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4.28 p.m.

Lord Rea: My Lords, I, too, thank the right reverend Prelate the Bishop of Oxford for initiating such an important debate. I thank and congratulate my noble friend Lady Lestor for her spot-on maiden speech. I also welcome my noble friend Lord McIntosh to the world of international development. He is becoming our all-singing, all-dancing spokesman. Perhaps that is appropriate since he answers Questions on heritage, I think, more than any other subject. I know that he will have been listening, and will continue to listen, to all noble Lords and will respond as well as time and the data available to him will allow.

This debate is also useful to the Government since it provides them with an opportunity to flesh out before the autumn White Paper on international development how their thinking is developing. My right honourable friend Clare Short has stated that our poverty-focused view of international development is not merely a question of overseas aid but will incorporate to an important extent the crucial role of world trade and the issue of international debt.

As many noble Lords said, the previous Government recognised the importance of debt in international development and took a few very useful initiatives, starting with Trinidad about seven years ago; and more recently, as my noble friend Lord Judd and others said, Kenneth Clarke proposed the use of gold reserves to reduce multilateral debt. I hope that we can take over that baton and gather more allies around us in taking the approach further forward than the previous Government succeeded in doing.

The HIPC initiative, discussed by nearly all speakers and described clearly by the right reverend Prelate, was, to give it its due, the first time that the international financial institutions relented a little on the principle that no debts to them could ever be written off or even reduced (written down). As pointed out in the right reverend Prelate's analysis, this initiative is proving too little, too late.

One of the early (though perhaps not early enough) benefactors of the HIPC is to be Uganda. As if anticipating this debate (Uganda seems to be the country in the news, as it were, in this debate), the Guardian today has a special section on Uganda. It is quite upbeat in its tone, with the underlying aim of encouraging investment and tourism. Reading between the lines, which describe Uganda's undoubted success in economic recovery, there are some less happy stories. Universal primary education (UPE) was one of President Museveni's electoral pledges. That laudable aim has led to a near doubling of school enrolment in one year, from 2.6 to 5.1 million. I should like to quote from an article in today's Guardian by Andrew Meldrum entitled, "Class is for everyone". The article states:

    'We are very happy with our new students and they are welcome', says Joseph Muyaja, deputy headmaster of the school ... 'Last year we had 540 students and now we have 850. But we don't have

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    enough teachers. For a teacher to teach more than 100 students, that's practically impossible' ... some classes must be held outside under the trees.

    'It doesn't work on rainy days', says Mr Muyaja ... Then we must crowd all the students inside.'

    The overcrowded, under-equipped situation at Kyalusowe School is matched at virtually all of Uganda's 8,500 primary schools".

What can be said for education can also be said for primary healthcare.

That is the reality of a situation in which seven times as much is being spent on debt servicing as on primary education (and 10 times as much as on primary healthcare). As my noble friend pointed out, simple measures save lives in a country with a very high child mortality rate. Oral treatment of diarrhoea and immunisation can make an enormous difference and are very cheap. There are many other countries, mentioned by noble Lords, where debt servicing costs are higher than the proportion of the national budget that can be devoted to social purposes.

Obviously the United Kingdom cannot by itself dictate the policy decisions of the international financial institutions. However, we can state the case and build alliances for widening the eligibility criteria for entry to the HIPC. One of those criteria is the need to follow the structural adjustment programmes of the IMF for two periods of three years--a situation which, as the right reverend Prelate showed, is impossible for many of the poorest countries to achieve.

We should also argue the case for deepening as well as widening the HIPC scheme, so that countries cannot merely achieve sustainability (the ability to go on servicing a slightly reduced debt) but have the burden lifted to such an extent that they can divert (or devote) the resources used to service debt to essential development which may possibly lift them right out of their historically acquired debt. (That may be a Utopian prospect when we consider that the United States has a debt of something over 1 trillion dollars. On the other hand, it has assets to balance that debt.)

The IMF has always imposed economic conditions and now speaks also of social sector conditionality--a laudable change but, as other noble Lords said, possibly "a bit rich" coming from the same source as structural adjustment programmes, which, as my noble friend Lady Lestor pointed out, have led to a decline in social spending and a reduction in the standard of life.

However, as my noble friend Lord Judd said, there is a need to ensure that debt relief measures do result in social sector expansion--or at least protection, and preferably great improvement. That has been called for for nearly 10 years by many economists and writers such as Susan George in 1989, in her book A fate worse than Debt. She called for a "3D" solution--debt, development and democracy--whereby indebted countries were allowed to pay back interest and principal over a long period of time in local currency and credit that to national development funds controlled by "authentic" representatives of the people working with the state. That was too Utopian to be accepted widely, but some "debt for development" swaps have

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been carried out, and some "debt for equity" swaps, as mentioned by the noble Viscount, Lord Torrington, over the years, mainly with commercial debt.

Oxfam has incorporated some of Susan George's ideas of over a decade ago into the fifth part of its Agenda for Reform, upon which my noble friend Lord Judd expanded; namely, to integrate poverty reduction incentives into debt reduction schemes. It states:

    "Countries willing to engage in a dialogue aimed at converting debt relief into poverty reduction initiatives should be rewarded with an accelerated time-frame for debt relief".

To increase the finances for heavily indebted poor countries initiatives from 5 billion dollars over an eight-year period--which is what is proposed--to a 10 billion dollar sum by, for instance, the sale of gold reserves would largely enable the HIPCs to break free of the stranglehold in which debt holds them today.

NATO Summit

4.40 p.m.

The Lord Privy Seal (Lord Richard): My Lords, with the leave of the House, I shall now repeat a Statement made in another place by my right honourable friend the Prime Minister on the NATO Summit in Madrid on 8th July. Copies of the Declaration which was agreed, of the separate statement on Bosnia, and of the NATO/Ukraine Charter, which was signed this morning, are being placed in the Library of the House. The Statement is as follows:

    "The main outcome of the summit was an invitation to Poland, the Czech Republic and Hungary to begin accession talks with NATO with the aim of joining the alliance by the 50th anniversary of the Washington Treaty in April 1999. This is a historic decision, and a step of huge importance, which I am confident will be widely welcomed in this House and indeed across Europe and the alliance. We aim to negotiate a protocol of accession by the end of this year. This will need ratification by all NATO members, as well as by the prospective new members. We shall of course ensure that there is a full debate in this House before British ratification.

    "Successful NATO enlargement has been a key objective of both the previous government and this Government. If we can get this right, it will make a major contribution to security and stability in Europe by bringing in countries of central and eastern Europe to one of our key institutions. Our priority was a manageable and limited enlargement, involving credible candidates with reliable democratic credentials and a real ability to contribute to collective security. As I said in yesterday's discussions, NATO is a military alliance, not a political club, and its collective defence obligations have to be taken with the utmost seriousness.

    "We were, of course, conscious of the sensitivities of candidates who might not be asked to begin negotiations this time, and of others, like Russia, who might fear the consequences of enlargement for them. We also wanted to ensure that the NATO door would

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    remain open for future enlargements. We therefore strongly favoured an enlargement of three countries at this stage.

    "I should say a particular word about Romania and Slovenia, whose applications were especially closely considered, even though there was no consensus to invite them on this occasion. Both countries have indeed made remarkable progress. Romania's new government deserves particular congratulation on the steps taken since they took office last November. A number of allies would have liked to see Romania and Slovenia included among those invited at Madrid. All, including ourselves, saw them as strong candidates for any future enlargement. But we felt that Poland, the Czech Republic and Hungary were the limit for current enlargement. I warmly congratulate them.

    "There will of course be a financial price to be paid, mostly by the new members but also by existing members of the alliance. We believe this cost will be manageable. For example, there is no reason why Britain's contribution to NATO budgets, currently some £155 million per year, should rise significantly in real terms.

    "There were, of course, other disappointed applicants. We recognised, for example, the progress achieved towards greater stability by the states in the Baltic region. NATO leaders agreed that they expected in the years ahead to extend further invitations to nations willing to take on the responsibilities of membership and whose inclusion would serve the interests of the alliance and enhance overall European security. We made clear our intention to intensify dialogue with aspiring members.

    "NATO's relationship with all its partner countries also took on a new dimension with the establishment of the Euro-Atlantic Partnership Council in May. Today's meeting with the heads of partner countries has been taking place under the aegis of the Partnership Council.

    "Relations with two partners deserve particular mention. NATO leaders underlined the historic achievement represented by the Founding Act between NATO and Russia, signed in May in Paris. Good future co-operation with Russia is vital for Europe's security.

    "In Madrid, we took a further important new step by signing with President Kuchma the NATO/Ukraine Charter, which provides for intensified consultation between the alliance and Ukraine. Ukraine's independence and sovereignty are vital to European stability and the agreement with her is a further move to consolidate her key role in Europe.

    "We also looked at progress on the alliance's internal adaptation, in particular the development of a new command structure. The aim is to reach final agreement by the time of the December ministerial meetings. Against this background, we warmly welcomed Spain's readiness to participate fully in the alliance once agreement on the new command structure has been reached. I should underline that,

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    while we want to see Spain contributing fully to alliance security, we are determined to ensure that the interests of Gibraltar are fully safeguarded in this process.

    "We also discussed Bosnia, and expressed particular concern about the political crisis in the Republika Srpska. We called on those responsible to resolve their differences peacefully and demanded that the police in Republika Srpska comply fully with all provisions of the Dayton Agreement. We also again urged the leaders of the region to deliver those indicted for war crimes for trial at the International Tribunal in The Hague. This issue must not and will not be put on one side.

    "Finally, we agreed on a further NATO Summit in April 1999 to mark the 50th anniversary of the Washington Treaty. That treaty has proved its enduring value in keeping the peace in Europe. But NATO has also shown its continuing relevance and its ability to adapt to changed circumstances. NATO must continue to evolve and change as the security situation in Europe changes. The agreement on enlargement at the Madrid summit is a further important step in that process. It is an agreement which meets all of the objectives we sought to secure. I commend it to the House."

My Lords, that concludes the Statement.

4.46 p.m.

Viscount Cranborne: My Lords, the House will, as usual, be grateful to the noble Lord the Lord Privy Seal for repeating the Statement. Arising out of what the Prime Minister said in another place, perhaps I may ask the noble Lord whether he will be able to assure the House that he too will arrange for a full debate before the UK ratifies the protocol of accession. As the Prime Minister--and the noble Lord--said, it is an extremely important element which I am sure this House would like to discuss.

The extension of the NATO alliance to the east was an important objective for the past Government, as it is for this one, as the Prime Minister acknowledged in his Statement. We therefore particularly congratulate the Government on their role in bringing that objective to fruition. After all, the NATO alliance constitutes a raft of security in an unstable world. I believe that European security is still the key to world stability.

So, we certainly welcome the agreement, which enables Poland, the Czech Republic and Hungary to join the alliance, and we congratulate them, just as the Government do, on their imminent accession. It is equally important that the door is held open for other countries, notably Slovenia and Romania. We welcome the sentiments expressed in that regard also in the Statement.

I am sorry that the success of NATO expansion was not matched by success in expanding the European Union in the same year. After all, the two matters are intimately linked, as I am sure the noble Lord, the Lord Privy Seal, would agree. Does he agree that the Partnership for Peace initiative played an important part

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in the process that led to this step in the expansion of the alliance and that the Partnership for Peace initiative should continue to play a role in other countries which are not yet members or who may never become members?

Meanwhile, we welcome the noble Lord's confirmation that NATO is an organisation with a hard edged purpose and in particular that Article 5 of the original treaty provides that an attack on one member should be regarded as an attack on all. I wonder, therefore, whether he could expand a little on paragraph 7 of the Declaration which states:

    "Admitting new members will entail resource implications for the Alliance. It will involve the Alliance providing the resources which enlargement will necessarily require".

I wonder whether the noble Lord could tell the House what will be the real cost to the three successful candidates themselves? Equally important, can he expand a little on the assurance given in the Statement about the costs to our own defence budget?

The Statement says that there is no reason why our contribution to NATO budgets should rise significantly. Perhaps the Minister can explain why the Government are able to take that view and give us some reassurance, particularly in the light of the defence review that they are undertaking. Can he also advise the House whether our increased contribution--significant or otherwise--will reduce our capabilities elsewhere? If so, is that trade-off worth having? It may well be.

I noticed that paragraph 2 of the declaration refers to,

    "building a European Security and Defence Identity within NATO".

As the Lord Privy Seal is aware, we support that aspiration. However, can he explain to the House how that clear use of the word "within" squares with that part of the draft Amsterdam treaty which refers to possible plans to integrate the WEU into the European Union? I thought I detected a clear reluctance on the part of the Government to accept that aspiration during the course of the report to both Houses of Parliament on the negotiations at Amsterdam. However, since it is clearly possible that at some time the Government may have to choose between two incompatible objectives, can the Lord Privy Seal assure the House that, if presented with such an uncomfortable choice, it is the Amsterdam aspiration that they will reject? If he can give the House that assurance, can he explain to the House how, once the Government have signed the treaty, they will go about rejecting that aspiration rather than what is contained in the Madrid conclusions?

I am glad too about what was said in relation to Gibraltar. We fully support any efforts the Government make to bring Spain and France back into the integrated structure of NATO, but not at any price. I hope that the Lord Privy Seal will be able to assure the House in rather more specific terms than the generalities contained in the Statement about the interests of Gibraltar, that there will be no weakening of the constitutional guarantees to Gibraltar which this country has already given.

In relation to Russia, clearly we agree with the sentiments of the Statement that the relationship with Russia is an important one and it is clearly right that it

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played an important part in the deliberations in Madrid. Does the Lord Privy Seal agree that this is an extremely delicate path for NATO and the allies to tread? Russia must of course be seen not to have a veto over the activities of independent nations; but we must welcome Russia's emergence as a free nation and, increasingly, as a partner for the West. We must not discourage that process and must only hope that the Madrid participants have judged correctly what is clearly an extraordinarily difficult balance.

I particularly welcome what the Prime Minister said in relation to the Ukraine--a country whose geopolitical importance is becoming increasingly apparent. We welcome the special declaration in relation to Bosnia and, most notably, once again it gives me pleasure to take this opportunity to pay tribute to the role of British troops in Bosnia--a role about which I was able to learn at least a little when I was privileged to be a junior defence Minister and an occasional visitor to that unhappy country.

I wonder whether the Lord Privy Seal can tell us in particular whether there was any discussion in plenary session or marginally in the Madrid conference as to whether the United States is prepared to extend the deadline for withdrawal of its troops from the middle of next year. Quite apart from anything else, Bosnia has shown that NATO's European members can only proceed in conjunction with the United States of America if NATO is to be an effective alliance. Some of us may feel that Bosnia has been the most difficult test that NATO has faced so far in military terms.

Finally, we welcome what has been achieved at Madrid. However, as the Lord Privy Seal will be aware--I suspect none more so than he--the nature of threats to security is fast changing. The questions of the Russian Far East, for instance, and of central Asia go far wider than NATO's immediate geographical limits; they concern Russia and many of the south European and central Asian parts of the former Soviet Union. Equally, the risk of proliferation of weapons of mass destruction is becoming increasingly serious. Can the Lord Privy Seal tell the House whether such matters will form an integral part of NATO's agenda between now and the next summit in 1999 and, indeed, at that summit itself? It is important that NATO continues to show that it can adapt to changing circumstances in good time.

From this side of the House we will do whatever we can to support what is self-evidently a good cause in an uncertain world.

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