Orders of the Day — International Monetary Arrangements Bill

Part of the debate – in the House of Commons at 6:27 pm on 11th July 1983.

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Photo of Robin Cook Robin Cook , Livingston 6:27 pm, 11th July 1983

I hope that the hon. Gentleman will forgive me if I do not give way, but most hon. Members had more time in which to speak than I have. However, if the hon. Gentleman will forgive me, I promise to give way to him on a future occasion.

My right hon. Friend the Member for Bethnal Green and Stepney (Mr. Shore) referred, as did several other hon. Members subsequently, to the case of Argentina. I should like to take up a point made by the Economic Secretary, because it is not our argument that Argentina should be made to go to the wall or be forced into bankruptcy. We want a modest condition to be attached to any further facilities made available to Argentina. As hon. Member after hon. Member has said, conditionality is what the IMF is all about. Barely a facility is extended which does not have a condition attached to it by the IMF. Conventionally, the package involves austerity, deflation and a cut in living standards for the country receiving the facility. There is an irony there, in that article 1 of the IMFobliges it to promote growth, but in practice most of the packages arranged in the past two decades have sought to stifle it. Whatever the merits of those packages for industrialised nations such as Britain, they are plainly inappropriate for nations that are destitute, and for whom the consequences of deflation and austerity can be such a hard cut in living standards that it imperils families living on the bread line. Indeed, the Government of Brazil, who are dominated by the military, and are thus unlikely to be mealy-mouthed or soft and gentle, have now been obliged to tell the international community that they cannot accept the consequences of the austerity package, which is part of the conditions of the facilities made available to them.

Whatever the packages may do to the countries that receive them, they are perverse from our perspective because they compound our problem. When we oblige such countries to accept austerity measures, we destroy our markets. It has been calculated that 150,000 men and women in America have lost their jobs because of the collapse of the Brazilian market for American goods. As my hon. Friend the Member for Linlithgow (Mr. Dalyell) has observed, our constituencies face a further 500 redundancies at the British Leyland Bathgate plant as a direct result of the Third world's debt crisis. Much of that collapse in the market results from the conditions attached to loans from the IMF. They are imposed as part of the price of the additional loans made available.

There can be no doubt that the IMF and other similar operations impose conditions on those who take their loans. Therefore, we seek from the Government a condition on the loan to Argentina to prevent it from using that additional facility for additional arms purchases. That point is touched on in the Select Committee's report. In paragraph 5.27 it suggests that there may well be a case for placing restrictions on loans to countries which might be likely to use them for irresponsible acts, such as overextended purchases of arms.

We believe that there is such a case in respect of Argentina. The Minister must answer two questions if he is to persuade the House that there is no such case. First, he must explain why it is prudent to make further loan facilities available to Argentina when they are dwarfed by that country's arms expenditure. My right hon. Friend the Member for Bethnal Green and Stepney referred to the loan of £1 billion or £1·5 billion that is being signed today in New York. However, that is less than the sum that Argentina is committing to the purchase of naval ships alone. It cannot be right to assist in the rescue of Argentina's economy while conniving at that Government's expenditure of very large sums on arms, which can make no contribution whatever to the development of its economy or to providing the finance with which to repay the loans that we are providing today.

Secondly, and most profoundly, the Minister must persuade the House that there is any sense in Britain offering Argentina an additional credit of £100 million so that it can purchase weapons at the same time as it insists on being in a state of hostilities with Britain, and refuses formally to cease them. The Government have a choice. They can decide to negotiate with the Argentine Government over the question of the Falkland Islands sovereignty, or they can insist, as they have hitherto done, on the resolute approach and can refuse to have any such negotiations. In that latter case they are obliged to withdraw from bolstering Argentina's economy with the credit with which it can purchase arms. If the Government attempt to adopt both of those courses, they will lay themselves open to the charge of hypocrisy. The Opposition will have no part in that hypocrisy and for that reason we shall vote for our reasoned amendment.