: I move: "That the Bill be now read a Second Time."
The explanatory memorandum which has been circulated to Deputies gives the background to the Bill and outlines the provisions of the Agreement, the terms of which the Bill would approve.
International Development Association (Special Action Account) Bill, 1978: Second and Subsequent Stages .
: Will the Minister be issuing a script?
: Yes, it is on the way. 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 of 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, on the initiative of the French President to discuss matters of mutual interest to industrial and developing countries. Discussions covered the fields of energy, raw materials, development and finance.
One of the major themes in the development area was the debt problems of developing countries. Its importance was due to the sharp rise in their total indebtedness after 1973 they borrowed to avoid the recessionary impact of the oil price rises. It was feared that some of these countries might have reached the limit of their capacity to borrow, and there was concern that not only would default hamper their own development and indirectly those of other developing countries, but that it would have repercussions on the international banking system.
While sympathetic to the needs of the developing countries, the industrial countries participating in the CIEC did not feel that concentration on the debt problem took sufficient account of the nature of the difficulties which they were experiencing. In particular, the European Community felt that a partial answer lay in the speedy 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 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. The Community alone has maintained its 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 its member states on the one hand, and the association on the other hand, which sets out the conditions under which the EEC contribution will be administered by the association.
The agreement, establishing the special action account with the association, is the subject of the present Bill. It entrusts the association with 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 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 dependence on official development assistance for external capital, the extent to which international economic factors contributed to the problems of the country, its prospective balance of payments, the composition and trend of its debt service obligations, and the extent to which its problems are likely to be met by contributions from other sources. Each special action loan will be made for the purpose of financing a clearly-identifiable, quick-disbursing pro-gramme or project and will be made available interest-free, repayments being made over 50 years, this term to include a ten year grace period.
Contributions to the special action account can be made in cash or demand notes. The lodgement 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 notifies the Association that all 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.
In closing, I would like to say that approval of this Bill will enable Ireland to play its role in putting the special action programme into effect. This Programme is specifically designed not just to help the poorest countries, but to particularly help those of the poorest countries whose problems have been caused to some extent by factors outside their own control.
I recommend the Bill to the House for adoption.
: This Bill does no more than is necessary for us, as mem-bers of the EEC, to play our part in helping countries which the North/ South Dialogue identified as being particularly affected by the change in the price of oil—that, in particular, but other factors as well—almost five years ago. At that time this country was emerging from a period in which our inflation rate was higher than that of most of our neighbouring countries and, indeed, than that of our competitors. Emigration had stopped for almost the first time in 150 years. We had a problem of unemployment which was being steadily mastered but we could see the effect of the oil crisis, as it was called, of 1973 on our economy and the push it gave to the inflationary spiral and the damning effect that had not just on trade inside the country but also on the economies of those countries with which we were just building up export markets.
From the point of view of some of the poor countries we were in a relatively good position to withstand the effect of the oil price increase, and sometimes I am amused now when I hear condemnation by various interests of the effect on their businesses or commercial undertakings of a rise of 2p or 3p, as occurred last week, in the price of petrol. I think back to four-and-a-half years ago when the price of oil quadrupled. That had to be absorbed into our economy then. Every effort had to be made to ensure it would do the least possible damage to the economy and have the least possible effect on employment, recognising that this was a transfer of money from the pockets of our people—I am speaking of Ireland particularly—to the OPEC nations and the other oil producing nations. A huge sum of money running, if memory serves me correctly, to well over £70 million a year, was removed from the standard of living of the Irish people and trans-ferred to the OPEC countries.
That appeared to be a bonanza for the oil producers in 1973-74. Some of them used the money extremely cleverly but others rather in the manner of the rake's progress. The bigger ones certainly used the money well. They invested it and got a good return. They recognised very quickly that, even though they got money in large amounts into their own coffers, that would not continue if the effect of transferring that wealth from the developed western world, which was their principal customer, was going to damage the economy of the western world. That lesson was learned very quickly, not by all the oil producing nations but certainly by the most important ones, and the acceptance of that lesson has mercifully had the effect of keeping the price of oil at a stable level for a number of years now. As one can see from the meeting of the OPEC Ministers last weekend, it is not by any means plain sailing for some of them if their view of the long-term effects on the economies of the world are not accepted by some of their partners and the price of oil is increased after January next with all its consequences.
On the international scene we are told that inflation is by no means under control and it will not take much to start the spiral moving up again. An increase in the price of oil next year of a significant nature might be just the very thing that would trigger off inflation and, from that point of view, our future is not altogether in our own hands. Up to this we have been, of course, in a relatively comfortable position compared to some countries in Africa, Asia and South America, countries predominantly rural in character with an agricultural economy, countries which had just begun to move out of the medieval type of economy and were beginning to appreciate the value of fertilisers.
Naturally the first thing that suffered was the use of fertilisers. Their use was reduced despite the advice from agencies all over the world, such as the FAO and so on, which had been impressing on them the value of fertilisers in order to increase crops and exports and give a better standard of living to their people. These countries stopped using sufficient fertilisers. Crops started to go back and the result was they could afford to use still less fertiliser the following year.
It is only right that the North/ South Dialogue should have identified those countries needing instant help and provided interest free loans or grants. In the case of the EEC it is interest free loans. I am not sure what Canada, the USA and Japan are going to do but it is right that one billion dollars should be set aside by the better off nations to help these countries. Apart from the charitable Christian approach it is a good investment because it will ensure that the economies of these countries are developed and the countries are not allowed to be sucked into a sphere of influence or help from countries with whose outlook and ideological approach we would not agree.
That is one point that should be borne in mind. The other is, and I suppose this should really rank first with a Christian country like Ireland, that we should appreciate that there are people in other countries who are very poor indeed, living well below the poverty line, even as we understand it, and should be prepared to give an instant injection of help without which many of these people will certainly die. The sum here is relatively small— 0.27 per cent of what the EEC is contributing and that is really only about 30 per cent of what the total fund will be so that in fact what we are giving is .009 of 1 per cent of the total fund. Naturally we would wish to give more. I am not sure if this will be the total investment in this fund or if the fund will be renewed from time to time with the EEC making further contributions later on.
: The intention is to dispose of this one billion dollars.
: And then it is viped out?
: That is right.
: I am sorry about that. One of the ways of bringing home to people this sense of urgency is to point out that this is entirely separate from all other funds, will be administered separately and will be distributed to worth-while projects as quickly as possible. The Minister said that:
"This programme is specifically designed not just to help the poorest countries, but to particularly help those of the poorest countries whose problems have been caused to some extent by factors outside their own control."
I cannot bring to mind immediately any country whose poverty is not to some extent caused now by circumstances which are outside their control or was caused by circumstances which were outside their control 50 years ago.
We are glad to support this Bill. I can promise the House that if, in future, governments bring in proposals for this country to help the less developed countries and to see that the inhabitants of those countries are brought up at least to the poverty level we enjoy, we will support them. The degree of poverty in many countries is totally unknown to the poorest person in this country. We have no conception of the number of people who die simply because they do not have enough food and that applies also to children only weeks old. Anybody who has been to Africa or the Far East will know what I mean. They will know that on the outskirts of many fine African cities there are levels of deprivation and poverty that are unknown to the poorest Irish person.
We are told that the politics of the world today are the politics of selfishness and that the haves are grabbing more and ignoring the have nots. We are very fond of saying that we brought Christianity to Europe during the dark ages. We are naturally concerned about our own future but we should not obscure our vision as to why we wanted our independence to run our own country. The fight for freedom was not to get hold of a bit of land and grow more wheat, produce more barrels of stout or to breed better horses so that our people would have a higher standard of living, although that was part of it. The underlying theme was that we felt we could contribute to the development of Europe and the world and that we had uniquely a message to bring to the world which was being stifled because we were not masters of our own destiny.
We now have that chance and we should not allow concern about our material future to put us off our stride by what I believe is the temporary phenomenon of the politics of selfishness. If we do not see we have a role to play and a contribution to make to the development of the EEC, we would be probably just as well off without our freedom because it means nothing. It is because we have a role to play that we wanted that freedom. The freedom which allows us to contribute to this fund should not allow us to lose sight of our duty and what I believe is the desire of our people to see that the benefits we have will be available to the people of the poorest nations.
: The Labour Party approve this Bill, which is essentially a stop-gap measure arising out of the situation after 1973 when the poverty stricken countries borrowed to avoid the recessionary impact of oil prices. It is encouraging to note that all the indications are that for the rest of this year there will not be a further increase in the price of oil and that this could last well into the first half of next year. Nevertheless the palliative action taken in this once-off measure is only a drop in the ocean in terms of the impact which the increase in oil prices had on the energy and raw material requirements generally of the poorest countries. It is sobering to note that the countries concerned had a GNP per capita of about £150 in 1976. That by any standards is a standard of abject poverty. We are making a small contribution when compared with that being made by countries like the United States of America and Canada. These contributions are needed and welcomed and we approve the Bill.
A Bill of this nature focuses attention on the need for full acceptance of the role of the European Community in relation to the development of the Third World through the progressive development of world trade rather than coming to this House on an ad hoc basis after each crisis. With the levelling off of oil prices in particular, now is the time for greater support for the creation of the necessary international institutions for economic progress to assist those countries. For example, the extension of the Lomé Convention could be quite pertinent in many of the areas mentioned this morning. Therefore I trust that this minimal Bill will spur on the Community to adopt a firm and progressive position in the international relief of poverty and the creation of a new economic order to assist those countries. We have no hesitation in encouraging the Minister to transmit, as a matter of urgency, the Irish contribution.
: I thank the Deputies for the welcome and the support they have expressed for the Bill. Regarding a point raised by Deputy Desmond I would point out that the special action account is for this contribution but that this is in addition to the European countries' contribution to the International Development Association. Ireland's contribution is in the context of our membership of the EEC, and while the contribution is small compared with the overall amount of a billion dollars, this year our contribution to the development countries will be £9.64 million. That includes the £596,000.
We would all hope that the fears expressed by Deputy Barry would not be realised in the take-off of a round of oil price increases. While increases in oil prices had an effect on the developing countries, it represented only some of the problem. Another aspect of the problem was the increase in the prices of imports of commodities from Europe and other countries and the drop in exports from the developing countries.
: All part of the one problem.
: Yes. There was the general recession in Europe, too. The increased prices of exports from the European countries together with the reluctance on the part of these countries to purchase commodities from the developing countries were all contributory factors to the problem.
Question put and agreed to.
Agreed to take remaining Stages today.
Bill put through Committee, reported without amendment and passed.