On section 1 and the reference to the Minister for Finance which we touched on when debating Second Stage, I, and the other speakers, referred to the fact that there was something faintly inappropriate about this Bill being taken by the Minister for Finance, in that it dealt closely with issues of overseas development assistance to Third World countries. I, and many speakers queried whether it would have been more appropriate to have it taken by the Minister for Foreign Affairs and should not the reference here indicate the Minister for Foreign Affairs rather than the Minister for Finance. While I accept that it is a money Bill, I would be very interested to hear detailed comments from the Minister as to the appropriateness of the legislation coming under the Ministry for Finance.
Multilateral Investment Guarantee Agency Bill, 1988: Committee Stage.
Senator Bulbulia argued in favour of this point on Second Stage. Section 1 is a definition section which assigns responsibility for our relations with MIGA to the Minister for Finance. The position is that the Minister for Finance has statutory responsibility for our relationships with the World Bank and its existing affiliates. This responsibility derives from the Bretton Woods Act, 1957, the International Finance Corporation Act, 1958 and the International Development Association Act, 1960. Therefore, it would be anomalous, if in the case of MIGA alone — also a World Bank affiliate — a similar responsibility was not established. Basically, what we are saying is that we have been consistent under the various international Acts to which we subscribe, that the Minister for Finance has responsibility for all World Bank affiliates. MIGA is another one of those affiliates. It would be a conflict in financial management and with our whole involvement with the World Bank if we were to take MIGA and make it the responsibility of the Minister for Foreign Affairs. That would not be in order. Consequently, this is the reason why the Minister for Finance is handling it.
Obviously, I accept what the Minister has said. Can he give an indication that there will be extensive consultations between the Minister for Finance and the Minister for Foreign Affairs about this, and that the Minister for Foreign Affairs — and in particular the part of that Department dealing with overseas development matters — will know about the operations of MIGA and about the funding? Can he indicate from which Department the funding will come and the mechanisms for that?
There was constant discussion between the Department of Finance officials responsible for this Bill and the Development Co-operation Division of the Department of Foreign Affairs. Prior to this Bill coming before any of the Houses of the Oireachtas or gong to Government, there were very detailed discussions between the Departments of Finance and Foreign Affairs. There are always discussions on any decisions that are to be taken at World Bank level or at MIGA level pertaining to Third World development and so on. I assure the House that that will continue to be the situation.
Could the Minister explain to me under what circumstances it is envisaged that the State would receive moneys from the agency? I am referring to section 3 (4) which states:
Any moneys received by the State from the Agency shall be placed to the credit of the account of the Exchequer...
Could the Minister explain to me under what circumstances our State would receive money from the Agency?
It could happen that we would be obliged to put 10 per cent of the money which we have committed upfront by way of a cash contribution. The balance of that would be in promissory notes and callable capital. If, for a particular reason, some Third World country defaulted on its commitment to a project investor and those promissory notes or capital had to be called, we might forward our money to make up for that default as our contribution to MIGA. If, in return, the Third World country came along a year or six months later and the moneys came back into MIGA, they could then be returned by MIGA to Ireland as part of Ireland's contribution of the on-call money. When that money came back it would be a matter for the Minister for Finance to decide what would be done with it.
I wish to say to the Minister that subrogation rights are a natural principle of insurance. In this case, section 4 clearly makes the point that subrogation rights of the agencies shall be recognised by the State. By definition we are dealing with Third World countries. They are poor countries. In the knowledge that we are dealing with poorer countries, how will investors feel about subrogation rights? In the normal insurance contract there should be no difficulty, but in the knowledge that one is dealing with much poorer countries, where there is less chance of getting money back and, unfortunately, where there is a tendency to take rather than give, does the Minister see this particular section as being one that might in the future cause problems?
I do not visualise any problems with it because any country subscribing to MIGA must automatically accept the subrogation rights. That is part of the whole acceptance of the convention and its structure. Once you accept anything, you accept everything. Consequently, the subrogation rights have to be recognised. Article 18 of the convention requires that MIGA subrogation rights be recognised by all members of the Agency. In essence, this means that the event of compensation being paid by the Agency to an investor the Agency would then be entitled to assume all the rights of that investor against the host country in which the event giving rise to the claim originally occurred. This section makes the necessary provision for the recognition of MIGA subrogation rights, should an Irish firm be involved in a compensation claim. Therefore, we do not visualise any difficulties there.
I would like your guidance, a Chathaoirligh, on this. I have a long number of questions on the Schedule.
It is quite open for discussion but one decision only. It is open to whatever length of debate or discussion you wish with the Minister.
I accept that. May I begin by asking a question about the payments of subscriptions under Articles 8 and 9 of the Schedule? Article 8 deals with the payments of subscriptions and states that they may be made in freely usable currencies and also that 25 per cent of the paid-in cash portion of developing member countries may be paid in their own currencies. That sounds very helpful, except that Article 9 states that the value of one currency in terms of another shall be reasonably determined by the Agency after consultation with the International Monetary Fund. Does that effectively mean that the official exchange rate of a developing country will not be allowed to be the criterion for the valuation of currency, but the valuation of the International Monetary Fund?
It seems that the benefits of allowing people to pay their subscriptions in their own currency will be effectively removed if they have to accept the IMF's valuation of their currency which is often, in many developing countries, quite different from the valuation that the country themselves put on it. Many countries have very serious exchange controls in order to protect what would otherwise be a very vulnerable currency. I would like some clarification from the Minister on that.
The exchange rate situation does not come into it. Each developing country may pay, in its own currency, 25 per cent of the amount it is obliged to pay. The balance of the money is on call as required. That would be paid in the country's own currency.
The subscriptions that are listed in Schedule A of the convention identify subscriptions as being paid in millions of special drawing rights. I am not an expert in international high finance but there must be some anomalies between the valuations of special drawing rights and the relationship with the individual currencies of different countries. I cannot imagine that countries would be allowed to define their currency with respect to the special drawing rights. I would presume that the reverse is the case. Perhaps what I need is more education on special drawing rights. Are they, in fact, determined by the country or by the Agency because the currency cannot be paid in their own currency. It must be paid in special drawing rights. Is the relationship between a developing country's currency and special drawing rights determined by the country or by the Agency?
One could answer simply and say that both the country and the Agency will be involved. There will be consultation between the country and the Agency. Whenever it shall be necessary for the purposes of this convention to determine the value of one currency in terms of another, such value shall be reasonably determined by the Agency after consultation with the International Monetary Fund. There will be consultation between MIGA — being the Agency — and the country. If there are difficulties there, then there will be consultation with the International Monetary Fund and an agreement will be reached.
It appears to me that there is no guarantee to the developing country on the status of their currency. I am familiar particularly with countries like Tanzania which, when I visited them, I found that the international exchange rate for-their currency was quite different from the domestic exchange rate. There were good, if very painful domestic reasons for that. It is necessary, if this is as benevolent an agreement as it is represented, to understand how well protected are the interests of developing countries. Are they being drawn into the IMF's version of their role in the world or are they being allowed to maintain their own identity, because the IMF has a quite different view of how a developing country should develop from that of the governments of many developing countries.
I find the reference to "after consultation with the International Monetary Fund" objectionable. It has been responsible already for the destabilisation of many countries and indeed for the enormous oppression of the poor of many countries. I find the role of the IMF in determining or contributing to the determination of the value of a local currency quite ominous.
My question relates to the preamble in the Schedule. Underlying all this is the need to strengthen international co-operation for economic development. We saw from the list under Schedule A that South Africa was entitled to membership of MIGA by virtue of its membership of the World Bank. While the Minister indicated when he was speaking last week that South Africa had not, in fact, taken out membership or put up its papers and taken out its shares, nevertheless, I find it extraordinary that South Africa can be involved in something like this, given that the whole purpose of it is to strengthen international co-operation for economic development.
I would like the Minister to indicate to me if he feels there is something extraordinarily irrational and strange about this because everybody knows that South Africa is involved in a policy of massive destabilisation in southern Africa, that because of its activities in Mozambique that country is on its knees and has the highest infant mortality rate in the world and enormous problems of poverty. It is an unnatural disaster in that country as opposed to the natural disasters which it manages to cope with admirably. I fail to understand how Ireland can involve itself in MIGA side-by-side with a country like South Africa which is entitled to participation in MIGA and whose actions and activities are quite the contrary to what MIGA is all about. I would be very interested indeed to hear the Minister comment on that and I would like to ask him whether he shares my reservations, my concerns and my feelings of disbelief that this should be so.
May I simply add to what Senator Bulbulia has said? There is apparently a view in the world that certain areas of activity are exempt from morality. One of those is in the operation of international finance. Matters that would be very harshly judged in other areas are apparently exempted. We will, for instance, advocate a total sporting boycott of South Africa——
I hate to interrupt any Senator when he is in full flight but I do not want to drift into Second Stage speeches. I appreciate that you know the rules of the House as well as I do. You are probably developing a point but we are on Committee Stage.
We are, a Chathaoirligh, and we are talking about very precise details of the Schedule of a Bill in specific terms. I want the Minister give this House what it deserves, which is an elaborate and detailed justification for an extraordinary decision to allow the most malign force in one of the poorest continents of the world to masquerade as contributing to development aid. That is a moral question. It is not a political question. It is not a financial question. It is a moral question. Any good that comes out of this Bill is completely undermined by the gratuitous granting of respectability to what is the most malign and destabilising force in the whole of the African continent.
The Minister cannot hide behind international conventions. There is some evidence of how international politics operate in these businesses in another part of that Schedule, which I will come to later on. Would the Minister explain to me how we can, on the one hand, claim to be concerned about issues and, on the other hand, apparently sit down around a table and contribute to the masquerade that South Africa is somehow a benevolent contributor to international development? It is the single greatest cause of destabilisation, of poverty and of economic underdevelopment in the whole of southern Africa.
Ask the leader or anybody who works in any of the frontline States what their greatest problem is — it is South Africa. It is absolute and utter nonsense to suggest that somehow they can contribute anything other than spleen, malice and destabilisation to the process of development. It is an immoral association to allow them to be there. I would suggest to the Minister that either we pretend, as we like to, that finance is somehow something separate or else this Bill is fundamentally flawed, as I said on Second Stage, because of the philosophical acceptance of South Africa as a possible contributor to world development.
I can see the Senator's points of view and I can share them indeed, but the situation is that South Africa is a member of the World Bank and that gives it rights to be part of the MIGA structure. We cannot, as a country, deprive South Africa of being a member of the World Bank; neither can we prevent them from qualifying for membership of a subsidiary organisation of the World Bank which deals in financial matters, the primary purpose of which in this case is to improve the situation in Third World countries. It is a matter for South Africa to decide its involvement with MIGA. As far as I know, they have not signed or even ratified MIGA as yet.
We are there from a contributory point of view, making our contribution to, improving the standards, opportunities and livelihoods of people and dealing with the difficulties which the people in the Third World encounter. The Agency itself, its staff or its president, cannot interfere in the political affairs of any member. Without prejudice to the right of the Agency to take into account all the circumstances surrounding an investment, the Agency shall not be influenced in their decisions by the political character of the member or members concerned. Considerations relevant to their decisions shall be weighed impartially in order to achieve the purposes stated in Article II.
While I can identify with what the Senators say, the main thrust and purpose of this Agency is to improve the opportunities and to expedite development in Third World countries. It is a World Bank structure and member countries of the World Bank are entitled to gain MIGA but that is at their discretion. We cannot interfere in that situation. It is up to us to decide what part we play. We are playing our part in a very honourable way. We have agreed to the convention since 1985 and we are now about to take the steps necessary to enable us to ratify it here. I think it is in the interests of the Third World that we do it.
I want to tell Senators that really they are asking question of principle which are relevant to Second Stage speeches. I understand that the Committee Stage of any legislation involves asking appropriate questions of detail on the section or Schedule and I would ask you to try to stick to that. I am not hassling any Senator, that is not my style, but I do not want to go back over the Second Stage. We are on Committee Stage. I appreciate that people in the House are very concerned about this legislation but I do not want the debate to get out of hand.
We accept the point made by the Minister but the arguments of the two previous contributors are irrefutable. As a country who has taken a stand in many areas, particularly relating to South Africa, ahead of other very important nations including Great Britain, we would have expected that our Government in entering into this convention, as a contracting State, would at least have expressed reservations about the participation of South Africa. We know we cannot stop them but if all the nations involved, as we are, in this area did that it would create a climate of opinion that might change the administration in South Africa or at least make them conscious of the world's demand that they should perform within certain guidelines. We accept it is difficult but can we have any assurance that the Minister expects any reservations at all about South Africa's participation?
Arising from what Senator Ferris has said, part of the difficulty is that the Minister of State in the Department of Finance is dealing with this and the questions we are asking could perhaps, because they involve matters of Irish foreign policy, be more comprehensively dealt with in a philosophical fashion by the Minister for Foreign Affairs. I understand the Minister must stick to the financial brief and specifically to the measures in the Bill but, at the same time, you cannot absolutely divide matters of principle from any legislation and what we are raising here is a matter of principle.
Given Ireland's publicly stated attitude towards South Africa, the question Senator Ferris put is a very reasonable one. Have we demurred at all at seeing South Africa listed as being a member of MIGA? Have we said that it in some ways contravenes our attitude and our knowledge of the activities of South Africa or are we content to hide in the thickets of diplomacy? Have we decided that this is merely a financial measure and, as such, we will not query and we will not rock the boat?
I hope that is not so. I hope, if this debate yields anything that the Minister will be able to give us an assurance that the Irish voice will be raised in query as to why South Africa is to be involved in MIGA which is essentially about development in the Third World when the world knows that South Africa is involved in massive destabilisation and destruction in southern Africa. I want to know that the Irish Government will point out the ambivalence, the ambiguity and the inconsistency in the position of South Africa vis-à-vis MIGA.
Before I call the Minister, you admitted yourself, Senator Bulbulia, that you were discussing a principle. You even used the word "principle". The Second Stage of this Bill was agreed in this House. I want the House to work properly; I want every Senator in it to be happy and every Minister but we cannot go back into pinning, and I use the word "pinning" carefully, a Minister for Finance on something that you feel a Minister for Foreign Affairs should be answering. The Second Stage was agreed. I appreciate what an excellent Senator you are. I say that here and I say it outside but we are on Committee Stage and I cannot let a Minister or a Member of the House back into Second Stage at this point on principles, on what stand past or present Governments have taken.
I accept that and I would not like to give anybody the impression that I was essentially hijacking this piece of legislation and conducting a debate on South Africa. I have had ample opportunities in the past and will have in the future to debate that issue extensively in the House and elsewhere but the fundamental question is still there because South Africa is listed and it is entitled to participate, as we are, and I want to know whether our voices have been raised in protest or query.
I appreciate very much what the Senators have said but we commenced negotiations on the convention as far back as 1985 and signed it in 1986. I presume the Minister for Finance of the day was fully aware of the situation and voiced whatever reservations he had pertaining to any country being involved.
We are left with two options really, as a result of what the Senators say. One is that because of the involvement of South Africa in the World Bank which gives it the right to be involved with MIGA, we opt out of this situation because we do not like South Africa and we renege on our contribution to MIGA. The other option we would have is to resign from the World Bank and I am sure nobody is suggesting that. Our record is there in the field of human relations and human rights. Ireland will continue, no matter what forum it is involved in, national, international, European or whatever, to voice what we believe at any time to be Ireland's position pertaining to any country's abuse of power or rights of individuals. I hope we will always continue in that way.
There are a number of serious questions here. Since we are on the issue, I have been looking through the list of countries participating and this is not a matter of principle. I would like the Minister to tell me where Democratic Kampuchea is, where its central bank is located and who is its Minister for Finance?
If I knew you had questions like that, Senator, I could have had the answers for you but that is not involved here.
It is extremely important. I will explain to the Minister if the House will permit me. Democratic Kampuchea does not exist. It is not a country.
You told us that the last day.
And the Minister did not tell me and I am entitled to know.
If the Senator has any specific questions like that and if he lets me have them personally I will see that my Department responds to them and gives him the maximum information.
I am sorry, the question is that we have, on the one hand, had an assurance from the Minister that South Africa is there because it is there. That is fair enough. The position about Democratic Kampuchea is that it does not exist. It is a figment of a conspiracy between the United States of America and China to refuse to recognise a Government which runs a country called the People's Republic of Kampuchea which actually has a capital, a government and people.
There is no such place as Democratic Kampuchea. I would like to know why one puppet regime which does not exist, which is in fact controlled by the greatest mass murderer since Hitler, is allowed to masquerade not as a government but as a country; that is what the Schedule says. It does not say Governments, it says countries. I am entitled as a Member of this House not to have my intelligence offended because people will not tell me that we are actually talking about judgments being made. Article 34 of the Schedule is the one that is made a mockery of here. It reads:
Without prejudice to the right of the Agency to take into account all the circumstances surrounding an investment, they shall not be influenced in their decisions by the political character of the member or members concerned.
What an appalling joke when the legitimate Government of Kampuchea is kicked out and a puppet, a conspiracy of terrorists with a record of genocide only exceeded by Adolph Hitler, are allowed to masquerade as a country because it happens to suit the global interests of certain super powers. Our Government have a reasonably good record on this issue in the United Nations I do not want to talk about the Government's position.
I want to know under what circumstances can a non-existent country or a non-existent regime, funded only by the United States, and China, be allowed to masquerade as a government of a country which is sorely in need of overseas aid. The whole thing defies description and raises, as I said before, fundamental questions about the background to legislation such as this. Democratic Kampuchea is a name for the greatest genocide since Hitler and it is quite disgraceful that they should be allowed to be involved in this. They would not be allowed to be involved in this if the spirit of Article 34 of the Schedule meant anything at all. It does not mean anything at all, it is a joke.
In response to Senator Ryan, Article 37 clearly establishes that:
Each member shall designate its central bank as a depository in which the Agency may keep holdings of such member's currency or other assets of the Agency or, if it has no central bank, it shall designate for such purpose such other institution as may be acceptable to the Agency.
The situation is that Democratic Kampuchea, as you refer to it, has not signed the MIGA Convention, has not ratified the MIGA Convention and until——
I would prefer not to mention Democratic Kampuchea. I do not like to have anything to do with genocide.
Well, I do not either and I hope by implication——
No, but you are in a better position to do something about it than I am.
As far as I am concerned, they have not signed it. They have not nominated a central bank or an institution and they cannot come into the system until they do that. There are clear rules laid down and while countries may indicate that they wish to join or they may be named by virtue of the fact that they are involved in the World Bank structure, until they adhere to the clear regulations, rules and structures laid down in the convention they cannot become members. That is the position.
I would like to join very strongly with the words I heard from Senator Brendan Ryan on the monitor. I think that anything that gives the slightest suggestion of recognition to that appalling regime must be resisted. The very fact that they are named here — their names should be withdrawn and expunged from the record. They are not a country, as the Senator has said; they are certainly not civilised; they have the worst record since Adolph Hitler. This is the time at which to do it. I am in receipt over the last couple of days of information from Oxfam——
We cannot continue to have repetition at this stage on this piece of legislation.
I did not hear all Senator Ryan said. I switched on the monitor to listen as carefully as I could and I was not aware that he had read into the record the situation with regard to Oxfam. I take it that this is what you are referring to, a Chathaoirligh, but in case that is not on the record I believe it must be placed on the record because it is extremely important. We as public representatives are currently being very actively lobbied by an organisation which has the highest credibility in this country for its marvellous work for the people of what is sometimes referred to as the Third World. They have made strong representations on the question of Kampuchea particularly because at the start of 1989 there will be a lot of media attention focused on this troubled country because of the tenth anniversary of the overthrow of Pol Pot and the Khmer Rouge and I particularly——
You are certainly into a Second Stage speech now.
In that case, I take your guidance and advice and I will sit down, but I would like to simply put the strongest support possible behind the words of my colleague, Senator Brendan Ryan.
May we ask for your advice, a Chathaoirligh, as to how to proceed with this because we are on Committee Stage and there is not an amendment down to this particular Schedule. It is possible that there are sufficient Senators here with an interest in deleting this particular country, which has a listed number of shares, from the Schedule and we could do that by putting down an amendment on Report Stage if this would assist the Minister in establishing the non-recognition of the country.
This is an international agreement and you either accept it or reject it. I understand it is not open to amendment at this stage in the House. I think all Senators are aware of that.
I appreciate that.
I would like to clarify the situation again. This is an international convention which has been negotiated and agreed. It is before this House to enable Ireland to make its contribution to further Third World development. We either accept what is now before us and enable Ireland to make a further contribution or reject it and deprive us of the opportunity of making that contribution. Of course, we take into account what the honourable Senators have said about the various situations. Ireland, of course, in every situation would take that into account and has taken that into account, but we either accept this convention or reject it. We cannot change the convention. It has been negotiated and agreed internationally and it is now before each country which wishes to get involved for ratification. We either ratify the convention and allow Ireland to proceed, make its investment, give the guarantees and allow Third World countries to develop or we reject it and deprive Ireland of that opportunity.
That is an answer to my question because I wanted to know how we could proceed. I realise now that we cannot proceed in that way but, as the Minister has rightly said, the reservations expressed here can be taken into account.
I am endeavouring not to be disorderly but my feeling is that there are matters of detail in this agreement and the only place you can tease out the detail of an agreement is on Committee Stage. I would like the Minister to explain to me how Article 34, which says in fine flowery language that "They shall not be influenced in their decisions by the political character of the member or members concerned". That is admirable. It is written in, it is in fine form, but the Schedule is quite clearly affected by the political character of mythological countries that do not exist. Can the Minister explain to me how he can reconcile Article 34 which says there should be no concern about the political character with the fact that because of the political character of the People's Republic of Kampuchea it is excluded from this agreement and the so-called Democratic Kampuchea, which does not exist, is made a party to the agreement? How can he reconcile the phraseology of Article 34 with the actual political intent and practice in the Schedule to the convention?
I wonder if the Minister could give some indication as to whether it is possible, and whether it will be done, that the very strong feelings of the democratically elected Parliament of the Republic of Ireland with regard to this so-called state of Democratic Kampuchea will be made known. I would like to have an assurance that the World Bank, which I gather is the administering body on this occasion, will be made very clearly aware of the strong feelings which are reflected here in the House, the strong feelings of a very large majority of people in this country, particularly those who are aware through aid organisations and so on of the extraordinary situation in Kampuchea.
I can give the assurance to the Senator that I will discuss it with my ministerial colleagues. I will be asking my officials to discuss it with their counterparts in Foreign Affairs and we will bring the very serious reservations which have been very clearly expressed here to the notice of the relevant organisations and personnel involved.
In answer to Senator Ryan, Article 34 clearly refers to the president and the staff of the agency. They must take into account all the circumstances surrounding an investment, they shall not be influenced in their decisions by the political character of the member or members concerned. They are an executive body with control on the investment that is being made and they have to make their decision based on the financial viability of the project, the security of the finance and the risks that are concerned. It is obvious that there will be certain risks to be taken into account, but because the project is being done by a certain person from a certain country or a certain company from a certain country or the investment is being made in a certain country, they cannot discriminate against either the company, the investor or the country. They cannot do that. They must make it on the clearly laid down guidelines that are there and take into account the risks that are involved.
There are other subsidiary bodies. There is at least one World Bank affiliate involved in similar work. It has taken risks and losses but overall it has been able to balance its books. It is the contribution of the developed nations to improving the lot of the underdeveloped nations. We are obliged to help and as a small country we are doing our job and doing it reasonably well. I think it would be the wish of the Senators and the Irish people that we would continue to help in whatever way we can with the Third World development.