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House of Lords

Thursday, 15th July 1999.

The House met at three of the clock (Prayers having been read earlier at the Judicial Sitting by Lord Bishop of Gloucester.): The LORD CHANCELLOR on the Woolsack.

Lord Forsyth of Drumlean

The Right Honourable Sir Michael Bruce Forsyth, Knight, having been created Baron Forsyth of Drumlean in Stirling, for life--Was, in his robes, introduced between the Lord Harris of High Cross and the Baroness Thatcher.

Baroness Warwick of Undercliffe

Miss Diana Mary Warwick, having been created Baroness Warwick of Undercliffe, in the County of West Yorkshire, for life--Was, in her robes, introduced between the Baroness Symons of Vernham Dean and the Baroness Amos.

Pakistan: Debt Restructuring

3.12 p.m.

The Earl of Northesk asked Her Majesty's Government:

    Whether, as a member of the Paris Club, they will encourage the Government of Pakistan not to default on their public debt.

Lord McIntosh of Haringey: My Lords, Her Majesty's Government encourage other governments to meet their financial and contractual obligations. Pakistan's IMF programme envisaged that it would need to seek debt relief from all its creditors. In its agreement with Paris Club creditors, the Government of the Islamic Republic of Pakistan agreed to seek comparable treatment from all their other official bilateral, commercial and private creditors.

The Earl of Northesk: My Lords, I thank the Minister for that Answer. Does he accept that an essentially Washington-inspired insistence that Pakistan should default on its debt, particularly in Eurobonds, could give rise to a disastrous political instability in an already tense part of the world? Does the Minister also accept that such a move would set a dangerous precedent, the economic consequences of which would have severe repercussions for developing countries generally?

Lord McIntosh of Haringey: My Lords, I do not accept the noble Earl's premise for either of those questions. It is not a Washington-inspired commitment. The IMF meeting on 14th January this year and the Paris

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Club meeting on 30th January recorded what I quoted in my first Answer; that the Government of Pakistan agreed to seek comparable treatment from all their other official bilateral, commercial and private creditors.

Baroness Williams of Crosby: My Lords, does the Minister agree that the situation of Pakistan has worsened in the past two months, with approximately one third of its total reserves leaving the country and with a sharp fall in the amount of inflow of capital into the country? Given the possible repercussions of the destabilisation of Pakistan, will the Minister consider whether the Paris Club might look again at the prospect of rescheduling Pakistan's debts so as to encourage the upholding of civil authority and a more moderate government of the kind we have at present?

Lord McIntosh of Haringey: My Lords, the decision of the Paris Club on 30th January involved a substantial contribution from its members towards the economy of Pakistan; and the reorganisation of the external debt of Pakistan resulting from loans and guaranteed credits extended by participating creditor countries. The amount of debt then involved--I do not have up-to-date figures--was approximately 3.3 billion dollars. I accept what the noble Baroness says about the situation worsening and I have no doubt that the Paris Club is keeping that under consideration.

Lord Ahmed: My Lords, is my noble friend the Minister aware that, according to the UN human development report, more than 40 million Pakistanis live below the poverty line, earning less than £1 a day? Therefore, will Her Majesty's Government support a debt relief scheme for Pakistan?

Lord McIntosh of Haringey: My Lords, we are well aware of the economic problems in Pakistan, which is why earlier this year the IMF set out macro-economic objectives for the next three years. They involve a recovery in GDP growth; a reduction in annual inflation; a reduction of the external current account deficit; stabilisation of total public-sector debt to GDP ratio; and an improvement in social indicators. The issue of debt relief, other than the restructuring I have described, goes wider than that in the Question on the Order Paper.

Viscount Waverley: My Lords, notwithstanding the recent rating increase from CCC to CC, how is the state of Pakistan reasonably expected to service a public debt of 43 billion US dollars with reserves of 1 billion US dollars, an average annual income of 400 dollars, and only 1.3 per cent of the people actually paying taxes?

Lord McIntosh of Haringey: My Lords, I am not in a position to comment on the noble Viscount's detailed figures. The restructuring of the debt is precisely the way in which the IMF and the Paris Club see the way

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forward. It is recognised that in its present economic condition, Pakistan is not capable of servicing the debt without some restructuring.

Lord Chesham: My Lords, does the Minister believe that government or multi-national body interference in private-sector lending to governments will help the Eurobond market in London?

Lord McIntosh of Haringey: My Lords, I do not accept the premise of that question either. The noble Lord implies that it is this Government or governments of the Paris Club which have invited Pakistan to default on its Eurobonds debt. That is not the case. In contrast, the Government of Pakistan have agreed to treat all chair debts, both sovereign loans and commercial debts, on the same basis.

UN Mission in Kosovo

3.19 p.m.

Lord Hurd of Westwell asked Her Majesty's Government:

    What action they are taking to build up the United Nations civilian administration of Kosovo, recently authorised by the Security Council.

The Parliamentary Under-Secretary of State, Foreign and Commonwealth Office (Baroness Symons of Vernham Dean): My Lords, we believe that the United Nations Mission in Kosovo (UNMIK) should exercise fully its authority under UNSCR 1244. We are actively supporting efforts to build up the capacity of UNMIK.

British personnel already hold key UNMIK positions. We have offered up to 60 British police officers and continue to identify personnel with specialist skills in other areas for urgent secondment to UNMIK.

Lord Hurd of Westwell: My Lords, I am grateful to the Minister for that reply. Kosovo is now virtually an international trusteeship with NATO acting on the military side and the UN on the civilian side, which she mentioned. Does the Minister accept that it is essential that the UN civilian efforts should be built up so that the UN can re-establish public services, the rule of law and all the elements of a civil society?

Perhaps I may raise two points. First, I am grateful to the Minister for her reply regarding police officers. As I understand it, the UN needs 3,100 police officers, but 2,000 have been pledged. Can she tell the House how many are already in place in Kosovo? Secondly, experience in Bosnia showed that some kind of independent radio and television was highly desirable. Can anything be done, perhaps by a British initiative, to set up in Pristina some kind of independent radio and television so that people can receive more objective news than that which is pumped out of Tirana or Belgrade?

Baroness Symons of Vernham Dean: My Lords, I agree with a great deal of the comments made by the

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noble Lord, Lord Hurd. The UN has been asking for a number of member states to provide people with specialist skills in 10 priority areas which they have outlined. I am happy to tell the House that one of those priority areas is the postal service, which was mentioned in your Lordships' House yesterday.

The noble Lord asked how many policemen have been deployed so far. An advance party of over 100 UN police officers has now been deployed to Kosovo to establish a headquarters and to liaise with KFOR. The main body, which the noble Lord mentioned, of just over 3,100 police officers, is expected to begin arriving in a few days time.

The noble Lord also asked about supporting what might be described as indigenous media in Kosovo. The Foreign Office has already given £66,000 to enable Koha Ditore, the Kosovar-Albanian newspaper, to begin printing. DfID has agreed funding for a second-hand printing press, to the tune of about £150,000. I can also tell the noble Lord that DfID has given some 150,000 dollars to the exiled Kosovar-Albanian Radio TV21 for equipment and staff costs. The grant has two aims; that is, to enable broadcasting from Skopje and to re-establish it in Pristina. The point raised by the noble Lord has been recognised. Funding has been provided by the United Kingdom.

Baroness Williams of Crosby: My Lords, first, can the Minister tell the House the number of British police officers among those now about to be deployed in Kosovo? Following the comments of the noble Lord, Lord Hurd of Westwell, does she agree on the urgency of this matter? In some areas of Kosovo it is fairly obvious that the KLA is establishing a kind of para-police force presence, which is unfortunate in terms of trying to be seen to be utterly even-handed. Secondly, can she tell the House about the serious problems of refuse collection and sanitation in the province? I understand that in some cities and villages this problem is leading to a public health catastrophe.


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