International Development (Brandt Report)

Part of the debate – in the House of Commons at 1:11 pm on 12th December 1980.

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Photo of Sir Ray Whitney Sir Ray Whitney , Wycombe 1:11 pm, 12th December 1980

At this stage of the debate I shall try to keep my remarks as brief as possible.

I join the general rejoicing that the reaction of the people of this country to the Brandt report has been so positive. We all agree on the significance of the report. I regret, however, that the level of the debate over the past 12 months has not intensified and has not been as rigorous and as well informed as it should be. Many of us who take a keen interest in these affairs in the House of Commons must bear a responsibility for that. Therefore, when I look at Brandt critically, that does not mean that I minimise in any way the great need to solve the problems which it sets out to solve or that I undervalue in any way the tremendously warm reaction from the British public.

What Archbishop Runcie described as flaws in the report are very much more than that. I give an example. The OPEC surpluses are touched on. In the 300 pages of the report, virtually every issue is touched on. But what does not emerge are the following figures. Every time a barrel of oil increases in price by $1, the oil bill for developing countries rises by $2. In 1978 the oil bill for the developing countries was $29 billion; in 1980 it has doubled to $58 billion.

We are talking of an OPEC surplus of perhaps $120 billion and of aid from Western countries of $20 billion. Even if we doubled our aid, which in present circumstances is politically and economically inconceivable, we should take it to $40 billion. But the deficit of the non-oil developing countries this year will be $70 billion and next year the deficit will be $80 billion. That is the broad outline of the problem. We talk vaguely about recycling. We need some concrete suggestions and results. That is the measure of the problem.

Another enormous gap is the reference to the Soviet Union and its lack of contribution. There is a three-line reference to the failure of the Soviet Union to participate in the debate. It will, of course, refuse to go to Mexico. Western countries, including EEC countries, are criticised, but their average contribution in development aid is ·04 per cent. of their gross national product. The contribution of the Soviet Union and its allies is ·04 per cent. It totals about $3·3 billion net, and 90 per cent. of that goes to Cuba and Vietnam.

The Soviet Union says "This is not our problem. This is a colonial problem. You, the West, are responsible for the poverty in the world." I totally reject that. Where the West has been, of course we have taken goods; but so, too, have we set up the ventures. We took the rubber to Malaysia and the tea to India. Therefore, we must not have a guilt complex. We must recognise the reality, our limitations, our responsibilities and the benefits that we get.

The same facts apply to what are now called the transnational corporations. Good things are said about them in Brandt, but the basic import of the words of Brandt is "Keep away from those nasty transnational corporations." But those of us in the developed world have tried very hard indeed to bring the transnational corporations to our countries—and to our constituencies. If anyone doubts that, he should ask the former Prime Minister, the right hon. Member for Cardiff, South-East (Mr. Callaghan), who tried so hard to invest in South Wales. One understands that. Brandt makes a dangerous shift of emphasis which is to the drawback of the developing world. In addition, it kindles the attack on the IMF and the World Bank. However, those institutions have already been defended.

The terms of reference of the IMF are to generate and liberalise world trade. It has done that well. In the 1960s, the less developed countries' average annual growth rate was 5·6 per cent. compared with 5 per cent. for the industrialised countries. During the difficult period of the 1970s, which included the oil shock and the mid-decade recession, the non-oil developing countries had an annual growth rate of 5·3 per cent., whereas the West had an average growth rate of 3·1 per cent. That is not a bad record.

Many things must be done. Great flexibility has been shown. Those who follow the workings of the IMF know about the facilities that it has made available to cope with the problems of international financing which have occurred since 1973 and the sudden rise in oil prices. For example, the rights of quotas, which used to be 300 per cent. and are now 600 per cent., can be held over three years. The standby credit, which used to be available for one year, is now available for three years. Two-fifths of a country's quota is available with virtually no conditions.

President Nyerere has made a hash of his country's economy, but that does not prevent him from interfering in the politics and economies of his neighbours and of other African countries. That does not stop him saying that these are terrible conditions. The IMF expects that. It has done a good job. At present, the IMF is actively engaged in looking for a new way. The Government must consider how we can continue to provide finance and how we can get OPEC to participate in the IMF. They must also consider whether the commercial and financial world can help.

Criticism of the World Bank is far too facile. During the last decade, loans from the World Bank have quadrupled to $7·6 billion. At the next International Development Association replenishment, $12 billion will lie involved. The West will contribute almost the whole; mount. The United States of America will contribute $3·2 billion and the United Kingdom will contribute $1·2 billion. Contributions from the OPEC countries are very small—for example, $390 million from Saudi Arabia.

The World Bank has changed its programmes since the vast infrastructures went wrong. It is ready to double its capital. I have referred to some of the poor analyses in the Brandt report. It also offers highly questionable solutions. For example, it is suggested that there should be a tax on world trade. Nearly everyone agrees that most of the solutions to the world economy will be found in the form of trade. How can anyone suggest that the introduction of an international VAT will promote economic recovery? That is scarcely conceivable.

The proposals on international commodity agreements may be highly desirable, but they are also very difficult. Experience shows that they can turn into international common agricultural policies. We all know how much some Labour Members like the CAP. Let us take the example of cocoa. Great efforts are being made to reach tin agreement. The Ivory Coast produces 22 per cent. and will not agree about the price. Mr. Gough Whitlam was a Brandt-inclined Prime Minister of Australia. Australia joined Jamaica to form the International Bauxite Association. As a result, the aluminium companies pulled out of Jamaica and settled in Australia, and Jamaica's bauxite industry was destroyed.

We must look closely and rigorously at these difficult areas. Those good men in our constituencies whose hearts are deeply troubled deserve from us the kind of analysis that illustrates these problems.

I am delighted that the Brandt report says that the primary responsibility for developing countries must be to solve their own problems. Indeed it must. We must look hard at the soil that creates economic growth and the soil that does not.

It is a sad reflection that four economies are challenging the West: Hong Kong, Taiwan, Singapore and South Korea. Some 60 per cent. of manufactures going into the developing countries come from those four countries. Not one of the 25 eminent persons interviewed by the 18 wise men on the panel came from those countries.

I was delighted that at the recent special session of the United Nations the EEC put forward important proposals on energy, on how to handle external balances and on food, and the United States called for a world trade pledge. These are the areas where, together with the gradual evolution of the financial institutions, progress is to be made. It is slow progress, but it has been continuing and we must not devalue it.

We must press the Government to make more progress. The direction is right. To quote a recent editorial in The Guardian, "Utopianism will lead us astray."