International Development Bill

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Mr. Rowe: Is not one of the key issues whether de-mining is helping the poor or the rich? There have been disturbing stories that a great deal of de-mining expertise is diverted away from helping the poor by corruption. For example, people who want to build a hotel will pay to have that part of the land cleared of mines by experts who should be clearing the land of poor peasants.

Mrs. Gillan: My hon. Friend makes a point about which I have no substantive knowledge, but it does not take much to extrapolate from what he says that there are two ways of looking at the issue. It must be a good thing if, by clearing the land, building a hotel and encouraging tourism, the economy is lifted and people are provided with gainful employment and taken out of poverty. However, it certainly would not be a good thing if it meant that an area of hardship was abandoned. We have all seen pictures of what happens as a result of the indiscriminate laying of mines. Indeed, when I was last in the Falkland Islands, I was moved to see that vast areas that are still covered in mines have merely been fenced off and abandoned because it is impossible to remove the mines.

Mr. Rowe: I hesitate to interrupt my hon. Friend again, but I do not want her to miss my obscure point. It seems to me that transparency is required. No one minds if a transparent decision is taken that, in the longer term, the poor will benefit more from the employment possibilities provided by a hotel than they will from de-mining a small peasant farming area. What is worrying is when that decision is not transparent and it is perfectly clear that somebody in the de-mining organisation is taking a back-hander in order to distort the priorities.

11.45 am

Mrs. Gillan: Yes, that point was so subtle that I had missed it; my hon. Friend makes it clear. I thank him for providing more detail.

I am conscious that I have been on my feet for some time, but, as I said at the start, a substantial part of the Bill is encompassed by clause 1 and the four amendments, which are of great importance. I move swiftly to amendment No. 4, which is intended to allow the Secretary of State to provide assistance for measures designed to attract foreign direct investment. That is based on the assumption that attracting foreign direct investment and private investment is a major purpose of development aid, because it helps to provide more tax revenue for Government to boost the local economy, to create jobs and to bear the risk if projects fail.

All experience shows that attracting foreign direct investment into developing countries is an essential element of poverty reduction. In chapter 1, page 18, the globalisation White Paper states:

    ``over the last few decades in reducing the proportion of people living in poverty has been largely the result of economic growth: raising incomes generally, including those of poor people. Economic growth is an indispensable requirement for poverty reduction.''

Taking those words at face value, we suggest that we add that objective to clause 1, to give voice to the Secretary of State's aspirations in the White Paper.

Foreign direct investment by multinational companies in developing countries boosts the local economy, creates jobs and helps to alleviate poverty. Foreign direct investment is far more important in the long term to developing countries than small increases in development aid. Foreign direct investment helps to remove some of the financial risks that Governments of developing countries face when they borrow from banks; companies bear the risk if their investments fail. If investment is successful, the host Government benefits from increased tax revenues and the investor benefits from the resulting profits.

I have seen that process at first hand. I referred to my experience of the former Soviet Union. It is a great pleasure to see how former satellite countries of that state have attracted foreign direct investment, boosted their economies and raised their standards of living. I am sure that we will hear anecdotes from many members of the Committee today, because many are well travelled and will have seen that process for themselves. That is not mind-blowingly new; it is received wisdom shared by all members of the Committee, so I encourage the Minister to consider including it in the Bill.

The Government themselves stress the importance of foreign investment in the globalisation White Paper. It states:

    ``The attraction of capital inflows is an essential element of a strategy to speed up sustainable development and poverty reduction.''

The document also states:

    ``A central feature of globalisation has been the substantial increase in movement of capital around the world. Foreign direct developing countries increased from US$36 billion in 1992 to US$155 billion in 1999, more than three times the level of development aid.''

Think of the contribution that that has made. Attracting foreign direct investment is vital to development.

If the Government have seized a window of opportunity to introduce the Bill, it would be foolish of them not to seize the opportunity to add this provision to it. It would send a signal to private investors that the Government and a future Conservative Government would positively welcome foreign direct investment and private investment in the countries to which we deliver development assistance.

I have taken some time and pains to speak to the four amendments. Notwithstanding the comments of some Labour Members, my hon. Friend the Member for South-West Devon—he has devoted great time and effort to his brief—my hon. Friends in Committee and I genuinely want to boost the Bill. I ask the Minister, in some way, to accept the amendments or acknowledge the issues that I have raised. I do not believe that he dissents from my point of view. I do not ask him to perform a difficult task, and it is not outwith the realms of possibility. The Opposition would bend over backwards to allow him to accede to our requests. In the spirit of co-operation, I ask him to accept our suggestions.

Dr. Tonge: I was interested to hear the hon. Lady talk about definitions of poverty. I suppose that it is difficult for those of us who have been to developing countries to compare poverty there with poverty in this country. I do not know why she is so puzzled, however. The international financial institutions were clear about which countries to class as highly indebted poor countries, and suggested clear guidelines to define a poor country. The United Nations did the same job for income per head per day. It was a little irrelevant to spend 20 minutes of debate trying to decide what poverty was. What we are talking about is perfectly obvious, even to those of us who, like me, have spent only four years on international development matters.

The Bill is necessary to prevent aid from being used for purposes other than alleviating poverty. We know that the previous Conservative Government were extremely good at diverting aid to other purposes, especially to promote the United Kingdom's trade and manufacturing industry. It is obvious to most hon. Members in my party what the Bill is for, and we welcome it.

The hon. Lady said that the causes of poverty were, to use her word, multifactoral. That goes without saying, so why single out three factors? It is extremely dangerous to do that.

We all want good governance, but it is not difficult to define. Does Uganda have good governance? Some of us who have been there think that Uganda is doing a pretty good job for its people, by alleviating poverty and bringing them into the modern world.

Mr. Robathan: The hon. Lady and I visited Uganda together and we both took the view that Uganda was doing a good job. It now appears that good governance is becoming more of an issue in Uganda. Perhaps the Bill should be saying that good governance will always be at the top of the issues that we address. If it starts impacting adversely on development, as appears to be the case, Uganda, which is the example chosen by the hon. Lady, will suffer as a result.

Dr. Tonge: Uganda is beginning to consider whether it wants to carry on as a no-party state. The reason why it has been so stable for so many years is because political parties have been banned, which may have been a good thing for Uganda for a while. I am uneasy when I think of how many years it has taken us in western Europe to have a semblance of good governance, and how long it has taken to work out what parliamentary democracy means. Some of us still believe that we have not yet worked it out correctly.

We have taken a long time, but we dictate to developing countries, having abandoned them after colonial rule, how they should govern themselves. We should be a little more humble in the face of other methods of governance. It is difficult to say who is doing a good job.

Financial corruption is always mentioned when considering how much aid money and the money earned by a poor country goes towards alleviating poverty and how much goes into the back pockets of dictators. Western politicians could really teach them a thing or two about financial corruption. We know all about it. Organisations such as Transparency International, which the Select Committee met in Bangladesh, try to prevent financial corruption. However, we should be careful when dictating the system of governance of a country. The system has to evolve and it has to suit the specific country. It is extremely difficult to define.

Mrs. Gillan: I am not sure what the hon. Lady meant when she said that we in the west can teach other countries all about corruption. Notwithstanding current events, this country is relatively corruption-free by anybody's standards. Is the hon. Lady saying that my amendments prescribe a system of governance? That is not the point of them at all. They would give the Secretary of State the liberty to put a system of good governance at the forefront. Without such a system, it would be almost impossible for the general population to lift itself out of poverty and to drive out the forces of corruption. A system of good governance would also lead to the development of the rule of law.

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