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

Not at the moment. We have been hearing that we must go on lending them money in order to sell them our exports and so that our own banking system may not be disrupted. A fine threat the debtors will think it when, having used those arguments, the IMF itself attempts to threaten them with ceasing to supply loans.

The word "bankrupt" applied to them is deeply fallacious. We are talking about the problem of sovereign debt, and that which is sovereign is not made bankrupt. What we are really saying is that we would like to undermine, deny or withdraw the sovereignty of debtors who, if they were not sovereign, would be bankrupt.

An absentee from the debate who, without disrespect to the distinguished contributions of the right hon. Member for Cardiff, South and Penarth and the right hon. and learned Member for Hexham (Mr. Rippon), is its true hero is the hon. Member for Bolsover (Mr. Skinner). What a pity that activities elsewhere—it cannot surely be the eve of the Twelfth of July?—have prevented the hon. Gentleman from attending, for the hon. Gentleman has seen further and deeper into this matter than most, certainly than the Prime Minister, whose position was substantially undermined by her junior Minister this afternoon, when he withdrew her argument that after accepting another loan the Argentine would not be able to continue buying weapons—he only said that it was "less likely to be able to buy weapons", a substantial modification.

It is a pity, I say, that the hon. Member for Bolsover is not here to behold his triumph and the validation of what he has said on this subject; for one puzzle was left unexplained in the speeches of the right hon. Members for Bethnal Green and Stepney and for Cardiff, South and Penarth. The right hon. Member for Bethnal Green and Stepney referred to the "astonishing recklessness" of the lenders who have brought things to the pass with which we are now confronted. The right hon. Gentleman said that this huge volume of debt—these billions of debt—had been piled up with "astonishing recklessness". In the motives that we impute to others, we often reveal something of our own character. Something of the sterling honesty and simplicity of the right hon. Gentleman is revealed by the fact that he thought it "reckless" to lend these sums of money to Brazil, the Argentine and other countries.

The right hon. Gentleman said the bankers were taking a reckless risk. But what is the Bill about? It is a Bill to indemnify those who lend. We ought to ask why they were so certain that in due course this indemnity would be forthcoming, and why they were taking what they considered to be justifiable risks.

I will explain something else to the right hon. Member for Cardiff, South and Penarth in the context in which he challenged me. He referred to the large loans that had been made to enable countries to purchase oil at enhanced prices. That was slightly corrected later by the right hon. and learned Member for Hexham, who said that the loans were made in the first place to countries that could purchase the oil so that they could then pass it on to countries that could not purchase it. Now, the loans are the counterpart of the oil exports—no loans, no oil exports—and had it not been possible to make these loans, it would not have been possible to hoist the price of oil. The problem of sovereign debt itself is the relic of the mechanism by which the price of oil was able to be pushed up. If those loans had not been forthcoming, the bottom would have tumbled out of the oil market faster than the sheikhs could put it back.