrative advice. We would be going straight to the point and avoiding the danger of becoming involved—and I think even the Minister is not sure what this might involve us in—because there would be no suspicion of Imperialism in doing something like that. Are we quite sure that the funds we are now providing will be used for purposes which we would approve of at all times?

I did not intend to speak on this measure but having heard some of the speeches, I felt I should make a contribution. Surprise was expressed that we were being drafted with nations such Brazil, Ghana, Iceland, etc. Part II, Schedule A, covers very wealthy nations and quite poor nations and I can see why we are not in Part II and it is relevant to say why. Our economy is based entirely on agriculture and in my view, the day when you had store cattle coming over from the west and going on to England has gone and the basis on which this country could be in Part I, among the wealthy nations, would be the basis of each farmer having a breeding herd, having land limed and fertilised and having a wealthy, productive farm, a farm which would enable him and his family to live in comfort. I want to say to the Seanad that not one in 20 of our farmers in 1960 enjoys that happy position and that is why we are in Part II rather than Part I and until the Seanad and the Dáil and every other responsible body realises that, so long will we remain in Part II, or move to Part III, if there were a Part III, and from Part III to Part IV, if there were a Part IV.

Lest I should be out of order, I shall move on to another aspect and just give this yardstick by which the Seanad and every other body can measure the truth or otherwise of my statement. My yardstick is this: when less lime is put on the land, it means that the farmer believes there is less hope of profit in the future and when less fertiliser is put on grassland, from which he will not get an immediate return, then there is no hope for the future and we remain in Part II. That has been happening in the past two or three years and it is right that it should be recorded.

There has been a lot of talk as to whether or not these funds could be devoted to compensation for confiscated industries and Senator Sheehy Skeffington objected to that course. I do not know whether these funds could properly be devoted to such a thing or not, but I say that in the injection of capital in undeveloped countries, it could well be that if private capital could see that its principal at least was safe and was underwritten, then in fact you might get far more private capital into a country than could possibly be provided by such a development as we are discussing to-day. On that point, one must come down to individual cases and Senator Sheehy Skeffington, myself and everybody else, must ask ourselves are we pro-Nasser or anti-Nasser. I am anti-Nasser. If Senator Sheehy Skeffington related his individual thought to his general statement, he would be pro-Nasser. Similarly, are we pro-Castro or anti-Castro. I am anti-Castro.

Senator L'Estrange is listening to you.

Again, if Senator Sheehy Skeffington related his individual thought to his general statement, he would be pro-Castro.

Certainly, I am.

An Leas-Chathaoirleach

Could I draw the Senator's attention to the fact that both the United Arab Republic and the Republic of Cuba are not in the Bill?

Could we hear the position regarding Henry Ford?

One can pay lip-service to something and what one says and what one does are different things. We have not had time to think about Henry Ford yet; he has been at this for only a couple of days. Senator Sheehy Skeffington also mentioned that the community should be helped directly and not too much of this money should be allowed to stick to the hands of various people. I agree with him that that is quite right but there are different ways of helping a community and the way to help a community in a measure like this is not by giving them what is almost alms but by developing them for production, and those views expressed in the framing of this legislation should be followed.

For instance, if instead of spending Marshall Aid money on land reclamation, we had increased our unemployment assistance figure here, we would not have got the return we have got. That is my view and I agree with Senator Sheehy Skeffington that it is most necessary that this money should be pumped into the economy, not for any individual person but for the development of that economy and to increase production. A statement was made by Senator Burke with which I disagreed, that the United States had bled themselves white. I immediately thought of lease-lend and of Coventry being razed to the ground, of Birmingham getting much the same treatment, and Liverpool the same, and of London getting all the bombing and I thought of all the gold on this side of the world which went to America to pay for the planes to fight that sort of thing.

They have not paid for them yet.

My information is that they have.

They have not paid for the First World War loans.

They have paid for them. My view is that while the United States have done a lot——

They have not paid them for saving them twice from extinction.

Can we agree to differ?

The Senator should not make statements like that when he cannot back them up.

While the United States gave a lot of help to undeveloped countries, it was wrong that all the old hulks that could be mustered were in the harbours of the United States of America full of surplus grain which would not be issued on to the world grain market in case it should depress the price.

What has this onslaught on the United States to do with the Bill? I ask that the Senator should be brought back to the facts in the Bill.

I am not making any onslaught on the United States of America. I am merely saying that in their giving they have been quite measured. That is a personal opinion. Everybody is thankful for the help given to undeveloped countries. If I say that they were quite measured in their giving, is that criticism?

This project is an excellent one. This is a body in which we should participate but we should also remember that we are very poor and that we are an undeveloped country. I can well imagine our being on the other side of the fence rather than being even in Part II.

Very briefly, I should like to congratulate the Minister very heartily on bringing in this measure. Senator Burke is absolutely right. It is a sign of our political maturity. Sinn Féin was a good motto and a very useful motto in its day. It served its purpose. But now that we have economic independence and political independence, surely it is our turn to help those who can hardly help themselves?

I do not think we should be concerned this evening as to whether we are to receive or to give under this measure. I think our aim is to become citizens of the world in the fullest sense, to accept the responsibility of world citizenship and to give as far as we can give. My own impression is that we will be giving and not getting, and as such I welcome the Bill.

I hope that what we are all trying to do in this country and elsewhere is to work towards a general world unity—a general unity of helpfulness and of ideals. It is sad that at the moment there seem almost to be two distinct political hemispheres. Looking through the list of those who are contributing to this Fund, I am glad to see some who might in some ways be thought to be more sympathetic to the eastern hemisphere than to our political world. I want to insist that I rejoice at the introduction of this Bill and others like it.

The only question I should like to ask the Minister—adding perhaps a small sting to my congratulations—is this: Why are we so late in joining? Why are we apparently one of the last since our name does not appear in the list of those who are already members?

I shall answer the last question first. We are not late. We are one of the founder members and we could not be any sooner. The first speaker paraphrased what I said in the Dáil to suggest that I said that you could never tell, we might get something out of it. I did not convey that impression in the Dáil. I said in the Dáil that we would find it difficult at this moment to envisage the circumstances in which we might get something from this Association. I do not think we shall, unless circumstances change very much.

I certainly would not push our claim before the claims of many other countries in Africa, Asia and, perhaps, even South America. I think the Government feel like that. It is very clear that we shall probably not need aid from this Association. We thought it right to join it and pay our subscription. I think it is a pity that people should be cynical about the matter. I have met people from these big countries at international meetings. If Senators have not met them, I am sure they will have read their pronouncements. When they do a thing like this, they talk about their obligations to poor nations and about subscribing liberally in order to help others. If we do that in this case, why should we be cynical? Why can we not say that we are subscribing in the hope of helping our neighbours? We may never get anything for ourselves but we may require aid some time and if we do, we shall be glad to look for it. I would, therefore, ask the Senators and others to look at the matter from that point of view.

Neither the Seanad nor the Dáil is committed to any further obligations than are outlined in the Bill. I said that 10 per cent. of our subscription will be made in gold or convertible currency. That is £108,000, half of it paid immediately and the other half over four years. The remaining 90 per cent., which is almost £1 million, is lodged in the Central Bank. That means that it is really a promissory note in the Central Bank to pay if required. We do not intend to spend that money in any way. It is just lodged there.

The suggestion was made in the Dáil and here again that it might be used like the Marshall Aid. We do not intend to do that. We do not intend to draw that money. It will be left there in case we may require it at any time. That money, as I explained in my introductory remarks here, can be used only to purchase goods from this country and it cannot even be used for that purpose without the consent of the Government.

I did mention that, in any probability, the International Association might come along and ask certain countries for a bit more help than they are asking under this Bill. Senators appear to be disappointed that we are not in Schedule I. Would they be all delighted if the members of the International Bank should read the debate in the Seanad and say that this country should subscribe the whole lot in gold? Personally, I would not be a bit delighted if they should do that. It is possible that Ireland could contribute a little more but if the request is made, it will be a matter for the Government to decide whether we should or not. If the Government decide that we should, it will be a matter for the Government to come to the Oireachtas to get permission to give a little more.

It is conceivable that some country which gets help from this Association might out of that money decide to buy some goods in this country. There is nothing to prevent us dealing in that way by any wording in this Bill. I think Senator O'Brien has some doubt on that point. Senator O'Donovan seems to have some doubt about what exactly our obligations are. I think I explained it as I explained it in the beginning. I am afraid that I cannot make plainer to any Senator or to anyone else what our obligations are, but it should be quite simple for anyone to understand. Our obligations are 10 per cent. in convertible currency payable over four years and there is no further obligation without the consent of the Government and the Government, of course, as Senators are aware, cannot consent to give more without the general approval of Parliament.

As I said at the beginning, under the Bretton Woods Agreement, two organisations were set up, the International Bank—the World Bank as it is called—and the Monetary Fund. The Monetary Fund was set up to deal with nations that got into difficulty with their balance of payments. We never had to call on that Fund to help us and neither have we so far called on the World Bank, although the World Bank, as Senators are aware, sent over a mission to investigate the economy of the country, early this year. It would be possible for us now, if there were any particular project for which we wanted international finance, to apply to the World Bank for a loan because they now know the facts of our economy and would be in a position to consider any such application. I have nothing in mind at the moment, but it would be in order for us to apply to the World Bank.

That was followed by the International Finance Corporation which was set up in 1958, I think, to deal with private enterprise rather than Government enterprise. So far as I know, no body in this country has applied to the International Finance Corporation for a loan. That could be done without my knowing it because the International Corporation would not necessarily consult the Government about such an application. The World Bank and the International Finance Corporation deal with propositions in a commercial way, that is to say, they do not give a loan unless it is a good commercial proposition. They charge the ordinary rate of interest and expect repayments in the ordinary way.

This is a fourth organisation which we are dealing with today. It was brought in specially to deal with the development of poorer countries where perhaps the ordinary rate of interest or the ordinary rate of repayment could not be expected. It is, as I said, the fourth of the series.

I do not think any other matter was raised and I would, therefore, wind up by asking the Seanad to look on this as a small contribution, if you like, to build up world economy and, even if we never get any return, £100,000 will not make an awful difference to the economy of the country.

Question put and agreed to.
Agreed to take remaining Stages today.
Bill put through Committee, reported without amendment, received for final consideration and passed.
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