Other Questions. - Third World Debt.

Bernard J. Durkan


9 Mr. Durkan asked the Minister for Foreign Affairs the progress, if any, made in the abolition of debt in respect of developing countries; and if he will make a statement on the matter. [8326/00]

Ivor Callely


61 Mr. Callely asked the Minister for Foreign Affairs the measures which would have to be put in place to cancel Third World debt; the steps, if any, Ireland will take to initiate cancellation of the debt; and if he will make a statement on the matter. [7756/00]

Bernard J. Durkan


161 Mr. Durkan asked the Minister for Foreign Affairs his views on the request for the write-off of debts in developing countries; and if he will make a statement on the matter. [8613/00]

I propose to take Questions Nos. 9, 61 and 161 together.

The heavy external debt of developing countries imposes a serious constraint on the development of the 41 heavily indebted poor countries or HIPCs. The high level of debt repayments required of these countries diverts scarce resources from key sectors such as health and education. Many of them also have to deal with very high rates of HIV/AIDS infection. For its part, Ireland has consistently advocated a generous and flexible international response to the debt crisis.

The World Bank/IMF at its annual meeting at the end of September 1999 agreed on extensive revisions to the original 1996 HIPC initiative on debt relief under which only three countries qualified for relief. These reforms ease the conditions under which debt relief is granted. They strengthen the relationship between debt relief and poverty alleviation. In this respect, the enhanced HIPC reflects one of the central points raised in Ireland's national submission to the HIPC review, that is, that the resources freed by debt relief should be of direct benefit to those in the greatest need.

Under the enhanced HIPC initiative, debt repayments by countries which have undertaken economic reforms should fall to a level which is sustainable and which does not deflect scarce resources from important social sectors such as health and education. By the end of 2000 almost 30 of the 41 HIPC countries should have qualified for debt relief under the enhanced HIPC.

Ireland, which was critical of the original HIPC initiative, sees the enhanced HIPC as a significant advance on its predecessor and an important step towards tackling debt. We welcomed the decision taken on 8 December 1999 that the EU should contribute 1 billion to debt relief and the HIPC initiative. Our share of this will be 6 million.

The Government is conscious of the extent of public support for the Jubilee 2000 campaign which is calling for total debt cancellation. The campaign has played an important role in galvanising the international community. The current debt relief provisions applied by the IMF and the World Bank are, in part, a response to the campaign's activities.

Total cancellation of debt for all 41 HIPC countries raises a number of difficult and complex questions. Issues such as corruption, poor governance, internal conflict and human rights abuses must also be taken into account. The funding of total debt cancellation would also be a major problem. It is natural that creditor governments, who will be expected to pay very substantial money in support of debt relief, will want assurances that resources are directed to the alleviation of poverty and not diverted into other areas, such as warfare.

In addition, total debt cancellation would raise uncertainties about the ability of countries concerned to borrow funds internationally in the future. Creditors are inevitably cautious about lending to countries which, in the past, have not been able to repay debts. A number of countries such as South Africa, which wishes to be able to borrow in the future, would not advocate total cancellation of debt.

In the case of Mozambique, we have argued that there is a compelling case for total debt cancellation. Mozambique has shown strong commitment to democracy and economic reform during the 1990s. It had qualified for debt relief under the original HIPC and should receive additional relief under the enhanced HIPC. Mozambique has now suffered a devastating blow to its development prospects. Yet, even with the application of debt relief, it must still pay US$1.5 million per week in debt repayments. France and Italy have promised to cancel Mozambique's remaining debts to them and we encourage other bilateral donors to take similar actions. The Paris Club of bilateral creditor nations decided on 15 March to allow Mozambique to defer its debt service payments to the group until additional relief is provided this year under the enhanced HIPC initiative.

Ireland strongly welcomes measures, whether through debt relief or debt cancellation, aimed at easing the burden. We have contributed £31 million to relieve the debt burden of heavily indebted poor countries. We have allocated £9.5 million to debt relief in Tanzania and Mozambique, both of which are priority countries for us. Funds amounting to £22 million are being channelled through the World Bank and the IMF to finance the debt initiative. Ireland will continue to use its influence to press for a just and comprehensive long-term solution to the debt problem in the developing world.

I listened intently to what the Minister of State said. On the one hand she outlined what is being done but, on the other, she mentioned the difficulty total debt cancellation can create. My question asked what measures would have to be put in place to cancel Third World debt, something she did not outline, and I also asked what steps, if any, Ireland can take to initiate cancellation of the debt. If we examined the benefits that could accrue from cancellation, we would have to initiate it and then see what the strong arm of some of the financial institutions would say about it. I ask the Minister to outline what we can do in that regard.

I outlined in my reply the comprehensive nature of this problem and the fact there has been an enhanced HIPC initiative which is an advance on the previous one of which we were critical. In our contacts in the EU and at the World Bank we have supported the need for greater and more urgent action. We have advocated the most generous possible EU support for HIPC. We, therefore, welcomed the decision taken on 8 December 1999 that the EU should contribute 1 billion to debt relief, that the HIPC initiative would place the EU in the lead role internationally in dealing with the issue and that Ireland's share would be in the region of 6 million.

The difficulty with the first HIPC initiative was that it placed stringent demands on poor countries in terms of their structural and economic reforms. Some relaxation of those rules have now been introduced. This is a more flexible approach to the heavily indebted poor countries.

Mozambique is an example of a country which is suitable for debt alleviation. It benefited substantially from the HIPC initiative and bilateral assistance from Ireland and other donor countries for its debt service repayments before the flooding. However, even if its debt is reduced to sustainable levels, it would not be able to recover from its current difficulties if it must continue paying the debt. It is a complex issue.

The Minister of State is aware that the global epicentre of the AIDS epidemic is sub-Saharan Africa. Statistics indicate that in 1999, 23.3 million men, women and children in sub-Saharan Africa had AIDS or were HIV positive. This figure represents almost 70% of the world's total infections in a region that is home to only 10% of the world's population. According to UN aids, eastern and southern Africa are home to 4.8% of the world's population, yet it has more than 50% of the world's population who are HIV positive and accounts for 60% of all lives claimed by AIDS since the epidemic's inception.

It is terrible that we are watching this holocaust while at the same time expecting the people who are suffering to spend money on servicing debt rather than on health issues. Does the Minister of State agree that it would be a service to humanity if we sought to establish a European Union commission on debt forgiveness on a regional basis? This might give leadership to other regions throughout the world. Will the Minister of State consider the possibility of establishing such a body which would be representative of the 15 member states?

I agree there is a need for urgency and for people to focus on this issue, particularly in the context of the pandemic of AIDS which has reversed much of the development achieved in these poor countries, particularly in sub-Saharan Africa. Following the Taoiseach's visit to Lesotho and South Africa, he was interested in pursuing a line with our European Union partners. He has formally taken an initiative with the Commission. The Department of Foreign Affairs has completed a programme which ensures that attention to and the treatment of AIDS is now part of all our development programmes in our priority countries. There will be further moves by the Taoiseach and the Department of Foreign Affairs to highlight the pandemic of AIDS.

The Minister of State said that only three of the heavily indebted countries qualified under the original HIPC initiative and that the number is now 31 out of a possible 41. Given that these are the most heavily indebted countries, why do ten not qualify? What mechanisms are in place to measure the impact of debt relief? If there is no impact in terms of improved water supplies and education and health systems, we must examine what we are doing and how we are operating.

It is important for those of us who are proponents of debt relief, the HIPC initiative and other instruments of the World Bank to know to what extent they make a difference. I do not know the reason those ten countries have not yet qualified. I presume it is because of the strict criteria – even when the criteria are relaxed these countries are still not eligible – or it could be bad governance or because these countries may not be democracies. I will find out why each of the ten countries are not eligible.

It is extremely important if the debt relief initiatives are to continue and be supported that any money saved by these countries should be ploughed into eliminating poverty and not used to pay debt service repayments. It is important that these Governments are not allowed to get away with not paying their debts while using the money on armaments or other measures which would not directly alleviate the suffering of their people. Our focus in Ireland Aid is always on the reduction and elimination of poverty. Our focus in debt alleviation should be to reduce poverty.

Does the Minister of State accept that 6 million is a paltry amount? What is the Minister of State's attitude towards the Tobin tax on international financial transactions which would eliminate debt in the poorest countries? What is the Minister of State's attitude towards the EU which has now forced 71 of the world's poorest countries to accept draconian immigration roles in exchange for renewing the £8.5 billion worth of aid and trade budget as part of the new Lomé Agreement?

A specific question was not tabled on the recently negotiated replacement for the Lomé Agreement. We were happy with the outcome on the replacement for the Lomé Agreement in terms of the least developed countries.

Does the Minister accept that 6 million is a paltry amount?

That is only a small part of our effort. Some £31 million has already been pledged for debt relief. Next year's aid budget will allocate further funds for debt relief. Debt relief has become a significant and consistent part of our overseas development programme and it is negotiated primarily by the Department of Finance.

The Minister of State said she is happy with the replacement for the Lomé Agreement although it imposes new draconian immigration rules on all these countries. Why did she say she was happy with that?

The time for this question has concluded. We must move on to Question No. 10.