Orders of the Day — International Monetary Arrangements Bill

Part of the debate – in the House of Commons at 5:12 pm on 11th July 1983.

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Photo of Mr Enoch Powell Mr Enoch Powell , South Down 5:12 pm, 11th July 1983

The right hon. Gentleman misunderstands. Of course the Opposition are serious about their amendment, but they are not serious about the subject. Hence the contradictions in which the right hon. Gentleman involved himself. I am much relieved that the right hon. Gentleman has not disavowed his intention to vote against the Question, That the Bill be now read a Second time. [Interruption.] There seems to be some disagreement in the ranks around me—not for the first time. I live in hope that, when the Question is put, there will be a sufficient cry from the Opposition Benches as will enable me to record my vote against the Bill being read a Second time. If that is so, I shall allow the order which the House will consider later—against which it will be impossible to find Tellers—duly to pass.

As I listened to the Minister, I noticed him referring to what he called the "fashionable" notions that were in circulation when the problem to which the Bill directs itself was building up. I could not help thinking what a fashionable speech it was that the Minister read to the House, and how replete with sentiments and notions from which, at the moment, it is impossible in polite society or the economic journals to dissent.

I should make it clear at the outset that I consider the international organisations with which the Bill is concerned to have two aims which are equally absurd and damaging, though the debate has principally directed itself only to the second. The first aim is to bring about stable, or as nearly as possible stable, exchange rates through the nations and central banks lending one another money to fudge the rates. The second is to lend money to those who are bankrupt, so that those who have lent to them shall, nevertheless, make their profits and get their interest. I consider both operations to be self-evidently absurd and arguably —I shall not argue it in too much length—damaging to both sides of the transactions.

It is clearly absurd to attempt to stabilise exchange rates. They express economic circumstances which, by their nature, are changeable and unforeseeably changeable. The respective supply and demand of the various currencies, which is what is expressed by the ruling exchange rates, are the response to real economic changes of which it is profoundly important those concerned should remain aware as they are spelt out to them by the movements of that price system. It is, therefore, something foredoomed to failure and inherently undesirable that what by its nature is unstable, needs to change, and is bound to change, should be sought to be restrained and stabilised by borrowing or printing money which may be then lent across the exchanges.

Although, however, that purpose is implicit in and served by the extensions which the Bill creates, it has not been the main topic of today's debate. The main topic of the debate has been the necessity to lend huge sums of money to those who, in private life, would already be bankrupt—in other words lend further huge sums of money to nations which are unable to repay and service the loans they have already contracted and which are determined that in no circumstances will they be found doing so.

The underlying proposition is that, faced with those debtors, we ought to lend them more money. Two reasons for doing so are given. The first is that if we do not lend more money they will not be able to buy our goods—the argument is usually wrapped up a little, but that is what it amounts to. Now, it is one thing to be told to sell all one's goods and give to the poor. It is quite another to be told that we should buy our own goods and then give them away. That is the activity to which we are to be stimulated by this type of proposition.

There is no possible benefit to be gained from buying our own exports and giving them away. The resources we apply in that way would be more usefully, agreeably and advantageously applied inside this economy in all kinds of ways which hon. Members on both sides of the House on other occasions are ready enough to propose. I dismiss, then, as self-evidently vacuous the proposition that we ought to lend to the bankrupt so that they may continue to buy from us.

The other argument, however, the central argument, is that if we lend them some more they will become good boys instead of bad boys; that a reformation will, or at any rate can, be achieved in their economies and even their moral behaviour. The key to that transformation is found in what the right hon. Member for Bethnal Green and Stepney — I am grateful to him for the expression—called the politicisation of conditionality. That was a splendid phrase: it goes to the heart of the matter and sheds illumination on the whole great scene.

The "politicisation of conditionality" was what Chinese Customs was about. It was what we did to the Khedive Ismail, when we said, "A lot of our people have lent you a lot of money, and by Jove we shall get the principal and the interest on it out of the backs of your fellahin, O Khedive." That is exactly the proposition, not put in such brutal terms, that lies behind the plea to lend to the bankrupt—that we shall put them back into a condition in which they will be able to service the principal and interest on the existing debt as well as the new debt.

However, one necessary piece of mechanism of the "politicisation of conditionality" was omitted by the right hon. Member for Bethnal Green and Stepney and by the right hon. Member for Cardiff, South and Penarth (Mr. Callaghan). To make sure that our debtors behave, we must exercise some power of compulsion over them. We must be able to collect the Chinese Customs; we must occupy Egypt and see that, while the Khedive enjoys his operas, we run his country. The argument would be sound enough if we were saying, "Let us go and occupy these countries," — I hope not with an international body — "because we know how to run an economy." Such countries might raise their eyebrows at being told that. Still, we could say, "Let us show them how to do what we know so well. Let us march in and take control of the police and the administration. Then we can see that the loans are serviced and the principal repaid."

Make no mistake, it is not through ignorance that the debtors have got into this mess. It is not because they are benighted, stupid people. It was in obedience to tremendous political forces, and therefore it is nonsense to talk about "politicising the conditionality" of these loans unless we strike down those political forces.

I shall be interested to see the IMF setting about that task by the remote persuasion of an international body. There is indeed one threat that the IMF dare not utter. The right hon. Member for Bethnal Green and Stepney got very near to it, but he saw the gulf before his feet and stepped back just in time. The IMF cannot say, "Do this or we shall not lend you any more money" — [Interruption.] Someone says it can, but what have we been hearing about?