Vol. 567 No. 6
134 Mr. M. Higgins asked the Minister for Finance the Government's views on the establishment of a fair and transparent arbitration procedure in relation to development country debt relief; and if he will make a statement on the matter. [9843/03]
As the Deputy will be aware, the issue of a fair and transparent arbitration mechanism to deal with developing country debt has arisen recently either as a stand alone mechanism or as part of suggested mechanisms for restructuring debt. While not wishing to prejudge the outcome of such considerations, which are ongoing, I am aware of a number of difficulties with current suggestions. This is hardly surprising given the scale of what is proposed. At the very least, there are bound to be difficulties in seeking to modify current debt arrangements and maintain the flow of foreign investments to developing countries. To make such a proposal operational there would need to be a quite unprecedented degree of consensus between national governments, creditor and debtor nations, in particular the private sector bond holders and the international financial institutions. Furthermore, unless such a mechanism were to be very carefully designed there would be real risks to areas such as national sovereignty which might render the approach wholly unacceptable to the debtor countries concerned. It could also threaten to jeopardise the flow of new borrowing which is particularly vital to the development of HIPC countries. I am encouraged to see that these issues have begun to be explored.
In addition, other measures, such as the use of collective action clauses which facilitate debt restructuring may be useful. These clauses provide for the orderly resolution of disputes concerning repayments, should such difficulties arise, and thus contribute to a more stable international financial order. It is the declared intention of EU states to use these contractual provisions when issuing bonds under a foreign jurisdiction.
