Seanad Éireann debate -
Thursday, 29 Jun 1978

Vol. 89 No. 13

International Development Association (Special Action Account) Bill, 1978: Second and Subsequent Stages.

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

Minister of State at the Department of the Public Service (Mr. MacSharry)

The purpose of the Bill is to enable Ireland to participate in the Special Action Programme agreed to by the developed country participants at the Conference on International Economic Co-operation at its closing session in Paris in June 1977.

The Conference on International Economic Co-operation — CIEC or the North/South Dialogue — was established in Paris in 1975, to discuss matters of mutual interest to industrial and developing countries. The conference established four commissions covering the fields of energy, raw materials, development and finance.

In the areas of development and finance a major theme was the effect the increase in energy costs in 1973-74 and the recession in developed countries had on the economies of the poorest developing countries. Particular attention was paid to the deterioration in the balance of payments and the rapidly increasing debt burden of these countries. Against this background the developing countries participating at the conference argued for a scheme of immediate and generalised debt relief — in effect, the cancellation of official debt and the consolidation and re-scheduling of commercial debt for interested countries.

The industrial and developed countries could accept that international economic conditions in 1973-74 had aggravated the already difficult situation facing many of the poorest countries. However, it was felt that generalised debt relief was not the best way to tackle these difficulties. Some of the more advanced of the developing countries felt that the concept of generalised debt relief could affect their credit standing and access to additional finance on commercials terms. In the case of some of the poorest countries the debt repayment problem was not the most important issue: it was rather a case of how to increase new flows of external finance.

The European Community felt that a partial solution lay in the provision of additional financial assistance, and it consequently proposed at the final session in June 1977 a $1 billion "special action" programme designed to meet the needs of the low income countries facing special difficulties. This was agreed to by the other developed countries, and it was decided that the $1 billion programme be shared as follows: the EEC $385 million; the United States $375 million; Japan $114 million; Canada $51 million; the balance to be provided by Sweden, Switzerland, Spain and Australia. Of the EEC share, Ireland agreed to contribute $1.04 million or 0.27 per cent of the total.

While the original Community proposal had envisaged a multilateral action administered by the International Development Association to which both industrialised and OPEC countries would contribute, other contributors have, in fact, chosen different types of contribution varying from debt relief to bilateral measures. Both the United States and Japan indicated that their contributions to the programme would be in bilateral form. The Community have, however, maintained their commitment to a multilateral action in the form of aid channelled through the association. In this regard, an agreement was concluded between the EEC and member states on the one hand, and the association on the other hand, which sets out the conditions under which the EEC contributions will be administered by the association.

This agreement, establishing the Special Action Account with the association, is the subject of the present Bill. It gives the association the responsibility of administering the EEC's contribution of $385 million, subject to the following general provisions: loans from the account shall be concentrated on the poorest developing countries, that is, those countries with a GNP per capita of $280 or less in 1976; the association will take into account the relative poverty of the developing country and its long-term growth potential, the degree of need for official development assistance for external capital, the extent to which international economic developments have contributed to the problems of the country, its prospective balance of payments, the composition and direction of its debt service commitments, and the extent to which its problems are likely to be met by contributions from other sources. Each special action credit will be made for the purpose of financing a clearly-identifiable, quick-disbursing programme or project and will be made available interest-free, repayments being made over 50 years, this term to include a ten-year grace period — that is the usual highly concessionary IDA terms.

Contributions to the Special Action Account can be made in cash or demand notes. The use of demand notes has the advantage from the donor's point of view that cash is not drawn down until projects being financed are sufficiently advanced to require it. The agreement envisages that contributions be made in two instalments, the first amounting to 45 per cent of the contribution immediately after the EEC notify the association that all their members have ratified the agreement, the second on 1 January 1979. The contribution counts as part of our official Development Assistance Programme and provision has been made for it in this year's allocation.

The approval of this Bill will, therefore, enable Ireland to play its role in putting the Special Action Programme into effect. This programme is specifically designed to help those of the poorest countries, whose problems have been caused to some extent by inernational developments outside their own control.

I recommend the Bill for the approval of the House.

Mr. Cooney

My party welcome this Bill and will support it as initiated. An encouraging feature which appears from the Minister's speech is that the EEC contribution in this aid scheme is being made on a multilateral basis throughout the Community. This is desirable. It identifies the EEC as, perhaps, a separate political unit, or an identifiable political unit in its own right. It is proper that aid being provided should be provided in this way. The total amount being provided is, of course, a matter which has been negotiated separately for individual countries. Our amount of the total is small, as it would have to be having regard to our relative position among the other contributors.

From time to time we read expressions of disappointment from people that the Irish contribution generally in this area is not larger than is provided for from time to time. It is important that we recognise that there are constraints which make us perhaps act less generously than our inclination would lead us to do. It is unfortunate that commitments were given in opposition in this are which have not been possible to fulfil in Government. However, be that as it may, there is a general earnest on the part of all sides in the Oireachtas to ensure that the country to the best of its ability and resources will contribute to the needs of the less well-off parts of the world.

Of course, apart from Government assistance a considerable amount is given through private agencies for relief in the under-developed countries. It is important, however, that in picking the agency they want to use, people should be quite clear what the objectives of the agency in question are. Some agencies are specifically designed to assist in the relief of hunger, such as Gorta, and have no involvement in the politics or quasipolitics of the Third World. There are other agencies about whom there may be some misunderstanding. Initially it was understood that their contributions would be in the same area as Gorta, for the direct relief of hunger, either by contributing immediately to famines or by the origination of schemes which would assist in the long term easing or removal of food problems in some of these developing countries.

There are other agencies, such as the agency of the Catholic Church — Trocaire — which as far as one can see involve a mixture of aid. It is not entirely aid for the relief of hunger because that organisation have now made it clear through a statement by their director that they feel they have an obligation to be involved in politics in a quasi-political way in the Third World. Many people contributing to that organisation might not realise that their contributions are not going exclusively for the relief of hunger. It is important not only that the private agencies should be supported but that the people supporting them should know exactly how their contributions are being spent.

Professor Conroy

I welcome this Bill. It is the second international aid Bill which has come to the House in this session. It is a very necessary and practical measure. It is also an area in which it is very nice to see Ireland playing a role. We have a great deal to contribute to the developing countries and the association between the developing countries and the developed countries. This has already been seen to some extent in the North-South dialogue in which we and I must refer particularly to the role played by the far side of the House — played a very useful part. Indeed, it is excellent to see that this is a matter on which the European Economic Community are working together.

People do not quite realise just how much the energy crisis affected the poorer countries of the world. In discussing the Finance Bill yesterday, from time to time we touched on the effect it had on our economy. It had a severe effect on our economy but nowhere near as severe as on the developing if they did not have the natural resource. For many of them it meant their entire foreign exchange had to be devoted just to obtain basic energy requirements. Indeed, the effect has been to throw several of them back into an even worse poverty than existed in the sixties. One is very glad to see this practical measure being taken to give some aid to the poorer countries.

One of the most crucial general world political issues at the moment, apart from the east-west confrontation, is that the poorer nations are not catching up with the richer nations. Although we may not fully realise it, we are one of the richer nations, if you look at the list of nations who are contributing: the United States, Canada, Sweden, Switzerland, Spain, Australia and our partners in the EEC. They are together as the wealthy countries, a very few and limited number of countries from the entire world. There is this sad and very dangerous situation developing in which the poorer nations are not in any sense catching up on the wealthier nations. They have fallen very much further behind and, as things are going at present, this looks like getting worse, rather than improving. One is very glad to see that in this agreement it is intended that very practical, clearly identifiable projects will be the ones which will be supported.

I would not under-estimate our contribution of over one million dollars. It compares very favourably in relation to our resources with the amount being provided by the United States. Certainly, one would like it to be more and I hope as our own economic and financial position improves on both ides of the House we will gladly agree to give further funds. One aspect which is very important is that, however distasteful it may be, the expenditure of these funds should be closely monitored. There is, unfortunately, no doubt that some funds have not gone to the projects and the intentions for which they were intended. Obviously any independent State has its own prerogative as to what it decides to do. It is important and, indeed, may well make it easier for certain of the States concerned if it is made very clear that the donating countries will be monitoring the actual distribution and effect of the funds contributed. The Bill is a very essential and very welcome Bill.

Mr. Crowley

I fully support this Bill. I am gratified that the Government are taking positive action in relation to the poorer countries. Ireland was a poor country for a very long time and, while we may not be exactly wallowing in wealth, at least we are in a better position than many of our brothers throughout the world. I must express some disquiet at the way some aid is administered throughout the world, especially to the poorer countries, and more especially at times of famine and disasters. I am sure many Senators here read the very disquieting article in one of the more reputable Sunday papers in the past couple of weeks which clearly showed that the massive amounts being granted in aid to those poorer countries were not finding their way ultimately to the people who most deserved them. Like Senator Conroy I feel we should monitor very closely how this money is spent.

It is a pointless exercise to allocate funds from the taxpayers' contributions if they are used to keep some dictator in power, or ensure that he can buy more arms and become more militant in the upholding of a police State. This is the type of concern I would like to allay in the minds of many people who contribute towards these worth-while projects.

Certainly, the principle of aiding less well-off countries is beyond reproach, but I wonder how much of the one million dollars we are allocating from Irish funds will eventually reach the source we would like it to reach. I hope the agencies through which we operate, operate more efficiently then many other agencies we have all heard about. Indeed, it would be tragic if aid were prevented from going to poorer countries because of maladministration or misadministration. Like the other Senators I believe the principle is exactly right, but let us make sure the money gets to the proper source eventually.

Dr. Whitaker

Very briefly, I want to join in welcoming this Bill. I am very glad that Ireland is playing its part in making a contribution to this multilateral EEC attempt to do something to relieve conditions in the poorest countries of the world. They are those within the GNP per capita of 280 dollars or less. That is the limit, but there are hundreds of millions of people within that limit whose average per capita income is very much lower, only of the order of £1.50 to £2 a week. That gives us some idea of the poverty, squalor and hopelessness in which their lives are cast. This deprivation was accentuated greatly by the sudden rise in the cost of energy and by the general recession in world demand which that provoked. It is hard for us in one of the 25 richest countries in the world, to understand the meaning of the poverty in which the hundreds of millions of our fellowmen live. The one point that came home most forcibly to me is that millions of children in these countries, through protein deficiency, suffer an irreversible permanent stunting of their mental as well as physical development. This, to me, is one of the most horrifying facts of the poverty which prevails among such a large proportion of the population of the world.

While I note that this contribution comes out of the total aid allocation we have assigned for this year, I want to express the hope that that total aid allocation will be expanding greatly as time goes on.

On the question of the uses or the sources to which this money will be going, I would endorse the remarks about the need for monitoring. In particular, we should be trying to move our aid away from just responding to immediate disaster and famine, although it is important that we should make such contributions towards doing something of a more permanent kind to remedy the conditions from which the countries permanently suffer. I mean by applying the resources more to permanent development solutions, through irrigation and improvement of agriculture, and so on, than just coming in after the disaster has happened and trying to remedy it. In those very disorganised conditions there is always the greater risk of money going astray and not going to those for whom it was intended. With those brief remarks, I should like to welcome the Bill very strongly.

Mr. Mulcahy

I also welcome this Bill. I take the opportunity to point out the way countries like Ireland can help poorer countries whose conditions have been described in statistical terms by Senators and by the Minister.

It is important to look at the four areas mentioned: the fields of energy, raw materials, development, and finance. There is a fair amount of emphasis on recycling debts in the case of these countries, and so there is a fair amount of emphasis on the finance side. I should like to address myself to the development idea. It is important that these countries should learn how to help themselves. Ireland has a great deal to offer in that area, particularly our knowledge in the agricultural field and, more recently, our knowledge of how to build an industrial nation from an agricultural one. Because of the fact that over the years Ireland has never been associated with the exploitation of poorer countries, Irish people might be more acceptable in a development role than some of the other countries who have benefited to an undue extent from contact with them.

I would hope Irish people would become involved in this development process. I will mention one example. The Irish Management Institute for quite some time have been visiting various developing countries and poorer countries and giving aid in the area of management development. These people have to learn how to manage their own affairs more effectively. This not only makes a positive contribution to the poorer countries but as always the teacher learns as well. It is very good for our people. They go abroad and come back with a wider perspective and are all the better for it. I hope there will be a big Irish involvement in the development side through this agency.

This has a spin-off effect for us too in providing employment at a high level, in jobs involving professional training. For many years Ireland has had a missionary dimension which can now be expanded into economic development. The development of satellite and world telecommunications will enable us to see what is going on in these countries. When we see photographs or films there seems to be some time dimension which removes us from the reality of what is going on. With satellite communication this will disappear and there could very well be quite a shake-up in the world situation. It is possible that having highly developed countries with a GNP per capita of five figures in dollars and other countries on single figures will not last.

A final point is the fact Irish officials and Ministers making contact with visitors from abroad should try to influence the development process and recognise some of the principles of development advocated for instance by people like Paulo Freire who brings out the point that development aid cannot be brought in and laid on people, that developers have to go in and join those people at their level of understanding. Senator Whitaker spoke about mental deprivation affecting the mass pyschology of poorer countries. It is important that developers do not go in with all the answers but that they join them at their level of understanding of their problems and work out from that.

Minister of State at the Department of the Public Service (Mr. MacSharry)

I would like to thank Senators for the welcome they have given this Bill and for the general points made. I do not think it is necessary for me to reply in detail to all the points made, but I think it important that I should reply to points made by Senators Conroy and Crowley about the monitoring of the expenditure of such aid. It is internationally recognised that the development association is the most effective way of giving aid and Senators can be assured that that expenditure is for the purpose intended originally. The agreement in the Schedule to this Bill provides for full consultation between parties concerned.

The point made by Senator Whitaker of moving aid away from disaster relief is a good one. I would like to point out that in our expenditure last year of £7.2 million approximately £100,000 only was for this disaster-type relief. So we have already moved away from what has become known as disaster relief and moved into the area of what might be described as more concrete development aid for developing countries.

I thank Senators again for their welcome of the Bill.

Question put and agreed to.

Agreed to take remaining Stages today.

Bill put through Committee, reported without amendment, received for final consideration and passed.