Orders of the Day — International Monetary Arrangements Bill

Part of the debate – in the House of Commons at 6:14 pm on 11th July 1983.

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Photo of Mr Tam Dalyell Mr Tam Dalyell , Linlithgow 6:14 pm, 11th July 1983

In his previous incarnation as Under-Secretary of State for Energy, the Economic Secretary to the Treasury was always willing at least to try to answer questions, in contradistinction to many of his colleagues. Therefore, to keep my speech brief, I shall put to him two complicated questions.

The first deals with joint default. I was privileged to be the leader of the first Inter-Parliamentary Union delegation to Brazil in the mid-1970s, and I have maintained a deep interest in that country. Is it not a fact that it is dawning on the world's big debtors that their weakness is also their strength? They have realised that they need not take the IMF medicine and that there is no need to risk the riot and revolution that austerity may bring. Instead they can default, refuse to pay their debts, or impose a moratorium and delay paying back what they owe. It is no secret that Lloyds bank has loaned much of its capital to Mexico and Argentina. It is also well known that the relations between the City banks, to which my right hon. Friend the Member for Cardiff, South and Penarth (Mr. Callaghan) referred, and Brazil are in the same category.

Those loans have brought neither stability nor prosperity. In some cases they have brought weapons and revolt, not least to the smaller central American states to which my right hon. Friend referred. To the bankers, the Falklands dispute was not just a war but a crisis of credit—in Argentina, which owed more than $30 billion—and all over Latin America.

Is it true, as has been reported in the press and as was reported in the BBC programme "Panorama" about four weeks ago, that the Mexican president Lopez-Portillo held two secret meetings with the Brazilians and the Argentines about joint default on or about 24 September 1982?

On that occasion he could not persuade either the Brazilians or the Argentines to default, and Mexico could not go on her own. I understand that the position may change sooner rather than later. I do not wish to be personal in the House, but my brother-in-law is a Jesuit priest who has worked in Mexico City for many years, and he has told me that a monumental social crisis is round the corner if we are not careful. Those who saw the "Panorama" programme must have noted the extraordinary contrast on the border between Texas and Mexico where the First world and the Third world meet. The position cannot continue.

What is the Government's reaction to that meeting and to the meeting in April 1983, which was not secret, between Jesus Silva Herzog of Mexico and Antonia Delfim Netto of Brazil, whom some of us have met? The "Panorama" programme contained the following statement by Mr. Herzog: I think Mr. Keynes was the one who said many years ago that when you are the debtor of an important sum then you are the partner of the bank. If we do not help developing countries to solve their indebtedness problem they will not be our importers for many years. Will that not hurt recovery? It is in the interests of the developed countries to find a way to ease the indebtedness of under-developed nations.

In a previous debate my hon. Friend the Member for Livingston (Mr. Cook) raised a matter about which he and I are deeply concerned. British Leyland has decided that its factory at Bathgate will be geared mostly to producing Third world exports. My hon. Friend in his speech asked a crucial question. It is in Hansard, and I hope that somehow it will be answered, because many trade unions, workers and management connected with Leyland want to know what we will do in our interests for the Third world.

I listened carefully, as I always do, to the right hon. Member for Down, South (Mr. Powell). There is another side to this coin. If he were the hon. Member for Linlithgow or Livingston and had this urgent constituency problem on his hands, I wonder whether he would make the same categoric speech that he made this afternoon. The truth is that factories such as Leyland's at Bathgate, having become Third world dependent — there are many in many constituencies—face this urgent problem. What hope can the Treasury hold out—given the defaulting, not just in central and south America but possibly in Nigeria and other parts of Africa—to the huge work forces sent to Scotland, in this case, by the Macmillan Government? The work force wants some type of reply.

If we cut off the development component, we shall create an intolerable situation in the developing countries. We cannot have a policy that is designed solely to enable private banks to be repaid. There must be something for the people of the developing countries as well. They must be persuaded that they are not simply working for foreign banks.

My collegues may have seen the by-lined article by Bernardo Kucinski in The Guardian today, which stated that Mr. Delfim Netto will capitalise on the increasing social unrest by warning bankers against demanding more than Brazil can give. Later it stated: Lula's strike could result in widespread food shortages and subsequent industrial disruption. One might add, "and how!" Problems of debt and recession spread from one country to another. Trade with other countries dwindles as each country has to import less. This debt trap in Latin America is—partially, at any rate— holding back economic recovery throughout the world. My first question is: Does the Minister accept that general analysis? In particular, what about our self-interest problem, which is epitomised at Bathgate?

My right hon. Friend the Member for Bethnal Green and Stepney (Mr. Shore) explained fully and powerfully the horrendous arms problem. This is not the occasion to go into the whole Falklands issue, but I draw the attention of Ministers in general to a horrific development—the purchase from the Italian firm Oto-Melara and from Matra in France of the Otomat, which is different from the Exocet. It has a range six times that of the M38 Exocet. The more modern Exocet has a range of about 42 kilometres and the previous one had a range of about 20 miles. This means a range of about 125 miles. These weapons may be used — heaven help us —against our ships by aircraft which are halfway between the Falklands and the Argentine coast. The Ministry of Defence is wrong in saying that they can be land-based only; they can be married, as the Exocet was, to the wing of an aircraft.

The British people cannot understand a set-up whereby Argentina is being given money which will be partly invested in Switzerland and partly spent on a remote-controlled mine, which the "International Defence Review", a highly reputable American publication, says the Argentines have specifically ordered. We are dealing here with mines that can be dormant for two years and are only five metres long. They are polyurethane-based, which means that they are very difficult to counter in any way. They have lithium or silver-zinc batteries which can last a long time. They can travel up to 100 km at 20 knots and can be set off by aircraft 500 km away at 30,000 ft. They have a TV camera which can identify their victims. That is just one example of the type of weapon that reliable sources tell us Argentina is ordering.

The Minister's answer to my interjection and that of my right hon. Friend the Member for Cardiff, South and Penarth was that that was all very terrible, but we had to face the fact that the break-up of the Argentine economy would be even more terrible for the West. Given those two evils, we had to do more to prevent the second than the first. It is a judgment with which I might have more sympathy than many of my right hon. and hon. Friends. However, in reply to that I read the moving letter dated 26 May published in The Observer written shortly before he died by David Tinker on HMS Glamorgan to his friend Gareth. He said: Your letter arrived today with the reinforcements: HMS Bristol, Andromeda and Co. Hi, life out here is no joke. We all thought that being 'wogs' they would be bound to lose, but unfortunately Europe seems to have supplied them with super-modern invasion kit. Those are the eloquent words of a man who was shortly to give up his life.

I agree with the Government that there is a considerable threat to the banking system if any of those three countries were to default. They are debtors on a huge scale. They have vast power. The conclusion that some of us must draw is that, from the Government's standpoint, the inexorable logic is that they had better negotiate with Argentina very soon. Negotiation is the only solution. It may be humiliating for the Prime Minister and difficult for many people, but the alternative is default and all the troubles that go with it.

For that and many other reasons, I conclude—it may not be the conclusion of all my right hon. and hon. Friends, but I have to speak personally in this matter—that the sooner that there are negotiations on the future of the Falkland Islands, the better for us, the West and, not least, for the inhabitants of the Falkland Islands.